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Forum to Curb Medical Costs Is All Business

October 24, 2006
Related Topics: Health and Wellness, Latest News
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Executives from among the largest employers in northwest Nevada met at John Ascuaga's Nugget Casino Resort near Reno earlier this month to figure out how to make smarter bets with their health care dollars and put an end to rising medical costs.

It hardly sounds like breaking news. But what was unique about the October 12 meeting—and possibly a portent of things to come nationwide—was that the usual health care stakeholders of hospitals, including insurance companies and such vendors as pharmacy benefit managers and major health benefits consultants, were not invited.

Only those footing the bill for health care—public and private employers—were allowed to attend to learn what's needed to make sure the health care they are funding is both high-quality and cost-effective.

"The time for holding hands and singing 'Kumbaya' is over," says Brian Klepper, president of the Jacksonville, Florida-based Center for Practical Health Reform and a speaker at the meeting, which was organized by the Reno-based Nevada Health Care Coalition. "We recognized it was time to put together a meeting that was just payers, not providers."

Many advocates for health system change argue that medical industry has not, on its own or in collaboration with employers, adequately addressed high health care costs and related issues such as preventable medical errors. Klepper, among others, says employers should use their market power to demand improvements in cost and quality by transforming the way doctors and hospitals get paid for their services.

The meeting was the first of a larger effort to get executives from regional employers to work with other employers to control health care costs for businesses.

"It is really important for people in the C-suite to show visual leadership on this, so that it is not just an HR thing, it is a business leadership thing that is important for everybody in the community," Klepper says, who spoke after the meeting during a telephone interview. 

In the two-hour meeting, which was closed to the media, Klepper says he laid out what he calls "the conceptual framework" of today's health care system. First, doctors and hospitals are not paid to provide cost-effective high-quality medical care, he says. They are paid either for each service they provide or, in the case of capitation, a lump sum for each patient, allowing them to pocket the money left over after care is given. Either way, care is not compensated based on quality, Klepper says. Second, employers have not used their claims data to hold doctors and hospitals accountable for the kind of service they provide.

Jerry Reeves, a pediatric oncologist, spoke about the value of using claims data to evaluate the cost and quality of medical providers in the region. Doing so can help create networks of high-performing doctors. This is something Reeves, former medical officer for insurance company Humana, has done as the chief medical officer for unionized hotel and restaurant employees in Las Vegas.

The meeting was intended to increase the Nevada Health Care Coalition's pool of medical claims from 30,000 lives to 100,000 lives, a number that would total about 25 percent of the population in northwestern Nevada.

"That is significant," says Michael Ginder, the coalition's executive director. Ginder also spoke by telephone with Workforce Management after the meeting.  A large data pool would allow the group to examine how the cost of medical treatment varies among providers, how different benefit plan designs increase the use of drugs for chronic diseases like diabetes, and the difference in the quality and cost of care of hospitals and doctors. Ginder says data is the key to forcing change; and collecting the data requires a collaborative effort among employers.

Medical providers "start acting differently once you have the data," Ginder says.

Employers that band together can use their market power as purchasers of health care to pressure hospitals and doctors to improve their services, he says.

"We have to assume that these doctors are well-trained and can diagnose and treat effectively," Ginder says. "But they have to understand the cost implications."

Jeremy Smerd

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