Gibson’s Wes Mantooth, Principal and Consultant in the Employee Benefits Practice, shares his insight on what 2017 may bring for the world of health care.
The elephant in the room, no pun intended, remains the impact of the new presidential administration. Anything said to be more than speculation is just that…more speculation. As of the time this outlook went to press, there was nothing concrete about the adjustments, if any, that will be made to health care reform. However, one thing does remain constant…whether the ACA stays or whether it goes, it will continue to cause disruption among consumers, employers, and the health care industry.
Dr. Eric Bricker, Chief Medical Officer of Compass Professional Health Solutions and friend of Gibson, recently posted a blog referencing a 2015 study released by the Health Care Cost Institute (HCCI). Part of HCCI’s mission is to provide unbiased information about health care utilization and costs. In this study it was determined that the primary reason health care costs are rising is because the price of health care services are rising. WHAT?!?! It’s not overutilization?? Although not completely innocent, utilization was reported to be flat or decreasing in many categories. It’s not the insurance companies?? No, it is not the insurance companies who are driving the cost of health care. The media loves to promote the salaries of health insurance company CEOs. Please keep in mind these are huge organizations that derive revenue from volume on relatively slim margins.
To the surprise of no one, prescription drugs were credited by the study as having the greatest impact on the increasing costs of health care. In 2015, there were $99B in specialty spend, projected to jump to $191B in 2020, with specialty drugs projected to comprise 47% of Rx spend in 2020 from 32% in 2015. Humor yourself and Google the cost of Harvoni in the United States and then the cost of Harvoni in India. But making sure you’re sitting down when you do (for those who have the “standing” workstations…). This is just one example of many that will make your head spin. If analyzing your prescription drug spend is not already at the top of your health care analysis in 2017, please add that to your list…the top of your list…very top.
Reference-based pricing, where employers set a pricing cap on the maximum amount they will cover for certain medical services, is eye-opening. It’s disruptive to all involved and antagonistic towards health care facilities. That said, a few employers have had success with this approach and saved hundreds of thousands of dollars. However, it does provide the transparency that is desperately needed in the health care industry. In addition to health care systems catching on and putting protocols in place to “bounce” these programs, cost management and engagement are likely to supersede a one-time discount.
Take a few minutes to research Health City in Grand Cayman. This is how health care should be…void of over-regulation, protected by tort reform, with the unabated ability to focus on the patient. The impact these three areas (in very simplistic and presumptive forms) have on the quality of care and outcomes is amazing! We work with a number of phenomenal administrators in the health care industry who would love to be free of oversight and concern of who is watching over their shoulder, allowing them to practice medicine freely, with confidence and trust in the system. Even though a model similar to Health City is unlikely to ever be replicated in the United States, it is still refreshing to know that it is possible.
Although challenging, this is likely the most exciting time in the health care industry due to all the opportunities for change that are on the horizon. There is no one-size-fits-all approach to attracting and retaining the best talent for your organization, but embracing a process that enables progressive change and allows for flexibility helps ensure you can respond quickly to changes in the industry. As disappointing as it was to hear that the Ringling Brothers and Barnum & Bailey are calling it quits, it appears the next health care circus is just beginning…including the elephants!
