Purchaser Pressure: The Emerging Role of Employers in Driving Value in Healthcare

By David Lansky, Ph.D.

Reprinted with the permission of the Society for Healthcare Strategy & Market Development of the American Hospital Association from Futurescan 2018-2023: Healthcare Trends and Implications. For more information on the publication visit,shsmd.org/futurescan.

As medical costs consume an ever increasing share of businesses’ profits, self-funded employers and public purchasers of health insurance are becoming more aggressive than ever before in direct contracting with providers.

Their heightened interest in this strategy is the result of growing dissatisfaction with insurers’ lack of progress in improving the value of health care. Employers have found that working directly with physicians and hospitals creates opportunities to:

• improve the quality of patient care and outcomes;

• enhance the patient experience;

• increase price transparency;

• steer employees to narrow provider networks; and

• manage costs more predictably.

For example, the Cleveland Clinic, Johns Hopkins Medicine, and the Employers Centers of Excellence Network offer travel surgery programs that allow employees from large companies such as Walmart to receive high-quality, appropriate care with no out-of-pocket costs (Johns Hopkins Medicine 2015; Slotkin et al. 2017; Zeltner 2012). And a number of large employers, including Boeing and Intel, have had success in contracting directly with provider organizations to manage the health of an enrolled population, leading to rapid improvements in the providers’ quality performance and predictable multi year costs (DeVore and Cates 2015; Evans 2015; Mecklenburg 2016).

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