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Economics & Investments

Pass? Fail? Mediocre? What Grade Would a U.S. Employer or Healthcare Carrier Give Your Hospital or Clinic?

Economics & Investments

Hospitals, clinics, the executives that manage them, and the government agencies who are responsible for them in each country, should be very interested in what score U.S. Employers and Healthcare Carriers would assign to their healthcare facilities.

The process by which U.S. Employers and Healthcare Carriers select and de-select healthcare facilities is a very complex one and, to help readers understand it, let me begin by saying that both groups employ extremely similar criteria in their selection process.

U.S. Employers design employee benefits to attract and retain valuable employees, and to reduce the expenses associated with employee turnover. It costs an employer an amount equal to an employee’s annual salary to replace that employee. The cost to U.S. Employers of providing healthcare coverage for their employees is made more affordable by utilizing the risk management tool of insurance, hence the introduction of healthcare carriers into the healthcare equation. Both employers and carriers benefit from keeping the overall cost of providing healthcare as low as possible.

For large multinational corporations like General Motors, which covers more than 1.1 million employees and former employees, footing healthcare costs presents an enormous expense—the company says it spent roughly $5.6 billion on healthcare expenses in 2006. GM says healthcare costs alone add $1,500 to the sticker price of every automobile it makes, and estimates that in 2008 that number could reach $2,000.(1)

Last year, just 59 percent of US workers were covered by their employer’s health insurance, down from 65 percent in 2001, according to research by the Kaiser Family Foundation. And health insurance premiums, on average, are 87 percent higher now than in 2000, compared with cumulative overall inflation of 18 percent during that span.(2)

But, the overall score that an employer or healthcare carrier assigns to a healthcare facility goes beyond cost. Here, in no particular order of priority, are five of the most important attributes that employers and carriers in the U.S. look for in a healthcare facility.

  • Accessibility – Employers and carriers want healthcare facilities in the cities, towns and neighborhoods that the employees live and work. This provides stability to an employee’s family and acts as a retention benefit and a deterrent to turnover. It’s important to remember that large U.S. employers are global and have employees overseas.
  • Quality of Care – Healthcare facilities have to employ physicians and healthcare professionals, and offer healthcare services that can treat the cross section of employees, and prevent catastrophic cost occurrences. Employers and carriers look for healthcare facilities that have a proven track record in their particular healthcare services.
  • Cost – Employers view cost in a competitive light. The lower their costs compared to their competitors’, the bigger the advantage in competing for customers and growing their market share. Healthcare carriers can realize more revenues if their premiums are lower than their competitors and premiums are directly correlated to healthcare costs.
  • Information Technology – Both employers and carriers manage their business intensely. In the U.S. executives rely on management reports to identify business trends and to measure company performance. Healthcare facilities that invest in updating their information technology so that healthcare usage can be captured and communicated to employers and carriers will score higher than those that don’t.
  • Relationship – Employers and Carriers that are successful in their industry seek long-term relationships with their suppliers, vendors and distributors. Healthcare suppliers, vendors and distributors are treated no different. Hospitals, Clinics and Governments that understand the business that their U.S. Company partners are engaged in, as well as the company mission, vision, goals and objectives, will score higher than those that don’t.

Lost in the complexity of managing mounting healthcare costs are the moral and morale hazard costs. If you imagine the loss in productivity cost to a company of an employee who stays in his or her job instead of taking a new job, just to keep his or health insurance benefits (one in seven do(3)), you begin to realize the hidden costs of costly and restrictive healthcare.

Add to that the costs incurred by a company when an employee has an ailment that is only partially, or not covered by the company health plan. Conditions that go untreated spawn others; untreated knee pain results in treatment for depression, lost wages, increased sick days, and the list goes on and on. I will address the true costs of our healthcare crisis in a future article in this magazine.

Healthcare is going global, there’s no doubt about that. The United States is a major market in the global healthcare landscape. According to a report by the McKinsey Global Institute, The United States spends more of its income on healthcare than other developed countries and that share is rising.

That phenomenon is not supported by a higher disease burden; the report goes on to say, but by a failure of the payors, employers and government, to provide sufficient incentives to patients and consumers to be value-conscious in their demand decisions, and to regulate the necessary incentives to promote rational use by providers and suppliers. The report concludes by saying that, to be effective, reform in healthcare will need to apply sound principles on both the demand and supply side of the system.

At OneWorld Global Healthcare Solutions, we agree with the principle expressed in the McKinsey report, perhaps not the conclusions. However, the problem with today’s healthcare crisis is that whereas there are many principles involved in its explanation, principles do not provide solutions. Executable actions that emerge from sound strategies do. This is one of the reasons we encourage foreign based hospitals, clinics and government who want to penetrate the U.S.

Healthcare market and be part of the global solution that will balance the supply and demand for quality healthcare, to engage a knowledgeable consulting company. Such action will improve the score that U.S. employers and healthcare carriers assign to your healthcare facility, to one of “Excellent”. On that note, an “excellent” start to improving your healthcare facility’s score is to attend the Medical Tourism and Global Health Congress in San Francisco in September, and sign up for the Positioning Workshop hosted by OneWorld Global Healthcare Solutions. See you there.

  1. Healthcare Costs and U.S. Competiveness; Lee Hudson Teslik and Toni Johnson
  2. Burdened by Healthcare costs, US Business Seek a Shift; Mark Trumbull
  3. Kaiser Family Foundation, Health Security Watch–October 2007 Tracking Poll.
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