Six health systems could make Wisconsin more competitive

Even as political candidates for this fall’s elections duck health costs as a major issue, payers continue to demand better value and providers continue to reorganize for improved outcomes.

Even Obamacare, with all its defects, all its supporters and fierce opponents, has faded from the spot light.

No final verdict can be rendered yet on the Affordable Care Act (ACA), but a partial verdict has come clear: The “Affordable” part is not working out. Access may have improved some – how much is still an unknown – but costs and premiums continue to rise. Price Waterhouse tracked premiums in 24 states and the District of Columbia and calculated an average premium increase of 7.5%. That kind of inflation compounds over time to unaffordable care. It amounts to the kind of hyperinflation we have seen for decades.

Yes, overall health costs have moderated across the country in the last two years, but they are still rising above the rate of inflation for other goods and services. Because of those painful, debilitating economics, big changes continue to be launched at the ground level, especially in the private sector.

Private employer are demanding lower prices, transparent prices, all-in prices over episodes of care, improved workforce health, better medical outcomes, low infection rates, transparent quality ratings and fewer admissions and readmissions to hospitals.

The latest major response in Wisconsin to that payer pressure was the announcement last week that six of our more innovative health systems are partnering to share resources and best practices.

LaCrosse’s Gunderson Health System, for example, has led the nation in getting its clients to sign end-of-life directives. Appleton’s ThedaCare has sharply reduced infection rates in its operating rooms. Aurora Health Care has a 7×24 centralized intensive center to monitor critical patients. Wausau’s Aspirus advertises its quality performance to show a competitive advantage. Green Bay’s Bellin Health has joined ThedaCare and Gunderson as national pioneers in the introduction of lean disciplines to health care. Bellin has led the way in working with employers to establish primary care at the workplace. UW Health does heart transplants.

Spreading those best practices and coordinating resources makes great sense. Think in terms of economic competitiveness with other states and countries. If Wisconsin were out in front on population health and management of health costs, the savings could be enormous.

The total health costs for the average employee in the country is around $16,000. Best practice companies spend around $10,000. Do the math. With 2.8 million workers in Wisconsin, and a differential of $6000 per employee, a statewide best practice model could potentially save $17 billion per year.

I know, I know, I’m ball parking. But even a fraction of that extrapolated number would have a positive impact on the state’s competitiveness and long-term prosperity.

The six collaborating systems are adding commercial muscle, too. Together, they are offering an insurance product called “Blue Priority” through an Anthem network. The lowest single premium I’ve seen reported is $181 per month offered by Blue Cross for a silver plan in a narrow network in the Chattanooga area. That’s 30% below the national median. Could the group of six match that?

One of their combined objectives has to be to gain market share for Anthem and the six systems. They surely would like to pick up share from United Health, which has by far the largest percentage of business in Wisconsin, and from the competing collaboration of the other large providers in the state.

That spells another layer of competition at the provider and insurer levels, which should be good for the real payers – employers and their employees.

It’s the payers and innovative providers, like the group of six, who are the strategic drivers of real reform. Their impact will be greater than that of ACA, which deals mostly with access issues.
Reform of the value proposition in health care – quality plus price – won’t come from politicians, who don’t even talk in those terms.

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