Tuesday, November 10, 2009

Hot Off the Press at the NBCH Annual Conference

The Annual Conference of the National Business Coalition on Health has just concluded and it was the best conference yet for NBCH. Timing could not have been better with the House passing health reform on the Saturday night before the conference began on Sunday morning. But this conference did not focus on national health reform (although clearly there was plenty of buzz and even a session or two on it), but on the fact that real health reform is happening in local communities, such as Memphis, and that it will take a long time for national reform to really change what happens at the local level. Here are some of the key take aways from the Conference:

Employer Payment Options:

The national health reform we appear to be getting is not payment reform, so employers will have to do that ourselves.

There is no one-size fits all in payment reform methodology because each market's health care delivery system infrastructure is different and applying one method across the country could result in dire consequences. In Memphis, for example, reference pricing may be something for us to consider since we have a consolidated hospital market, where in other markets other market-driven approaches may work better

Reference pricing (tying what an employer pays to the most efficient provider's price within a market) was the most discussed payment methodology that could be implemented today. Safeway and other major employers are already doing it with their health plans. Key issue is defining the "market" which most suggested would be much larger than the traditional market definitions for tertiary services such as heart surgery, knee surgery, etc (not primary care or chronic care management). In Memphis, maybe we include Nashville in our market? This approach means that we would be expanding the market for where we “incent” our employees to go for care, but it may be an approach worth considering if pricing becomes too high locally and quality is either equal to or below what our employees could get elsewhere.

Accountable Care Organizations (ACOs) operated by hospitals that end up "consolidating" hospitals and medical staffs would limit referral patterns and probably increase prices, and therefore costs, because of increased bargaining power. In Memphis, this could be possible if either Methodist or Baptist consolidated with their medical staffs. We would want to be sure that employers reaped the clinical/outcome benefits of this consolidation at a reasonable cost. We would want to consider packaging this approach with reference pricing to be sure prices did not get out of control..

Employer Benefit Design:

We should move toward value-based benefit design (which we have started in Memphis) and then to value-based payment.

You can say no then say yes, but you cannot say yes and then say no. In other words, it is easier to say yes to something you have denied in the past vs. taking away something you have given in the past. Applying this to benefit design, be strict on the front-end and say yes to those services/benefits that are evidence based (and provide them at no cost to the employee) and no to everything else (or assign a very high copay). Then, as the evidence becomes clear that something is effective, enhance coverage.

Public Reporting:

We need to move toward measuring and reporting whether "appropriate care" was provided. Move from measuring gross volume and outcomes to whether the right people got the right care...a very different paradigm. This will address employers’ concerns about “over-use” and “waste” in the system and help ensure that employers only pay for the right care.

Health Reform:

If the public plan is structured where it is on a level playing field with commercial plans, why do we need it?

The AHA seemed to imply that hospitals are "too big to fail" because of their tax free bonds that have not yet been paid....Probably a message being delivered to Congress quite regularly.

I am sure there is much more to share, but these are the highlights. Great meeting and great speakers...Great thinking for us in Memphis on how to deploy some of these strategies to improve the cost and quality of health benefits!!!


  1. ACOs- an acronym I'm not familiar with. Your update taught me a lot and gave me insight I never even considered. Glad that the conference went well. Still, NBCH is among the best places to learn and share cutting edge health care reform/cost information.

  2. For more information on Accountable Care Organizations go to:


    Hope this is helpful.