The Carrot-Flavored Stick

A while back I posted a blog about Mr. Stick, the mean, older brother of the carrot.  It was in reference to the fact that benefits managers are somewhat hamstrung when it comes to cost cutting measures related to healthcare.  They can only tweak so many plan designs before they need to resort to the stick approach.

Mr. Stick is the bully in the playground who demands your lunch money. And you give it to him because you don’t have much of an option.

I began thinking a bit more about the challenges a benefits manager faces.  And I have a few thoughts and ideas to share…

Why is healthcare so expensive?  Well, there are so many reasons…fragmented care, enhanced technology, our payment system, medical waste, mis-aligned incentives, disparate systems, over-utilization, etc.

But there is another piece to this which is a huge component of the cost puzzle – the consumer.  Or the patient. Or the employee.  He/she goes by many different names.

Fact is that people complain about healthcare costs as they sit around eating ice cream by the pint and drinking “diet” soda while going to the world’s most expensive hospital’s emergency room for a hang nail.

Yes, I’m over-exaggerating.  But the scary fact is that people don’t realize the role that they play in contributing to healthcare costs.

Now, this blog post isn’t going to be about health and wellness. But it is going to be on utilization and education.  Some would consider this to be a “stick” approach.  But the carrot can be added to the stick to create…well, I guess it would be a carrot-flavored stick.

So how does the benefits manager play a role in utilization and education?  How does an employer help impact behaviors enough to curb the wanton utilization that isn’t needed? How does the benefits manager create the carrot-flavored stick?


This requires some explanation, doesn’t it…

Benefits managers have only so much power to change benefits, raise co-pays, raise deductible levels, change health plans, offer incentives and promote healthy behaviors.  But the fact still remains – most people have no clue how our healthcare system works or the downstream effects of their choices.

Therefore, benefits managers need to find a way to educate and empower their employees about healthcare.

I’m sure you’re picturing what I’m picturing – a room…no wait, a HALL…full of eager employees, salivating, just waiting to learn about healthcare.  And no, I did not forget to take my meds today. It’s purposely sarcastic.

Employees probably won’t care about something like this…unless there’s something in it for them.

Today, many employers are using some form of carrots and sticks.  Carrots can be in the form of incentives when someone completes a health risk assessment or takes part in a wellness program.  Sticks can be in the form of a tobacco surcharge or more cost sharing.

My thought to create the carrot-flavored stick is this:  put together programs that educate employees on how the healthcare system works – how hospitals are paid, how doctors are reimbursed, why some hospitals cost more than others, how insurance companies operate, the value of generic vs. brand medicine, how more healthcare doesn’t equate to better outcomes – the topics go on and on.

For each “course” completed, the employee gets money into their employer-funded health reimbursement account (HRA).

The fancy pants benefits managers will go even further.  They will have levels of “courses” and will designate healthcare “champions” for those who achieve high levels of education.  They’ll test employees and create competitions around these programs. Winners get special things like days off or gift cards.  And as the employees become more engaged in this, the stakes can be raised.  Education on things like employer-direct healthcare will help educate employees as to the value of such a “drastic” measure. However, the employee buy-in is likely to be greater because they now have a much better understanding of the system and why something like this is a chance for the company to save big money resulting in lower premiums for themselves and their families.

The question becomes this: who will offer these trainings?

I’ve got my own thoughts on this.  One is brokers/consultants, just as Gary Fradin suggests – see my author’s note below.

In my post about the Broker (R)Evolution, I discuss how brokers need to evolve. This is one of the ways to evolve.  The other idea would be for the entrepreneurs out there – create a company that does this sort of education.  I suppose it’s also possible that the employer trains someone internally on these topics, but that is not as likely. The last idea would be for the federal government to offer it.  Picture the state exchanges in 2014, complete with patient/member education programs that offer lower premiums if you complete training/education classes.

Good idea?  I think so.  Because a carrot-flavored stick is better than just a plain old stick, right?

Now, if we can begin working on the ice cream flavored stick…low-fat, of course…

[Author’s note: I attended a continuing education class today, well after I drafted most of this blog. The teacher of the class, Gary Fradin of Health Insurance CE, LLC suggested that brokers be the ones who educate employers on topics such as over-utilization and the harm of un-needed healthcare.  Well, since he stole my thunder a bit, I figured it was time to complete writing this blog tonight.  Thanks, Gary! ;)]

In Good Companies, Volume III

Working at an insurance brokerage and consulting firm, I have the privilege of seeing some very innovative companies who work with clients at the firm.  I also do quite a bit of research myself on various health care companies – it only helps me to do my job better.  Some of what you’re reading below is research I’ve gathered on my own.

With that said, I thought it would be sort of neat to highlight some of these companies in a piece I’m calling “In Good Companies”. You’re currently in the midst of Volume III!

Here are a few in no particular order. If my blog does not do them justice, check them out for yourselves!

Sermo – Two docs are better than one.  What about 120,000 docs? With all of the treatment variation in healthcare today, why not have physicians collaborate in a community just for them?  Enter Sermo.  68 Specialties? Check.  All 50 states?  Check.  With the philosophy “no one physician is as knowledgeable as physicians working together” this community of doctors share information and collaborate using the organization’s real-time communications portal that also verifies credentials. In an age when two docs right down the hall from one another may not even chat about the same patient that they both saw that day, Sermo is a welcomed guest to the way healthcare is sometimes done, but shouldn’t be.  Social media + Medicine/Docs = Sermo.

Silverlink Communications – How do you influence behaviors?  How do you get people to make better decisions regarding their own health? With nudges – small but meaningful changes in behavior.  And what results from better decisions?  Why, lower costs and improved health!  With consumers at the heart of health care utilization, organizations such as health plans and disease management vendors are desperately seeking ways to get individual patients to take better care of themselves…get a check up, get a flu shot, take their meds…Silverlink provides a unique “test and learn” technology backed by mounds of data analytics to provide targeted communications (phone, text, etc) for each individual consumer – senior citizen, a person with a chronic illness, a healthy person.  And I think they’re just scratching the surface with regards to their market.  Do you think employers would love something like this?  I do.

The Vitality Group – There are lots of wellness companies out there. There is only one group like The Vitality Group.  At least that I know of.  [In the interest of disclosure, there are a whole lot of wellness companies I haven’t researched.]  By offering a health enhancement solution backed by clinical, behavioral and actuarial science, The Vitality Group stands out.  Using their network of vendors and tying incentives to targeted activities, employers utilizing this solution help their employees understand their health status and take meaningful steps to make positive change resulting in healthier behaviors.  And how do they help their clients achieve the best ROI?  With “100% verifiable activities”. This is something I haven’t heard from other wellness companies. If you want to know which activities are verifiable…check out their website or give them a call.

Vitality – On the vitality theme, I figured I couldn’t leave out this gem.  In order to solve the billion dollar medical adherence problem, some MIT folks figured a simple but incredibly effective way to target this problem.  A flashing pill cover.  Yes, that’s it. Glow cover with lights and sound.  Sometimes the most simple approach is the best approach. Those on prescription meds are reminded to take them. Loved ones rest easier knowing they don’t have to worry as much about mom or dad forgetting to take their meds. Good Morning America, Today, and The New York Times have all featured this company and their product. And Dr. Oz says, “I love this product.”  Well…that’s all I need to hear. I’m sold! And for those who aren’t, this product isn’t just a flashing pill cover.  It not only alerts the patient to take their meds, but it sends a weekly alerts to a selected member of the patient’s social circle to alert them of compliance. It re-orders the prescription from pharmacy when it is running low.  And for those who stick to the regimen, the product sends a printed report with incentives to both the patient and the doctor. Sounds like something you should have thought of but didn’t?  Yeah…me too.

WEGO Health – Where do the top 10% of online health social media go to connect? WEGO Health, of course!  In order to help health advocates continue to do what they’re doing and to expand the reach to help others, WEGO Health exists.  Sometimes others say it better than you ever could, so here it is, straight from the horse’s mouth…and by that I mean WEGO’s website:  If online health communities are an unruly high school, then Health Activists are its dedicated teachers – and WEGO Health is the teacher’s lounge. We help leaders to come together, to learn from each other, and to go back to their classrooms better at their craft. There you have it.  Now go check them out.  And please be nice to any substitute teachers.  Aw, who am I kidding…torture away. Because you know you were going to do it anyways…

That does it for another edition of In Good Companies.  If you know of an innovative health company, let me know!  You might just see it in Volume IV!

[Disclaimer: I am not receiving any compensation or bonus from any of these companies to do this. This isn’t an endorsement of these companies based on personal or professional experience.  I do not speak for my employer.  This post does not influence client placement or recommendations to clients. I just think it is neat to showcase some great minds and great companies at work.]

Healthcare 5.0 – Post Baby Boom…And The Big Payoff?

Being the healthcare geek that I am, I often wonder two things about the rising costs of healthcare:

1) Is anything being done today going to really impact the trend of rising costs especially with baby boomers getting older and the cost of healthcare being at its highest prior to death?  Probably not.

The Dartmouth Institute for Health Policy & Clinical Practice states that 25% of Medicare’s dollars are spent in the last year of a patient’s life.  As more baby boomers reach the end of their respective lives, these costs will be evident and any cost saving efforts or efforts to streamline cost, quality and outcomes (see ACOs) may not yield deep savings…at least not initially. I’m assuming that any efforts today to address the high cost/consumption of healthcare at the end of life will yield minimal cost control results by the end of the baby boom.

Oh and I’m purposely not addressing the quality or outcomes question here nor am I getting into waste or physician practice patterns – a blog for another day, perhaps!

Back to the subject at hand…

We cannot let short-term results (or lack thereof) deter us. We have to continue trying and we can’t be discouraged when drastic changes in healthcare delivery, payment, and utilization yield only minimum cost impact due to rising costs in other areas that are outside of our control. Technology costs money as well, but it also leads to better care in many cases.  I should also note that we should not be tricked into thinking these cost control measures aren’t working due to the overall rise in healthcare costs.

2) What will happen post baby boom? Will all of the work we’re putting in now to promote awareness, empowerment, and consumerism become “the norm” in 50 years? Will behaviors have changed enough in 50 years so that prevention and wellness is no longer a program offered by your employer, but a way of life?  Will this change lead to lower healthcare costs or at least a more controlled trend for future generations? Will the pendulum swing to the other side or at least come back to center?  Is this when we’ll see the fruits of decades of effort?

OK, so maybe I’m wondering a lot more than just two things…it’s part of being a healthcare geek, I suppose.

This is where I think we will see some impact.  After the high utilization baby boom period has passed, costs may normalize (meaning not be as skewed due to a higher volume of baby boomers consuming more care at the end of life).  This, coupled with the education, prevention, and empowerment efforts of today will lead to sustainable behavior change.  It will yield a future generation of more savvy healthcare consumers who will be living in a new era of healthcare – an era I’m calling Healthcare 5.0. (Has anyone claimed HC5.0 yet?  If not…DIBS!)

So lets look past the end of the baby boom generation which, by most accounts, is only 30 to 40 years away.

The baby boom generation began around 1946 and ended in 1964. Assuming that folks live to age 80 (which in some cases will be a conservative number and others, not so much), that puts us into 2040 time frame before the baby boom generation has lived its collective life.  Let’s also assume that Medicare is still solvent and the health system we have in place (or some semblance of it) is in effect.  The result may be a pendulum swing back the other way. Oh and that’s also assuming we survive the continued rise of costs that may not be curbed until 2050.

Empowered patients, wiser consumption, a focus on prevention, integrated quality and coordinated care that drives better outcomes, evidence-based guidelines for the practice of care…and the dawn of Healthcare 5.0.  Kind of makes me wonder what Healthcare 3.0 and 4.0 will look like…