Wednesday, January 13, 2010

Michael Porter on the Employer Role in Health Care Reform

Here's what Michael Porter, the Harvard Business School strategy guru, said about employers in a New England Journal of Medicine article last summer:

We must keep employers in the insurance system. Employers have a vested interest in their employees' health. Daily interactions with their workforce enable employers to create value by developing a culture of wellness, enabling effective prevention and screening, and directing employees to high-value providers. Employers can also foster competition and drive broader system improvement in ways that are difficult for government entities to replicate. To motivate employers to stay in the system, we must reduce the extra amount they now pay through higher insurance costs to cover the uninsured and subsidize government programs. We must also create a level playing field for employers that offer coverage by penalizing employers that are free riders.
Employers didn't envision just how complex their role would become when they began to offer health insurance as a benefit during World War II. Wartime wage controls prevented them from using higher pay to recruit and retain desirable employees. Health insurance (and other benefits) allowed them to compete for the employees they wanted.

If we were designing a health system from scratch we wouldn't make employers so central for making it work. Health and health care isn't the business they're in. But that's the system we have, and we have to play with the cards that we've been dealt!

Employers are well positioned to change the system in positive ways.
  1. Getting smarter about costs. Public discussion of health care costs last year was pathetic. If we listen to Democrats we believe "greedy insurance companies" are the villains. If we listen to Republicans we believe that "greedy malpractice lawyers" are the evil-doers. Neither party helped us understand the real drivers of the cost explosion: (1) our belief that more care = better care, (2) the corporatization of medicine, (3) fee-for-service payment, and (4) our national allergy to acknowledging the need for limits.

    Employers can educate the 160 million Americans who get health insurance through their work about health costs better than politicians can. How much is the total health bill for the company? What percentage is from insurance costs, and how much comes from the impact of "life style choices" on health and productivity? Are the practice patterns in the community efficient and effective, or is insurance money being wasted? Are individual employees (and their families) doing what they can to promote their own well-being?

    All but the smallest businesses are large enough to allow meaningful cost patterns to be understandable. And all but the largest multinationals are small enough for employees to feel allied to the employee population they share health costs with.

  2. Influencing care delivery. Physicians, hospitals, and other providers are difficult for politicians to tangle with. We like and trust our providers more than we like and trust our politicians. But businesses are accustomed to looking at value for money in a matter-of-fact way. They can ask tough questions about whether the health services they purchase are producing good outcomes in an efficient manner or if the system that serves them is fragmented and riddled with waste - which, alas, it is!

    Quality circles, Lean, and other employee-centered approaches to process improvement have led to substantial gains in value in manufacturing and other industries. Wherever possible, employees should be enlisted in similar activities with regard to the health care they receive. Efficiency shouldn't be the exclusive province of PhD and MD experts. I appreciated the suggestions I received from my own patients about how I delivered care. Employees could contribute useful front line observations about how care can be delivered in a more integrated and efficient manner.

  3. Improving health. Virtually every area of health has peer-led health improvement activities. AA and NA help with substance problems. Cancer support groups have often been shown to contribute to better outcomes. Peers can help each other stick to healthier diets and get more exercise. Over the years it was more and more common for me to encourage patients to go to the web to see what kinds of help they could get from others who have experienced similar conditions.

    When employers identify the areas of health that are most problematic for its workplace community it can encourage and support positive actions by individuals, ranging from weight loss and exercise to diabetes management.

Taking this kind of role with health and health care is demanding, and it isn't the primary concern of the business. But the reform debate shows that for the forseeable future we're wedded to employer-based health insurance. The business sector has tremendous potential for shaping our dysfunctional health care system.

(For additional advice from Michael Porter, see his article "What Should Employers Do About Health Care?"

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