Employers need to move off the sidelines and play a more aggressive role in helping curb ever-rising healthcare costs, according to a broad spectrum of stakeholders.
"If 'leave us alone' is the industry mantra, there is no hope but political solutions. And political solutions will be like performing surgery with a sledgehammer," Reed Tuckson, former chief of medical affairs at UnitedHealth Group, said Wednesday at a Health Affairs event in Washington, D.C.
Hospital and pharmaceutical costs continue to skyrocket, as does physician and healthcare CEO pay. Despite this, healthcare utilization and provider productivity has remained flat.
Efforts from the Trump administration to lower drug costs have failed to yield fruit as a court struck down its mandate requiring drugmakers list prices in television advertisements and the White House withdrew a controversial plan to bar pharma rebates to pharmacy benefit managers, both in mid-July. Other proposals to make hospital prices more transparent are not seen meaningfully impacting the cost trend.
Employer-based insurance covers more than 55% of the country, according to Census data. And, though the primary role of companies is not to insure their employees, they bear the brunt of the country's unsustainable rise in costs.
"Healthcare is not their day job. They build ships. They stock groceries," Elizabeth Mitchell, president and CEO of the Pacific Business Group on Health, said. "But as costs go up, they're the ones paying it."
Some big employers are already making moves.
E-commerce giant Amazon, holding company Berkshire Hathaway and multinational investment bank J.P. Morgan announced a joint venture last year to lower healthcare costs for employers. The nonprofit company, called Haven, plans to leverage data and technology to drive positive incentives and lower costs and is already creating waves in the space, although concrete detail remains scarce.
Employers as providers
A growing number of large purchasers are directly contracting with providers to deliver targeted care for their workforce, whether through bundled payments, carve-outs or Centers of Excellence for a defined condition, an advocacy role or through their health plans to offer accountable care organizations.
ACOs, or a defined network of providers held accountable to quality and financial benchmarks, are a popular tool of commercial and public payers to manage patient care while cutting costs.
Airline manufacturer Boeing and tech giant Intel, among others, have led the development of ACOs. Intel's New Mexico program in partnership with integrated health system Presbyterian Healthcare Services, called Connected Care, went live in 2013. The ACO grew to span five regions in New Mexico, Oregon, Arizona and California, where the technology company has large employee populations, with some positive results, including increased health engagement, decreased system waste and better management of chronic conditions.
Some major U.S. companies like Apple, Walmart, CVS Health and Walgreens are taking this a step further and building out primary care capabilities themselves.
This month, Walmart plans to open a "Walmart Health center" in its Dallas, Georgia, store, which will sell services like dental, mental health counseling, X-rays and audiology on top of services offered in its other healthcare clinics, such as primary care and treatment of minor illnesses and injuries.
"I’m starting to see Walmart as a solution to a lot of society's problems," Otis Brawley, Bloomberg Distinguished Professor at Johns Hopkins University, said Wednesday.
The expansion of its provider services positions Walmart, the country's largest private employer, in direct competition with CVS, which has been moving into primary care and wellness. It recently announced plans to expand its HealthHUB concept to 1,500 locations by the end of 2021 as part of its enterprise growth strategy.
Walgreens has also identified the business potential of preventive and primary care in retail locations, partnering with a provider group in April to open primary care clinics next to five pharmacy locations in the Houston area. And Apple has opened a small number of primary care facilities for its employees at its headquarters in Santa Clara, California, a move that — if successful — will likely be copied by other employers.
"They're the ones purchasing the care. That changes the dynamic," Mitchell said. "Employers and physicians want the same thing — healthy patients are healthy employees."