This document outlines a new partnership model for health systems to expand their market share by working with employers to reduce healthcare costs. It notes that employers are looking to partner with providers who can lower costs while improving outcomes and that traditional wellness programs focused on prevention have shown little direct impact on claims expenses. The document recommends that health systems implement onsite clinics and chronic disease management programs targeting high-cost populations as these have been shown to lower costs in the short-term and allow employers to reduce premiums and become self-insured. Case studies are presented showing how these approaches have stabilized costs for employers.

1. A new partnership model for
health systems to expand
market share through
reducing employers’
healthcare costs
Thomas W. Brink, TWB Resource Group, Inc.
February 2015

2. What if…
 You could increase your market share, by…
 Being seen as the health partner that…
 works with business to improve the health of their
employees.
 works to reduce the cost of healthcare for
employers making them more profitable
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3. What will employers be looking for in the
next five years?
2013 18th Annual Towers Watson/National Business Group on Health Employer Survey on
Purchasing Value in Health Care
 Partnerships with healthcare providers who are aligned with the
business needs of employer
 Employer value proposition – their business needs
 Reduction of healthcare costs
 Improved healthcare outcomes
 Employers do not buy the argument that high cost healthcare equals
quality
 Employers see the healthcare system and its unwillingness to
aggressively manage expense as the reason for the high cost of
healthcare.
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4. Employers are NOT looking to health systems to create value.
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5. Why employers do not look to a health
system for help
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6. Why should health systems market to
employers isn’t patient satisfaction enough?
 Employers are the largest provider of healthcare coverage in the United
States
 Due to the ACA 2018 “Cadillac Tax” and smaller profit margins due to a poor
economy employers are looking for ways to reduce their healthcare costs
 The health system that partners with employers to reduce their healthcare
cost will see and increase in market share and volume
Coverage Covered in
millions
Employer health plans (‘13 US Census Bureay 169
Medicare 49.4
Medicaid 2014 69

7. Employers are looking for means to
reduce costs
 Cost shifting to employees – HSA’s, higher deductibles
 Restricting choice
 Narrow networks
 Onsite clinics
 Wellness – focused on those who currently spend the least. Seeks to keep
them from moving to high cost members
 Chronic disease management – focus on the high cost members

8. Health systems talk health not dollars
 Healthcare providers have been trained and focus on improvement of
individual and population health
 Business focuses on the bottom line – profit. Although they may reference the
need for better health among their employees they want to see tangible cost
reduction.
 Health systems focus on wellness, clinical compliance and disease
management. Although this is good from a healthcare perspective, health
systems fail to show a direct correlation to these efforts and reduction of
actual healthcare claims cost of the employer
 Claims cost is the real measure of cost reduction for the employer as it
affects the employers healthcare premium and whether or not they can
become self insured or have to remain fully insured.
 A self insured employer accepts more risk and therefore has a lower
cost. In order for the employer to accept this risk and go self-insured
the employer must have definitive assurance of controlling healthcare
cost.

9. Population health
 In any given commercial group population 5% of the group accounts for 70% to
75% of the claims cost
 Identifying and focusing on this 5% of the population is the quickest way
to show cost savings for the employer
 Traditional wellness programs focus on the 95% of the group that use 25% -
30% of the healthcare cost. Although the argument is used that this prevents
future cost by preventing this group from entering the 5% of chronic high cost
users, there is little financial evidence to support this approach.
 Also, since the average length of time that an employee stays with an
employer in the US is 5.4 years, the employer paying for the wellness
does not realize the financial ROU on the wellness benefit – the
employees next employer does.
 Traditional approaches also may focus on a specific health condition, e.g.
diabetes, hypertension, obesity. This approach is based on health providers
training to focus on specific health conditions. Individuals with specific health
conditions may be in the 5% or 95% of the population. Addressing a specific
health condition does not correlate to a direct reduction in claims expense.

10. Where are healthcare dollars spent
Health
Status
Health
Spend
5%
High Risk
Complex
Multiple
disease
20%-35%
Rising risk
Conditions currently
under control
60% - 75%
Low Risk
Healthy
60% - 75%
20%-35%
5%

11. Traditional approach spends most of the wellness effort on those
who use the lowest amount of the healthcare $. ROI = minimal
benefit
Traditional
Wellness
Approach
5%
Effort
Expensive
Disease TX
20-30% Effort
Often uncoordinated care
resulting in transition to
complex diseases
60% - 75% Effort
Health assessments
Biometric screening
40%-50% of pts have to PC relationship
Health
Spend
60% - 75%
20%-35%
5%

12. Recommended approach devise programs aimed at those who
spend the largest amount of the healthcare $
ROI = maximum benefit
New
Approach
Produces highest ROI
Health
Spend
60% - 75%
20%-35%
5%
• Chronic disease management – risk
stratification, intensive case
management
• Onsite clinic – reduces ER visits and
pharmacy cost coordinates care
• Onsite clinic
• Health coaching
• Biometric screening
Hlth assess
Bio screen
Wellness Ed
Onsite

13. Population Health Management – a business
ROI based approach
 Risk stratification – identify the 5%/25%/70% spend
 Design specific programs
 5% = 70% of spend: Special chronic disease management team (Provider – MD/NP;
nurse; pharmacist; diet; behave health: onsite clinc
 25% = 25% - 35% of spend: Monitor disease condition, coordinate care; onsite clinic
 70% - 5% - 10% of spend: Support healthy life style
 5% = 70% of spend has highest ROI for programs not the 70% where most
wellness programs are directed.
 2013 Rand study showed no statistically significant savings on wellness

14. Rand 2013 study on the effectiveness life style management
programs showed no significant cost savings for employers –
Disease management programs have 8 times the ROI as
lifestyle management programs

15. Rand 2013 study identified that if an employer wants an
immediate impact on healthcare cost, disease management
programs should be implemented. The most effective “on
the ground” disease management program can be done with
an onsite clinic

16. New model: onsite medical home which
coordinates care and expands primary care
involvement. True medical home
Onsite
clinic
EE’s
Coord
care
Primary
Care
Wellness
Pop
Hlth
Mgm

17. Case example 1: Onsite Medical Home Clinics achieve cost savings - XYZ
established an onsite clinic with a nurse practitioner and medical assistant. In 8
months XYZ reduced its loss ration from 140%+ to less than 70%. This resulted in
reducing annual premium increases of 30% - 40% to less than 5% for a three
year period.
17
Onsite Clinic
Opened
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18. Case example 2: Southern IN company has 500 EE’s. Onsite
Clinic established stabilizing healthcare cost allowing the
company to move from fully insured to self insured.
125
175
225
275
325
375
09-2005
to 08-2006
09-2006
to 08-2007
02-2008
to 01-2009
02-2009
to 01-2010
03-2010
to 02-2011
03-2011
to 02-2012
03-2012
to 02-2013
03-2013
to 02-2014
2014
Annualized
Company X Health Plan Total Cost PMPM
Onsite
clinic
started

19. Case example 3: Chronic Disease Management
Intervention Programs (CDMI)
CDMI is a process of intervention with employees experiencing multiple high cost
chronic conditions due to their unhealthy lifestyle. That 5% of any employee
population that utilizes 60% - 70% of the healthcare dollar.
 Healthcare employer with 3,000 covered lives
 From 2008 to 2012, CDMI participant claims decreased
by 14.9%.
 Claims were reduced $659 Per Member Per Month.
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20. 10/26/2015 20

21. Employer Services Approach
Employer
customer
Employer
Services
(branded
under
Health
System)
Chronic
disease mgm
Health
System
Services
provided
based on
assessed
needs of
and
requested
by the
employer
insurance
product
Other
Onsite clinic
Occupational
Health

22. Key employer services
 Occupational health – all employers required to have by state law. Entry
service to employers for the health system
 Onsite primary care and occupational medicine – large employers (500+
employees) can cost justify. Brings care to the customer versus making the
customer come to healthcare
 Chronic disease management – focuses on the 5% of high cost utilizers. Works
well when done within and onsite clinic
 Insurance product: When an employer’s healthcare cost is managed, the
employer can reasonably accept more risk and therefore reduce his cost
associate with a wholly insured plan by moving to self-insured.
 If the health system has an insurance or TPA product they can work with the
employer to bid down the employer’s health plan administration cost.
 Even if the employer does not choose the health systems plan, the health system is
see as a factor in helping the employer reduce the cost of the health plan
administration.

23. Progression of services - summary
 Assessment of employers employee population to determine the best
approach to reduce cost. Analysis of claims, wellness data and other
clinical data
 Development of programs to address the employers goals.
 Most likely goals
 Reduce healthcare costs
 Improve health and productivity of employee population
 Implement services to address those employees with most serious
conditions. 70% of cost
 Onsite clinic, chronic disease management program
 Implement services to address employees with rising risk. 25% of cost
 Onsite clinic, close monitoring, Rx assessment, Rx compliance,
coordination of care
 Implement services to address employees with good health. 5% of cost

24. Questions? Discussion
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