We Can Still Right Our Health-Care Wrongs
While the health-care debate continues to rage on at a national level, most employers still struggle with the increasing health-risk factors of their employees and rising financial trends each year.
Some employers question whether to relinquish these responsibilities to the government or to an insurance exchange. Employers committed to the productivity of their most important asset—their employees—wrestle with what to do next to keep costs under control. Some have added an account-based plan, shifted cost, and moved to incentives (or disincentives) to keep employees healthy. Nonetheless, health-care insurance costs are projected to increase 12 to 13 percent next year.
Big Business vs. Global Competition
Health care remains one of the most critical issues for America and American companies to address. Health care is a big business; it represents 17.5 percent of the GDP, and is rising.
And the costs associated with it are a major challenge to global competitiveness for U.S. companies. To remain competitive, such costs in other countries must be considered. In terms of U.S. dollars, other countries spend $2,000 to $3,000 per person a year on health care; the United States, by comparison, spends roughly $7,500 per person.
The current American health-care system forces U.S. employers to fund a big business model, which is projected to consume more and more of every dollar. If we are able to control costs and reduce the dollars we spend per person on health care each year, the nation would have more money to invest in other areas such as education, transportation, safety, and defense; therefore, positioning our country to better compete globally in the future.
Question the Cost and Variation
So why is the per-person cost of health care higher in America than in any other country in the world? Why do costs in some major metropolitan areas of the United States run as much as 30 percent higher than in other comparable U.S. urban markets? One main reason is that the quality of health care and related costs varies by physician and hospital. For example, in the Dallas/Fort Worth area, a bypass procedure at a top quality hospital to treat a heart condition can range from $53,000 to $98,000. For further sake of comparison, in the same metro area, the cost of an MRI ranges from $600 to $2,000 with similar services being performed.
Change the Mindset and Approach
The widespread mentality among medical service suppliers generally has been that, if a medical error occurs, insurance will cover the complication or duplication. We cannot fault these suppliers for this; after all, they are just trying to provide value to their shareholders and no one has really questioned their cost of services. Conversely, those delivering value and quality have not been rewarded by a significant increase in patients. Somewhere along the line, the importance of adding value back to the customer and charging reasonable prices for services was lost.
In an effort to change the current mindset, some in the industry have focused on creating more of a product mentality from health-care service suppliers. When an employer leverages their scale and works with insurers and employees to define expectations from health-care suppliers, they can produce the right outcomes in health improvement and cost. We have seen the results of working with top physician groups and hospitals to meet the needs of an employer and the patient. The free market can drive change to improve quality and costs.
As we work to change the mindset of suppliers, we must also work to change the approach to health and wellness to have a lasting effect on our health-care system. The reality is that 20–30 years of bad lifestyle and behaviors have produced chronic illnesses and disease among our population, which is the root cause of cost drivers. Aggressive workplace and lifestyle wellness efforts are essential for stopping the production of disease and, ultimately, stopping disease from destroying our country’s health-care industry.
If we as employers, patients, and insurance providers can work to both reduce disease and the need for major health-care services, as well as create a free market among service suppliers, we can influence our country’s health-care costs. 
Jeff Spencer is vice president of Holmes Murphy & Associates–Kansas City.
P | 913.469.1398
E | jeffspencer@holmesmurphy.com
Return to Ingram's June 2011