So allow me to elaborate a bit on this thing about impotence, which really is about control, or lack thereof.  Employers want to reduce costs and improve benefits, but they feel they have no control..in other words, they are…impotent…

It’s ok..it’s not you–it’s me.  Really.

We-me–us–your insurance broker–have promoted the idea that we can add value to you by aggressively shopping the market to reduce your cost of health insurance.  And we’ve been successful!  Almost every time we take a customers plan out to bid, we save money–5% here, 8% there, 11% here…real money, real results.  We feel great because we have helped you balance your budget..you’ve lived to fight another day!!!

But in the process, employers have unintentionally and unknowingly ceded responsibility for controlling over healthcare cost to health insurers by actively (over) using the competitive market to reduce year over year increases.  It produces short term savings, but long term problems….like a 131% increase in costs and a 20%+ redution in avereage benefit levels over the past decade, according to the Kaiser Family Foundation.  So yea, the process works…sort of…and then again… it really doesn’t work, does it?

Before I start to prescribe the remedy for your problem,  let me provide a couple of clarifications:

• I am by no means against free market solutions–in fact, I think more reliance on market based competition is what is needed, not less;
• Going out to bid for health insurance every year can be an important tool in managing year over year costs–in many cases, over the past couple of years the savings produced in the aggressive RFP process has allowed many companies to survive and remain in businesss;
• I believe companies that provide health insurance and related risk management solutions need to be a critical partner in any long term solution; and
• I see no conflict with capitalist for-profit health insurance–competition breeds innovation, and I don’t really care how high profit margins are in health insurance as long as the value derived by customers–employers and employees– is sufficient, which ultimately means that prices are market competitive.

Ok, so on to the remedy, or at least the framework we need to establish to implement sustainable results.

1.  Re-define “The Market”: Customer frustration stems from the fact that insurers have all the power right now, so employers need to get out of the market for “health insurance”, which is a heavily regulated state by state oligopoly where you are a price taker, and get into the market for “long term health care cost management services”, which is ripe with customer-driven innovation, customer service and free-market competition.  Think about it: Why are your costs going up? Ask your insurance carrier this question and they will tell you that they are just passing along the increases in unit cost demanded by hospitals as well as higher demand for services from the obese and chronically ill.  It may be true, but this passive cost pass through approach reminds me of a defense contractor or a municipality justifying their property taxes.  There is no way the consumer wins in this kind of market.  It’s time to get out while you can.

2.  Forget about Price: That’s right–forget about the cost of coverage for a second and focus instead on the things you need to compete as a buyer in the market for long term healthcare cost control services, namely:

• More information
• More creativity
• More innovation

If you focus primarily on price, all you will get isrelatively lower prices, which are still way to high.  Instead, demand the things you need to be a smart, well prepared buyer.

3.  Own the Problem Financially-You only want to be in the market for long term health care costs control solutions if you have a problem with cost control that you are trying to manage, and that means you need to own the problem outright.   Over time, this will mean moving from a fully-insured to a self-insured or partially self-insured arrangement.  The first step is to demand options from your broker or carrier that include alternative funding arrangements–self-insurance, minimum premium, “participating contracts”, etc.  They’re out there, and we can use the RFP process to make sure we get the best the market has to offer.

This framework will sound very familiar if you have a self-insured plan.  And even if you do, this shift in attitude and approach to the market will increase your sense control and begin to eliminate the frustration that comes from market-induced impotence.

But not the kind you’re probably thinking about or maybe most worried about.  Experts across the country are puzzled by a particularly stubborn form of impotence that has emerged in markets across the country.  By all accounts,this appears to be an especially difficult strain that is presenting itself in, of all places, the work place. 

The condition appears to affect all but the most virile and progressive organizations and is reported to be 100% resistant to the popular prescriptions available in the market.

I am referring of course to health insurance, and the inability of employers to control costs.

The onset of the condition is gradual and appears benign at first. In fact, early symptoms are generally viewed quite favorable by most of the affected:

1. A choice of multiple high quality and cost competitive health plans;

2. New and improved benefits for members that includes lower copays, gym memberships, coverage for alternative medicine, etc.

3. Virtually unlimited choice of providers-every hospital, every doctor, every lab, and every pharmacy.
 

 4. The removal of most restrictions and impediments for members to access care.

 

At the beginning of the cycle, in fact, circa 1995,employers often looked forward to the annual renewal process because of the opportunities they presented-lower costs, better benefits, happy people.

As the market presents more and better options, employers become comfortable with these offerings and the solutions they represent.  But times change, of course, and as market conditions over the past decade have eroded to the point that employers universally abhor the insurance renewal process and the relative opportunities available in the market are dismal.

Essentially, what is happening is that decision-makers have become conditioned to looking to the market for answers to their problems with health insurance–rising costs and plumetting employee satisfaction. 

As a result, they feel powerless themselves to solve the problem-they are at the mercy of the market.  It’s what I call ”maket induced impotence”.    In other words, there is no easy cure for the conditions, so we’re forced to try to minimize the symptoms.

Ah, but innovation is alive in the market.  In our next session we’ll start to address the root causes and what we can do about it.  But for now, just be on the look-out for the tell-tale symptoms:

• Frustration
• High blood pressure
• Aggressive beghavior toward health insurance brokers or representatives

If you are exhibiting any of these symptoms, rest easy.  You are not alone…help is on the way!

Teenagers aside, this is also an incredibly insightful question for us as we develop the most appropriate solution for employers dealing with healthcare problems.  What we are looking for in the answer to this question is perspective, ownership and motivation.  Some examples:

1.  HELPLESSNESS:  My problem is my claims–we have a lot of unhealthy people and they are driving our costs through the roof.  But the claims are the claims, and there is nothing we can do…This suggests a problem exists within the four walls of the organization–which is good–but through attitude or experience or both the employer feels they are powerless to impact the problem…which is bad.

2.  VICTIMHOOD:  My problem is my insurance carrier…they’re screwin’ me again…This suggests delegation and abdication-I have hired my insurance carrier to manage the problem and they are the problem. Not only are they not performing but they are giving my employees high blood pressure and driving me to the brink of cardiac arrest!

3.  MISSION CRITICAL:  My problem is my ability to compete in the market and to survive-my health care costs are through the roof and my employees are totally pissed off…there has to be a better way…Suggests a sense of magnitude, urgency, motivation and a willingness to roll up their sleeves. ” What we’ve done in the past hasn’t worked, there must be a better way, and we need to find it now…”

Can you see how the answer to the question is so crucial?

Our job is to help organizations improve their business performance by controlling costs and driving high employee engagement.  But we have to be realistic, and we have to match expectations with capacity.  We cannot implement a progressive health improvement strategy in an organization that feels helpless or like a victim of the health insurance carrier–it won’t work!

Success is relative, and the plan must match expectations with reality.  We do a huge disservice if we fail to understand the organizations relative sense of ownership, urgency and motivation.

Try it for yourself.

What is your problem???

• Costs that are 20% or more lower than they are today;
• Annual increases that are less than 5% and more like CPI; and
• Employee satisfaction rates that are 90% or better…

We have a lot of really smart, creative and dedicated folks in our operation trying to uncover a sustainable solution that delivers these results consistently and systemically for our customers.  But while we poke and prod and look for the optimal recipe, we can look to some unlikely sources for inspitration and creativity.

In the most recent edition of Fast Company magazine, there is  fascinating excerpt with some inspiring lessons for all of us searching to solve the unsolvable healthcare cost problem.  In Switch: How to Change Things When Change Is Hard, authors Dan and Chip Heath tell the story of Jerry Sternin and his trip to Vietnam for his employer, Save the Children.  Sternim’s job was pretty straightforward; to find a cure for the malnutrition facing kids in rural Vietnam.

The conventional wisdom was that malnutrition was the result of an intertwined set of problems: Sanitation was poor. Poverty was nearly universal. Clean water was not readily available. The rural people tended to be ignorant about nutrition.

That analysis was, in Sternin’s judgment, TBU — true but useless. “Millions of kids can’t wait for those issues to be addressed,” he said. If addressing malnutrition required ending poverty and purifying water and building sanitation systems, then it would never happen. Especially in six months, with virtually no money to spend.

When we analyze a big, complicated problem — like malnutrition in Vietnam, or a married couple nearing divorce, or a business on the verge of bankruptcy — we seek a solution that befits the scale of the problem. If the problem is a round hole with a 24-inch diameter, our brains will go looking for a 24-inch peg to fill it. So, naturally, the experts on malnutrition in Vietnam wanted to talk about poverty and education and sanitation systems…

But in times of change, this mind-set will backfire….

When it’s time to change, we must look for bright spots — the first signs that things are working, the first precious As and Bs on our report card. We need to ask ourselves a question that sounds simple but is, in fact, deeply unnatural: What’s working and how can we do more of it?

…Sternin’s strategy was to search the community for bright spots. If some kids were healthy despite their disadvantages, then that meant something important: Malnourishment was not inevitable. The mere existence of healthy kids provided hope for a practical, short-term solution. Sternin knew he couldn’t fix the thorny root causes. But if a handful of kids were staying healthy against the odds, why couldn’t every kid be healthy?

To understand what the bright spots were doing differently, the mothers first had to understand the typical eating behaviors in the community. So they talked to dozens of people — other mothers, fathers, older brothers and sisters, grandparents — and discovered that the norms were pretty clear: Kids ate twice a day along with the rest of their families, and they ate food that was deemed appropriate for children — soft, pure foods like the highest-quality rice.

Armed with that understanding, the mothers then observed the homes of the bright-spot kids, and, alert for any deviations, they noticed some unexpected habits. For one thing, bright-spot moms were feeding their kids four meals a day (using the same amount of food as other moms but spreading it across four servings rather than two). The larger twice-a-day meals eaten by most families turned out to be a mistake for children, because their malnourished stomachs couldn’t process that much food at one time.

It’s an absolutely fascinating article, and I can’t wait to read the rest of the book-I just downloaded it to my brand spanking new Kindle to read on my vacation!!!

But as the President and Congress has shown over the last year, it is nearly impossible to solve the healthcare cost problem with a single, comprehensive solution…But we must tackle the problem nonetheless, and I for one am anxious to apply the lessons of Jerry Sternim ASAP!

And make no mistake: this is about our PRIVATE healthcare system, and how private citizens are helping to make it work better.

Today I’ll be riding in the 30th Pan Mass Challenge, a 2 day bike ride across Massachusetts that will raise more than $30 million this weekend for the Jimmy Fund and the Dana Farber Cancer Institute. Read more about the PMC here.

In New England, if you think about the best cancer care you generally think Dana Farber.  Maybe it’s because those of us who are Red Sox fans hear about it through the Jimmy Fund, the Red Sox charity that supports Dana Farber.  Or maybe it’s because they do some of the best research on cancer in the world.  But for whatever reason, Dana Farber is at the top of the list.

It’s great to have the choice to go there if I or someone in my family needs to.  Maintaining that choice, and not having to wait long periods of time to see the specialists we need to, has to be part of whetever health reform that emerges.  Build around what is working, fix what is not.  Freedom of choice and access to the best in the world, like Dana Farber, for those of us with private insurance living in New England, is part of what is working.

For those without private insurance, this is what you are missing and what needs to be fixed.  But very carefully.  For those of you not living in New England, well, I don’t know what to tell you…

Cancer research, of course, and Dana Farber for sure, are huge beneficiaries of PUBLIC tax dollars in the fight to cure cancer. And we need to continually invest tax dollars in medical research for the greater good.  But this event is about how private citizens are enjoined in the fight by riding, volunteering, cheering and contributing to help fight this terrible disease.

I have a 46 year old co-worker who is in late stage breast cancer and nearing the end. I am riding fior her this year, and I am sure I will bawl like a baby 10 times these next 2 days when I think of her and when I see the hundreds of other survivors out there riding and volunteering and cheering everyone on. It is incredibly moving, and incredibly inspirational. It’s about people who care getting off the couch to help others and to support the tremendously talented physicians, nurses and researchers who are trying every day to help find a cure. I am proud to be part of it, and proud be doing a little something to help out.

You can follow me today on twitter here: http://twitter.com/billcarew or donate to my effort here, if you are so inclined.

It’s part of what is working…