Narrow networks of health care providers offer new ways for employers and health plans to control the costs of care.  But many of these networks are being constructed without regard to the value they deliver, said Scott Wallace during last week’s Benefits Forum & Expo in Boca Raton, Fla.  Wallace is a visiting professor at Dartmouth’s Geisel School of Medicine and a leading expert in the emerging fields of employee health strategy and chronic disease care design. 

“Value is the health improvement achieved for the costs.  It’s easy to measure what health care costs,” said Wallace.  “But the bigger question is, ‘What are you getting for the money you are spending?’”  Noting that the cost of employees’ poor health trumps – by three to seven times – the cost of their health care benefits, Wallace cautioned employers and their health plans to focus on the health outcomes achieved for the medical conditions suffered by employees.

“Health care is not a commodity,” he noted.  “People with different conditions need different care, and the outcomes achieved by providers vary dramatically.”  He also noted that despite claims to the contrary, quality is easy to measure.  “In health care, quality is better health outcomes.  It’s not that hard to determine when people return to work, whether their capabilities are restored and whether they have complications.” 

“If we get this wrong, we risk a tremendous backlash – from employees, their families and the government.  The amount of regulation that could be engendered by this trend is positively frightening,” Wallace added.

He suggested employers take several steps to ensure that their narrow provider networks deliver value – better health for the costs – to employees.

1.  Match needs with excellent providers.  Employers need to understand the health conditions of their employees and find providers who deliver world-class results for those conditions.  “A hospital’s great cancer outcomes don’t mean much if you need a hip replacement,” he noted.  “What do they do in hips?  We need to get away from ‘eminence-based medicine’ and start to think about ‘evidence-based medicine.’  It’s not a question of general reputation,” he said.

2.  Employers should demand that providers demonstrate excellence for specific conditions.  “How quickly do employees return to work after heart surgery?  What hospitals do for particular conditions matters.  There’s just no reason hospitals aren’t reporting how their patients do after care.” 

3.  Establish and report relevant outcomes.  “Employers should start to measure how their employees’ health changes as a result of care by different providers.  Health care is the only field where we measure every input and almost never measure the outputs,” he said. “The big question is, ‘Did the patient get better?’  Nothing else matters all that much.” 

4.  Mandate real transparency.  Noting that hidden costs could undermine the success of narrow networks, Wallace recommended employers and health plans require non-network providers to be identified before care is delivered to patients.  “The recent New York Times story about a man being billed $170,000 in out-of-pocket costs are just ridiculous.  If we don’t get a handle on this, it’s going to turn narrow networks into the 21st century version of managed care.  The political repercussions will be intolerable.”

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