Memo to the health care industry: The jig is up by JP Mangalindan @FortuneMagazine April 14, 2010, 10:32 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The demand for high value health care by big corporations is real By Colin Evans & Jacob Sattelmair, Dossia Employer health care spending has been rising at a rate of over 9% annually, according to PriceWaterhouseCoopers. The health legislation recently passed will expand access to health insurance, but will leave the health care system unreformed. Not only that, but challenges faced by large employers remain largely unchanged. Employer health care spending has been rising at a rate of over 9% annually, according to PriceWaterhouseCoopers, threatening the global competitiveness of American corporations. Though large employers are uniquely positioned to demand better value from the health care system, they have historically been largely ineffective in doing so. Corporations today are committed to financing an unsustainable health insurance benefit while allowing most decision making to be controlled by outside interests. They have suffered from the fact that since spiraling health care spending is no one group’s fault, it’s no one group’s responsibility, either. However, as executives and employees increasingly assume responsibility and take concerted action to address health care spending, they are demanding a higher value, lower cost health care system that would benefit all Americans. Private sector greed, particularly within the entire health care industry, is often blamed for spiraling health care costs. Yet there are many more companies in America that are hurting as result of runaway health care spending than there are profiting from it. US employers provide health insurance for over 160 million Americans. Together with their employees, they pay for nearly 100% of the ever-rising $2.5 trillion spent each year on health care in the US. They do thisthrough direct spending, premiums, taxes, cost shifting for charity care, and inflated prices that subsidize government under-reimbursement. Follow the money Nobody has greater financial motive, and means, to champion a better value in our health care system than US corporations. Large, self-insured employers are uniquely positioned to save money by lowering the demand for, and improving the efficiency of, care delivered to employees. Yet even in those large companies, preventable chronic diseases are rampant, health insurance is typically irrational, prices are opaque, employees are uninformed consumers, and up to a third of spending is wasted, according to a Thomson Reuters report. It is unimaginable that any successful US corporation could remain indifferent to double-digit spending inflation on an essential cost. But since health care is outside of most companies’ direct business expertise, they have largely viewed the health care industry as incomprehensible and therefore untouchable. Rather, employers have focused on shopping health plans, sharing costs with employees, and promoting employee wellness. Again a huge challenge is that spiraling health care costs are seen as nobody’s fault, and nobody’s responsibility. HR departments are tasked with providing benefits and CEOs are focused on “core” business issues, so both are disinclined to try to own this thorny problem. Employees are generally satisfied with generous health benefits without realizing that spiraling costs have been stealing their wages for decades. Waking up about costs Employers, however, are beginning to stir. Large self-insured employers are starting to understand their power lies in becoming more discerning consumers of health care, in order to drive efficiency. By doing so, they are changing the face of healthcare in the US and providing leadership and innovation that is desperately needed. Pitney Bowes, a long-time leader in employee wellness, has a robust program in place to create a healthy corporate culture and Pitney Bowes’s health care costs are about two thirds that of comparable companies. Intel Corporation has taken great strides to encourage its employees toward value based, consumer driven health insurance. This type of consumer driven plan is now offered by over half of employers and has been shown to save employers hundreds of dollars per employee annually, particularly when combined with employee wellness initiatives. What comes next: the right to your digital health care data To drive efficiency in the health care delivery system, employers are taking a more hands on approach with providers. Many employers offer their employees access to convenient, cost-effective nurse-staffed onsite health clinics for basic care. Self-insured employers are also beginning to cut unnecessary overhead by negotiating prices directly with hospitals and provider networks — bypassing the health plan administrators that stand between them and make money on every claim that is filed. The key to all such initiatives is data – better informed patients will become more demanding and more effective healthcare consumers. The law is very clear that everyone has the right to an electronic copy of their health information, but many health plans have been doing everything possible to reduce employer and patient leverage by illegally holding on to members’ data. Some AHIP members have gotten on board with the idea of a connected membership but most of them are refusing to make it easy for employees to exercise their right to copies of their health information. This is an indefensible position, and it is only a matter of time before employers select health plans that connect and refuse to do business with those who do not. Colin Evans serves as the president and CEO of Dossia , a non-profit organization of large employers seeking to drive consumer-initiated change in health care. Jacob Sattelmair, is a senior research fellow there.