Trends in Employer Healthcare Strategy with National Business Group on Health

We sat down with Brian Marcotte, President and CEO of the National Business Group on Health, to discuss the most pressing healthcare issues facing employers today and how deploying holistic well-being strategies can strengthen the workforce.

National Business Group on Health is a nonprofit dedicated to representing large employer’s perspective on health policy issues and helping companies optimize business performance through health improvement, innovation, and healthcare management.

We are also delighted to welcome our new host, Dr. Kiki, a sought after science expert for TV and new media.

We’ve posted complete transcript of the podcast below. You can subscribe to Sequenced on Apple Podcasts, SoundCloud, Stitcher, and Google Play.

Dr. Kiki: Welcome to Sequenced, where we talk to healthcare influencers, investors, and advocates about the changing world of healthcare. This podcast is brought to you by Color, a health service company. And I’m your host, Dr. Kiki.

This month, we sat down with Brian Marcotte, President and CEO of National Business Group on Health, and discuss the most pressing healthcare issues facing employers today. National Business Group on Health is a nonprofit dedicated to representing large employer’s perspective on health policy issues and helping companies optimize business performance through health improvement, innovation, and healthcare management. Brian, welcome to the podcast.

Brian: Well, thank you. Looking forward to it.

Dr. Kiki: I am, too. So, just to get started, can you give us a general overview of what your goals are with this annual survey?

Brian: Sure. So, we conduct this survey, typically, in the June time frame, which is the time most employers, particularly large employers, that’s our membership base, make their decisions about the upcoming year. And what’s important about that is the survey ends up being about what employers will do in 2018, not about what they’re thinking of doing in 2018, and that’s the real important distinction. So, this is, when we put the results out in the August time frame, it’s a real good indication of what large employers will do for 2018 and what they’re thinking about 2019 and beyond, both from a healthcare strategy perspective and from a plan design perspective.

Dr. Kiki: And what were the key findings you came home with this year?

Brian: Well, I think, I’d start with a couple of observations from the data and then talk about some specific findings. Over the summer, we heard a lot around repeal and replace in Washington. That had more to do with public exchanges and the volatility within the public exchanges, both in terms of premiums and health plans moving in and out, which is not a reflection of employer sponsored healthcare. Employer sponsored healthcare, which covers most of the Americans in this country, continues to be the most efficient and effective way to offer Americans access to affordable, quality healthcare. It’s more stable, premiums are typically lower, and you don’t have the health plans moving in and out of what employers offer their employees, like you do have in the public exchanges today.

We do need a robust and stable individual market to complement employer base system. But it’s important to note that the debate on whether the repeal and replace Obamacare and the instability of public exchanges, it’s really not reflective of what’s happening with employer sponsored coverage. So, I would say, that’s the first observation. The second observation is we’re seeing a shift in strategy among large employers who are moving more towards a focus on the supply side opportunities, in other words, how healthcare is delivered, rather than demand side opportunities, which is how employers have typically looked at healthcare and trying to manage the demand for healthcare services through healthcare management and plan design efforts such as moving employees to consumer directed health plans. We’re seeing a lot more activity. We can talk about what that means when we get into some of the survey results.

And I would say the last area is we’re seeing a conscious effort by employers to improve the consumer experience with the healthcare system. I think employers have realized that as much as we would like employees to be sophisticated consumers of healthcare, the delivery system is just way too complex and fragmented, and consumers just don’t touch the system enough to ever be a sophisticated consumer. So, we’re seeing growth in decision support services and concierge services, trying to help employees navigate, understand their benefits, understand their treatment options and where the best place to go for care. And I think those are the three things that stood out to me the most when I look at the survey results overall. And if you’d like, we can get some specifics about what I’m saying.

Dr. Kiki: Is what you’re seeing this year and how the trend seem to be moving this year, is this significantly different from what you’ve seen historically?

Brian: I would say, the medical trends are not significantly different. I think what we’re seeing from plan design perspective, which is relatively minor this year is not that different. Employer healthcare isn’t pretty stable over the last five years. It’s been trending, from a cost perspective, around 5% a year. Now, 5% still isn’t good. It’s better than what you’ve seen in the public exchanges, but 5% is still more than double consumer price index and it’s well above what wages are. So, it’s still not acceptable from an employer perspective because it’s still increasing at too fast a rate. But it’s been pretty stable over the last five years around that range.

Dr. Kiki: What are some of the drivers of these healthcare costs? What’s pushing that 5% increase for employers?

Brian: You know, the interesting thing over the last couple years has been specialty pharmacy. And while specialty pharmacy only touches, say, 2% to 3% of the overall employer population or employee population, it has been the top driver of medical trend for most employers over the last few years. And these are typically very expensive drugs. They cost thousands, or even tens of thousands of dollars per treatment.

Dr. Kiki: So, in specialty pharma, you’re talking about drugs that are targeted at maybe smaller patient populations.

Brian: They are typically smaller patient populations, but you do see a lot in oncology. You even see some in the asthma or diabetes area as well that may emerge. But they, for the most part, require special handling. They are typically infused as opposed to taking a pill. And so, because of all of those factors, they are very expensive. And you’re right, in some cases, they are often drugs, if you will, where they are targeting a very small population and, you know, very expensive when they target that population. If you think of hep C and Sovaldi, when Sovaldi came out a couple years ago, and that costs, at that time, over $80,000 a treatment and it surprised many employers. They weren’t prepared for that when it first came out. And Sovaldi became the poster child of specialty pharmacy at the time.

Dr. Kiki: Is there something that employers can do so that they don’t get taken by surprise like that in the future? Are there effective tactics to control these changes in the pharma costs?

Brian: Well it’s really hard to control the pricing in specialty pharma from an employer perspective. I think one of the things we’re seeing for 2018, employers are really trying to focus in on where these drugs are administered. They’re already very expensive but the interesting thing is where you have them administered, for example, a hospital versus a freestanding infusion center, or an outpatient facility versus a physician’s office, or even the home. Depending on the drug, there are more efficient sites of care where these drugs can be administered and the variance in price can be seven times, from one site of care to another site of care. Moving down from a hospital setting to outpatient or to a freestanding infusion center can be 4x difference in price.

That’s probably the one area employers are focused on the most when it comes to specialty pharmacy, when we look at 2018. They’re doing a number of other things as well, but this one in particular, we saw over a 50% increase in the number of companies engaging inside of care management for certain specialty drugs. Working either through their health plan, through their prescription benefit manager, or in some cases, just contracting with a separate specialty pharmacy manager. And really, they’re already expensive, let’s ensure that they’re being delivered in the most cost effective and appropriate setting and try to head off some of the cost that way.

Dr. Kiki: And so, this seems like it’s one of the trends that you’re noticing in how employers are starting to put together their designs for benefits and the plans that they offer. So, this on-site infusion centers, what other trends are you seeing?

Brian: Well, I think, we are seeing overall medical trend go up 5% or 6% for next year and there are a number of factors that go into that as well. Specialty pharmacy is certainly one of them, but high cost claims are also typically up there in terms of one of the key drivers of overall healthcare cost. You’re seeing more focused efforts to coordinate care better for high-risk, high-cost claims. And I would say, those two in particular, in addition to just price going up, we’re seeing a lot of consolidation in the industry right now. And it goes under the radar screen pretty much, where you see hospital systems merge with other hospital systems, or hospital systems buying physician groups. And while you think there are synergy that comes out of that type of consolidation, we’re not really seeing that’s the case. In fact, we’re seeing anecdotally the other way, where costs are going up as facility charges get added to physician’s office visits, if a physician’s office was now purchased by a hospital system or as a contract with a hospital system. So, there are a number of factors that go into why healthcare cost continue to increase. And just the underlying inefficiency and fragmentation within the delivery system itself, where there is considerable waste and a lot of variation in the way care is delivered.

Dr. Kiki: It seems there’s a big opportunity there to get rid of some of that waste and to move to a more efficient delivery system. Do you think employers, that is part of why they are focusing on the supply side delivery aspect? Is it maybe part of the perspective of the employers that, if we focus here, it’s going to help?

Brian: Well, absolutely. And I think one of the reasons they are more focused on the supply side right now is they’re running out of runway on the demand side. So, employers have been tweaking plan design for years to help offset medical trend. Where trend may be running 6%, they tweak plan design and that may knock off a point or two in terms of medical trend. But most companies, when you look at our survey data, 90% of large employers offer consumer directed health plans today, which are high-deductible plans, typically with the health savings account or a health reimbursement account. And about 40% offer them as the only option. Once you move to high-deductible plan, there’s not a lot of runway left on tweaking plan design. Employers are beginning to look more at how healthcare is delivered and how they can work with partners to better manage the delivery system to drive efficiencies that way. It’s harder to do because it’s very market specific, very localized. When you’re a large, multi-state employer, it’s hard for you to focus on multiple markets at once. You really need to do that through your health plan or third party. It’s hard to, unless you have a significant concentration of employees in a market, where you may go direct, and a number of companies have done that, small percentage, but there are companies doing that, you need that leverage in the market to get the attention of the provider community and focus on doing something different.

Dr. Kiki: It seems like there’s a real inflection point there between being a large, multistate corporation, where that gives you buying power with a health insurance company overall, but then, if you’re focusing on these more local regions in finding partners, you really have to have a large enough employee population in a particular locality to be able to do that.

Brian: Absolutely.

Dr. Kiki: In terms of the employees themselves, we’ve heard the last several years, I have noticed that there is a connection between how employers take care of their employees and the health and wellbeing of employees can not only save employers money because of work hours that are not lost, if the employees are healthy, but also because it leads to an improved business performance overall. What exactly is that link between employee well-being, productivity and performance?

Brian: That is the big question that employers are trying to address right now. We’re beginning to see, you know, we’ve talked about shifts at the beginning in terms of strategy. One of the other shifts we’re seeing is focused not just on healthcare strategy, which has been historically what companies have done, but to look more broadly at workforce strategy and to look at the initiatives companies implement around the health and well-being of their employees, as well as the healthcare management of their benefits. What they’re really trying to do is deploy the most competitive, effective, resilient, and engaged workforce possible. They are beginning to look at the connection between health and the well-being of employees and business outcomes, not just productivity absenteeism but real business outcomes and what’s important to the business. There are some reason that’s really important right now. As you’ve seen the movement of wellness, which has historically been programmatic, meaning I can implement wellness programs out of my benefits department within a company, or my health and safety department, or even HR, and the shift has been more to holistic well-being, where you’re not only looking at physical health, which wellness programs have typically focused on but you’re looking at the emotional well-being of my workforce.

You are putting programs in place to help address the financial well-being, social connectedness, job satisfaction, and looking at the individual more holistically. The subtle difference there is wellness was about the company helping you identify health risks and then telling you what you should do to manage those health risks. So, if you do a biometric screening and you’re at risk for cholesterol or blood pressure or even weight, then the company, through a third party, is offering programs to you to help address your cholesterol, your blood pressure, or your weight.

Well-being, holistic well-being is more about enabling you to meet your goals, not goals the company thinks you should meet. The subtle difference there is if I have challenges managing down debt or managing a budget, that’s my priority as an individual, not possibly my physical health. And so, I really need to start over here and help me figure out what’s the best way to manage my debt down or manage my budget through some of the financial well-being resources you may be offering to me. I start where I’m gonna be able to reach my goals, not goals that the employer thinks I need to reach.

And so, holistic well-being ends up being more of an organizational initiative, not a department initiative, it’s not something you can really drive out of the benefits department. It has to be driven by the organization. It has to be woven into the fabric of the culture and it needs to be embraced by your C-suite, your CEO, and the like.

Dr. Kiki: Absolutely.

Brian: Because of that, the connection to business outcomes becomes critically important because part of the way you will get C-suite attention is to make this important to them, not just to the health of the employee or the well-being of the employee but, if you’re able to tie it to the performance of the company in some way, it elevates the attention in the investment in these programs within the organization.

Dr. Kiki: Does it also lead to a positive impact on recruitment and retention of employees?

Brian: Yeah, absolutely. We did a survey with another company looking at the offering of well-being programs and the impact of those programs on such things as the emotional attachment an employee develops towards the job, how supported they feel by their employer in achieving their own health and wellness goals, their sense of community and connectedness and support at work, and translating that into more loyalty, employees who are more committed to the organization and act as an advocate for the company, you know, and even recommending the company to other people. There’s this effect when you hit a certain tipping point just by offering a number of programs, it doesn’t even mean you’re participating. But we found, just by offering more seven or eight programs in the area of healthcare management, employee health and well-being, was enough to drive more employee engagement around these elements of emotional affinity and feeling that the company was supportive, and supportive even with their own well-being. And that translating into more employer loyalty and even tie into job performance. There’s is a relationship between engagement and well being. Companies are now trying to see what that relationship is between well-being and business outcomes and there are some companies that are making some headway into looking at that correlation.

Dr. Kiki: Do you know what they’re finding? Is it positive?

Brian: Yes, and so, I’ll give you a couple of examples. There’s a company that was looking at call center performance. Business outcomes become very company specific or even industry specific. Call center metrics, in terms of customer satisfaction are also worried about turnover and burnout because those are tough jobs. People don’t typically call into a call center to tell you how well things are going. They’re typically an issue, so, they are stressful jobs. There was one company who started implementing resilience training within the call center to help employees ride through difficult conversations and to actually be more present and reduce absenteeism. They found that they had such success with that outcome in reducing absenteeism and it was sustainable over time that they were questioning even how many call centers they needed.

Dr. Kiki: Wow.

Brian: So, think about how that conversation changes with the C-suite. You go from talking about this resilience training as being more of a well-being initiative or a wellness initiative to reduce the stress of call center workers to possibly having a conversation about increased productivity and how many call centers do we really need if we’re driving productivity up. They got to the point where they started building in resilience training into their onboarding training of new call center employees in continuing to make it available. That’s an example of going from a focus on healthcare and healthcare strategy to more of a focus on workforce strategy and how workforce strategy can be tied to business performance. You start looking at what you’re trying to do with the health and well-being of your employees in a completely different light. The goal here being that you want investments in well-being to be viewed the same way a company views investments in training, learning and development, the safety, they’re all part of going back to producing and deploying that competitive, resilient workforce.

Dr. Kiki: It sounds like we’ve got employers who, and the C-suite employees, who are looking at the bottom line and they wanna have their cost savings. They want to hit their budget marks. But then there’s also this side of the positive benefits of these well-being programs that are showing more positivity toward these business outcomes. What would you recommend to an employer who’s sitting down and looking at their bottom line and trying to figure out what they’re going to design and implement as programs to optimize health and well-being?

Brian: Well first, you want to look at this more holistically and not just focus on the physical health. We talked about some of the opportunities around emotional well-being, financial well-being, and there’s data you can probably pull using third party (so you’re not seeing personalized information). To get a sense of where your areas of opportunity are and structuring those programs, that’s one thing. But I think tying it back to your C-suite is almost where you need to start. I think CEOs are either one end or the other or somewhere in between on this. They either get it and they’re very engaged because they intuitively understand the relationship between well-being and retention and engagement and workforce strategy. Or they are very possibly very financially focused, haven’t really seen the connection, and not sure if they want to make the investment in these programs because they don’t see the connection. Then you got others that sit somewhere in between, and that also, I think, speaks to their personal level of engagement in healthcare and well-being of employees in the company.

I think, first, it starts with understanding where your CEO and your C-suite is on the spectrum and then trying to understand what’s important to them, what are they driving as an organization, and then how do you try to make and see connection points to what you’re trying to implement or think you need to implement for the organization with the priorities, the business priorities of that organization. You’re trying to make that business connection and not just focus on, “These are wellness programs, these are health improvement programs.” That typically runs toward, “What’s the ROI on that?” Very programmatically, “What’s the ROI on that?” “I’m going to implement a resilience program, what’s the ROI on that program?” And it’s important to look at performance of these programs. We’re not trying to say that isn’t important.

But looking at them, just specifically what that program does as opposed to holistic impact on the organization. The study that we did with a third party, just by merely offering seven to eight programs seem to be a tipping point where it drove higher levels of engagement in terms of the employee loyalty, the belief that the company cared about their well-being, that was a supportive culture and they felt more of an emotional attachment to the company. Just by the mere offering of these programs, not that people participated in them but they knew they were available and they were there and that they were communicated and that it gave the employees a feeling that the company cared about them as an individual. I think that understanding your C-suite, understanding your culture, understanding where this fits in and how do I tie it back to what’s important to the performance of this company, is where I would start my diagnostics on how to move forward with the program.

Dr. Kiki: The resilience training that you mentioned seemed like a fairly innovative healthcare wellness or a healthcare prevention program for employees. Do you have some other examples of how companies are innovating in these healthcare prevention programs?

Brian: I think we’re seeing a lot emerge in the mental health area, for example. We’re seeing companies begin to do more training of managers and peers on the recognition of the signs and symptoms of behavioral health issues and challenges and then how to have the conversation with an employee to help stir them to the right resources. That’s something that’s really grown over the last couple of years as well as anti-stigma campaigns to help also break down barriers to access to mental health. We’re also seeing an increase in telebehavioral health services. We’re now offering behavioral health coaching and resources digitally for employees. We’ve seen over a 50% jump in the number of companies offering that in 2018.

Companies have an offering biometric screenings for years to help employees recognize and understand the health risk and try to help with prevention. But I think we’re seeing more around this shift to holistic approach to not just focus on the physical health because there’s a segment of your population that will engage and there’s a segment of your population that won’t engage in those things because they have other, either social determinants or other issues that they’re trying to address in their life that are more important to them at this time and they need to start there.

Dr. Kiki: Have you seen an increase in things like genetic testing or various maladies? I mean, mental health does have genetic ties. Cancer, there are definite genetic signals. Have you seen an increase in any of this?

Brian: We’ve certainly seen increase. And I think the challenge, and this is something employers are struggling with right now, it’s understanding what to cover with respect to genetic testing. It’s complicated by the fact that we have seen an explosion in the number of genetic tests that are out there now and they fall into a couple of categories. You have drug companion tests, which help predict or determine whether a specific drug will work for a specific patient, and you have genetic profiling tests, which look at tumors to see what types of drugs might be effective in treating the particular condition. I think the challenge employers have is what do I cover and what don’t I cover. They’re pretty much stuck in neutral in many respects because they’re trying to figure out what’s the right thing to do and they need some guidance. We’re trying to help them by collaborating with other partners in the industry and trying to make sense of what you should cover and what you shouldn’t cover and what guidelines can we put out there to help them make decisions about this space. It’s promising, obviously, but it’s daunting right now, from an employer perspective on what they should be covering.

Dr. Kiki: As we do have an increase in genetic testing, people are going find out more about the different mutations and variance that they have. What are the federal protections that are available in the workplace with people against genetic discrimination for health insurance?

Brian: You’ve got GINA, which is, if I remember correctly, the Genetic Information Nondiscrimination Act, which prohibit employers from using data to either affect someone’s employment or affect their coverage in some way. And those are the two major pieces of legislation that are out there that really provide the protection, legislation or regulations that really provide the protection for employees, as well as HIPAA, in terms of disclosing personalized health information. Big companies have well-designed wellness programs that are very compliant with HIPAA, ADA, and GINA. Companies do not look at individual personalized information. And I think we’ve got over that hurdle pretty much with biometric screening. I recall in a former life, when we first rolled out biometric screenings, we got that sensitivity from employees about, “Well, who sees this data? What are they gonna do with this data? How is this gonna affect my employment?”

And employers were very good about being upfront when they rolled these things out saying, “We don’t see personalized information. It goes to a third party, it’s managed by a third party, and it’s the third party who communicates you, your results, and what your opportunities are to reduce your risks.” And that’s the same thing that’s happening with genetic information. Companies don’t see the data, they don’t want to see the data. If they see anything, it’ll be in aggregate form, so it’s de-identified. It’s very important from an employer perspective that employees understand or they’re not gonna get anybody to participate in these programs. So, and the protections are there, both from a regulatory and legislative perspective.

Dr Kiki: How do you see the employer’s role in providing health plans and benefits changing and evolving in the next five years? Let’s do the five years out, what do you see happening?

Brian: So, I think employers are definitely here to stay in offering healthcare to their employees. Obviously, there’s a lot of uncertainty around the public exchanges in the individual market right now. We’re not really sure what’s gonna happen with that more long term. So, if you would have gone back five years ago and asked me that question, I know there was a lot of uncertainty, I would say, among employers and others on how long employers would be in healthcare. In fact, when I started this job three and a half years ago, on the very first presentations I did was in front of the board and leadership team of a health plan, where I was providing my thoughts in terms of whether employers would be in versus somebody else who thought they would be out. And there were a lot of those conversations going on, even in 2014. But today, and for some of the reasons as we started this conversation, with the general observations about the state of employer sponsored healthcare versus the public exchanges, I think employers are in this, will definitely be in this for the next five years.

Now, in terms of what will they be focused on and what will they be doing, I think you’re going to see much more focus on the employee experience with their benefits, both in terms of trying to simplify those decisions for them to make it easier for them as we talked about we’re starting to see concierge services and decision support services trend up to help employees navigate through the system. You’re going to see more in the way of that availability going forward. I also think you will see a lot more in the area of personalization. Again, leveraging data through a third party and this intersection of data and technology that has emerged is providing great promise in helping to engage people in the moment with the opportunity to make a decision that will positively impact their healthcare. There are some point solutions that are doing that very well right now around diabetes. When somebody’s out of range, their glucose is, they’re either hypoglycemic or hyperglycemic, that can feed something right to their monitor or right to their smart phone that can tell them what they can do in the moment to get their blood sugar back in line, you know. So, that’s just a small example.

One of the bigger challenges employers have right now is engagement, not engagement in terms of, “Is my employee engaged in my company,” but engagement in, “I’ve got all of these resources I’m making available to my employees. How do I get them to use them?” Because typically, they’re out of sight and mind. The way employers have historically communicated is more broad based shotgun communications whoever we’re sweeping at the time, great. But if I’m an employee who’s pretty healthy, I file that and six months later, if I have a knee issue or a back issue and there’s a resource available, I completely forget it’s available. Through predictive analytics and pushing communications to a smart phone, you will see more and more opportunity to engage employees in the moment around a particular issue they may be having or an opportunity to improve their health.

Dr Kiki: I think it’s an employee issue as well. Maybe employers identifying or making information consistently and constantly available for their employees. Because a person is really not paying attention to that stuff until they have that knee problem, until they have the back problem, until they start coughing, and then they say, “I need to go to a doctor.”

Brian: Right. How do we make from that point reach them in the moment to make that experience as simplified and as convenient as possible. Given the technology that’s available and the platforms that are emerging and the predictive analytic capability through third parties to mine the data, for lack of a better term, to push communications to people, that’ll be relevant to them as an individual, is very promising and we’re seeing some good signs of some of the results of those today that’s just gonna get better as we go forward. The big question is how creepy is too creepy when it comes to personalizing information, right? I think companies will approach that differently. Some will dial it up and some will go more conservatively in terms of what they do. It’s all being duped with third parties anyways, but in many cases, employees are gonna have to opt in, if you will, to participate in those things. But the opportunity is ahead of us.

Dr Kiki: Thank you so much, Brian. It was wonderful speaking with you. Thank you for listening. If you enjoyed this conversation, please subscribe to our podcast and leave a review. Sequenced is brought to you by Color, a health service company that helps you learn your genetic risk for common hereditary conditions. To learn more, visit

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