“[Data analytics company Embold Health chief executive officer Daniel Stein:] In the larger health care policy discussions, Medicare and Medicaid and other government programs get a lot of attention. But as you noted, most working Americans get their coverage through their employer. All in, about 165 million Americans are getting coverage through their employer. It’s a tough job to provide health coverage for your employees. Not only do you have to worry about things like cost and quality, the usual types of pressures that a purchaser has, but coming through this global [Covid-19] pandemic, employers were focused for a long time on, “How do you make sure that we’re caring for our workforce?” and making sure they’ve got access to care during that time when they, and so many of us, were under pressure.
[..] The main thing that employers coming out of Covid-19 are now grappling with is the challenge of rising medical costs. While the public sector programs have been [flatter] over the last 10 years, employer-sponsored costs have been up about 40%. Coming out of Covid-19, we’re seeing an acceleration in trend projections. Many of the employer consultancies that advise employers on their benefit programs are predicting high single digits, maybe even double-digit trend increases as we see the price increases and some of the utilization returns coming out of Covid-19. For employers, they still have the important mandate of, “How do we provide coverage for our people? How do we make sure it’s high quality?” But now they’re also under a lot of pressure: “How do we do this in a way that’s affordable?” [..]
[NEJM Catalyst’s Editor-in-Chief Tom Lee:] Given these pressures, where the people providing care feel like their expenses are going up and employees can’t bear more expense, what are the major options available to the employers?
[Stein:] Historically, employers have purchased plans from their carriers, from their health plans that tend to be big, broad PPO [preferred provider organization] networks. You can think of these as networks that have virtually all the providers, a high 90% of providers, in the network. The way that the carriers have competed with each other typically has been who can extract the biggest discount out of the providers in terms of their network rates. But what we’re seeing is there’s not that much additional savings to be had with that traditional dynamic. Instead, what employers are increasingly focused on is, “What can we do differently within the networks that we already have?” That’s where the type of solutions that we do around digital [network] steerage and network optimization come to bear. Because as you know, as a doctor, and as I know from my own clinical experience, there’s a huge amount of variation in how different doctors care for similar patients, and we see that variation in the context of a lot of unnecessary and inappropriate care. To give you a couple of examples, if you look at a woman who is having a healthy pregnancy, under 35, no comorbidities, [no] preeclampsia or gestational diabetes, their likelihood of having a C-section varies almost fourfold, depending on which obstetrician delivers that baby. Or [with] another big cost-driver in the employer world, musculoskeletal, if you take a member who has new degenerative joint disease, new onset osteoarthritis — a population where we know knee scopes, arthroscopies, don’t benefit — if you look in the commercial claims data, that member’s likelihood of having that unnecessary knee surgery varies 10 [times], depending on what orthopedic surgeon they’re seeing in the network. One of the big opportunities that employers are finding is, “How can we optimize the decisions that our members are making regarding what providers to see for their specific care needs within the networks that we have?”
[Lee:] Can employers steer volume successfully to the physicians you identify as both high quality and efficient? Or do narrow networks make their employees too upset?
[Stein:] You can think about this as two separate questions. The first is, can you provide guidance to your members to help get your members to those highest-performing providers? The second is, how do you do that, and does that “how” include some type of network components?
Let me separate them. The first thing is to be able to do this, you need to first understand how the providers in the network are performing. [..] The second part of this, which gets to your question, is, “We have this information, but if we make it available to our members, can we influence their decisions?” What we’ve found, probably not at all surprising to you, is the average person doesn’t know what to do with a risk-adjusted, propensity-adjusted complication rate after a spine surgery. [..] But if you take that information and make it actionable through a recommendation engine that says, “I need to go see a back doctor who’s high quality, who’s high quality in my network, who’s high quality in the local market where I’m living or working, [and] who matches my preferences around gender, languages spoken,” and factors like that, what we’ve found is members absolutely will use that information, they want that information, and they make different decisions in terms of which providers they pick. On that first part, the evidence that our employers and our employer clients have seen is an unequivocal yes. If you make that information actionable and you make it available to the member when they have a care need, they’ll pick higher-performing providers. The network part of it, the other half of this equation, is an interesting question. What we find is some employers want to layer on financial incentives, which you can think of as an optimized network solution, and some employers don’t. A lot of that is cultural: How do they think about their employees, [and] how do they think about their benefits program? But for the employees who have gone down that route to include financial incentives, usually they’re doing this through lower co-pays and lower deductibles for the higher-performing providers. It’s not something that the members get upset about. In fact, in many ways it’s perceived as an extra benefit: “If I go use these higher-performing providers, I have a more generous benefit offering associated with it.”
[Lee:] The world is changing, and I’m sure what’s true today in terms of receptiveness is going to be history in a few years. I’ve seen data showing that patients increasingly are not relying upon doctors to tell them who they should go see next, and they’re looking at other information. My guess is that some of the information that you’re providing will be received more and more eagerly as time goes forward. If we were to pretend that you’re back in business school and this was a class, and the professor asked, “How does Embold create value?” what would be your answer today?
[Stein:] [..] consumers want this information. They want to be able to have objective insights into how the providers are performing when they have this care decision. They don’t want to just rely on their doctor’s recommendation. But the information that they have at their fingertips traditionally has been stuff like online reviews and word of mouth and much more subjective insights. There’s definitely a growing appetite in the market for this objective information. That’s how we produce value. We know that higher-performing providers on average cost around $2,500 less per year. Every other industry, we’ve seen this to be true: higher quality on average leads to lower total costs of care. Health care is no exception there. The way that we create value is by understanding how the providers perform and then making that information available to people when they have a care decision so that they can make a better decision. We’re able to measure both the direct clinical impact of those decisions — how much better care they’re getting in terms of the quality and the quality outcomes — as well as the financial impact, the savings that they and their employer are able to realize from it. It is one of those win-wins, where people getting better care are also driving a lower total cost of care as well.”
Full interview, D Stein and TH Lee. NEJM Catalyst, 2024.8.2.