What We Think

Hardball health strategies

By Richard Service, Editor

Since the 1980s, the business community has been the prime force in reshaping the delivery of U.S. health care. Within that community, the largest employers set the tone for the entire market. That's why we were eager to publish the first truly comprehensive study of purchasing strategies among the Fortune 500.

Conducted by JSI Research and Training Institute and sponsored by The Robert Wood Johnson Foundation's National Health Care Purchasing Institute, the survey drew an astonishing 84 percent response rate. It also uncovered some fascinating contradictions in corporate thinking.

It's no surprise that the firms with the best records of keeping premiums low between 1994 and 1999 have a high portion of workers enrolled in tightly managed plans—a migration from indemnity insurance that is now largely complete. On the other hand, pushing employees into plans with restricted access can clash with the desired image of "employer of choice." Indeed, 40 percent of the respondents report that an increase in employee complaints has paralleled the growth of managed care.

Aggressive purchasing tactics abound, but many companies don't seem willing to acknowledge all the consequences. Competitive bidding—and rebidding—of health business is common. Ninety percent use RFPs and half rely on one-year contracts. These companies are playing hardball, yet two thirds characterize their relationships with health suppliers as partnerships.

There's some confusion on the elusive question of quality of health care. More than half the firms surveyed require their plans to have NCQA accreditation, for instance, but fewer than 10 percent consider accreditation to be the most useful source of quality information. Customer service is the most widely used "quality" requirement. Three out of five set some contractual requirements for provider access, but barely a third demand annual improvements in clinical quality or disseminate quality information to their employees.

Only 7 percent tie employee contributions to quality ratings, General Motors being the outstanding example of that minority. The automaker amasses data that includes the quality of clinical and preventive care, boils it down to reports cards for employees, retirees and dependents and charges a hefty differential to anyone who insists on enrolling in a low-scoring plan. GM eventually drops those poor performers, by the way, as do half the companies surveyed.

What sort of market are these corporate giants creating for the rest of the business community? The competition will be tough. The focus will be on cost. The measures of quality will be largely administrative rather than clinical. Those are not bad things. They're just not enough.

 

Richard Service. Hardball health strategies. Business and Health 2001;6:4.