Benefits

Vulcan-like Ventures: Clamping Down on Health Care Costs the Mr. Spock Way

By Sarah Sipek

May. 2, 2014

When it comes to managing their health care benefits programs, employers can learn a lot from “Star Trek.”

You didn’t read that wrong.

Dr. Robert Galvin, the CEO of Equity Healthcare and the former chief medical officer at General Electric Co., used characters from the sci-fi cult classic to address the question of whether business will have a place in the health care sphere 10 years from now. The question helped direct a larger talk on how employers can shape the health care system that Galvin gave at this year’s annual Midwest Business Group on Health’s conference in Chicago.

“There are 10 million people in the public exchange, 40 million in private insurance and 100 million who will continue to purchase coverage directly from individual health insurers,” Galvin said. “There’s no exit. The government doesn’t want employer-provided insurance to go away.”

However, just because businesses will likely continue to play a role doesn’t mean that they should continue to provide health care coverage in the same way. Employers need to follow the lead of Mr. Spock, Galvin said, and be more logical about how their companies allocate funds for employee health care coverage.

“This period of low-cost health care won’t last,” Galvin said. “It’s up to providers to hunker down and find a cost-effective solution.”

It begins with putting an end to ineffective health initiatives. At the top of his list are employee wellness programs.  

“Wellness programs don’t save money,” Galvin said. “They’re not effective. You may be able to influence employee behavior at work, but at the end of the day they’re going to drive out into the world where McDonald’s and KFC exist. The impact doesn’t match the cost.”

Disease management programs and on-site clinics fall into this category as well.

“These programs are so destructive because they keep us from looking at the excess,” said Brian Klepper, principal and chief development officer at WeCare TLC, an on-site primary care clinic and medical management firm based in Florida. “Runaway health care costs are the most serious threat to the economy. “

A 2008 PricewaterhouseCoopers study found that wasteful spending on health care adds up to as much as $1.2 trillion. Based on that figure, Klepper projects that as of 2014 the wasteful spending has increased to over $1.5 trillion. For perspective, the national debt currently sits at just over $17 trillion.

Instead of focusing on trying to offer incentives for healthy employee behavior, Galvin advocates that businesses act as educational intermediaries and prepare employees to make informed decisions about their health care coverage based on both economics and quality of care.  

“You have to design health care programs to drive consumerism,” Galvin said. “Make employees price sensitive to their decisions. If a $40 copay gets them a $240 appointment, they need to understand the value of the plan they’re purchasing.”

To that end, employers shouldn’t fear initiating high deductible plans.

“Employees won’t leave because of health benefits,” Galvin said. “They stay because they like their boss, the job or the pay. They take the benefits issue in stride.”

If employers are going to ask their employees to take on a higher upfront cost, it is employers’ responsibility to choose health insurance providers that pay based on the value of the care. Value of care is a focus for Klepper who has done considerable research into how the health care industry exploits patients, purchasers and primary-care physicians. He used the financial burden incurred by patients when they are passed off from a primary-care physician to a specialist as an example.

“Getting bumped over to a specialist means that you’re taking on a higher cost for diagnostics and procedures,” Klepper said. “It can mean 10 to 15 times the cost for patients.”  

To prevent their employees from being victimized, employers need to manage the care process like they manage their businesses, Klepper said. This means intervening to provide for the cost-effective acquisition of high-value products and services that avoid unnecessary care.

“Businesses never pushed back,” Klepper said. “Moving to individual health coverage vs. group coverage allows the health care industry to control the regulation process and abuse the system.”

Klepper recommends that businesses join together and leverage their collective strength to demand better policies and care for their employees.

“The only group more powerful than the health care industry is those who aren’t a part of it,” Klepper said.

Sarah Sipek is a Workforce associate editor.

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