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Tech Tools Add a Dose of Transparency to Cut Health Care Costs

August 12, 2011
Related Topics: Benefit Design and Communication, Internet, Health and Wellness, Health Care Benefits, Featured Article

To hear Howard McClure talk, empowering employees to make educated decisions will not only transform the way health care is delivered but also boost productivity, employee satisfaction and potentially company profits.

McClure is evangelistic about the benefits of health care cost transparency to employees and their employers. So enthusiastic is he about empowering employees to make financially responsible health care choices that the former president of CVS Caremark pharmacy services came out of retirement in May to become chairman and CEO of Brentwood, Tennessee-based change:healthcare, which has created the Healthcare Transparency Index to help companies and consumers better identify health care costs. For example, the 2011 second quarter index shows costs for imaging services.

“We believe that employees, who are more responsible than ever for the management of their health care expenses, should have the tools they need to be successful,” he said. “Without real pricing information, employees are just health care users. With consumption being the only thing they can control, we know that employees will manage health care by not going to the doctor. With useful information, employees become health care consumers receiving care they need at a price they can afford.”

Change:healthcare’s foray into health care information technology comes at a time when, globally, the health information technology market is predicted to reach $53.8 billion in 2014, according to a report by Dallas-based research and consulting firm MarketsandMarkets. As technology continues to mesh with medicine, industry leaders—including McClure—contend that transparency will cut costs while building a stronger, more responsive health care system.

“The key to building a great health care company is to have a positive impact on people’s lives. Cost transparency is that kind of opportunity,” McClure said. “Cost transparency is a market need whose time has come. Consumer-directed health plans, as well as a renewed interest in reference-based pricing, make cost transparency a necessity for employees and their families.”

The need for cost transparency also is apparent to Cristie Travis and her colleagues at the Memphis Business Group on Health. The group—a coalition of member employers—offer tools to help employers and their employees manage the cost and quality of health benefits. The tools provide access to critical market data, facilitate best-practice sharing among the local market’s leading employers and offers solutions to successfully manage health care benefits.

One of the solutions is an employee communication toolkit that includes a PowerPoint presentation containing consumer health care information and messages taken from the American Institutes for Research, a behavioral and social science research organization. The Memphis Business Group on Health is working with 10 employers on customizing the information for the local market and for each company.

“Through this PowerPoint, employers can give their employees examples of what is safe, timely and quality care,” said Travis, the group’s CEO. “Then we show them that not everyone gets quality care and that there are different variations in price and quality. We also give them an overview, how they can prepare for a doctor visit and questions to ask their physician.”

Travis said this information can be relayed via company e-newsletters and messages, the company’s internal website or even during a “lunch-and-learn” presentation. The key to informing and empowering employees is the way it is delivered. With the explosion of social media, companies should consider delivering important health care messages to employees via Facebook and Twitter, she said.

“This is about communications as much as it is about health care,” she said. “One of the biggest advances in the technology platform is the ability to personalize and customize and give consumers information that is relevant to their health. You have to engage people to use this technology. One important thing that change:healthcare and other organizations are doing is they aren’t just pushing information, but they are using technology in a way that engages people.”

Travis, whose father was a physician, said boosting and facilitating consumer confidence and power is crucial to reining in health care costs.

“I’m especially excited about what we’re doing and what companies like change:healthcare are doing because it democratizes health care,” she said. “For example, one of the real benefits of change:healthcare’s tool is it reveals that price varies significantly and that you can get the same quality care for less money, so why would you pay more?

“There are software tools out there that will tell you the average cost of an appendectomy at a hospital, but that’s totally useless,” Travis added. “It’s just the average price and very few people are at the average. The other thing is it’s the hospital’s charge; it’s not what people pay. It’s not the negotiated rate of a health plan.”

Wendy Lynch, co-director of the not-for-profit Center for Consumer Choice in Health Care, which is operated by the Ann Arbor, Michigan-based Altarum Institute, says such technology is an important piece of the shifting national health care puzzle.

“What we need to have is information technology that tracks and communicates information about health care,” said Lynch, who also serves as senior scientist at the Health as Human Capital Foundation. “What change:healthcare and others have done is use mobile technology to push information out to consumers at the time they are making decisions about where to go, for instance, to get a refill on their prescription. They are raising awareness about which agencies are being transparent about what they deliver.”

Employers that use such tools will reap the benefits of a healthier, more empowered employee as well as a healthier bottom line, Lynch said. Businesses must align compensation, time off and health plans so both employers and employees are aligned with the same goals.

She said a tool like the change:healthcare’s Transparency Messenger, a tool that gathers data for the company’s quarterly Healthcare Transparency Index, can also improve the quality and performance of consumer-driven health plans. In some cases, she said, consumer-driven health plans have gotten a bad rap because employers put a high-deductible plan in place but do not fund a health savings account for employees.

“You need to fund the health savings account so there is limited exposure beyond what that person can save,” Lynch said. “Consumers become motivated because these are extra funds they can keep and grow for retirement, so they pay attention. A true consumer-driven health plan puts money in your possession so that you feel much more inclined to protect it. What change:healthcare does is help people realize they can get the same service for much less—sometimes half as much money if they know where to look. That’s what has been missing with these plans.”

Change:healthcare’s McClure says employees become better-informed health care consumers, which could help curb rising costs for companies.

“The health care situation is a big issue and our company has the ability to make some meaningful contributions to individuals as well as providing meaningful savings to employers so they can continue to do business and help control their health care costs,” he said.

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