Healthaxis Corporate Blog

Lower Healthcare Costs with Better Benefits Administration

  

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A few years ago, I was traveling with my colleague, Larry Thompson, now Senior Vice-President of Large Accounts at HealthNow, and we began talking about why companies have such a difficult time lowering healthcare costs.  I thought the problem was primarily because CEO's didn't take the issue seriously enough.  That may seem hard to believe, because CEO's are always insisting that the costs of health benefits are hurting their companies' bottom lines.  But instead of taking charge of the situation themselves, they often delegate the issue to other executives or outside consultants and insurance brokers.  Unfortunately, this delegation of responsibility is seldom accompanied by a commensurate delegation of authority that could effect real organizational change.  The result is that the "benefits problem" is viewed as a cost issue to be dealt with, and approaches to lowering costs typically are either trying to achieve higher network discounts or cost shifting from the employer to the employee.  The usual outcome is that it is either not enough, or it is unacceptable because employees don't like it.  Ultimately, nothing really changes. 

My view was, and still is, that to fix healthcare, we must first "fix" our approach to solving the problem.  We must focus on changing the way we as leaders comprehend and manage the idea of healthcare.  We must begin to see healthcare not as a benefits program with a bundle of disintegrated parts, but as a process that can be managed and improved upon with tangible financial results.  In the end, it's about creating a fully integrated health and benefits administration system and combining that system with a new cultural identity that makes "health" the primary focus.

As Larry and I continued our conversation, I described an approach I had developed that was based on the SEI Capability Maturity Model.  I called this approach the CorporateHEALTH Maturity Model (CHMM).  The CHMM describes a collection of tiers of corporate health maturity.  Each maturity level has a set of process areas and performance standards that determine the effectiveness of corporate response to healthcare process initiatives.  The processes can be managed and refined to increasingly higher levels of capability so that the corporation can measure its progress toward a goal that achieves the highest level processes for improving health and lowering cost.

The five maturity levels are:

1. Insurance for basic care,
2. Insurance as a benefit,
3. Health as a corporate objective,
4. Health as a guiding principle,
5. Health as a corporate value.

The elements of CHMM program management range across a total of twelve different but complementary categories.  Examples of categories would be plan design, funding mechanisms, and communication. 

Once Larry understood the idea, he and I quickly began outlining a framework that describes how organizational effectiveness for "Corporate Health," could be measured, and further, at any given level of maturity, what the next steps were for improving the process.  The result was compelling.

Why do we need the CHMM?  To me it's obvious.  The healthcare system in America is broken.  Costs are high, returns are low - and let's face it, no one really fully grasps the whole picture. It simply is too complicated.  Where do we start? First, corporate leaders need to begin dealing with the issue of "Corporate Health" in a more business-like manner. They need to stop viewing it as "benefits cost."  It's an operational problem, not a cost problem.  Expensive consultants or reliance on government intervention are not the solution.  The solution lies in using a systematic and integrated approach to problem solving, similar to the way other major operational issues are handled.

In future blogs, I'll write about the CHMM framework in more detail and offer some solutions for how companies can get started improving their Corporate Health processes.