VICTORY CONSULTING™

HEALTH CARE BUSINESS STRATEGIES & ECONOMIC RESEARCH

FOR EMPLOYERS AND PROVIDERS

Influencing Partnerships Based On Relationships Between Health and Productivity Management And Knowledge Management  

by

Noel K. Harper M.B.A.

 Based on research of the emerging health care market it is indicative that productivity related concerns would influence significant numbers of employers to continue to favor the long tradition of sponsoring health care benefit programs. Because, in doing so, they will be positioned to maintain better leverage over their investments in HPM programs. This indicates that as the industry  transitions to domination by defined contribution (DC) programs that fund health reimbursement accounts (HRAs) and health savings account HSAs, two versions of the increasingly popular consumer driven health plans (CDHPs), a variety of health care benefit products  will certainly coexist in the marketplace of the future.

 Further, unless provider organizations form contractual partnerships with employers, which focus on the development and delivery of products / services geared to advancements in HPM, they will continue to face the Herculean task of finding innovative ways to serve increasingly complex demands from stakeholders affiliated with employer-based benefit programs. In the absence of such partnership agreements, research suggests that employees / patients, employer / payers and health plan or insurance company administrators - each a stakeholder with significant interests in traditionally sponsored benefit programs - will continue to confound providers with disparate, if not conflicting objectives, while otherwise united in a complex bond as a single client.

With the IRS ruling of June 2002, on health reimbursement arrangements (HRA), and the more recent passage of the Medicare Bill of 2003, employers no longer need to look wishfully at DC health care programs. HRA programs are now being investigated by increasing numbers of employers purposely because they can be designed as consumer-driven health plans (CDHP) to cap company expenses. HRAs facilitate the business objectives of employers by offering financial / tax incentives comparable to those available from company sponsorship of traditional health care benefit programs. Consequently, HRAs have succeeded in making DC programs very attractive alternatives.

 Indeed, Employee Benefit News, July 2003 reports, “ It's been a bellwether 12 months for consumer-driven health plans.  Momentum is starting to increase, and we are seeing all of the major insurance companies, both publicly traded and Blue Cross Blue Shield-style plans, beginning to offer CDHP style products. … Vendors brag that they can't get the quotes out fast enough for self-insured employers wishing to evaluate CDHPs for Jan. 1, 2004.” While there are some issues yet to be addressed, the IRS ruling on HRA unfettered employers from the restrictive provisions of medical savings account (MSA) type programs.They are now free to experiment with CDHPs and further exploit financial / tax incentives, to foster what some consider the ideal health care marketplace - one that is consumer-driven. Employers hope this event will bolster their chances of receiving optimal value in return for investments in health care programs. In any event, with growing knowledge about the positive relationships between productivity and health, employment-based programs will continue to exert significant influence on the health care market.              

The foregoing should suffice for health care business executives to conclude that employers in their target markets have varying but substantive reasons for either sponsoring or funding  health care benefit programs. More importantly, employers will continue to retain a vested interest in the health of human resource assets, even while they struggle to respect the HIPAA rights of personnel, since failure to do so jeopardizes the potential for fully exploiting an employer’s IC and its ability to achieve a competitive advantage.

 Research also reveals a trend toward employers who are seeking to maximize their ROI in health plans by utilizing the results of benchmarking studies on HPM. Employers are becoming convinced that with HPM they may have at last found evidence-based business cases which support the notion that investing in health care benefit programs may return significant value to their IC.

 Employers are becoming enlightened to a growing body of evidence which supports the conclusion that the $13,277 per employee (MEDSTAT, 2000) which companies already spend on average to ensure optimal returns on productivity and innovation from healthy human resource assets will rise considerably, if expenditures are ineffectual at identifying and treating the health related causes of “presenteeism” - employees who are at work but who aren't performing at peak levels because of common health conditions, estimated to cost employers $180 billion in lost time each year (MEDSTAT, 2000).

Therefore, in the  future, it is foreseeable that provider organizations will be routinely challenged to show how their products / services improve the ability of employer-clients to fully exploit investments in health care programs by: facilitating optimal productivity gains; helping to drive innovation and thereby contributing to a competitive advantage. Without question, employers must structure their partnerships with providers to optimize on these benefits, if they hope to remain viable in the 21^st Century.  

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