Blog Articles

Boeing, Going, Gone: The End of Group Health Insurance

Boeing Headquarters

Come the fall, when benefit enrollment is in full swing, Boeing employees in St. Louis and South Carolina will have a new option – one of their local health systems, in addition to current coverage alternatives from Blue Cross and Blue Shield (BCBS) plans.

Boeing announced last week that it has directly contracted with Mercy Health Alliance, an accountable care organization (ACO) in the St. Louis bi-state region, and the Roper St. Francis Health Alliance ACO in South Carolina’s coastal low country.  Express Scripts is managing the pharmacy benefit and the Health Care Service Corporation of BCBS Illinois will help with administration and paper work.

Greater Savings, Improved Health, Better Experience

By working directly with the ACOs, Boeing hopes to save money for itself and employees, improving employee health and enhancing service for a more positive employee experience.  Boeing South Carolina executive Beverly Wyse told WSCC-TV the company is applying the same logic to healthcare as it does in building Dreamliners, with a commitment to more quality, reliability and lower costs.

Boeing estimates employees will save $350 to $1,000 per person per year on monthly payments, deductibles, copays and prescription costs.  Mercy executive Donn Sorenson told the St. Louis Business Journal Mercy could cut per family health care costs by more than half to $6,000 from the large-employer average of $15,849.  He plans to do it with greater attention to preventative and maintenance care.

In negotiating Preferred Partner ACO contracts, Boeing puts a high priority on access and convenience.  Primary care appointments are available for acute conditions same day and within 72 hours for any condition.  The wait for a specialist appointment can be no longer than 10 days.  In addition, each Preferred Partner provides extended hours, a dedicated phone line with care navigators, a member website and phone apps.

Competition in Seattle

Additional Preferred Partner arrangements are in the works, understandably because Boeing’s formula appears to be working.   A year ago, Boeing contracted with two ACOs in the Seattle area – Providence Swedish Health Alliance and the UW Medicine Accountable Care Network.  Of the 27,000 eligible employees and 3,000 retirees, about 18,000 signed up for one of the ACOs in roughly equal numbers.

In Seattle Boeing has pitted two prominent health systems against each other, creating a retail, consumer market within its large employee population, much like a private exchange.  Through their ACOs, both systems have assumed upside and downside risk, absorbing an insurer’s traditional role.

Instead, BCBS Illinois collects and provides data, in addition to performing administrative services as in St. Louis and South Carolina.   Boeing’s relationship with BCBS Illinois could be a plus, if the manufacturer decides to implement a private exchange.  BCBS Illinois has its own, Blue Dimensions, private exchange platform, which offers “many of the same features of online shopping.”

Boeing’s Health Care Endgame

In fact, the Seattle competition may foreshadow Boeing’s endgame, according to Tory Wolff of Recon Strategy.  Boeing “is setting up its market to transition to a provider-consumer type market.  We do not expect it to be too long before Boeing starts transitioning its employees to defined contribution.”  The impact would be substantial.  The company spends $2.5 billion on health care for 480,000 employees, dependents and retirees in 48 states.

Assuming Wolff is right, look for Virginia Mason to become a third option for Boeing’s Seattle employees.  In St. Louis, SSM and its newly acquired Saint Louis University Hospital could become a second option.  In time, BJC Healthcare/Washington University Physicians will conclude their shared brand – without an insurer intermediary — can attract more Boeing patients.   In South Carolina and other major Boeing locations, expect the same.

Private Exchanges – Small but Growing Rapidly

While Boeing approaches a private exchange, where employees get a broad range of coverage options and a defined company contribution, other large employers have already made the plunge. These include Walgreen Co., CVS Health Corp. and IBM, at least for retiree benefits.

Admittedly, private exchange utilization is still extremely small.  There are six million participants this year, up from three million in 2014.  However, by 2018, 40 million people likely will choose coverage on a private exchange, according to an Accenture study.

Aon Hewitt attributes the projected surge to a number of factors, including lower cost.  The average annual cost increase to employers completing a second year renewal 2.6%.  Large employers with similar benefit structures saw increases of 6.5% to 8% this year.

However, the most significant driver is a 40% excise tax on “Cadillac” health benefit plans scheduled for 2018 implementation under the Accountable Care Act.  Imposed on family and individual plans respectively costing $27,500 and $10,200, the tax could impact as many as 48% of employers in its first year, according to the benefits consulting firm Towers.

According to Accenture, private exchanges are a “compelling alternative” for employers who want to accomplish two goals simultaneously – control cost and administrative burdens, while still providing health coverage.  They are very aware that 76 percent of consumers see health insurance as the primary or an important factor for continuing to work at their current employer.  In fact, employer involvement in facilitating health benefits matters as much if not more than the employer’s financial contribution.

Sam’s Club Now, Amazon Soon?

Typical operators of private exchanges include health insurance companies and benefit consulting firms.  However, small employers may rely on an unlikely source to provide their employees with coverage options, Sam’s Club, which has collaborated with Aetna to offer the Aetna Marketplace for Sam’s Club.  Employers can offer a defined contribution plan or make a flat, pre-tax contribution an employee can apply to his or her plan choice.  (Recently proposed IRS rules could negatively affect the latter option.)

Can Amazon be far behind?  Perhaps not.  Both Wal-Mart and Amazon are engaged in a fierce battle for consumer loyalty.   There is no public evidence suggesting an Amazon move toward offering a private exchange.  However, Amazon Web Services has been touting its deep association with Oscar Health, a technology-driven, health insurance start-up, which could be serving as a learning platform for Amazon.

What is surely not far behind is the end of group health insurance, supplanted by a rapidly growing retail market for health coverage.  As blogger Joe Markland has observed, “a single 10,000 person employer will become a firm with 10,000 retail buyers.”    In addition to the 40 million in private exchanges by 2018, Accenture predicts there will be 31 million participants in public exchanges, up from 15 this year, for an overall 71 million consumers.

Retail Market Driving Insurance Mergers

This burgeoning retail market is the primary driving force behind the mergers of Anthem and Cigna, and Aetna and Humana, respectively.  Yes, greater size will provide negotiating advantage, but within a model that is quickly becoming obsolete.  In fact, insurance industry critic Wendell Potter observed last year, “If the Boeing strategy flies, health insurers as middlemen will be history.”

Agreeing, Leavitt Partners notes that employers want benefit options that will drive a world-class, healthy, productive workforce.”  However, it concludes, “the current composition of intermediaries cannot meet these demands on yesterday’s technology and workflows.”

Instead, health insurers are racing to avoid commoditization.  They have to reposition to add value differently in the new retail paradigm.   Instead of pounding out reimbursement deals with providers, they will need to collaborate, creating differentiated coverage alternatives for retail marketplaces.

More important than added scale, success for these insurer mergers will depend on the integration and expansion of initiatives such as:

Ultimately, successful health insurers will be collaborators instead of intermediaries, creating value with, not at the expense of, providers in a retail marketplace.

For more on this topic, see Employers Chasing Health Care Rainbows and Branded Narrow Networks:  Gold Value at Bronze Prices.

Telemedicine: Bad for Antibiotic Stewardship?

telemedicine2Sandy Walsh is a breast cancer activist and, assuming she is like one in seven adult Americans each year, a sinusitis “survivor” too.

She served as the first-ever consumer advocate on the American Academy of Otolaryngology—Head and Neck Surgery (AAO-HNS) panel that recently updated the adult sinusitis clinical practice guideline.

Patient Education and Watchful Waiting

Novel, too, was the panel’s emphasis on patient education and its expansion of watchful waiting (without antibiotic therapy) as an initial management strategy.  The latter now applies to all patients with uncomplicated acute bacterial rhinosinusitis (ABRS) regardless of severity.  The prior guideline limited the antibiotic-free approach only to patients with “mild” illness.

Patients may not even need to see a doctor.  “For the first time we’ve really made it crystal clear how to self-diagnose your own bacterial sinus infections without going to the doctor, with a high degree of accuracy,” Dr. Richard Rosenfeld told National Public Radio.  He led the AAO-HNS guideline panel.

Not seeing a doctor for a sinus infection might actually have its advantages.  The doctor a patient sees, not the patient’s condition, largely determines treatment, according to an Annals of Internal Medicine study published this month.  Physician preference or “style” largely determined antibiotic use, not patient related factors like fever, age, setting, or comorbid conditions.

Telemedicine and Antibiotics

What happens when telemedicine makes physicians more accessible, convenient and less expensive to “see” for ailments like sinusitis?   Antibiotic prescribing rates for acute respiratory infections were similar regardless of whether the encounter was face-to-face or via telemedicine, according to a JAMA Internal Medicine study published this month.

That the prescribing rates were similar represents an improvement – of sorts.  A study published two years ago, also by JAMA Internal Medicine, found that telemedicine physicians were more likely to prescribe an antibiotic.

Other research shows that acute respiratory tract infections account for 75% of all outpatient antibiotic prescribing.  Half those prescriptions are unnecessary because a large portion of those infections are likely viral, not bacterial.

Even more troubling, telemedicine physicians in the 2015 study were more likely to use broad-spectrum antibiotics, raising concerns because “overuse increases costs and contributes to antibiotic resistance.”  The study suggests telemedicine physicians may have been prescribing more conservatively due to limited diagnostic information.

To decrease antibiotic prescribing, the study’s authors want telemedicine operators to change physician behavior with timely feedback.  They also recommend “direct education to patients to influence demand.”

Do It Yourself for Patients

Sandy Walsh, the consumer advocate, is ready with patient education — specifically “do-it-yourself” diagnostic tools for sinusitis sufferers.  She and her co-authors have written a plain language, adult sinusitis summary, including patient information sheets, based on the new AAO-HNS clinical practice guideline.   The summary, already available online, will appear in the August issue of Otolaryngoly – Head Neck Surgery.

According to Dr. Rosenfeld, the key to this “do it yourself” approach is learning how to tell whether the infection is viral or bacterial.  As he told NPR, if you have been sick less than 10 days and you are not getting worse, it is most likely viral and an antibiotic would have no effect.

If you do not improve or get worse in 10 days, it is probably bacterial.  Still, Dr. Rosenfeld advises that, even then, an antibiotic would play little role in what is largely a battle between your body and the infection.  “There’s a good chance you’re going to get better on your own,” says Dr. Rosenfeld.

Integrate Telemedicine and Education

Telemedicine providers would do well to follow Dr. Rosenfeld’s example.  Fully integrate patient education as first line therapy for sinusitis, help patients learn how to diagnose and care for themselves, and reserve antibiotics for true need.   Make telemedicine good for antibiotic stewardship.

And, get the help of consumer advocates like Sandy Walsh!

As Insurers Merge, What’s Next for Healthcare? Watch Gretzky!


Remember that quote from hockey great Wayne Gretzky, “I skate to where the puck is going to be, not where it has been.”  To see where healthcare is going, watch Gretzky.  Watch the successful organizations that always seem to be in the right place at the right time. Watch Ascension Health.

The nation’s largest not-for-profit health system, Ascension popped up in a recent New York Times story on health insurer consolidation.  It had become an insurer, too, when it acquired Michigan-based U.S. Health and Life Insurance in February.

Ascension Health as Insurer

Ascension plans to continue the small insurer’s focus on serving small, self-insured employers, according to a filing with Michigan regulators.  Although 20 states have licensed the insurer, Ascension plans to concentrate on Michigan, where the health system’s footprint is biggest, as well as in Illinois, Indiana and Wisconsin.

Longer range, the system has the much more ambitious vision of coupling its new insurance asset with a newly formed Ascension Care Management subsidiary to provide employers with population health services. Ascension then can take provider direct contracting with employers to a new level.

Generally, organizations like the Mayo Clinic and the Cleveland Clinic have contracted with national employers for single-price orthopedic and cardiac surgeries.  Ascension, on the other hand, is ready to provide capitated care arrangements directly to employers for all their employees, not just surgical patients. Modern Healthcare reports that risk based contracts, including capitated arrangements with payers, already cover about 1.9 million Ascension patients.

Being a Healthcare Gretzky

To be a Gretzky, a healthcare provider must be able to assume risk. However, not every provider capable of assuming risk will be as good as Gretzky.  There is more to being a Gretzky, including focused scale, powerful information technology and clinical leadership.

Focused Scale

Surely, Ascension’s size is its most striking characteristic.  However, size alone does not make Ascension a Gretzky.  Instead, Ascension brings a distinguishing focus to its size, one that recognizes healthcare in the U.S. as a confederation of 50 state markets plus the District of Columbia.

For example, in Michigan, Ascension has allied with CHE Trinity Health Michigan to form Together Health Network for joint managed care contracting and, potentially, offering narrow network coverage products on the state’s public insurance exchange.

The network, which does not involve an asset merger, covers nearly all of the state, with 75% of the population no more than 20 minutes from a participating hospital or physician practice. Reinforcing that coverage, Ascension has also agreed to acquire Crittenton Hospital Medical Center in Southeast Michigan.

On the other hand, Ascension has scaled back in Arizona, where it has entered into a joint venture with Tenet and Dignity Health, resulting in Tenet operating Ascension’s Carondelet Health Network.  Ascension had not been a major presence in the market.

Ascension is also configuring horizontally for the nation’s diverse healthcare payment models.  In a recent article, CEO Tony Tersigni observed that Medicare resembles Canada, our under-65 model is closer to France, Germany or Japan, veterans, military and Native American healthcare is a lot like the British National Health Service and, for the uninsured, rural India or Cambodia provide the best comparison.

Consistent with this mental map, Ascension last year announced establishment of Ascension Health Senior Care, now the nation’s second largest not-for-profit long-term care provider in the nation.  Consisting of 34 facilities serving more than 5,500 patients, the unit shares best practices and establishes consistent standards.

Once again, like Gretzky, Ascension has positioned itself well. At this week’s White House Conference on Aging, the Obama Administration announced a proposed rule updating, for the first time in nearly 25 years, the quality and safety requirements for nursing homes and skilled nursing facilities.

Powerful Information Technology

Ascension is not waiting for national data to achieve “drastically reduced hospital readmissions.”  Instead, in almost real time, it spots patterns in 30-day readmissions using admission, discharge and transfer (ADT) data across the care continuum. The immediacy enables Ascension to evaluate and adjust interventions on a local level.

“We are highly engaged with supporting the technology that would enable rapid identification and management of those conditions, so we are working very hand-in-glove with our clinical leaders,” Ascension Information Services (AIS) vice president Mary Paul recently explained to HealthITAnalytics.

The system has identified three key risk factors for readmissions – medication management, access to primary care and socio-economic factors.  ““We can predict fairly well which patient is likely to get in trouble from their clinical situation, but their social determinants are just as important,” Chief Quality and Nursing Officer Ann Hendrich told the publication.

Meanwhile, 2,500 AIS employees are also working to standardize and consolidate across 1,900 sites of care in 23 states, according to CIO Mark Barner.  They are shrinking more than 4,000 software applications to a much smaller number and consolidating 37 disparate interface engines into one.  Ascension is using the Athenahealth ambulatory electronic health record application and cloud based applications for ambulatory physician practice management.

Clinical Leadership

Ascension Health has been at the forefront of the patient safety movement for more than 20 years.  In connection with a 2002 commitment to 100% access to safe, effective care, Ascension adopted a goal of clinically excellent care with no preventable injuries or deaths by July 2008.  The Joint Commission Journal on Quality and Patient Safety published a series of articles charting the system’s journey toward clinical transformation.

Ascension continues its leadership through its Hospital Engagement Network (HEN).  Selected by and with funding from CMS, Ascension’s HEN is developing advances in ten areas, including sepsis, hospital acquired infections, patient safety culture, home healthcare models, hospital acquired kidney failure, and safe patient handling.  Ascension will share the advances with hospitals throughout the nation.

The Ascension HEN has already identified, documented, refined and shared best practices in ten additional areas, including urinary tract infections, adverse drug events, pressure ulcers, fall injuries and central line associated blood stream infections. For example, Ascension developed a protocol for reducing catheter induced urinary tract infections, which account for 30% of hospital-acquired infections, by limiting catheter use.

In another example, Ascension has dramatically reduced induced or C-section deliveries before 36 weeks, which often result in higher complications for babies and mothers.  In February 2012, Ascension’s early-elective delivery rate was about 3.5%, already substantially lower than the national average of 10% to 15%.  Now, it is even lower, at 0.6% after shared data with physicians and stepped up patient education efforts.  (For additional advances in obstetrical care, see three Ascension-authored articles in the January 2014 edition of Health Affairs.)

Last month, Ascension told the White House Forum on Antibiotic Stewardship that it wants to “set the pace for the nation in antimicrobial stewardship.” It has pledged to establish facility-based antimicrobial stewardship programs in all Ascension hospitals that will include both a pharmacist and a physician with antimicrobial expertise.  The system also said it would reduce the use of three broad-spectrum or niche antimicrobials by at least 10% reduction during the first 12-18 months.

What’s Next for Ascension?

One of the best ways to project where a Gretzky organization will be next is to watch the Gretzky’s within it.  In Ascension’s case, that would include Chief Quality and Nursing Officer Ann Hendrich, who joined Ascension in 2003, after leading the development of an innovative coronary care unit at Methodist Hospital in Indianapolis.

That she would be a Gretzky to watch at Ascension was clear from an observation she made in her application to be a Robert Wood Johnson Executive Nurse Fellow in 1998.  Hendrich wrote, “The opportunity to take shell space and not replicate the present and familiar but integrate environmental design, technology and a new care delivery model is imperative.”

In her dozen years at Ascension, Hendrich has played a key role in cementing Ascension’s clinical leadership.  Given the system’s accomplishments, especially in clinical quality and patient safety, Ascension merits the recognition usually afforded the great healthcare brand names like Mayo, Cleveland Clinic, MD Anderson and Kaiser.

Establishing a strong national brand is “what’s next” for Ascension.  The need and the opportunity are clear and, to track how Ascension intends to build its brand, look to the recent arrival of another Ascension Gretzky, Nick Ragone.  A lawyer and author, Ragone most recently led the Washington office of Ketchum, a global public relations agency.

As Ascension’s chief communications officer, he will “enhance the strategic identity of Ascension,” according to the 2014 announcement of his arrival. His initial focus has been internal, engaging 153,000 employees, as it should be for any brand-building exercise.  Ragone is supporting an enterprise-wide “One Ascension” initiative, which is integrating and establishing best practices throughout the once highly decentralized system.

Meanwhile, Ragone is preparing to take his branding initiative on the road:  He is looking for a brand strategy director to “lead work around the definition and development of the Ascension brand, both internally and externally.  The Director will be responsible for developing the value of the Ascension brand and driving strategies to build brand equity for Ascension, its Subsidiaries and Health Ministries.”

Epilogue as Prologue

Earlier this month, Modern Healthcare editor Merrill Goozner interviewed Ascension CEO Anthony Tersigni.  He asked Tersigni about Aetna buying Humana and Anthem pursuing Cigna.  Tersigni shrugged off the big deals, saying, “Ascension is preparing to take on risk itself for self-insured employers as the system strives to manage population health while encountering an increasing number of patients in high-deductible plans.”

Spoken like a true healthcare Gretzky.

Obamacare High Deductible: Build It So They Come


“Where do you want to get your MRI,” Dr. Barry Yeaman asked his patient.  “I don’t care, wherever you want me to do it.”  The Norman, Oklahoma, family physician tried again.

Dr. Yeaman told his patient about price differences in Norman and nearby Oklahoma City, where the cost of an MRI can vary by as much as a thousand dollars or more.  The patient still was not ready to make a decision.

“Patients still defer to the provider.  I see it nonstop,” Dr. Yeaman explained to a panel of health care executives convened by HealthLeaders media.

Will They Come?

Build it and they will come?  Not yet.

Here we have Obamacare’s next big challenge – not in the courts, but in the rapidly expanding consumer marketplace carved out by high deductible plans, whether on a public exchange and from an employer.

As many as 36.9% of those under 65 with private insurance coverage were enrolled in a high deductible plan last year, according to the National Center for Health Statistics.

This year, nearly 90% of those who bought health insurance on a public exchange enrolled in bronze or silver plans,  most of which have high deductibles.

Typically combining both medical and prescription drug expenses, the deductibles far exceed the IRS high deductible definition of $1,300 for an individual and $2,600 for a family.

Next year, all 30,000 employees of the Carolinas Healthcare System will have only one health coverage option – a high deductible plan.  It will require individuals to pay up to $5,600 and families up to $11,200 a year out of pocket in deductible, copays and coinsurance.

With their own money at stake, consumers theoretically will shop for better prices and higher quality, thus forcing health care to deliver greater value.  Fact is, such consumers are about as real as ball players emerging from an Iowa cornfield.

The better answer is “build it so they come.”

Underinsured and Unable to Choose

A few consumers do come to shop, believing they know something about health care, only to be thwarted by opaque and unavailable pricing, even when required by law, or surprise bills from providers they have never met.

However, like Dr. Yeaman’s patient, most consumers are unable to choose.  Facing tight budgets, many simply buy less of everything instead of choosing needed medications over optional skin cream, according to the Rand Health Insurance Experiment.

In another example, employees at a company with a new high deductible plan cut back on prescription drugs.  They did so although the high deductible did not apply to the pharmacy benefit.  The National Bureau of Economic Research suggested employees were unaware of benefit design details and possibly skipping physician visits.

For a significant number of consumers, whether they have the skills needed by today’s health care shopper is beside the point.  They do not come to market simply because they do not have the money to participate.

According to the Kaiser Family Foundation, 37% of U.S. households do not have enough liquid assets to meet individual and family deductibles of $1,200 and $2,400 respectively.  Doubling the deductible levels increases to 49% those who do not have enough liquid assets.

As many as 31 million adults with employer provided coverage were underinsured last year.  High deductibles alone put 7 million in that category, according to a Commonwealth Fund study.  Half had problems with medical bills or medical debt.   Meanwhile, the Consumer Finance Protection Bureau reports that half of all overdue debt on credit reports stems from unpaid medical bills.

Last year, among adults fully insured with a public exchange plan, one in four reported they went without some needed medical care because they could not afford it, according to a recent Families USA study.

The High Deductible Squeeze

Health care organizations across the nation are feeling the impact of high deductible health plans.  According to Crowe Horwath, insured patients’ bad debt and charity rates were up 22 percent and 130 percent last year in Medicaid expansion states, and 35 percent and 130 percent in non-expansion states.

The Advisory Board reports that Healthcare providers are collecting $0.18 to $0.34 on the dollar from patients with high-deductible plans.  Once a bill exceeds 5% of household income, payments are nearly zero.

Last year, when Federal Express instituted a high deductible plan with health savings accounts, Methodist Le Bonheur Healthcare in Memphis was running $17 million behind budget by the end of the first quarter.  Some hospitals like St. Luke’s in Kansas City are insisting on 25% prepayment.

Drug companies are feeling the pinch, too.  According to the Families USA study, 14.2% of those newly insured on the public exchanges went without needed medications because of high deductibles and copays.   Up to 16% of cancer patients quit their treatment plans because they cannot afford out of pocket costs for life-saving oral cancer medications, according to a recent University of North Carolina study.

Even clinical pathology labs are seeing revenues decline as more patients in high deductible plans fail to pay their bills.  Labs like Arizona’s Sonora Quest Laboratories have begun asking patients to pay in advance, as they aim to collect millions they had previously written off.

Health Care Responds

Health insurers and employers are responding with new, value based benefit designs that encourage consumers to make wise health and financial choices.  These plans typically lower consumer out of pocket costs for services that support better health, such as prescriptions for chronic conditions.  University of Michigan researchers studying such a plan used by Connecticut state employees suggest there is better control of chronic conditions.

Writing in the Boston Globe, one of the researchers explains that value based benefit plans “rely on consumers to understand their benefit design and evaluate different costs for various services.”   Betsy Cliff admits, “That kind of consumer education isn’t routine.”

However, some organizations are making impressive attempts.  Kudos go to the American Gastroenterological Association (AGA), for example.   As a template for all-in colonoscopy pricing, it is using the pricing sheet – known as the Monroney sticker– pasted on new and used car windows.   Meanwhile, MetroHealth System has put a 38-foot RV on the road in Cleveland staffed by three financial counselors to answer consumer questions.

Last week, the American Society of Clinical Oncologists issued a new framework for evaluating cancer treatments based on cost, effectiveness and side effects.  Last year, the American College of Cardiology and the American Heart Association issued their own statement on cost/value methodology.

Three SEO Keys

Across health care, leaders and communicators must challenge themselves to build a less complicated healthcare marketplace so consumers will come and shop.   Here are three SEO keys for doing so:

  1. Simplify the Market:  Bundle, package or just better organize quality measures, outcome data, pricing and billing.   Like the AGA, look to other industries for simplification strategies.  Be transparent, accessible and responsive.
  2. Educate the Consumer:  Before they become patients, teach consumers how to become good healthcare shoppers.  This is a job for every part of health care, not only payers.   Like Cleveland’s MetroHeath, go into the community.
  3. Offer Options:  For those consumers who do not have enough money, even if insured, provide them with low or no-cost options for health care and prescription medicines.  Identify and meet other needs to enable healthy choices.

Whether a baseball field, website or the healthcare marketplace, “Build it so they come.”

King v. Burwell: 12 Keys to Effective Communications

Supreme Court - King v. BurwellIn King v. Burwell, if the Supreme Court rules for King, as many as 11.7 million Americans will wonder how the decision affects them.  That’s right – not just the 6.4 million directly affected, but everyone who gets coverage through an exchange, state or federal, subsidized or not.

They will be looking to their insurers, physicians and hospitals for answers.   In fact, even some of the 169 million Americans getting coverage at work may also wonder, so their employers should brace for questions, too.  For most Americans, there will likely be more confusion than clarity.

Yes, policy wonks, political operatives and health care insiders already know the justices could eliminate subsidies in the 34 states using the federal exchange, hitting southern states the hardest.  They also know that the subsidies, averaging $268 per month, reduce premiums by an average of 72% to about $105 per month.

However, the entire issue will be news to most Americans when the decision comes down, especially if it is for King.  In fact, as many as 37 percent of voters do not know or have no opinion on the case’s core issue of subsidies, according to a Morning Consult national survey released last week.

The justices could hand down a decision any day.  So, if you are a physician, hospital, insurer, or employer, or engaged with patients and health consumers, prepare to communicate.

Here are 12 keys to effective King v. Burwell communications for your organization:

1.  Convene a high-level, cross-functional response team to assess the decision’s impact, identify affected stakeholders and their concerns and develop a response strategy.

2.  Establish a set of guiding principles to align actions and communications with your organization’s mission, values and brand promise.

3.  Develop key messages based on your guiding principles to help all stakeholders clearly understand your organization’s approach.

4.  Decide as soon as possible whether your organization will support state or federal policy solutions that will restore subsidies.

5.  Create a communications map illustrating how internal and external stakeholders will present or receive questions to ensure all gaps are closed.

6.  Provide general explanations to patients, members, employees and consumers regarding how the decision does or does not affect them, based on their state, insurance type and any subsidies.

7.  Address, one-on-one, individual patient concerns regarding continuation of care and ability to pay. (If you are a provider, see HFMA for guidance.)

8.  Help patients and consumers develop personal response plans, utilizing available community, government and private sector resources.

9.  Encourage patients to maintain care until they speak with their physicians and develop a personal response plan.

10.  Ensure employees and partners have a ready answer to initial questions based on the key messages, plus guidance to refer patients, members, friends and neighbors to your website for more.

11.  Meet immediate patient and consumer needs for information with a quick response and ongoing follow up, internally and externally, via statement, spokesperson and website.

12. Adopt a transparent attitude, responding as completely and forthrightly to questions and requests for information.

A free planning tool is available at Planning Effective Communications on

From Hospital Whispers to CNN Transparency

St. Mary's Medical Center

With a whisper, a staff member at St. Mary’s Medical Center in West Palm Beach, FL, broke the medical omerta.  Confiding with a patient family, she revealed problems with the hospital’s pediatric cardiac surgery program.

Later, a member of that family overheard a worried mother in an elevator, asked if the mother knew a child with a heart problem at the St. Mary’s and, on hearing yes, passed along the whisper.  The mother and her husband called their daughter’s cardiologist, who agreed with the second whisperer’s advice:  Move your daughter to another hospital.  They did.

Whisper Now a Shout

Several years later, the whisper is now a shout.  On Monday, CNN broadcast a heartbreaking story on infant deaths and complications following pediatric cardiac surgery at St. Mary’s, a Tenet Healthcare facility.   The report featured young Layla McCarthy playing on her family’s deck despite two legs paralyzed since her heart surgery.   Layla’s mother, Christine McCarthy, was the worried parent in the elevator.

St. Mary’s chose to limit its participation in the CNN story to a written statement, refusing interviews or on-air appearances.  However, it is now releasing additional information and is getting public support from families whose children had successful surgeries.  Parents Pierre and Angela Rodriguez call Dr. Michael Black, head of St. Mary’s pediatric cardiac surgery service, their “miracle doctor.”

The CNN story claimed the St. Mary’s program had a mortality rate of 12.5% from 2011 to 2013, well above the national average of 3.3%.  However, over a longer period, the Florida Agency for Health Care Administration reports a lower mortality rate of 4.58%, more in line with a state average of 3.97%.   Since April 2014, when St. Mary’s received recommendations from a Florida Children’s Medical Services site visit, the hospital says the mortality rate has been consistent with the national average.

Ultimately, the facts will sort themselves out.  St. Mary’s will continue defending its program and Dr. Black with additional information.  In addition, the McCarthy’s and other families have filed lawsuits.  It is also too early to grade St. Mary’s engagement with CNN and other media.

Secrecy Veiled Worlds

However, in light of this story, our nation’s hospital and medical communities would do well to examine the extent to which they operate in secrecy-veiled worlds, separate from patients, families and consumers, but for the occasional whisper.

When CNN asked St. Mary’s to provide mortality rate data, CEO Davide Carbone responded that raw mortality data “does not give proper context for the complexity and severity of each case, which could potentially lead to providing misleading information to consumers.”

He has a point.  The problem for St. Mary’s is that we now live in the new transparocracy.  Increasingly, transparency forces organizations to change behavior, practices and policies ahead of legal or regulatory requirements.

Instead of refusing to provide mortality data because it might mislead consumers, organizations like St. Mary’s need to work at making such information available and understandable.  Resistance to transparency will ultimately be futile, especially as other hospitals post their own outcomes data.

In Kansas City, Children’s Mercy Hospital publishes its pediatric heart surgery outcomes on a website.   Its Ward Family Heart Center reports data according to procedure complexity using the standards of the Society of Thoracic Surgeons.  Mortality rates for the most complex procedures are slightly higher than the national average, but Dr. James O’Brien, the center’s chief, explains, “sometimes our outcomes won’t be great, but we will continue to share our data.”  Children’s Mercy is the hospital with several hundred patient and family advisors actively involved in decision making across all services.

St. Mary’s should take heart from Children’s Mercy because the defect known as hypoplastic left-heart syndrome featured in the CNN story has a high fatality rate, according to the Palm Beach Post.  Since at least April 204, St. Mary’s has been reporting data to the Society of Thoracic Surgeons database like Children’s Mercy.  Therefore, St. Mary’s should have the same data available for posting on its own web posting, and it should do so as part of its strategy for recovering from the CNN story.

The Whispering of Surgeons

Meanwhile, not even a whisper about St. Mary’s came to Florida consumers by way of the state’s medical establishment.  However, there was much “whispering” among Florida’s pediatric cardiac surgeons.

Johns Hopkins professor, Dr. Jeffrey Jacobs, wrote in his April 2014 report on the Florida Children’s Medical Services site visit to St. Mary’s “it is common knowledge that multiple pediatric cardiac surgeons…have express concern about babies having complex pediatric cardiac surgery at St. Mary’s,”  adding that “concern exists across Florida.”

However, patient families told CNN they were unaware of the issues.  They also said St. Mary’s did not  provide them with information on pediatric cardiac surgery outcomes.   CNN reports one family remembering Dr. Black saying he had never lost a single patient at St. Mary’s, although CNN indicates several prior patients had not survived.

Some level of confidentiality about problems like those at St. Mary’s makes sense, but only for a time, to provide space for corrective action.  In fact, Dr. Jacobs did not include in his report confidential information he received from St. Mary’s as part of a peer review process.

Time to Raise the Veil

However, once St. Mary’s became the talk of Florida medicine, the time surely had come to raise the veil and inform at least the parents considering heart surgery for their children.  During Dr. Jacobs’ April 2014 visit to St. Mary’s with his colleagues, someone should have asked St. Mary’s what it was telling families.  In addition to checking whether St. Mary’s was reporting data to the Society of Thoracic Surgeons database, the review team should also have asked whether the hospital had any plans to post the data on its website.

As patients and their families are becoming more actively involved on their care teams, thus playing an important role in improving care, they can only do so with full information.  Transparency has thus become a standard of care, subject to review as much as any clinical practice.

Instead of whispers, rather than shouts, let patients, families, providers and physicians communicate openly, fully and transparently.

10 Steps to Transparency in the New Transparocracy

Transparency in the New TransparocracyTransparency is creating a new world, triggering organizational change on par with the transformative evolutionary effect more than 500 million years ago of light penetrating the oceans.  That is what Daniel Dennet and Deb Roy of Tufts and MIT respectively conclude as they view today’s digital revolution through the Cambrian lens of In the Blink of an Eye author Andrew Parker of Oxford.

Writing in the March edition of Scientific American, Dennet and Roy suggest that when organizations, like Cambrian animal life, “find themselves exposed to daylight, they quickly discover that they can no longer rely on old methods; they must respond to the new transparency or go extinct.”

Surviving Cambrian creatures developed camera style retinas, nervous systems, claws, jaws and shells, as well as predatory and defensive strategies.  Successful 21st century organizations will adapt their “organs” for delivering goods and services, as well as modify externally facing functions such as public relations, marketing and legal, according to Dennet and Roy.

Change is Changing

Earlier this month, Panera Bread became the first national restaurant company to publish a No No list of artificial colors, flavors, sweeteners and preservatives it has eliminated or intends to remove from its menus by the end of 2016.  “The No No List is the latest step on our journey to clean food and a transparent menu,” said the company’s founder and CEO Ron Shaich.

A regulatory bureaucracy did not order the change.  Nor did it compel Chipotle to eliminate GMO ingredients, Pepsi to stop using aspartame, Kraft and Nestle to drop some artificial dyes and McDonald’s to use antibiotic-free chicken.  Like Cambrian creatures, they responded with new policies, procedures and practices to transparency’s light and the altered competitive environment it creates.

They and other organizations are adapting to what I call the new transparocracy, i.e. government, rule, power, control (-ocracy) by light (-par-) shining through (trans-).

Within this new transparocracy, the “nature of change is changing,” as explained by Accenture’s Mark P. McDonald.  Now inherently social, the change process begins with dissatisfaction, followed by a demand for information and ensuing transparency, choice based on the new information, and change “in the face of clear information that drives active choice.”  This is, according to McDonald, instead of the traditional process by which change occurs: problem, solution and adoption.

Adapting Organizations

Some companies began taking adaptive steps more than 20 years ago amidst the right-to-know environmental movement, a harbinger of transparocracy.  In 1988, Monsanto’s CEO, Dick Mahoney, issued the Monsanto Pledge, an environmental manifesto that included a commitment to reduce legally permitted air emissions by 90 percent in five years.  With progress publicly reported each year, Monsanto achieved the goal by its self-imposed deadline.  The company also made its product material safety data sheets (MSDS) – 1,200 in all – publicly available.  In 1996, Mahoney provided a retrospective and “lessons learned” in Anatomy of a Public Policy Crisis.

For an evolved adaptation to the new transparocracy, we need only look to Nike.  Facing intense scrutiny of supply-chain labor practices, the company embarked on major changes beginning in the 1990s.  Nike found that simply pressuring suppliers did not achieve enduring change.  Instead, it needed to base change on real business solutions driven by strong market signals, according to CEO Mark Palmer.  In other words, organizational structures at the local level had to adapt.

Parker says Nike “suspected that a new model was being born – one that would tap into the wisdom of diverse contributors, where collaboration was more important than proprietary secrets. We learned to view transparency as an asset, not a risk.”   The company has now moved beyond having a responsive corporate responsibility team to an adaptation-supporting sustainable business and innovation team.

Further pushing the adaptive envelope has been Tesla’s Elon Musk.  He announced via a blog post last year that Tesla “would not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”  Musk explained that he created Tesla to accelerate the advent of sustainable transport, and that making its technology open source, rather than defending patents, would advance that goal.  He added that technology leadership depends on the company’s ability to attract and motivate the world’s most talented engineers.

Health Care Transformed

Meanwhile, throughout the 17% of the US economy represented by health care, reformers are intentionally deploying transparency to drive change.  Several weeks ago, AARP, Aetna, the National Consumers League, the Pacific Business Group on Health and other organizations launched the Clear Choices Campaign.  Their aim is to put more health cost and quality information in the hands of consumers and the developers of transparency tools for consumers.  They also support competitive health markets.

Once consumers become patients, having chosen where to get care, transparency comes into play again fundamentally to change the physician-patient relationship model.  Transparency makes it possible to involve patients as full partners in decision-making, explained New England Journal of Medicine executive editor Gregory Curfman, M.D., at an October 2014, seminar sponsored by the journal and the Harvard Business Review.

Hospitals increasingly are engaging patients and their families in helping with the redesign of care – as detailed in my last article.  At Children’s Mercy Hospital in Kansas City, a 2012 policy change “placed patients and families at the center of decision making.”  Now, Children’s Mercy has more than 300 advisors embedded on committees, task forces and teams throughout the hospital.  In North Carolina, Vidant Health integrates more than 150 advisors on teams and committees.

Across the economy, every organization will need an adaptive strategy for the new transparocracy.  As Dennett and Roy observe, the old protective interfaces between organizations’ internal affairs and the public world are losing their effectiveness.   “We can now see further, faster, and more cheaply and easily than ever before—and we can be seen,” they explain, adding, “The players who cannot adjust will not last long.”

Steps to Transparency

In developing their strategies, organizations should consider these ten steps to transparency:

1.   Make mission “true north:” This is the “why” of your organization, establishing your reason and right to operate, not a slogan or tagline. Align all your practices and behaviors with it.  Some organizations also use their business model as a public reference point for their performance.

2.   Prioritize your focus: Considering your mission and business model, identify those areas, e.g. supply chain, menu ingredients, health cost and quality, where greater transparency will have the most positive impact.  Proceed area by area in order of importance.

3.   Redefine privacy boundaries: Certain information must remain confidential, such as personal health and market-moving information, as well as critical privacy needs.  Narrow what this information is and who gets it internally.   Then, identify transparency zones within the organization for both employee and public.

4.   Provide understanding: Add perspective and explanation to the information you release, both internally and externally.  Anticipate how the public and employees will receive and question it.  Provide answers up front.

5.   Deliver accessibility: Make your information easy to find and use, for example through a central point on your website. Ensure it is timely and current, and the public can count on it.   Provide vehicles for feedback and questions.

6.   Monitor and respond: Track how your information flows through digital space.  Monitor your website metrics and social media.  In real time, identify issues that can be resolved with more information, more comprehensible portrayal or more easily understood explanations.  Fully engage in the social media conversation.

7.   Recruit and Include: Embed consumers, customers and other stakeholders on work teams, task forces and committees.  Engage volunteers; hire some to serve as the external voice, internally; and recruit others for short-term intern-like roles.

8.   Modify practices and behaviors: Capitalize on the feedback, conversation, reaction and dialogue your information triggers.  Improve products, policies, practices and procedures accordingly.

9.   Restructure the organization: Adapt your organization, setting priorities, instituting process and allocating resources. Reduce hierarchies and foster the collaboration among employees and with the public that accompanies greater transparency.

10.   Manage the transition: Prepare a detailed roadmap for your transition to greater transparency.  Carefully consider and communicate the reasons for more transparency. Link to your mission, relevant past history or new external circumstances, especially if you are contradicting prior disclosure resistance.

New Patient Family Advisors Move Health Care, Not Flower Pots

Patient family advisors Beth Daley Ullem, Chrissie Blackburn and Kim Blanton at the 17th Annual National Patient Safety Foundation Congress plenary session, From Experience to Engagement:  How Three Patients are Leading Patient Safety

Patient family advisors Beth Daley Ullem, Chrissie Blackburn and Kim Blanton at the 17th Annual National Patient Safety Foundation Congress plenary session, From Experience to Engagement: How Three Patients are Leading Patient Safety

Don’t ask Kim Blanton, one of the new breed of hospital patient family advisors, where to put the flower pots.  Politely, she will say she doesn’t care.  Instead, she told last week’s National Patient Safety Foundation (NPSF) Annual Congress, “Give advisors meaningful work meeting a true need.”

For more than a decade, hospitals have been establishing volunteer patient family advisory councils.  Most function as useful sounding boards, providing feedback on brochures, commenting on building designs, adjusting form language, assisting with patient satisfaction programs and arranging flower pots.

Meanwhile, consistent with NPSF recommendations, a small but growing number of institutions are now including patients and families more broadly in shaping the delivery of care. These advisors sit on safety committees, assist root-cause-analysis teams, participate in clinical redesign initiatives, support quality improvement projects, and serve on governing boards.

When North Carolina’s Vidant Health asked Blanton to be an advisor five years ago, her first meeting was about end-of-life care.  Since then, she has interviewed candidates for senior positions like chief medical officer and worked on reducing heart failure readmissions. As a long-time cardiac patient, Blanton brought a unique perspective to the development of a transitional program that helps patients care for themselves at home.

Advisors on Staff

Increasingly, hospitals are even hiring advisors, as University Hospitals Case Medical Center in Cleveland did when it appointed parent Chrissie Blackburn as its first principal advisor on patient and family engagement.

Blackburn, who also addressed the Congress, is the creator of the ETeam® program, a communications tool for point-of-care patient and family engagement.   Reporting directly to the chief executive officer, she has been piloting the program in several units and is currently developing a module for hospital-acquired infections.

In 2008, Children’s Mercy Hospital in Kansas City hired parents Sheryl Chadwick and DeeJo Miller as family centered care coordinators.  Seven years later, Children’s Mercy has more than 300 advisors embedded on committees, task forces and teams throughout the hospital.

Chadwick and Miller attribute the broad involvement of advisors to a 2012 policy change “placing patients and families at the center of decision making.” By 2014, the number of participating advisors had more than doubled.

Leading a Congress workshop, they reported a parent saying she “feels like a peer on the team.”   Last year, the Caregiver Action Network ranked Children’s Mercy among the nation’s top 25 organizations for patient and family engagement best practices.

Similarly, Vidant Health is doing more than sponsoring a top-level advisory council, according to Blanton.  “Advisors partner with care units on the front lines, working with staff, going to meetings and participating in rounds.”

During the ten years she has received care and provided advice, Blanton says she has seen progress. “It’s a whole lot better.  There are 150 advisors like me, helping to make it better,” she explained.  Vidant fully integrates advisors on teams and committees, engages patients and includes advisors on root- cause-analysis teams.   Last year, the health system reviewed its extensive patient engagement experience, dating from 2000, during a recorded North Carolina Network Consortium online event, Engaging Community: Patient Advisory Councils.

Transparency- Engagement’s Frontier

Both Children’s Mercy and Vidant Health provide advisors with training, especially on the importance of maintaining patient confidentiality.  Still, engaging so many advisors on a daily basis, from the C-Suite to the front lines, requires a strong commitment to transparency.

In fact, the level of that commitment defines patient engagement’s frontier.

Hospitals and health systems are beginning to add patient and family representatives to their boards.  However, some are only doing so up to a point.  One asked its patient representative to leave when discussing adverse events, according to Beth Daley Ullem, a parent who joined Blanton and Blackburn on the NPSF Congress stage.

Ullem, who works with boards on improving patient safety, said there is “such a gap in the information patients are given.  There is such variability on outcomes, but patients are unable to access outcomes and safety data.  To get to value based health care we need outcomes and pricing transparency.”

In fact, the most recent report of the NPSF Lucian Leape Institute, Shining a Light – Safer Health Care Through Transparency, called for “extreme honesty with patients and their families from start to finish.”  The report, distributed to all Congress participants, concluded that the “current status of transparency between clinicians and patients in most organizations is less than optimal.”

Apologize, Disclose, Resolve

When failures in care result in harm, the report advises clinicians to embrace apology, disclosure, and early resolution.  Presenting a successful model at the Congress was the Massachusetts Alliance for Communication and Resolution following Medical Injury.  Also making progress in this area have been the University of Michigan Health System and the University of Illinois Medical Center at Chicago.

Although the report recommends involvement of willing patients and family in root-cause analyses of medical errors, it does acknowledge the practice merits further discussion, experimentation and research.  In fact, the practice could turn out to be controversial, judging by comments from the Michigan Health and Hospital Association Keystone Center during a Congress presentation.

The Center is coordinating an initiative among the state’s hospitals to increase patient and family engagement.  Kicked off in October 2013, with a white paper, the effort now involves networking activities, leadership engagement, materials development and a measurement process.  The latter includes patient, family, or caregiver participation in root cause analysis.

Two Decades of Progress

Still, the patient safety movement has made considerable progress on patient and family engagement since October 1996, when the NPSF debuted at the first Annenberg Center patient safety conference in Rancho Mirage, California.

The foundation officially got underway shortly thereafter on January 1, 1997, began work on a research grant program and concluded the year by announcing a survey finding 100 million Americans had been touched by medical error as patient, family or friend.  Meanwhile, the Joint Commission implemented a new “accreditation watch” program for institutions experiencing a major error or near miss.

“The initiatives were good,” Linda Golodner told USA Today, but “doctors must start treating patients with respect for real change to take place.”  Then the president of the National Consumers League, Golodner added that patients would detect some problems on their own if they had more information.

Now, with more information, patients and families are doing more than detecting problems.  They are part of the solution.

Branded Narrow Networks: Gold Value at Bronze Prices

Branded Narrow NetworksSummary
  • Less satisfied consumers are adjusting to narrow networks.
  • Consumers are buying on price and need help finding providers.
  • Insurer, provider joint branding is opening consumer mental shortcuts to providers.
  • Healthcare transformation is driving insurer, provider collaboration to deliver gold value at bronze prices.
  • Insurers, providers are creating new joint branding collaborations for 2016.
  • Consumers ultimately will choose providers allied with insurers in consumer-friendly narrow networks.

On the way to consumer-driven health care, consumers have confounded the reformers, leaving an amazed Uwe Reinhardt in their wake.

Americans, he wrote last week, “seem so obsessed over their freedom to choose their own health insurance carrier and policy” that they will give up freely choosing their doctor or hospital. There is no accounting for taste, marveled Reinhardt as he quoted “Julius Caesar or Voltaire or Yogi Berra or whoever.”

Consumers Adjusting to Narrow Networks

To be sure, consumers are adjusting to the narrower provider networks of the bronze and silver exchange plans.  Even with subsidies, enrollment in these lower-cost plans on the public marketplace grew from 85% to 89% over the past year.  Among all enrollees, 87% qualified for a premium subsidy.

Although not as satisfied, only 17% of bronze and silver enrollees have switched to broad-network gold and platinum plans, according to McKinsey.  Meanwhile, 13% switched from broad to narrow plans.  This occurred in an active shopping environment; more than half of all re-enrollees who shopped for coverage changed plans.

Consumers Buying on Price, Need Help Finding Providers

For unsubsidized consumers, price has also been a significant driver.  In fact, bronze plans were more popular on the private eHealth insurance exchange, with 46% opting for the lowest-cost level, while only 22% did so on the public marketplace.   Most popular on the public marketplace was the silver level at 67%, while silver accounted for 23% of eHealth enrollees.

Consumers have not completely forsaken their providers; many simply gave up trying to find them, defaulting to price as the most easily accessible decision shortcut.  This year, 44% of bronze or silver public marketplace enrollees were unaware of their network choices, according to McKinsey.

When the National Health Council surveyed during open enrollment last fall, 36% said it was hard to find a list of providers and only 24% said such a list was easy to access.  Despite the barriers, nearly all (79%) tried to find their providers.  All but a handful asked for standardized provider lists and provider search tools.

More lists and tools can be useful, but they will not be enough.  Consumers still must navigate complex information…and lots of it.  More than detailed roadmaps, consumers need mental shortcuts to providers equal to the role price plays as a shortcut for plan selection.

Joint Branding Opening Consumer Mental Shortcuts to Providers

The most powerful consumer shortcut is a decision-enabling brand, and it is through joint branding that consumers will ultimately integrate price and provider choice in selecting a health plan.  Take the husband and wife owners of a small Chicago family business.  They signed up for a lower-cost plan from Land of Lincoln Health featuring one of its preferred-partners, Swedish Covenant Hospital, as reported by the New York Times’ Reed Abelson.

They are not alone:

  • Aspirus, a Wausau, Wisconsin, health system, and Arise Health Plan have launched a the Aspirus Arise plan called with Arise Health Plan targeted at individuals and businesses employing less than 50 people.
  • Aetna and Inova Health System Foundation have created Innovation Health to serve Virginia with a “collaborative model.”
  • DaVita Health Partners and Independence Blue Cross and Blue Shield have established Tandigm Health, a Philadelphia-based primary care offering.
  • Health First Health Plans and Florida Hospital Healthcare System have set up a commercial health plan in Central Florida called Florida Hospital Care Advantage.
  • Harvard Pilgrim Health Care and New Hampshire’s Dartmouth-Hitchcock and Elliott Health System formed ElevateHealth, a non-profit joint venture, which has lowered costs by 20%.
  • In upstate New York, Excellus BlueCross BlueShield and Bassett Healthcare Network teamed up to offer Bassett Select Silver and Bassett Select Gold health plans.

Variations include Vivity, an HMO-style joint venture formed by Anthem and seven Los Angeles hospitals, including the prestigious Cedars-Sinai Medical Center.   In Minnesota, Medica is offering a narrow network plan including the Mayo Clinic, Mayo’s affiliate hospitals, Northfield Hospital and Winona Health.  However, Medica is the sole owner of the plan.  Meanwhile, Mayo and UnitedHealth Group are pooling data in a joint venture called Optum Labs.  In Phoenix, Cigna has teamed with Banner Health and Scottsdale Lincoln Health Network to offer a narrow network plan exclusively in Maricopa County.

Accountable care organizations (ACO) have been an especially popular vehicle for early collaborative efforts between insurers and providers.  Beginning in 2008, Cigna has been a leader in this space.  It now has Cigna Collaborative Care arrangements with 122 physician groups, such as the Medical Clinic in North Texas, which serves the Dallas/Fort Worth region.  Meanwhile, the Memorial Herman Accountable Care Network in Houston has teamed up with Aetna’s ACO initiative, called Aetna Whole Health.

Will all this collaboration ultimately lead to consolidation of insurers and providers?  If Pittsburgh provides any lesson, I doubt it.  There, UPMC offers an insurance plan and the insurer Highmark has acquired Allegheny Health Network.   Battles between the two over reciprocal network access have been fierce.  Elsewhere, providers entering the insurance market have found themselves excluded from other insurers’ networks.  Others have found challenges with venturing outside their core competencies or have absorbed losses for years before turning a profit.

Healthcare Transformation Driving Collaboration to Deliver Gold Value at Bronze Prices

Still, short of consolidation, considerable incentives are driving greater collaboration between insurers and providers, particularly through co-developing and -branding narrow networks.  The incentives begin with the fundamental shift from fee-for-service to value- and outcomes-based reimbursement, the pace of which is accelerating.

Inevitably, providers will have to assume risk associated with achieving defined outcomes, leading to more sophisticated cost control, greater care coordination, management of health on a population level and the creation of integrated delivery networks.  To succeed, they need the access to insurers data,  risk management and loss control competencies; joint ventures or other collaborative vehicles provide that access.

Conversely, insurers need differentiation, given PPACA benefit design limitations that have made cost the primary differentiator.  Exclusive and/or creative relationships with respected provider brands can provide valuable differentiation, especially if delivered at a lower cost.

In fact, McKinsey found that the 63 co-branded plans offered on the public marketplace had lower prices than the 73 plans where providers served as insurer as well as provider.  Co-branded plans were also more likely to have lower prices than insurer-led plans.

Meanwhile, in the group market, insurers need to keep pace with their employer customers.  Big employers like General Electric are contracting directly with centers of excellence for joint replacements, some cancer care, organ transplants and bariatric surgery.  Only four institutions received GE joint replacement contracts for joint replacements.  Another four institutions, assembled by the Pacific Business Group on Health in the Employers Centers of Excellence Network, provide joint replacements for Walmart, Lowes and McKesson employees.

A recent Towers Watson survey found that employer use of centers of excellence (either within health plans or via a separate network) and narrow networks will triple over the next three years.  The survey also found that a quarter of employers have actively considered private exchanges and more than a third consider them a viable alternative by 2018.

Insurers, Providers Creating More, New Collaborations for 2016

Across the nation, insurers and providers are deep into creating new collaborations for the upcoming 2016 open enrollment season.  Last month, Tufts Health Plan and the Granite Healthcare Network encompassing five New Hampshire not for profit systems announced a new joint venture.   Cigna has told shareholders it is “now forming (delivery system) alliances with hospitals and hospital systems that will provide access to quality, value-based care in local communities.

Especially busy will be the teams at San Francisco’s UCSF Medical Center and John Muir Health, which just finalized their agreement to create the Bay Area Accountable Care Network.  They intend to offer insurance products through the new company, but with established health plans. UCSF Medical Center CEO Mark Laret explained to Modern Healthcare:

“We intend to partner with Anthem Blue Cross or other insurers. This isn’t just us putting together a narrow network and putting that on the list of narrow networks with the other products the health plans might offer. We want to come together as true partners where we are taking both upside and downside financial risk for the health of the population and the financial performance of the network.”

Other insurers had better be scrambling, if not in San Francisco, then throughout the nation, to line up collaboration partners among the nation’s leading provider systems.  Fast approaching are open enrollment periods when consumers will choose providers allied with insurers in consumer-friendly narrow networks.

Voting with your Tweet: The Brandification of Democracy

state and corporate logo brand mapThere was a time, a little over 50 years ago, when the original “open for business” state closed for the day.  Instead of a “Welcome to Delaware” sign, drivers found a barrier.   Try again later, advised a guard.  When one motorist — unable to enter Delaware — asked, “Is New Jersey open?” the officer replied, “Yes” and then “Smile, you’re on Candid Camera!”

Indiana Embroiled

Now, every state brands itself as “open for business.”  It was no joke when many felt a new law sanctioning LGBT discrimination had closed Indiana.  Twitter exploded, corporate sponsors withdrew from conferences, and dismayed businesses froze expansion plans.  The demand: Change or repeal the law.

Adding urgency was the impending arrival of college basketball’s Final Four.  Indianapolis has spent more than 35 years and millions of dollars building its brand as the amateur sports capital of the world. It landed the NCAA headquarters in 1999, but the law prompted the NCAA to think of leaving.

Within days, Indiana rapidly changed the law, removing the discriminatory provisions just in time for the Final Four.  “The message is clear today,” announced Indiana House speaker Brian Bosma. “It’s coming from Republicans, Democrats, corporate leaders, the community leaders of all stripes, that Indiana is open for business.”

Explanations Vary

Many explanations for the both the controversy and rapid reversal focus on the uniqueness of the situation.  They note changing public opinion on LGBT issues, the preponderance of LGBT support among younger Americans and the broad cross-section of families with members who are LGBT or LGBT supporters.

Others cite intense pressure coming from big brands like Apple, Emily’s List, Lilly and others.  Indiana and Indianapolis have brands to protect, too.  “We’ve worked decades to build a brand that is Hoosier hospitality and this bill has really questioned that,” said a spokesman for Visit Indy, the Indianapolis tourism bureau.

Brand Convergence

However, this is not the last time, nor the only issue, where brands will play a critical role in the making – and unmaking – of public policy.  In fact, what occurred in Indiana – and concurrently in Arkansas – reveals a convergence in corporate and state branding freighted with considerable implications for our democracy and those seeking results from it.

The new, common denominator for both corporate and state brands is people.   No longer do attractive logos and clever taglines define a successful corporate brand.  Now, the people who follow a brand define the brand, attracted by a point of view.  Meanwhile, states are fundamentally rethinking their brands as jobs increasingly follow people, instead of the other way around.

Traditional State Branding

In their branding, states have historically targeted CFOs or operations chiefs.  Take Delaware, where its business friendly brand originated with the 1792 establishment of its Court of Chancery, business lawyers’ venue of choice.   Home to more corporate incorporations than people, Delaware became especially popular with financial companies when it eliminated usury limits in 1978.

Now, states jockey for high positions on site selection surveys in a battle to attract jobs.  “The fight for the attention of site consultants and CFOs is more pitched than ever,” observed Area Development in a recent ranking based largely on costs, infrastructure and logistics.  Indiana appears to have shared that mindset.

“Our brand includes collective thoughts about the cost of doing business in Indiana, the pro-business tax structure and the track record of how the state and local groups help companies find a suitable location and put together a mutually beneficial winning deal for relocation, wrote the economic development director of Shelby County just outside of Indianapolis in 2010.

Business is Changing

Business priorities are changing, though.   People concerns and companies’ employment brands count for as much, if not more.  The Indiana-based Salesforce Marketing Cloud division threatened to halt investment plans because of the law.  CEO Scott McCorkle warned Gov. Mike Pence:  “Our success is fundamentally based on our ability to attract and retain the best and most diverse pool of highly skilled employees, regardless of gender, religious affiliation, ethnicity or sexual orientation.”

For talent-dependent companies, “attract and retain” quickly becomes “attracted by” highly skilled people.  In fact, companies are increasingly locating where large numbers of young, college-educated people live, according Joe Cortright of the urban think tank, CityObservatory.   Pittsburgh’s Carnegie Mellon has a highly rated computer-engineering program, and the city is more affordable for recent graduates than Silicon Valley.  So, what does Google do?  It located in Pittsburgh.

Jobs Follow People

Turned upside down is the traditional paradigm of dishing out tax credits and other financial incentives to attract jobs.  In addition to and increasingly before the CFO, a company’s human resources chief needs to be satisfied the talent pool is ample and sustainable.  Indiana’s legislators got the message the hard way:  Jobs follow people, especially young, talented college graduates, and legislating with them in mind makes more sense for a state’s brand.   They might have noticed that the percentage of workers with advanced degrees in Indianapolis had increased from 11.6% to 17.1% between 2005 and 2013.

Evolving Corporate Brands

Meanwhile, corporate brands have also evolved.  Historically encompassing products, corporate brands now engage people through the brand’s role in their lives.  For example, 50 years ago, DuPont’s tagline was “Better things for better living, through chemistry.”  Now, DuPont says “We drive progress,” explaining that, “at DuPont, progress means creating a better, safer, and healthier life for people everywhere.”

Note the contrast between things, i.e. products, and a clear point of view – in effect a policy statement – about what it accomplishes for society.  Indiana’s Eli Lilly says it “unites caring with discovery to make life better for people around the world.”  “Join Apple,” the iconic tech company encourages prospective employees, “and help us leave the world better than we found it.”  Even Wal-Mart’s brand has evolved from “Everyday Low Prices” to “Walmart helps people around the world save money and live better.”

The promise of better lives.  Global corporations now make it, just as elected officials and those seeking election have done so for more than two centuries in our democracy.    For corporations, the power to deliver on such promises traditionally has come from commercial and financial success.  Increasingly, that power now comes from people as employees and brand evangelists, representing yet another convergence with government.  Both have constituencies.

Brands are Us

We are beginning to see the realization of a prediction made several years ago by Toronto social media observer, Josip Petrusa, who was among the earliest to coin the term brandification.  “Brands, he said, “will no longer come to represent the products that encompass them but the user who empowers them.”   This is particularly true when the preponderance of users are millennials, the same millennials companies seek as employees.  Petrusa explained:

“Millennials are considerably brand-centric. They love the brand. They love brands. They share brands. They talk brands. They live brands. They speak brands. And they have invested considerable ideological value into them. They have come to represent who they are.”  He called this the brandification of social presence.

Still, brand love can be fickle and swiftly withdrawn in the daily brand referendum relentlessly conducted on social media.  Having won followers with a point of view, a brand must stay true to that point of view or risk abandonment by followers voting with their tweets.

One of the biggest risks to a carefully curated brand is association with another brand featuring an inconsistent or, even worse, contradictory ideology or point of view.  When this other brand is a state, and the contradiction comes via legislation, spotlighted by social media, the collision can be quite combustible as we saw in Indiana.

Brand Alignment

However, the more significant outcome of Indiana’s brand collision was the quick, legislative reversal, ensuring alignment between corporate and state brands.  Going forward, with Indiana’s experience a compelling lesson, a state will be more careful to align with the corporate brands powerful enough to affect the state’s economy or its own brand.

The more such alignment between corporate and state brands occurs, the closer we will be to the brandification of American democracy.   It could be a good thing for those seeking greater tolerance and less discrimination in our laws, especially in the face voter suppression, gerrymandered districts, low voter turnout and the dark side of corporate political involvement – vast amounts of unreported spending.

More Corporate Activism

The question is whether brand evangelists will demand more social activism from corporations, especially those promising better lives.  Will North Dakota then have a better chance of filling 23,000 job openings by ultimately passing LGBT anti-discrimination legislation?  Will Arizona then see the lifting of a business boycott by rolling back a discriminatory immigration law? Will the 17% of Greater Cleveland’s college educated workforce – up from 11.7% in 2005 – engage corporations in reforming the city’s deficient police department?  Will St. Louis then recover from Ferguson with help from Millennial Activists United and others?

Perhaps American’s corporate brands will need no further prodding.  Maybe the like-minded among them will come together in common cause with states and cities to make lives better.

Candidly, I hope so.