By Clayton Christensen and Jason Hwang
It's time for American companies to turn health care costs from a weakness into a strength.
High health care costs are one reason many of America's once-venerable corporations -- like General Motors and Chrysler -- are struggling to compete globally.
Foreign firms rely on their governments to shoulder the burden of providing health care to employees; in the U.S., tough decisions about funding and managing healthcare has always fallen upon business leaders. However, rather than simply being a historical and cultural burden, this responsibility also creates the opportunity for remarkable innovation.
We recommend executives make one or more of three innovative changes:
- encourage employees to use nurse-staffed in-store health clinics for common ailments
- partner with integrated health systems like Kaiser Permanente, and
- set up company-run clinics at corporate offices and plants.
Retail clinics are basic health clinics staffed by nurses and located inside pharmacies and stores such as Wal-Mart, CVS and Walgreens. There are about 1,000 such sites in 37 states, according to a September 2008 article in the journal Health Affairs. Nurses deliver routine medical care for common ailments like a sore throat or ear infection. A typical visit costs one-third less than an urgent care clinic visit and three-quarters less than a visit to an emergency department, according to another article in Health Affairs that analyzed the costs to the insurance carrier.
Ninety percent of retail clinic visits are for 10 common complaints that constitute 18% of all visits to primary care doctors and 12% of visits to emergency rooms. So, the more employees visit retail clinics for these common problems, the more money companies will save.
Plus, retail clinics would help reduce the absenteeism related to the time it normally takes to schedule an appointment, see a doctor and fill a prescription. Retail clinics have made convenience a key part of their sales pitch by offering walk-in, no-wait visits in places where people already shop.
How to encourage employees to visit these clinics? Companies should demand coverage of retail clinic visits from their health plans and offer discounts to employees. In states where regulations bar nurses from operating health clinics without doctors, companies should lobby to reverse these restrictions.
Next, employers must take aim at the fee-for-service reimbursement system, which is the most common method by which health insurance companies pay for medical services and which has fueled much of our skyrocketing healthcare costs. Fee-for-service rewards providers who are able to squeeze in more patient visits and perform more procedures. It encourages providers to profit from treating sickness, but not from maintaining the wellness of their patients.
Employers can help fix this flawed incentive structure by moving their employees away from health plans that offer little more than a telephone directory of independent contractors. The alternative is to partner with prepaid, integrated health systems like Kaiser Permanente, which serve as both insurer and care provider. These organizations are much more likely to deliver cost-effective care that keeps their members well because these organizations are involved in both delivery and financing of care.
Finally, there is a vanguard of employers who have taken dramatic steps to involve themselves much more deeply in their employees' health. Moving far beyond reimbursement for gym memberships and implementation of disease management programs, companies like Perdue Farms have set up their own clinics and contract directly with healthcare providers instead of negotiating through insurers. Perdue's on-site wellness centers offer services similar to a typical family practice clinic, and patients can make appointments during company time. The company's goal is to return employees to normal health as quickly as possible and to keep them healthy year-round.
Quad/Graphics, a printing company based in Wisconsin, is another firm that operates its own on-site clinics. It was so successful that its subsidiary QuadMed now operates clinics for Briggs & Stratton and Miller Brewing. If employer-managed clinics prove to be a superior business model, similar spin-offs may eventually open their doors to the public.
Instead of continuing to outsource employee health to an utterly dysfunctional supplier, the best hope for rebuilding this nation's healthcare system is for our companies and business leaders to take a more proactive role.
Clayton Christensen and Jason Hwang are co-authors of "The Innovator's Prescription: A Disruptive Solution for Health Care." Mr. Christensen is co-founder of Innosight Institute, a not-for-profit think tank for which Mr. Hwang is Executive Director of Healthcare. A former CEO of MinuteClinic, a retail health clinic, is a distinguished fellow there. Mr. Hwang is also a former physician at Kaiser Permanente.
Source: Wall Street Journal