Three Insights About Hospital-Physician-Insurer-Employer Health Care Market

Check out the three page article on "U.S. Health Care's Future" in the Marketplace section of the December 12 Wall Street Journal. Using personal stories of a doc, hospital CEO, insurance executive, human resources manager and a patient, the news piece portrays the blurring business lines between insurers, buyers and providers.  Mainstream readers of the Journal are likely to think the topic is both timely and novel.  Regular readers of the Disease Management Care Blog learned about his months ago.

Who are these five canaries in the health care coal mine, these bellwethers of the insurance business, these oracles of management and what are they telling us?

1. Dr. McCullough, a salaried physician with 28% of his income contingent on quality and satisfaction.  Some measures were imposed by the local Blues plan, which was passed through to the him by his employer.

Message: Purchaser and buyer control of physician reimbursement is already big and it's growing.

2. Jim Taylor, a hospital CEO who cannot buy an electronic record system unless he merges with two other hospital systems.  If the merger is approved, the hospital will also be able to take on "warranty-style" payments from insurers.

Message: "Bigger is better" for capital-constrained hospitals.

3. Chris Day, an Aetna executive who got an Arizona health system to share insurance risk.  The main sticking point was the two-way mutual sharing of internal cost and contracting data.

Message: If insurers are willing to share internal pricing data, they must really mean it and think it's an important success factor.

4.Robert Jacobs, the HR person, who linked about $10 per week of employee's health insurance premiums to healthy behaviors (like tobacco) and quality test results (like blood cholesterol levels).

Message:  "Don't just stand there," say the employers, "do something."

5. Louis Kandor, an 86 year old man with advanced diabetes, who is being visited by a nurse who, in turn, is employed by a care management service provider under contract by his Medicare Advantage insurer.

Message: One key to mitigating risk for every insurer (except fee-for-service Medicare) is to use nurse-led care management.

While the Journal article doesn't spell it out, the DMCB believes the anecdotes can be distilled down into three useful insights:

1. Stakeholders are scrambling to demonstrate measurable outcomes to an increasingly educated and  skeptical public.  That's the basis for physician pay-for-performance and premium surcharges.

2) Sharing proprietary insurance data is important.  Is information the secret ingredient that was lacking during the similar - and mostly unsuccessful - insurer-provider collaborations back in the 1990s?  We'll see. 

3) For those hospitals that cannot or will not take risk, the next best answer is to merge.  That will mean economies of scale, access to capital and negotiating leverage.