A recap of the Boston Business Journal Future of Healthcare Event on April 7th
Spring was proud to sponsor the Boston Business Journal’s breakfast event earlier this month. The title, “The Future of Healthcare,” is a critical point of discussion for our team and our clients day in and day out, and carries more weight now since the pandemic highlighted critical system gaps. Our consultants continuously look for innovative solutions that help organizations mitigate the impacts of rising healthcare costs, attract and retain employees, address behavioral health, and ultimately frame insurance and employee benefits in a more strategic way. Our work closely aligns with the market and what is trending with key players, such as insurance carriers, healthcare providers, technology vendors, and more. As such, we were delighted to get the inside scoop directly from industry partners.
The in-person (refreshing!) event provided much food for thought and called upon the sentiments of a range of stakeholders. Michael Dandorph, President and CEO at Tufts Medicine, provided the healthcare provider viewpoint. Andrew Dreyfus, President and CEO of Blue Cross Blue Shield of Massachusetts (BCBSMA), an industry veteran, brought the health plan perspective to the table. And Ali Hyatt, General Manager of Provider Commercialization and Marketing at Amwell, a telemedicine company, rounded out the discussion.
While the panelists all brought different points of view, there was a clear consensus as to what areas of healthcare need the most attention, and where the industry should focus in order to shape a more positive “Future of Healthcare.” A common thread was the need to view healthcare through the lens of the consumer (the patient) and find ways to improve that experience. We repeatedly heard the word transformation, meaning we all need to reframe our thinking and our approach to address the following key areas:
Affordability
It’s no surprise that affordability was front and center, as healthcare costs continue to climb. As Dreyfus pointed out, the problem only got worse when COVID-19 necessitated paying higher salaries to staff, and caused premiums to increase. The rise of high-cost specialty drugs, which now represent around 25% of healthcare spending, and the consolidation of healthcare systems add even more fuel to the fire. As a result, employers are increasingly shifting more of the health plan costs to their employees, creating real barriers to care. Dreyfus cited a survey that found that in Massachusetts, half of the public has delayed or avoided necessary care due to costs. And as Hyatt pointed out, access is the most important driver of affordability. It is lack of access that tends to escalate prices for all parties within the healthcare system.
But enough about the problem; we all know it’s grim. When it comes to solutions, the panelists had ideas. Amwell is focused on making things like follow-up treatment, appointment making and care regimens easier to build an infrastructure that yields better outcomes. Tufts Medicine is working to build trust with consumers to help them better manage their health proactively, so that perhaps the patient never has to come to the hospital at all. Dreyfus emphasized the need to move away from the current fee-for-service system, where physicians earn less if they can keep a patient out of the hospital, which is backwards. “We should be paying for health and outcomes,” stated Dreyfus. High costs in a pandemic-stricken environment have pushed people away from engaging with healthcare systems and added to stress, leading to increased issues surrounding…
Mental Health
The speakers came at mental health from multiple angles. There is the obvious problem, which is that COVID-19 took immeasurable tolls on mental health. For as much good that technology has done regarding the flexibility to “work-from-anywhere,” it has also been detrimental. Dandorph pointed out that remote work for many just means logging on earlier and signing off later, with almost no down time. Hyatt added that a recent Microsoft study showed that employees were pulling an additional “third shift” from 9-10PM, feeling the need to log back in at night after tending to family or other obligations. Beyond work pressures, we also have retirees and seniors to consider, who have been isolated, vulnerable and afraid since the onset of the pandemic, and have been exhibiting increasing signs of depression and/or dementia as they struggle with loneliness.
Then there is the more specific problem, which is burnout within the healthcare industry. Dandorph dubbed this the “pandemic before the pandemic,” with suicide rates among physicians more than double that of the general population. COVID-19 amplified things, and staff has been retreating ever since, adding to the labor shortage we are seeing across all sectors. To solve for this crisis, the panelists stressed the need to simplify processes to relieve the burden on healthcare professionals. They are looking at ways to eliminate clinicians spending hours on the phone for pre-authorization processes, or typing up notes, and ultimately remove steps when possible. By integrating automation technologies and digitizing routine tasks, not only will staff get back time, but administrative costs should also go down.
The good news is the stigma around mental health has fallen – maybe not completely, but significantly. For their part, BCBSMA has dramatically expanded their staff in this area, adding around 17,000 social workers, psychologists, psychiatrists and others. In some cases, the health plan is paying mental health practitioners more to bring them back into insurance networks, as they are often separate due to administrative burden. BSBCMA has also committed to pay at parity for mental health visits indefinitely.
The panelists agreed that all the touchpoints of healthcare are inter-related; you can’t have a strong system if one cog in the wheel is poor. Specifically, the mental health component can be helped in part by…
Digitization
Telehealth was a hot topic at the Boston Business Journal event. While it was even higher during the height of the pandemic, Tufts Medicine is still seeing about 80% of behavioral health visits and 15%-20% of all healthcare visits in a virtual format.
In summary, there’s no going backwards. Telehealth is here to stay, and Hyatt told a memorable story highlighting its value beyond mere convenience. She described a patient treated by Amwell who, at the time did not have a primary care physician (PCP) and was struggling with bronchitis systems. He was a smoker, mid-50’s, with various health issues such as emphysema and high blood pressure. He remembered he had access to Amwell and through his virtual visit, the clinician was able to discern that his nebulizer tubing was cracked, that he was not taking his blood pressure medication, and that his wife’s cuff he had been using wasn’t the right fit. After the visit these problems were resolved and he was enrolled in a care management program through the insurer from which he receives nutrition tips, reminders about appointments, and more. As Hyatt put it, “This was a consumer who would have gotten lost in the system.” Dreyfus agreed that seeing patients in their home environment can be extremely valuable, as the clinician can do things like look into their fridge to get a gauge of their diet, look into their medicine cabinet to understand drug-to-drug interactions, or flag things like rugs that could cause a fall.
Telehealth does not work for every medical issue, and some still prefer in-person care. Importantly, Dreyfus flagged up that someone seeking mental health services, for example, may not be comfortable doing so in their home, which could be the source of their stress. But as Hyatt pointed out, we shouldn’t be viewing it as telehealth versus in-person care, but how it all works together. The panelists think of telehealth as the beginning of a series of services that are more focused on the patient experience with the goal of increasing…
Consumer Engagement
As Dandorph explained, a virtual healthcare visit is one aspect of where the future of healthcare is going, but we need to think about digital more broadly. He pointed out that in the tech industry for example, they have figured out how to engage consumers and be a regular part of their lives without being intrusive. Healthcare isn’t there yet. But if we can engage patients with their health early and often, and make their care needs and system navigation easier to understand, the result will be better outcomes and lower costs across the board. Dandorph introduced the concept of food as medicine and suggested partnerships that could enable all types of populations to eat healthier.
There are myriad ways to achieve such engagement, and one of them pitched by Dreyfus is to make the home the new locus of care. We were able to figure out at-home COVID-19 tests, so why stop there? Are there other tests or treatments that could be out-of-the-box? With the appropriate clinical support, better outcomes may be more likely in a home environment, and could be more comfortable for the patient and convenient for unpaid caretakers. This is especially true for elders, where the panelists agreed that long-term care needs to be a big piece of this puzzle as we move forward.
To bridge the consumer engagement gap, Tufts Medicine is thinking differently regarding hiring and leadership. Dandorph and his team brought in leaders from outside the healthcare realm, more familiar with consumer markets, who could think differently about making those connections and building brand recognition. Hyatt echoed this sentiment. At Amwell, they prioritize having a mix of staff; a balance of those from healthcare who understand the realities and the regulatory environment, and those from outside the industry who can bring fresh ideas and rethink the consumer experience. Hyatt noted that the biggest issue at a health system in New York was around payment and billing, where patients were frustrated with the complexity. We again get back to simplicity.
While all of these innovations are fantastic, we need to remember that they are not all equally accessible, which brings us to…
Inequity
Like mental health, health inequity was another issue unmasked by COVID-19. There is still a digital divide, where technology solutions may not be accessible for some. There are social determinants of health to consider, Dandorph noted, such as food access, safe housing, economics, and education. When we talk about Food as Medicine, as an example, it may not be simple for everyone due to costs or inconvenience. And as Dreyfus pointed out, we are still dealing with underlying racism in care. So, what can we do about it?
Recently collected all their member data – race, ethnicity, and other measures – and published it in a transparent way, highlighting where they stand now and where they need to improve equity efforts. They also developed similar reports for healthcare systems and vendors in the region. Then, they committed to using their value-based care programs to eliminate the inequities they found. The health plan made a $25 million grant to the Institute of Healthcare in Improvement in Boston. And starting in 2023 they will be the first plan in the country to pay hospitals more for achieving equity goals, as they have in the past to improve quality of care. Tufts Medicine is focused on developing more culturally competent services, as a start, but Dandorph stressed that health inequity is a societal problem that will require stronger…
Partnership
Yes, the healthcare system in the U.S. is broken in some ways. But it isn’t just up to hospitals and carriers to fix it. The panelists emphasized that things work better when silos are broken down, admitting even their organizations could work in closer collaboration, as they are aligned on priorities and direction. Dandorph explained the need for more partnership between the private and public sectors. For example, federal regulation is needed in the realm of high cost prescription drugs. Further, the government funds 40% of all healthcare in the U.S. through either Medicare or Medicaid, and many of its members are the ones suffering most from problems related to inequity and mental health. “These are macro societal issues,” said Dandorph, and as a society we need to elevate the economic status of those vulnerable communities and work on building trust between the people and the companies who can help them. This will take more work than any of the panelists’ organizations can do
alone. It will require community leaders. It will require businesses and employers to be more involved. Just like patients need help connecting the dots of their care, we need to connect the dots between each other.
Ultimately, the first 5 focus areas can be solved for only if #6 plays a larger role. Many of the objectives discussed – shifting from a sickcare system to a healthcare system, lowering costs, minimizing complexity, eliminating disparities, driving engagement in healthy behaviors – can only be accomplished through greater and widespread collaboration and connectivity.
Our Managing Partner, Karin Landry, presented on climate risk at the 2022 RIMS Riskworld Conference. Check out this session summary from Business Insurance.
In the United States, over 155 million people received medical and health-related benefits through some form of employer-sponsored program in 2021, according to the Kaiser Family Foundation. As healthcare costs continue to increase year over year, it should not come as a surprise to learn that after compensation-related expenses, healthcare costs are usually the second highest expense for most employers.
Employers are beginning to ask important questions about the future of their health care offerings and turning over every stone in an effort to control these ever-increasing costs. For employers that are currently leveraging fully insured plans, a prime opportunity to lower the total cost of healthcare exists through self-funding. By transitioning to a self-funded program, employers can achieve savings of anywhere from 5% to 15% depending on their program design and cost structure.
Self-insurance has become the most prevalent way to fund for healthcare benefits. Of those employers offering employer-sponsored programs, 67% choose to do so through a self-funded program. [1]
What is Self-Insurance?
Self-insurance, also known as self-funding, is a strategy used by employers to gain control over healthcare costs. In addition to control, the significant savings achieved through self-insuring is exactly why so many are considering a transition, as a viable alternative to manage and lower costs.
Self-insurance is the process of unbundling a fully insured plan, where employers use a third-party administrator to operate the plan from a benefits and claims processing perspective. This ensures that employees are not impacted by the change. The most significant difference pertains to how the program is funded; instead of paying a fixed premium amount, employers take a portion of the financial risk associated with the claims of the program, in exchange for lower overall costs.
The incentive for incurring this additional risk directly relates to the hefty charge carriers typically add on to their fully insured premiums. By taking on this extra risk, employers strip away these insurance carrier profits and are able to reduce their healthcare spending. To protect against the catastrophic losses that may occur due to higher-than-expected claims frequency or severity, employers typically take advantage of medical stop-loss coverage.
Groups looking to move to self-insurance should focus on understanding the financial and qualitative impact of this move. For this reason, we usually recommend groups that are larger (over 100 enrolled lives) to contemplate this strategy. The reason for this threshold is that most states regulations allow companies with over 100 enrolled employees (50 enrolled employees in some states) can request the insurance carriers for their historic claims information. This can then be reviewed by actuaries to help understand and outline the financial implications of potentially taking on some of the risk associated with moving to self-insurance.
Managing Risk – Stop Loss Insurance
The largest concern when considering a self-funded program relates to the risk of the program being impacted by unexpectedly high claims – be it due to the volume of claims or due to the exposure to a handful of large loss claims. One very sick individual or a series of unanticipated smaller claims could lead to a higher-than-expected claims level in a self-insured plan. Stop-loss insurance minimizes or eliminates this risk as well as dramatic fluctuations in claim costs over time, creating a level of predictability.
Aggregate Stop-Loss
Provides employer protection for the risk of catastrophic loss by providing insurance coverage for total group claims over a certain dollar amount. Stop-loss carriers issue policies that pay when the aggregate claims amount exceed a pre-determined percentage of expected claims levels. Aggregate stop loss is usually expressed as percentage of expected claims like 125%.
Specific Stop-Loss
Provides employer protection for individual catastrophic claims. Similar to aggregate stop-loss, financial protection is provided when the claim exceeds the pre-determined deductible or attachment point. Specific stop loss is usually expressed as a deductible amount like $25,000 per individual. For both specific and aggregate stop-loss, all claims exceeding the attachment point are covered by the stop-loss carrier and not the responsibility of the employer.
Benefits
Additional benefits to self-funding include design flexibility, cost transparency, and increased savings. Further, increased insight into the actual cost of care, administrative costs, and any loaded fees or additional expenses to the plan allow for more informed decision making.
Full Transparency & Increased Access to Data
Many fully insured employers don’t understand the true cost of their program or areas of claims concentration, or using a broker or advisor, as commissions are often loaded into premium rates. Additionally, obtaining claim information in a fully insured environment is challenging. Increased transparency and data with self-funding allows employers to analyze cost drivers and implement targeted programs to lower utilization costs, while increasing employee health and satisfaction. In a self-insured plan this information is easily available on a timely basis, thereby allowing employers to better understand their programs and make changes to cater to their unique demographic of employees before their next renewal.
Program & Design Flexibility
Every state has a unique list of mandated coverages that can add significant costs for both employers and their employees. Because self-insured plans are governed by ERISA and generally pre-empt state law, employers avoid these additional costs by allowing them to design plans that meet both employer and employee needs, increasing satisfaction for all stakeholders.
Financial Control
Better-than-expected claims in one year can offset next year’s expenses or reduce program contribution levels. In addition, employers may choose to purchase medical stop-loss insurance or a level funding arrangement to provide additional security and create consistency from a cash flow perspective.
Cost Savings
Typically, premiums paid in fully insured programs include loaded fees and industry loss trends. In a self-funded program, employers not only minimize or avoid paying these additional charges, but their costs are directly correlated to their specific experience, and not that of their peers. Tools such as consumer-directed health care, price transparency tools, specialty networks, value-based plan designs, and wellness programs all can be built seamlessly into a self-funded plan and help drive down utilization costs and the total cost of healthcare.
Want to learn more?
Self-insurance remains a powerful tool in an HR team’s arsenal to control and potentially reduce the burgeoning healthcare costs, as well as provide benefits that are targeted to their population. Employers who make the change can reap immediate advantages and avoid, or at least slow down, inevitable cost increases. Our client, edHEALTH, is a prime example of self-insurance done right, where their members were able to gain savings, offer enhanced coverage, and take a more targeted approach to employee benefits. Our Consulting Team is made up of highly trained risk funding professionals with years of experience. We help employers navigate the self-funding waters and to develop the best funding strategy to meet their individual needs.
1. 2021 Employer Health Benefits Survey. kff.org. https://www.kff.org/report-section/ehbs-2021-section-1-cost-of-health-insurance/.
Vaccine mandates for COVID-19 continue to evolve and change. Organizations are facing pressure from various internal stakeholders as well as federal and state agencies that often contradict each other. COVID-19 rates are declining in the US, which has translated into decreased mandates and the lightening of previous requirements. With that said, some areas of the world are experiencing a renewed surge, which may signal a pendulum swing is coming related to vaccine and mask mandates. Only one thing seems certain – mandates and COVID-19 requirements will keep changing, and employers must design programs, policies and tools that continue to be flexible.
Regardless of your organization’s current strategy surrounding vaccines, testing, and masking protocols, it is critical to consider tracking systems, communications, incentives, and equity.
Vaccine tracking systems
While public tools like this COVID-19 tracker are available, many organizations are wondering how they can record and track vaccine and booster status if that is a requirement for employees. Without a tracking mechanism, policies will be difficult to enforce. However, collecting vaccination status and test results is considered confidential medical information. It is important to understand the privacy factors and risks involved in housing such information. Whether using a third-party platform or something internal, make sure you cover your compliance bases.
Communications
No matter the course of action you take, be prepared to deal with opposing viewpoints. If you are taking a hard vaccine mandate stance, does that mean employees who do not comply will be terminated? Are you offering exemptions and if so, how easy are those to get? Are you at risk of being sued over these policies? Alternatively, if you are not implementing a vaccine mandate or similar masking/testing requirement, it will be important to make accommodations for employees who feel unsafe in such an environment. Perhaps separate workspaces need to be ensured, or expanded remote working policies put into place. Whatever your corporate decisions, plan to over-communicate. If your programs and policies are fluid, many employers have found an information hub useful so employees know where to look for the most current information.
Incentives
In 2021, incentives for vaccinations were popular. State governments facilitated cash-based lotteries. Honda offered cash incentives to employees, and Kroger offered both cash and free grocery incentives. In true Massachusetts form, the state offered free Dunkin’ iced coffees to those getting vaccinated. Now, incentives have petered out a bit, but Arkansas is still handing out a $20 lottery ticket to anyone who gets a shot, and New York is offering the chance at ski passes to those who get a booster. The bottom line here is that vaccination and booster incentives are fair game. Just keep in mind that at this stage in the game, they may or may not be effective.
Equity
The walk back of the federal OSHA law means a patchwork of policies exist between states. If your organization has employees in multiple states, make sure you are aware of the legislation across the board. As an extreme example, be prepared to develop a policy strategy for employees in states where vaccine mandates are prohibited even for private companies. A uniform policy may not be feasible but ideally you should set corporate requirements and then adjust only where required by law.
The vaccine discussion has been a hot topic for over a year and we are not done with it yet, as risk factors keep changing. If you have questions about vaccine compliance, communications, accommodations, or reporting, please get in touch with Spring and we would be happy to help. Our client, edHEALTH, and its member schools, have effectively navigated the evolving and charged landscape of COVID-19 policies, which have been even more complicated in the realm of higher education. Here are some additional tools available to help you out.
The higher education sector is faced with unique risks and expectations. In this Boston Business Journal article, our Managing Partner, Karin Landry, highlights key points from a Future of Higher Education event, pointing out risk management considerations for this field.
Change is the only constant in life.
Heraclitus (Greek philosopher)
If what Heraclitus said is true, and I believe it is, then why is it so hard for us – both people and organizations – to accept change and realign goals and objectives? We could cite deep routed tradition at universities and colleges, pillars of success permeated from board chairs at non-profits, family values passed from prior generations at partnerships, or implanted views from shareholders. But whatever it is, the things that once got us climbing toward the top may also be what is holding us back from reaching the next summit.
As I refine my lens as a thought leader in employee health and welfare programs, I believe traditional change philosophies may be outdated. As organizations continue to evolve and grow, those corporate flaws that once reflected in the mirror as fine lines are becoming deeper. Workers and customers are redefining their definition of perfection and demanding more action, transparency, and change. Alas, our approach to organizational change requires a facelift, or maybe just a makeover.
I think Martha Freymann Miser, PhD summarized things well in a piece called Three Myths of Change. In that piece she highlights 3 myths of change, which reflect some outdated philosophies of change management:
- Change Starts at the Top
- Prediction is Possible
- Control Equals Efficiency
Myth Makeovers
Although it is poetic to think that change starts at the top, I think it’s more accurate to say that change starts with leaders. Those leaders may or may not be at the top. In addition, I think there is a healthy skepticism that exists in many corporate cultures making it necessary to find change agents within all areas of your organization, so colleagues can take inspiration from their peers as well as senior leaders.
The myth of prediction is possible resonates with me because that is how I live my personal life…plan, plan, plan, execute. My goal is to methodically plot things out and make calculations to predict the future and remove the unknown. However, planning does not remove risk, it just mitigates it – or at least that is what I tell myself. Martha says it best with, “We like to believe we can plan change and roll it out much like a new system in a factory.” Unfortunately, that is rarely the whole story, and organizations need to accept and embrace some modicum of the unplanned.
Given the recent COVID-19 landscape, organizations were forced to reconsider how they managed and regulated performance, which is a necessary lesson in the myth Control Equals Efficiency. With all the standardization and best practices (which of course have a place), it’s possible we have removed the flexibility required to be pliable and see change as an opportunity rather than an obstacle.
More important than highlighting the myths, Martha summarizes three new approaches that hit the nail on the head after we have spent the last two years living in a world where change within our personal and professional lives was not just constant but imperative.
- Use New Metaphors
- Do Less Planning and More Experimenting
- Celebrate Disruption
These refined strategies require that we accept our organizational flaws since they are arguably what makes our organization special, human, and best in breed. Instead of focusing on the laugh lines, focus on what got us to today…the laughter and experiences…and build from there. If we think like aging entrepreneurs going under the knife isn’t necessary, we can makeover our organizations (and ourselves) by shifting our mindset. From there we can reap the benefits of a stronger organization with workers who know they are living their best lives because they are part of our workforce culture and mission, not in spite of it. Our client, edHEALTH, has a model based off of the need for change for its members, and is well versed in rolling with the punches it cannot control.