Have Health Plans Co-Opted the Role of Superhero from Providers?
We’d all be millionaires if we earned a nickel every time we heard the phrase, “The American healthcare system is broken.” Of course, it’s much more complex than that. Yet this simple, damning statement has served as a consistent analysis of the state of healthcare for years. It was one of the principal drivers of reform during the Obama administration, and now, it’s the fuel that runs “repeal & replace.”
This simple statement begs an important question: if healthcare is broken, then who is at fault for breaking it?
It’s a question that providers, pharma and other major healthcare players haven’t taken the time to answer effectively.
So, who has?
Health insurance companies – particularly the national for-profits and increasingly specific Blue Cross plans – have recognized this question as a unique positioning opportunity for their brands. Health plans have pointed to others as the culprits.
Providers, constantly pushing back against rates and trying to negotiate higher payments.
Drug and device manufacturers, relentlessly raising prices.
Sometimes these claims are true, to be sure. And shifting focus onto others as the cause of the unreasonably high cost of care may seem unimaginative. Yet it serves a vital strategic purpose. By pinning the blame elsewhere, health plans have positioned their industry (and their brands, specifically) as the superheroes of healthcare. The sheriffs that are bringing order to a lawless western town. And they are wearing the badge convincingly:
United, in a statement to the press, shaming a major Georgia health system for its rate increase request: “[The provider] wants to raise costs by nearly 30 percent at its hospitals over the next three years without committing to performance measures that emphasize quality care, paying for improved outcomes, and lower costs. That kind of increase is unfair to Georgia customers and has made it difficult to reach a compromise on a new agreement.”
Independence Blue Cross (of Pennsylvania), on its recent announcement that it will cut payments to physicians by as much as 50 percent: “We’re in a changing environment. We’re looking to be good stewards of our customers’ and our members’ health-care dollars, and we’re benchmarking ourselves with other payers, regulators for national trends.”
Blue Cross Blue Shield of Texas, in a letter to employers, on why it refused to negotiate with a newly formed clinically integrated network that combined two large health systems in Texas: “As we’ve seen time and again, these sorts of business relationships are often created to provide the leverage necessary to command higher reimbursement rates from insurers. Higher reimbursement rates result in higher costs for members. As a customer-owned industry leader in Texas, we are committed to advocating on behalf of our members for high-quality, cost-effective health care. It is an obligation we take very seriously.”
Blue Cross of Minnesota, in a blog post, blaming the high cost of care squarely on healthcare providers: What Minnesotans should also know – and now do know – is why health care costs continue to rise. It’s because some providers take the approach of passing costs on to people who pay the premiums rather than focusing their energy on reducing the underlying costs of care.
By relentlessly focusing on a simple message – that the rising cost of healthcare is someone else’s fault – health plans have shifted focus away from their own price hikes, and have set themselves up as the antidote. With the momentum they have generated, they are using this public message to attack healthcare providers during contract negotiations, demanding rate cuts. In reality, health plans aren’t exactly Wyatt Earp. Health plans have been raising premiums steadily over the years, and in some cases, by a lot.
Health plans are expected to increase insurance premiums for exchange plans faster in 2017 than in any previous year. And employer-sponsored plans haven’t fared much better. According to a study of 425 large employers by the National Business Group on Health, overall health care benefit costs are anticipated to increase by 6% between 2016 and 2017. No matter the statistics, words have impact, and health plans’ words have created a big one. Health plans are finding success carrying their “advocate” message to consumers, then using it as a big stick to beat healthcare providers into rate concessions. That means we can expect them to keep doing it.
For healthcare providers, this means even tougher contract negotiations ahead. It also means they cannot assume patients will be on their side in disputes against health plans. They must earn patient allegiance by engaging them, communicating their value, and reclaiming the “advocate” ground that they have conceded to health plans.
In many ways, healthcare providers have a much more compelling story to tell than health plans do. After all, they heal the sick. What’s more compelling than that? And providers are today, more aggressively than ever before, eliminating costs and entering value-based arrangements – credentials that allow them to prove their commitment as the consumer’s advocate. The ingredients are there, yet few providers have brought them together into a successful recipe. While providers are eager to participate in value-based arrangements, they need access to data, shared savings, and potential upfront investments in setting up the programs.
Healthcare providers have a great story to tell. Yet they must tell it relentlessly if they want to regain the ground they have lost to health plans – both in rates, and in consumer allegiance. They cannot rely on reputation or quality alone to prop up their brands. Not when health plans are fighting every day for hearts and minds.