This is a transcript of my recent podcast interview with Andy Webber from the National Business Coalition on Health.
David E. Williams: This is David Williams, co-founder of MedPharma Partners LLC and author of the Health Business Blog. I’m speaking today with Andy Webber. He’s president and CEO of the National Business Coalition on Health. Andy, thanks for your time today.
Andy Webber: Thank you David. Thanks for your interest.
David: Andy, what is the National Business Coalition on Health?
Andy: NBCH, National Business Coalition on Health, is a national association of 60 purchaser-based business and health coalitions around the country. Coalitions have been around for a couple of decades, NBCH for about 15 years. We are the national umbrella group. These organizations are focused on a common agenda of value-based purchasing.
David: Value-based purchasing? Can you describe a little bit more what that is, and what that really equates to in practice?
Andy: Sure. The bottom line is that employers are the purchasers of healthcare. They provide health insurance benefits to about 160 million Americans. Every year they spend over $600 billion on healthcare services –about a third of the total spent, together with large government programs, and what individual consumers spend. The essence of value-based purchasing is that we should be demanding and rewarding better value in the healthcare system. And we’re not sure that we’ve done a very good job of that over several decades. We need to have more of an ownership responsibility for improving health and healthcare through the dollars that we spend.
David: What are the challenges in the U.S. systems? It’s a mixed system with private employers but also the large government programs. It’s hard for the provider to know what they’re supposed to do, and sometimes they are hard to influence by anybody other than Medicare. So, I’m wondering how successful some of these coalitions have been. I’m sure it varies geographically, but I know here in Massachusetts, there’s not a very active employer coalition, and the big employers are actually health care organizations.
Andy: Right, we do have gaps around the country. We’re in about 40 states, but we do have some large gaps, like Massachusetts and Philadelphia. I was just on a phone call this morning with some folks interested in starting a coalition there. So, you’re right. And to your point, it is a weakness of the system. I think, there’s a critical need for purchasers in the private sector to harmonize our activities with the big gorilla, and that is the Medicare program. And I think, it’s got to go both ways. Obviously, we need to take the lead from Medicare. If Medicare moves in the direction of payment reform for example, as they did with nonpayment for never events, then I think it’s incumbent upon private sector purchasers, particularly working through healthcare plans, that we follow in kind. And we mirror what Medicare is doing.
At the same time, a lot of our communities that are really innovating in programs like Bridges to Excellence, or piloting different payment reform methodologies, they’re frustrated because Medicare doesn’t have the flexibility to join private sector innovation.
Wouldn’t it be great if we could somehow integrate what’s happening in the private sector with some flexibility for the Medicare program to join our own collaboratives, and our own innovations in local markets around the country?
Unfortunately, that flexibility has not been there. But, it’s something that we’ll be talking to this new Administration about in the future.
The bottom line is that I do think that we send mixed messages. And I think the provider community has a legitimate beef, to say, “We get different signals, we get different requests, different performance measures out there being used from the public to private sector. Can’t you, the purchaser community, get your act together?” I think that’s a legitimate challenge, and something that we’re going to have to work on.
David: What do you expect to happen in the incoming Obama administration with healthcare reform? In particular, do you see elements of the Obama plan, or other plans that are being talked about, that are likely to help to reinforce or to allow some integration between the private sector efforts and the public sector efforts on things like value-based purchasing?
Andy: I hope so. Let me first say that I think there are huge challenges out there for the new Administration. Priority setting is probably the first challenge. Can Barack Obama and this Administration take on dealing with the economy and getting a new stimulus plan through? Can we take on this challenge of energy independence? It sort of reminds me of John F. Kennedy’s pledge “We’re going to put a man on the moon in ten years.” Can we become energy independent in a decade? Healthcare reform is a huge issue, and of course fighting two wars and restoring our international standing. I think there is a question, particularly given the economic conditions Can we do everything at once?
So, I think, that’s one of the first things to look at in terms of whether this Administration moves swiftly, or whether they move sort of gradually. Yes, healthcare needs to be taken on as a major priority. But, are you going to take on everything at once? Can we deal with the 47 million people that don’t have access to care, and the value-based purchasing agenda that can drive some real transformation of healthcare? Can we do all that within the first 100 days or six months? Probably not. But, we can certainly start on that agenda and you can certainly see some down payments on larger healthcare reform that I think would we part of the initial legislative agenda for a new administration.
And let me say at a larger issue this is the good news I do think there is an appreciation that healthcare reform cannot be narrowly defined as simply getting everyone into the healthcare system, and dealing with access issues. I think there is a recognition now, unlike 15 years ago when Clinton took this challenge on, that we have got to at the same time as we bring people into the system, we need to fundamentally change the healthcare delivery system itself. It is a highly inefficient system. It is a system that is focused on illness and treatment of illness and not enough on up front prevention and chronic care, illness management.
There are great opportunities to both improve quality and actually reduce cost over time. We have not built the information infrastructure that we need in this sector of our economy, which is almost an outrage when you see how other parts of our economy have used information technology to drive higher efficiency and better quality at lower costs.
There is again a misunderstanding that it’s not just access;it is affordability; it is driving high quality. To put it simply, we’re talking about transformation of healthcare delivery as part of this reform agenda.
David: It’s definitely hard to do everything at once and I suppose the most likely scenario would be one where healthcare is seen as intrinsically linked to the economy. I know, before the auto makers, for example, started complaining that it was the financial collapse that was putting them over the edge, it was healthcare costs. And when you ask voters about the economy and what they’re concerned about they talk first about gas prices, but healthcare figures right up in there.
And I suppose looking at the big stimulus package. It goes from a minus to a plus that it is so expensive to do anything in healthcare. So, maybe we will see some action.
I wonder whether you’re seeing any wavering among your members of the employer coalitions about the future of private health insurance and whether anyone is saying well maybe it’s time to throw in the towel and actually go to a government system.
Andy: Actually the coalitions in the local communities that are our member and the employers that they work with are not saying that. They’re saying that we’re going to stick in the game. For us to be competitive and to recruit and retain talent and human capital in a very competitive market place, we’re going to have to provide benefits. So, we do not hear, at least from our coalitions and the employers that they’re working with, a lot of employers saying let’s run for the hills and get out of it completely. Indeed we’re hearing that more employers believe that they can be a real change agent for not just dealing with the healthcare cost problem by being better value-based purchasers, but employers are also in the unique position to improve the health of their workforce.
You’re seeing a lot of employers investing in work site health promotion and prevention programs, bringing onsite clinics to places of employment, building cultures of health and understanding that workforce health and productivity is a competitive asset in a global economy. It’s something that could differentiate one company from another.
And by the way, David, the extension of that is that I think health status of the American population is part of our ability as a country to compete in a global economy. It’s not just whether we’re better educated. It can be this issue of are we a healthy and productive workforce? And that could be part of our competitive edge in the future.
Here is the critical issue for this new Administration that I would pose for everyone as a chief challenge. Why do we, as a society, spend twice as much money per citizen on healthcare services than any other country on earth yet we rank 37th in healthcare status?
Shouldn’t our focus be, and shouldn’t the focus of the healthcare system be on the end goal of improving the health of individuals and by extension the health of our communities rather than just the treatment of illness? I’m not sure that our focus on the treatment of illness and all that we’re spending on that side of the equation has really dealt in a way that needs to be focused on again the end goal of improving the health of the American population.
David: On a somewhat related issue, I’m wondering how your employer members and coalitions are thinking about private health insurers. Because there’s been a lot of wealth creation in that industry over the last decade or so (although most certainly quite a lot of it has been eroded) and yet at the same time we’ve had higher healthcare costs and these sort of issues of quality versus value and spending versus value that are there and are not doing too well on international comparisons. And of course employers stepping up as opposed to having insurers making all the effort there. Do you see a role going forward for private health insurers? Are they likely to have to make a lot of changes? Are they likely to actually fall by the wayside in the future?
Andy: I don’t think they’re falling by the wayside. I think they are truly our key agent to the employer community and to the big government programs in executing this value-based purchasing agenda. You know, the healthcare plans are the ones that have the contracts with doctors and hospitals. Yes, it’s our money; they take our money from the employer community to then pay the bills. But, the sort of reimbursement incentives and how they pay for care and that reimbursement architecture is so critical to the alignment of the right sort of incentives in healthcare.
We need to be paying for different things and we need to be rewarding a greater value. That can’t be done by employers or government without the help and the partnership of healthcare plans. So, we’ve got to be working almost hand in glove. We need to be connected at the hip to really make this value-based purchasing agenda sing.
So, I do see a very important role for the health plan community. Working in concert and fulfilling, again, the vision and the demands of the employer community who, at the end of the day, are the ones paying the bill.
In that regard, I need to mention, at NBCH, we have developed what’s called an “evaluation tool.” It’s a common RFI that over 20 of our purchaser-based coalitions use. It’s a common RFI and survey that we do every year to evaluate the performance of health plans. And in that electronic survey, we’ve got hundreds of metrics on plan performance. We ask questions about, you know, what are you doing to change plan design and engage consumers and measure the performance of providers and change the contracting incentives that you have with the provider community? All of these are key strategies that we believe are part of the value-based purchasing agenda.
So, we’re trying to do our part to send as the purchaser community –employer community– a common message and a common set of expectations to our key partner in this value-based purchasing agenda –health care plans.
David: You mentioned before about how the U.S. spends twice as much as other countries on healthcare without that much to show for it. There have been some analyses that have shown a lot of that has to do with unit cost, not just the utilization. Even advanced services like MRI are equally available outside the U.S. But in the US the pricing is higher. So, I’m thinking, value-based purchasing is a good way to enforce a transformation of the healthcare system and get value for what we pay for. But, how much of an opportunity do you see for other sorts of more, maybe, heavy-handed cost control measures like fee negotiation or reductions in fees? Is that part of your agenda or do you think that’s not so necessary?
Andy: Well, I don’t think we’re in great support of government pricing if that’s where you’re going. And quite frankly, in terms of the data that I’ve seen –and this changes depending on what you’re looking at– I do think it’s volume variation that is often the chief determinant and driver of healthcare costs going up. And, of course, both sides are important. So, to answer your question, we don’t support price controls. We don’t support them in healthcare. We don’t support them in other industries. It’s not something that the business community really, really, will get behind and I think will be a vocal opponent if that is a key element of the agenda of the new Administration moving forward.
David: All right, Andy. Those are the main questions that I had but I’m aware those may not be the top issues from your standpoint. Are there other topics that you’d like to make sure we cover in this discussion?
Andy: Well, the only thing that I’d leave the folks that are listening to this with is that I do believe that we’re going to make progress. That we’ve got to develop a culture, and I think Barack Obama has done a pretty good job of this building a sense of shared responsibility. I mean, if we all go into our little silos — and we’re certainly to blame for this– where purchasers are in one corner, providers in another, plans in another, consumer advocacy groups somewhere else, the government in another corner, all trying to deal with these issues, we’re not going to get very far. So, I think at both the national level –and more importantly than even the conversations at the national level at the local community level, in local markets, in local communities where health and healthcare really happens, we need to get all the stakeholders together, build an ethic and culture of shared responsibility, set some common goals based on what, I think, are some tremendous opportunities out there to both improve quality and reduce costs and improve access. And then, identify that we’ve all got to make some sacrifices and really work on the unique things and solutions that we can bring to the table.
So, we’re trying to encourage our local business and health coalitions to reach out and convene a discussion with all stakeholders in healthcare if we’re going to make progress. So, I would like to leave the people listening to this with that notion.
David: I’ve been speaking today with Andy Webber, President and CEO of the National Business Coalition on Health. Andy, thanks for your time today.
Andy: No problem. Thanks again for your interest.December 16, 2008