Proactive leaders thrive in competitive landscape

February 1, 2006

The rise of the healthcare consumer, pay for performance and the focus on care management and prevention will not just be blips on managed care executives' radar screens this year. They will not only need to address these issues, but build a framework around them for long-term sustainability, according to PricewaterhouseCoopers.

NATIONAL REPORTS-The rise of the healthcare consumer, pay for performance and the focus on care management and prevention will not just be blips on managed care executives' radar screens this year. They will not only need to address these issues, but build a framework around them for long-term sustainability, according to PricewaterhouseCoopers.

"To manage, rather than be managed by the market, health plan executives need to be proactive," says Jim Henry, health industries leader, PricewaterhouseCoopers LLP (PwC). "They need to look now at the issues likely to face the industry this year."

The days of $10 copayments will become a distant memory for hundreds of thousands of Americans with high-deductible health plans and health savings accounts. PwC's report, "Health Industries Top Issues for 2006" shows that more than three-fourths of large employers believe they can cut healthcare costs by asking their employees to pay a greater share of those costs.

PAY FOR PERFORMANCE

Misaligned incentives lead to fragmented care, communication gaps, and rising costs, according to PwC. Eighty-five percent of organizations surveyed by PwC say they are moving toward pay-for-performance initiatives, a significant increase over the past two years.

"Accountability is the name of the game," Henry says. "The increased emphasis on reimbursement and financial incentives that are tied to performance will place new demands on executives from across the health industry to develop and agree on quality measures. Payers will need to establish systems and processes so that they can evaluate and compare providers. They will need to provide employers with customized data to assist them in managing their health costs. They will rely more heavily on information technology and business intelligence tools to capture, store, retrieve and report quality information."

CARE MANAGEMENT AND PREVENTION

Consumers who are paying more of the direct cost of their healthcare have an increased incentive to manage their health and lifestyle, according to PwC. Poor diet and physical inactivity rose by 33% over the past decade and may soon overtake tobacco as the leading preventable causes of death in the United States.

"In 2006, we can expect a significant increase in voluntary and/or mandatory health promotion and wellness initiatives," Shaman says.

This is perhaps most surprising of all the trends for 2006, because historically, reimbursement and financial incentives have focused on acute care rather than prevention, according to Shaman. "Much of the effort to reduce health costs in recent years has focused on disease management for the chronically ill rather than on wellness programs," she says. "But there is increasing recognition that the nation's 'obesity crisis' is a major contributor to morbidity and health expenditures. In the coming year, health industries are likely to see a growing market for drugs, treatments and services oriented toward wellness and prevention."

Employers increasingly will call upon health plans to offer coverage for more preventive services, and to provide health risk assessments and care management programs, Shaman says.

For further analysis from PwC, go to http://www.pwc.com/healthcare.