5 ways to find healthcare solutions in a sea of choices

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As a healthcare purchaser, how do you choose between heart disease and cancer? High deductibles or narrow networks? Care coordination or second opinion?

Those are a few of the literally thousands of point solutions spread out over dozens of health benefits verticals vying for your attention, time, effort and budget. Evaluating them all is impossible. Conducting an RFP for each area is unrealistic. Prioritizing your problems — let alone finding solutions — is extremely hard.

As a former founder of an innovation lab at a Fortune 500 consultant, I have grappled with these dilemmas for years. My clients and colleagues expected me to be aware of everything valuable in the market. Failure could cost my clients millions, and me my role. The challenge was determining which problems mattered most and which vendors addressed the root causes to make an impact.

Through trial and error, an algorithm emerged to sort through the hype to find transformative solutions, which can conveniently be remembered in shorthand. I’ll unpack these concepts in greater detail:

1. It saves at least 1%
Top solutions should impact total budget by at least 1% net of fees. It’s inclusive because many approaches can succeed, from having small impact on a major-cost category to large impact within a niche (e.g., reduce orthopedic surgeries by 10% or dialysis by 90%).

Although many good solutions don’t quite have a 1% impact, having a sorting mechanism to quickly identify top solutions is a logical starting place when opportunities outnumber execution resources, and the cost of inaction is significant.

2. It guarantees a 2:1 ROI
Does the solution guarantee a 2:1 return with 100% of fee at risk? This is a high bar: few solutions will put their fee at risk against doubling your money. Fun fact: there is a very high correlation between solutions that do not work and solutions that refuse to put fees at risk.

Occasionally, firms will use gimmickry to meet this threshold. Outlier exclusions, selection bias and regression to the mean all confound results. Buyers must be cautious to ensure the return is a guarantee of results earned, not results engineered. Some resources, such as the Validation Institute, offer free online courses to health benefits purchasers for spotting and avoiding biostatistical gimmicks.

3. It has third-party validation
Good solutions that have been in the market awhile will have references confirming claims and sharing credible evidence of the expected result, thus conferring third-party validation. Directly supplied references are a good step, though they are often curated. Getting validation from a consulting or auditing firm, or peer-reviewed journals, is ideal. For any solution where evidence is not apparent or available, take additional precautions to ensure that the course of action has been de-risked through additional guarantees or limited scope (and reduced expectations). This can enable employers to easily adopt pilot programs and experiment with new and innovative approaches.

4. The expected ROI is at least 4:1
A solution regularly achieving a 4:1 return may seem a high expectation for the industry, but CFOs will tell you that business investments in almost any area of most companies require a 4:1 expected ROI, and that benefits should expect the same from their vendors (e.g., as new manufacturing equipment or acquisition of a new technology will be expected to provide a 4:1 ROI to get approval, so too should a benefits investment). By increasing our ROI expectations, we can reduce the number of underwhelming solutions, forcing startups to deliver more value.

5.All numbers can be calculated using fifth grade math:
This one touches on the financial gimmickry mentioned in No.2 above — that ROI figures built on theoretical numbers, actuarial models, complicated adjustments and exclusions, behavioral modification and loss prevention are too complicated to easily compare and should be deprioritized. This is not to say these options are bad, simply that among thousands of opportunities, choose those with simple calculations.

Ultimately, we’d all like to address every niche — major and minor — in the quest to optimize the health plan, but with finite time in any given year, we must prioritize opportunities and focus efforts. We need to raise our expectations of vendors and health providers; employers generate the profitability for the system and are in a great position to demand the changes that will better serve their populations, benefiting the rest of us as well.

Protecting the literal lives of employees is the highest-stakes area of any business, yet no other area of our business is more likely to be more broken than the cost and delivery of healthcare. Our people deserve better than they receive today, and employers are positioned to deliver it.

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