Most employers that self-fund their employee health benefit plans do so in order to “drive the bus.” And, of course, self-funding does give employers more control over benefits. However, as I’ve written in the past, the trend over several decades has been that health costs for self-funded plans tracks along the same exact road as fully insured plans – a road up a never-ending hill with an unjustifiable incline. Even worse, we’ve seen no improvements in the ubiquitous variations in outcomes that Dr. John Wennberg first wrote of in 1975! In short, self-funded plans have had essentially no impact on the market.
If you have any question as to why even the largest self-funded employers haven’t actually been able to map out their own course and take control of costs or drive the market toward more reliable outcomes, these two articles should resolve the question….
Even the community’s largest employers haven’t the necessary purchasing power to negotiate prices or impact quality in an oligopolistic market. But that’s not the real challenge. Negotiating lower prices is not the real solution. Rather than “simply” mitigating results (e.g., unjustifiable prices), we need to fundamentally alter the causes for unjustifiable pricing and unreliable outcomes. Forcing structural change in the market is our only chance to address sustainably, affordability and ongoing improvement in outcomes. We must do what Nicolo Machiavelli, in 1535, referred to as “change the order of things.”
This broader, more strategic goal explains the joint purchasing initiative that we’ve entered into with the Purchaser Business Group on Health (PBGH). Through this arrangement, we uniquely align and leverage the purchasing practices of our local, largely public employers with those of national, private employers. Doing so allows us to further realize the intent for The Colorado Purchasing Alliance I had discussed with Governor Polis – to address healthcare reliability and affordability on behalf of ALL Colorado employers/purchasers so we can advantage our overall economy on an ongoing basis.
Our purchasing partnership with PBGH has both short- and long-term tangible advantages:
It is important to note, however, that this approach need not only advantage purchasers. Because PBGH members are national employers, this approach potentially advantages those Colorado hospitals that perform given services at the highest levels by providing an opportunity to attract business from contiguous states or even from across the country. Hospitals with services that compete with the best in the country will be included in PBGH’s national “Centers of Excellence” program! Want more business? EARN IT!
PBGH and TCPA will realize the purpose of our relationship by doing exactly what is mentioned above: purchasing healthcare with due diligence and, perhaps for the first time, genuine fiduciary responsibility – both of which require utilizing benchmarks as integral to prudent purchasing.
In our specific case this means we will:
Finally, and most specifically, we’ve begun this process for select orthopedic services and will, subsequently, send out RFIs for other services including general surgery, maternity, oncology, and other services. Based on a pricing analysis of procedures that can be performed on an out-patient basis for our participating purchasers (using the Colorado APCD), we decided to initially contact free-standing facilities given their significant and documented price advantage over HOPDs.
With 45 years of experience in healthcare, I’ve never been more enthusiastic or optimistic about the mission of achieving the best outcomes at the most affordable prices.
But we must be both clear-eyed and resolute: this can only be done if we change the order of things.