Time to get in with the in-crowd? A new study looking at the performance of group purchasing organizations (GPOs) shows the organizations can save billions in annual health care and related costs savings. And let's be honest: Who doesn't want to save every dollar they can?
GPOs -- entities that achieve health care cost savings by aggregating their health care buying volume and then using that leverage to negotiate discounts with manufacturers, distributors and other vendors -- have the potential to save the health care system some $36 billion, according to a study of 429 hospitals and over 3 million hospital admissions by Dr. Eugene S. Schneller, a principal for Health Care Sector Advances, Inc. and professor at the Arizona State University School of Health Management and Policy.
Schneller's research, "The Value of Group Purchasing 2009: Meeting the Needs for Strategic Savings," finds GPOs can save:
* $6.8 billion in hospital pharmaceuticals.
* $8.5 billion in medical/surgical purchases.
* $1.9 billion from the cardiology implant market, either directly or indirectly by providing members with GPO purchased goods or reference pricing from directly engaging the marketplace.
* $840 million in attributed savings from the orthopedic implant marketplace.
* $1.8 billion in reduced hospital purchasing costs by eliminating the need for hospitals to comprehensively carry out strategic sourcing, contracting and other key GPO activities for inpatient pharmacy, general medical products, orthopedic products, other clinical products and housekeeping products.
With those kinds of numbers, GPOs are worth a look, no? Is your company part of a GPO or considering joining one? Comment and let me know.
Showing posts with label health care costs. Show all posts
Showing posts with label health care costs. Show all posts
Thursday, April 30, 2009
Monday, April 13, 2009
News You Can Use: Employers expect cost hikes due to COBRA subsidy
This likely won't come as much of a surprise, unfortunately, but new survey numbers from Aon show 60% of employers expect their overall health care costs to increase as a result of implementing the federal COBRA subsidy.
Polling some 300 employers who attended recent Aon COBRA webinars, the consulting firm finds 40% expect their overall health care costs to increase 1% to 5% because of the subsidy; another 40 percent expect costs to spike between 6% and 10%; 12 percent forecast increases from 11% to 15%; 8% expect an increase of 16% or more.
“Typically, 5% to 10% of former employees enroll in COBRA, and we expect that number to increase to 14% to 18% as a result of the subsidy. As employers begin to plan for their 2010 health benefits, they must take the new COBRA subsidy costs into consideration,” says Tom Lerche, Aon’s health care practice leader. “Most plan sponsors continue to experience a 7% to 11% health care cost trend rate, so additional costs from this subsidy will impact overall health care plan strategy for 2010.”
In addition to higher medical plan costs from utilization and adverse selection, plan sponsors will have higher administrative and communication costs, he adds.
In other words, start building these costs into the budget, pros. And don't cost your company more money by not having all the information. Visit ebn.benefitnews.com, keyword "cobra" for in-depth EBN reporting on the subsidy and how you can prepare/protect yourself.
Polling some 300 employers who attended recent Aon COBRA webinars, the consulting firm finds 40% expect their overall health care costs to increase 1% to 5% because of the subsidy; another 40 percent expect costs to spike between 6% and 10%; 12 percent forecast increases from 11% to 15%; 8% expect an increase of 16% or more.
“Typically, 5% to 10% of former employees enroll in COBRA, and we expect that number to increase to 14% to 18% as a result of the subsidy. As employers begin to plan for their 2010 health benefits, they must take the new COBRA subsidy costs into consideration,” says Tom Lerche, Aon’s health care practice leader. “Most plan sponsors continue to experience a 7% to 11% health care cost trend rate, so additional costs from this subsidy will impact overall health care plan strategy for 2010.”
In addition to higher medical plan costs from utilization and adverse selection, plan sponsors will have higher administrative and communication costs, he adds.
In other words, start building these costs into the budget, pros. And don't cost your company more money by not having all the information. Visit ebn.benefitnews.com, keyword "cobra" for in-depth EBN reporting on the subsidy and how you can prepare/protect yourself.
Thursday, April 9, 2009
Overheard @: JD Power's Dougherty discusses health plan satisfaction stats
Try as you might, it seems most workers still don’t understand their health plan. That’s one of the top-line findings from J.D. Power & Associates' third annual national study on health plans satisfaction.
And according to JDP's Jim Dougherty, executive director of the firm's helath care practice, what employees do know, they don't like much. “Members still tend to be least satisfied with the information and communications they receive from their health plan -- the third most important factor in overall satisfaction,” he says. “Consequently, improving member communications can go a long way in driving higher levels of overall member satisfaction -- particularly since only one-third of members say they fully understand how their health plans work.”
You can find the nuts and bolts of the study -- which covers more than 33,000 members in 131 plans across 17 regions -- online, but I chatted with Dougherty recently to get the inside scoop on what he found most interesting about this year's findings.
First, although member satisfaction regarding communication is on the bottom rung, Dougherty mentioned that "plans that are moving customer service online are gaining in satisfaction." Really? I would've thought removing the human element from plan communications would have been a driver in lowering satisfaction. But no, Dougherty told me: "If a Web site is designed well and members can find what they need easily, it appeals more to members since it takes less time to answer routine questions."
Dougherty also noted that "every one of the plans in the Northeast had a significant increase in satisfaction" and that California plans posted strong numbers as well. What's going on there on the coasts? In a word, reform. Dougherty seems to believe that the buzz surrounding Massachusetts' health reform initiative and California's efforts to do the same was a rising tide that lifted all boats, so to speak.
One last nugget involved Dougherty's take on JDP's numbers regarding "plan tenure," specifically when it came to consumer-driven plans. Employers that had a rocky first year with a CDHP should take heart, as the survey shows that although member satisfaction in their first year of a CDHP is pretty low, year two seems to mark a turning point.
"In year two, they're much more satisfied," Dougherty's told me. "They understand the plan better, their health care spending needs better, how to manage an account and the tax savings better. It takes about a year to 18 months for them to get there, but if they can get to the second year, they are happier."
And according to JDP's Jim Dougherty, executive director of the firm's helath care practice, what employees do know, they don't like much. “Members still tend to be least satisfied with the information and communications they receive from their health plan -- the third most important factor in overall satisfaction,” he says. “Consequently, improving member communications can go a long way in driving higher levels of overall member satisfaction -- particularly since only one-third of members say they fully understand how their health plans work.”
You can find the nuts and bolts of the study -- which covers more than 33,000 members in 131 plans across 17 regions -- online, but I chatted with Dougherty recently to get the inside scoop on what he found most interesting about this year's findings.
First, although member satisfaction regarding communication is on the bottom rung, Dougherty mentioned that "plans that are moving customer service online are gaining in satisfaction." Really? I would've thought removing the human element from plan communications would have been a driver in lowering satisfaction. But no, Dougherty told me: "If a Web site is designed well and members can find what they need easily, it appeals more to members since it takes less time to answer routine questions."
Dougherty also noted that "every one of the plans in the Northeast had a significant increase in satisfaction" and that California plans posted strong numbers as well. What's going on there on the coasts? In a word, reform. Dougherty seems to believe that the buzz surrounding Massachusetts' health reform initiative and California's efforts to do the same was a rising tide that lifted all boats, so to speak.
One last nugget involved Dougherty's take on JDP's numbers regarding "plan tenure," specifically when it came to consumer-driven plans. Employers that had a rocky first year with a CDHP should take heart, as the survey shows that although member satisfaction in their first year of a CDHP is pretty low, year two seems to mark a turning point.
"In year two, they're much more satisfied," Dougherty's told me. "They understand the plan better, their health care spending needs better, how to manage an account and the tax savings better. It takes about a year to 18 months for them to get there, but if they can get to the second year, they are happier."
Wednesday, April 8, 2009
Yay or Nay: Is the Wal-Mart, Caterpillar Rx benefit model better for employers?
Wal-Mart is expanding a pilot program that eliminates copays on generic drugs purchased at its stores to more employers.
The program already operates at the construction company Caterpillar, where employees who purchase generic prescription drugs at a Wal-Mart or Sam's Club pharmacy are waived the $5 copayment. Some see the program as a way to help employers reduce health care costs tied to prescription drugs by trimming the work they have to do pharmacy benefit managers.
“The easiest thing to do is look at the number the PBMs spit out,” said Todd Bisping, pharmacy benefits and informatics manager at Caterpillar, the Chicago Tribune reports. “As more and more companies realize we just can't blindly assume what's going on is best for us, they're going to start digging into it and find the same thing.”
Have you done the digging that Bisping mentioned? If so, what did you find? Will the Wal-Mart-Caterpillar model be a better one for employers and employees on a wider scale? Yay or nay?
The program already operates at the construction company Caterpillar, where employees who purchase generic prescription drugs at a Wal-Mart or Sam's Club pharmacy are waived the $5 copayment. Some see the program as a way to help employers reduce health care costs tied to prescription drugs by trimming the work they have to do pharmacy benefit managers.
“The easiest thing to do is look at the number the PBMs spit out,” said Todd Bisping, pharmacy benefits and informatics manager at Caterpillar, the Chicago Tribune reports. “As more and more companies realize we just can't blindly assume what's going on is best for us, they're going to start digging into it and find the same thing.”
Have you done the digging that Bisping mentioned? If so, what did you find? Will the Wal-Mart-Caterpillar model be a better one for employers and employees on a wider scale? Yay or nay?
Thursday, February 26, 2009
News You Can Use: Obama budget puts $634B down payment on health care reform
President Obama this morning unveiled his first budget, which includes a $634 billion down payment on achieving universal health care for Americans.
Obama says increasing taxes on the wealthy, cutting wasteful Medicare spending and eliminating certain government subsidies will finance the plan. According to the Associated Press, among the proposed Medicare cuts are curbing payments to insurers serving older Americans and charging wealthier beneficiaries more for the program' s prescription coverage.
However, AP reports, the $634 billion is a little more than half the money needed to insure all Americans, including the some 48 million currently living in the United States without coverage. The nation currently spends more than $2 trillion on health care.
What do you think of the early details -- sketchy though they may be -- of the president's health care budget proposal? Comment and let me know.
Obama says increasing taxes on the wealthy, cutting wasteful Medicare spending and eliminating certain government subsidies will finance the plan. According to the Associated Press, among the proposed Medicare cuts are curbing payments to insurers serving older Americans and charging wealthier beneficiaries more for the program' s prescription coverage.
However, AP reports, the $634 billion is a little more than half the money needed to insure all Americans, including the some 48 million currently living in the United States without coverage. The nation currently spends more than $2 trillion on health care.
What do you think of the early details -- sketchy though they may be -- of the president's health care budget proposal? Comment and let me know.
Monday, February 23, 2009
Yay or Nay: Does coordination of care work?
An interesting and somewhat shocking Wall Street Journal report cites research from the Journal of the American Medical Association that finds coordination of care is ineffective at containing health care costs.
The model generally involves nurses or other medical professionals serving as the linchpin between physicians, other service providers and patients -- with the belief that keeping everyone on the same page regarding patient care and education would result in lower costs from reducing duplicative efforts and reduced hospitalizations due to conflicting treatment regimens.
JAMA's study shows that in 15 random trials of care-coordination programs, only two -- yes, two -- showed significant differences in hospitalizations between those whose care was coordinated and a control group. Even worse, one of the two actually posted more hospitalizations. The dagger: none of the programs posted any savings.
Having devoted no small amount of ink in EBN to the effectiveness of the care coordination model, I was truly surprised to read this data. What about you? What is your view of care coordination? Is it effective -- yay or nay?
The model generally involves nurses or other medical professionals serving as the linchpin between physicians, other service providers and patients -- with the belief that keeping everyone on the same page regarding patient care and education would result in lower costs from reducing duplicative efforts and reduced hospitalizations due to conflicting treatment regimens.
JAMA's study shows that in 15 random trials of care-coordination programs, only two -- yes, two -- showed significant differences in hospitalizations between those whose care was coordinated and a control group. Even worse, one of the two actually posted more hospitalizations. The dagger: none of the programs posted any savings.
Having devoted no small amount of ink in EBN to the effectiveness of the care coordination model, I was truly surprised to read this data. What about you? What is your view of care coordination? Is it effective -- yay or nay?
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