December 5, 2011 | last updated April 19, 2012 1:47 pm

Teamwork Can Tame Health Care Costs

As every business owner knows, rising health care costs are taking an increasingly big bite out of revenue, limiting funds for growth investments such as new employees and new equipment.

Solving a problem as complicated as rising health care costs requires a multifaceted approach in which key players all work together. Here is what employers, employees, insurers, providers and the government can do.

Promote limited networks. Fallon Community Health Plan has been offering what we call high-performing networks since 2002. Network providers are chosen carefully based on objective clinical and service quality measures. They have proven track records of innovation and quality and have shown to be effective and cost-efficient. Employers and employees who choose high-performing networks save 12 percent on premiums for a traditional plan, although the covered services are exactly the same.

Give employees a financial stake in reducing health care costs. Limited networks help, because the co-pays are lower. Tiered networks are a variation on limited networks, with employees paying higher co-pays at the time they receive services if they access a broader network. Employers should also consider high-deductible plans, which have lower premiums and encourage employees to know the actual cost of health care services.

Create wellness and disease management programs. The most cost-effective way to hold down health care costs is to prevent people from getting sick in the first place. Employers should create wellness programs while health plans should offer discounts and other financial incentives for gym memberships and other programs that promote a healthy lifestyle. Health plans, providers and employers should also work together to promote programs that help people manage chronic diseases such as diabetes, which are responsible for a disproportionate share of health care spending.

The role of employers in these equations is both to shop aggressively for health plans and engage their employees through communication and financial incentives. Employees need to take more responsibility for their own health and health care. And health plans have to help them by offering the broadest possible range of products.

In addition, providers need to be open to new kinds of compensation models. Under the old fee-for-service model, providers were paid by the test or procedure. Not surprisingly, this created an incentive for more tests and procedures. A better model is to tie compensation to outcomes. And both providers and insurers need to abandon their traditional relationship of being on opposite sides of the negotiating table and instead work together on models that result in both better care and lower costs.

Finally, government, rather than simply enacting price controls, which have failed throughout economic history, should provide the other major stakeholders — businesses, health plans and providers — the freedom and flexibility to develop the innovations that have already begun and that will be the only lasting solution to our current crisis.

Patrick Hughes is president and CEO of Worcester-based Fallon Community Health Plan.

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