Reducing Health Care Costs While Improving Employee Well Being | Health Care Solutions and Benefits Management

With health care reform in a constant state of flux, employers continue to look for ways to save on health care costs while providing employees with adequate care and improved well-being.

Unfortunately, the majority of health benefit plans only focus on cost, not outcome—presenting organizations with a difficult challenge.

First Service Administrators, Inc. (FSAI), of Lakeland, Fla., is a third-party health care benefits administrator for hospitals, health care systems, and public entities.

FSAI’s typical clients are hospitals and educational institutions, often referred to as “cradle to grave” employers.

Because these employers experience low employee turnover, FSAI was strongly motivated to adopt a long-term medical risk management strategy aimed at improving health status in the chronic population and providing acute illness management and prevention.

Through partnering with Verisk Health, a company that leverages health care data to identify, manage and minimize medical and financial risk, FSAI uncovered ways to improve the overall health status of its clients’ employees while also controlling costs.

COST SAVINGS AND BETTER HEALTH.
According to the 2008 Almanac of Chronic Disease, 95 percent of the $2 trillion health care industry in America is spent on acute care compared to the 5 percent spent on preventive care.

This alarming statistic reflects a flawed approach in health care management that leads to high costs and poor health outcomes.

In 2008, FSAI and Verisk Health joined forces to help FSAI address for its employer groups, the age-old adage “an ounce of prevention is worth a pound of cure.”

Through the implementation of Verisk Health’s Explorer solution and analysis of the resulting data, FSAI was able to identify situations where pro-active interventions could help prevent disease and/or keep existing diseases from worsening.

The solution allowed FSAI to examine every level of an employer’s health care plan and identify areas where a small investment now would lead to incredible savings later.

As a result, FSAI has eliminated spending on inefficient or ineffective programs and has been able to reinvest the funds saved to maximize access to quality care.

For FSAI, the outcome of using Verisk Health’s Explorer solution has been monumental.

In the course of one year, its clients’ per-member, per-month costs have dropped from an average of $383 to an average of $367.

Additionally, FSAI successfully lowered costs across its book of business by 5 percent and reduced emergency room use by 10 percent.

FSAI customers have also begun to see long-term effects of their strategic program. Explorer’s analyses helped FSAI institute changes in drug selection, treatment costs, facility management and compliance education - all of which led to greater client satisfaction.

FSAI’s new initiatives have achieved the ultimate result in health care – costs savings AND better health.

Examples of this include:

Drug Cost Savings
FSAI piloted a program to save money on cardiovascular drugs. With the help of its clinical team and data from the Explorer solution, FSAI identified drugs that were most effective in both performance and cost. Based on the results, the clinical team tested switching from a combination of Crestor, Lipitor and Vytorin to a combination of Simvastatin and Vytorin. The result was a $150,000 savings for the test group. This prompted FSAI to institute this change in other employer groups and test the viability of the same approach with other drugs in all sectors.

Lower Treatment Costs
In an effort to increase recommended follow-up appointments and clinical test compliance for all members, FSAI recommended reducing co-payments for members with chronic illnesses. This led to improved health quality and a reduction in chronic illness treatment costs. Additionally, inpatient admissions dropped 10 percent.

Facility Management Savings
Using Explorer’s normative benchmarking capabilities, FSAI compared unit costs of services per facility. FSAI identified high-cost facilities for contract renegotiations with an initial success of $100,000 in savings in one instance. With these incredible savings at the outset, FSAI applied the same concept at other facilities, leading to a savings of $1.95 million annually. FSAI also saved an additional $750,000 in the renegotiation of other contracts.

Compliance Education and Incentives
In an effort to initiate an employee education campaign, FSAI used the data from Verisk Health’s Explorer solution to pilot a preventive screening program. Results of its initial awareness campaign increased mammogram compliance from 46 to 72 percent. The number of at-risk employees who had preventive screening increased by 26 percent and, in one case, an employee was diagnosed in the earliest stages of breast cancer. A successful lumpectomy and subsequent therapy cost $15,000. When compared with the potential loss of the employee’s life or the $250,000 it would have cost for treatment if the cancer went undiagnosed. This case emphasized how important -- and cost effective -- preventive care is in the health care industry.

What’s Next
Together, FSAI and Verisk Health have taken service excellence to a new level. Employers can now focus their efforts on improving employees’ overall wellness with the added benefit of realizing significant cost savings.

FSAI is currently looking to expand employee identification and stratification analysis for care management. The company has piloted new applications that have led to the implementation of additional wellness and chronic condition management initiatives.

FSAI also plans to integrate Verisk Health’s Explorer with the company’s call center in order to better engage employees and encourage behavior changes that will lead to improved health outcomes.
Finally, the company is looking to make Explorer available to doctors so financial incentives can be implemented based on health treatment outcomes.

While the future of healthcare is unclear, one thing is certain. FSAI and Verisk Health will be at the forefront of bringing the latest strategies for improving employee health and reducing costs to the organizations they serve.

N. Stephen Ober, MD, MBA
Dr. Ober is an executive vice president at Verisk Health, a global leader in identifying, analyzing, and predicting health care risk. Prior to joining Verisk Health, Dr. Ober served as executive director of new ventures at Boston University (BU) and co-founded BG-Medicine, Inc., a biotechnology company that developed and applied a unique “systems biology” approach to drug discovery and development.

Dr. Ober received his BA and MD degrees from Boston University, his clinical training in surgery and orthopedic surgery from University of California San Diego, and his MBA from the Harvard Graduate School of Business.