Blogs | HCMS Group

Video 5 of Hank Gardner’s Series: Human Capital Risk Index — Population Risk Stratification

Written on February 28, 2013 by Hank Gardner, M.D. in Costs, Hank Gardner Blog, Medications, Policies and Incentives, The 5%

In order to manage risk, you need to be able to predict it. Health benefit costs continue to rise at an unsustainable rate. Thirty to forty percent of costs are driven by over-utilization and waste. This waste cannot be analyzed with reactive cost reports and analytics; you need a comprehensive, predictive risk assessment.

HCMS Group’s Human Capital Risk Index® (HUI) is the only leading risk score that predicts and measures human capital health and job performance risk (not just disease).

Built from our diverse research reference database of over 3.2 million individuals from over 100 distinct populations, the HUI takes various data types into account; it utilizes lost-time, medical, pharmacy, and compensation data in order to provide the best assessment of risk and predict high-risk/cost cases.

Our HUI is unique in the fact that it incorporates lost time data and enables our evaluation of a full spectrum of risk. Using lost time data allows us to predict progressive HUI scores before claims cost even come in. This foretelling risk index allows us to provide the right service at the right time without delaying cost-saving and risk-prevention opportunities due to a lag in claims data.

Learn more about HUI by watching the video below.

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Video 4 of Hank Gardner’s Series: The 5% of employees driving over 50% of benefit costs

Written on January 22, 2013 by Hank Gardner, M.D. in Hank Gardner Blog, The 5%

Population Turnover in the “5% Group”

Earlier videos have demonstrated how 5% of an employee population is driving over 50% of benefit costs. Hank Gardner’s fourth video focuses on the management opportunity of understanding that people migrate in and out of this 5% high-risk/cost group.

This video answers the following questions:

How is “the 5%” population dynamic?
How often is there turnover in this group?
How is our healthcare system a reactive system?
What does the migration in and out of the 5% group help indicate?

Have a question or comment? Leave a response below and Dr. Gardner will reply.

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Video 3 of Hank Gardner’s Series: Which benefits are driving your company’s cost waste?

Written on December 17, 2012 by Hank Gardner, M.D. in Costs, Hank Gardner Blog, Policies and Incentives, The 5%

Employee Population Risk Stratification with an Integrated Benefits View

As we have presented in earlier videos, we know that 5% of employees drive over 50% of a company’s health benefit costs, but which benefits are driving the most cost and waste?

Watch the third video in Dr. Hank Gardner’s “New Thinking Paradigm” Series to hear his discussion on how lost time (short & long-term disability and workers’ compensation), prescription drug, and health plan policies are contributing to the waste.

Learn the answers to these questions:

How does the design of benefits drive cost and waste in the different employee risk groups?
What are the costs incurred by “the 5% group” broken down by benefit type?
What behaviors are predictors for employee migration into “the 5%”?
What is an integrated benefit management strategy and why is it important?

Have a question or comment? Leave a response below and Dr. Gardner will reply.

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Video 2 of Hank Gardner’s New Thinking Paradigm Series

Written on November 29, 2012 by Hank Gardner, M.D. in Costs, Hank Gardner Blog, Policies and Incentives, The 5%

Dr. Harold (Hank) Gardner is the founder and CEO of HCMS Group. His 40+ years of experience in healthcare delivery, health economics, and health professions education coupled with the use of HCMS’s unmatched Research Reference Database (RRDb) fuels his “new thinking” disruptive solutions for the healthcare cost and quality problem.

Dr. Gardner’s second video of this new series addresses Population Risk Stratification as he discusses how employee risk groups differ in terms of benefit use. Just 5% of an employee population drives more than 50% of benefit costs.

Have a question or comment? Please leave your response below and Dr. Gardner will reply.

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Hank Gardner’s New Thinking Paradigm Series – Video 1

Written on October 29, 2012 by Hank Gardner, M.D. in Hank Gardner Blog

Dr. Gardner’s first video of this new series addresses HCMS Group’s RRDb (with de-identified information on over 3.2 million individuals) and “Big Picture” Data Model as he discusses the importance of comprehensive person-centric data in human capital risk management.

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Health Risks and Cost Risks are not the same

Written on August 28, 2012 by Wendy Lynch, Ph.D. in Costs, Policies and Incentives, The 5%, Wellness

The weak association between health risks and near-term health care utilization

There is a widely-held belief that companies can reduce healthcare costs by encouraging healthy behaviors. This presumption is based on decades of research showing that:

a) Health risks (such as smoking, inactivity, and obesity) increase the chances of chronic disease over time

b) Health risks are associated with higher costs. This body of evidence fuels the multi-billion dollar wellness industry and dictates the types of programs offered to employees.

But how strong is the relationship? And can it help with short-term cost management?

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The 5%: On more medications (Especially pain medications)

Written on June 18, 2012 by Wendy Lynch, Ph.D. in Costs, Medications, The 5%

The 5%

As we have shown in earlier blogs, “the 5%” is comprised of workers who are spending the most in total integrated benefits costs and are accounting for about 50% of all costs. On average, the 5% receive more than ten medications and see ten providers annually.

Because total benefit costs for the 5% are 20 to 30 times higher than the 95%, one can expect a higher rate of utilization in every area.

Pain medications are the most frequently prescribed class of medication. Pain is not usually a unique condition, but instead a symptom of another condition or a result of a procedure.

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What makes a person expensive in healthcare? Not what most people think.

Written on April 4, 2012 by Wendy Lynch, Ph.D. in Costs, Medications, The 5%

A question from the audience last month: “We spend the most in healthcare on a small portion of really sick people. You don’t expect them to shop for care during an emergency do you?”

I was giving a presentation about the important role that cost-conscious consumers can and should play in healthcare. The person asking the question, as everyone could tell, disagreed with the idea. While I doubt anything changed her mind, her loaded question illustrates some common misconceptions in healthcare: 1) high costs are driven by catastrophic medical events; and 2) treatments for these severe conditions leave little room for discretion and often require quick medical decisions.

In this context, it’s no wonder many people jump to an extreme conclusion when they hear the term “consumerism,” because they assume it means patients need to stop and compare prices in the height of an emergency.

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Are we steering patients to the right places? Comparing “in-network” and “out-of-network” costs.

Written on February 8, 2012 by Wendy Lynch, Ph.D. in Costs, The 5%

Authors: Nathan Kleinman, Justin Schaneman, and Ian Beren.
Anyone who has selected health insurance in the past decade is probably familiar with the concept of “networks.” Under the rules of an insurance policy, patients will pay a different portion of treatment costs depending on whether specific doctors and hospitals are part of the insurance plan’s approved “network.” Some policies pay none of the costs when the patients gets care out-of-network, others pay some.

While provider networks are created in part to deliver higher-quality care (1,2), the primary purposes of networks are cost management and standardization. Insurers negotiate a standardized set of lower fees from provider groups in return for directing patients to those practices.

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Paying patients to take drugs, or helping them make informed choices?

Written on November 29, 2011 by Wendy Lynch, Ph.D. in Costs, Medications, Policies and Incentives

It’s hard to imagine something scarier than a heart attack: crushing pain, combined with the realization that the organ you rely on to beat every second of every day is in trouble. Suddenly, you are mortal.

Many patients who experience a heart attack consider it a wake-up call, and a reason to take better care of themselves: “Maybe I should walk more and lose a few pounds.” Certainly, for heart-attack victims who are prescribed a medicine to drastically reduce the chances of another heart attack, there is a strong motivation to take it.

But here’s the surprising part: often they don’t. In the year after a heart attack, only about 40% of patients take medications as prescribed (1).

Nudging people toward making good choices

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Your Anger is Understandable; Now Do Something With It

Written on October 19, 2011 by Wendy Lynch, Ph.D. in Healthcare Reform

While virtually every other sector of the economy stays flat, healthcare costs will climb once again in 2012. The average cost of healthcare coverage for US employees will exceed $10,000 (1). Already squeezed to balance budgets, employers are looking for any cost savings they can find. Given their track record for reducing costs, it is not surprising that over 70% of employers offering insurance will provide a consumer-directed health plan (CDHP) in 2012, and one-in-five will ONLY offer a CDHP (2). But to many employees, the change isn’t a welcome one. Typical reactions:

This new plan is disappointing and frightening. It’s not right that you are adding both more cost and more risk to what I have already. What if something serious happens to me or my children? How will I afford a bigger out-of-pocket cost? This is not what I signed up for. I’m switching to my husband’s plan.

It is clear this has nothing to do with “consumers”, and everything to do with shifting costs onto the backs of workers. Shame on you.

What they really mean: “I’m mad because you are taking something away. I want health care costs completely covered like the old days and I don’t want to be asked to take a greater role in paying or assuming risk. I’m angry because you (employer, HR) inflicted this change on me.”

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One Size WON’T Fit All

Written on October 17, 2011 by Hank Gardner, M.D. in Costs, Healthcare Reform, Policies and Incentives

Successful Companies Will Be the Ones that Design their Own Health Care Reform Model

With the federal government preparing to mandate an Essential Health Benefits (EHB) package, companies are going to have to get creative. If they fall prey to EHBs, costs will continue to rise. The successful companies will be the ones that wrangle the problem by implementing their own customized design for health benefits, just like they do wages, that de facto becomes their own version of Health Care Reform.

Despite what appears to be incentives to drop their plans and send their employees into the state-run exchanges when they start up in 2014, companies will have a vested interest in continuing to provide a health benefit package to their employees for 2 main reasons:

Health benefits are a major component of total employee compensation needed to recruit and retain workers.
Losing control of the cost and design of an important component of rewarding and retaining employees can jeopardize business success. See our book, Who Survives? How Benefit Costs are Killing Your Company.

Labor costs vary dramatically from industry to industry, so applying a one-size-fits-all approach with EHBs will wreak havoc with many, and particularly smaller businesses.

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Note to consumers: the rules in healthcare are a little different

Written on September 28, 2011 by Wendy Lynch, Ph.D. in Costs, Healthcare Reform, Medications

Let’s say you’ve invented a new product. Before you can sell it, you need to figure out its price such that you maximize revenue without pricing it higher than your customers will pay. If it costs more than similar products, you’ll need to figure out how to convince people to pay more for your product than they might elsewhere. This is how healthy, rational consumer markets work, promoting innovation that balances cost and quality. To contrast, now imagine you’ve invented a new product in healthcare. Guess what? You get to set the price without worrying what cost consumers will tolerate because they won’t be paying for it directly, and it doesn’t need to reflect how well the product works!

Because consumers don’t realize that the price of healthcare products and services is set very differently than prices in other markets, it leads to perceptions and behaviors that can be expensive and even dangerous. Here is a personal example:

An older relative of mine, Gladys, came to visit last year. While here, she became ill and I took her to my family physician. Among other outcomes of the appointment was a prescription refill, which she took to the pharmacy. Upon returning to my house, Gladys was clearly upset: “Why did your doctor give me a cheap medicine?” “I’m sorry, Gladys, what do you mean?” “My doctor gives me the good medicine, the $60 one.” “Gladys, I think she gave you the generic; it’s the same medicine, it just costs less.” “If it was as good as my medicine it wouldn’t be so cheap,” she grumbled.

Gladys kept the medicine during her visit, but told me a few weeks later that the ‘cheap’ medicine didn’t work so she went back to her own doctor to get the “good medicine.”

Gladys is a strong believer in the axiom: ‘you get what you pay for.’ And in most other industries, Gladys would be right.

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The similarity between financial markets and healthcare: uncertainty

Written on August 18, 2011 by Wendy Lynch, Ph.D. in Costs, Healthcare Reform

A question: Does uncertainty in medicine mean consumers should be more or less involved in choices?

As the country watched wild swings in the stock market these past weeks, every investor faced unfortunate hindsight: if only I had cashed out at 12,500! Combined with the pain of continued uncertainty, many investors decided to remove their (remaining) funds simply to stop the discomfort of an unknown future.

While we all dread the anguish of downward market fluctuations and wonder daily what is in store for our dwindling nest eggs, no one can change the fundamental truths of investing: risk and uncertainty. Yes, experts can advise us and help us assess varying degrees of risk among options, but no one can guarantee the success of our investment decisions, no matter how well-informed.

If the world of financial markets is this uncertain, should investors be less involved in the decisions about where they place their money and how much risk they assume? One could easily argue that the average investor is not capable of making good decisions. So, should we all find a seasoned stock broker to make decisions for us, independent of our personal circumstances and preferences? After all, they are the experts—right?

What about letting someone else make decisions about our health?

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The power of consumer ratings: How Yelp! and Amazon will promote healthcare quality

Written on July 20, 2011 by Wendy Lynch, Ph.D. in Costs

Online consumer ratings of healthcare services are a reality. On sites like Yelp!, Angie’s List, and RateMDs, a growing number of patients can (and do) rate their physicians and hospitals on a variety of factors related to service and treatment. Other patients place a very high value on individually-reported experiences, so much so that researchers found that a single, emailed anecdote from a relative held as much weight as ten quality ratings graphs from the validated quality tool, HCAHPS (1).

What influence will online ratings have on healthcare? At this early stage, there is both great enthusiasm for and great resistance to their use in decision making.

Not all providers welcome consumer ratings.

It seems a significant subset of physicians believe that patients are incapable of assessing the quality of their healthcare services. Some doctors have even tried to prevent their patients from doing so by requiring patients to sign a “no negative review” agreement – restricting online reviews (2). One company actually specializes in creating contract language allowing physicians to legally remove any patient reviews from websites, preventing a forum for what some might call honest feedback (3).

What does it mean when an industry tries to block efforts to gather consumer input about services? Would we understand if airlines claimed that travelers should not be allowed to rate their travel experience because the average consumer cannot understand the complexity of aviation? Or if cell phone providers claimed that consumers are not qualified to judge technology because telecommunications is beyond their comprehension? Doubtful.

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In healthcare, why it is best that we choose for ourselves.

Written on June 23, 2011 by Wendy Lynch, Ph.D. in Healthcare Reform, Medications

Faced with a difficult medical situation, it is not uncommon for patients to ask doctors for advice. But asking, “Doctor, what should I do?” is a very different question than, “Doctor, can you help me understand and weigh my options?” It may sound like semantics, but your involvement and participation in making personal health decisions can make a difference in your recovery.

A recent study showed that patients who make their own choices report better recovery than those for whom choices were made by doctors (1). Regardless of WHAT choice was made, the patients who did their own choosing reported better physical and psychological outcomes; active choice-making had its own healing power. It may also protect us from unwanted consequences.

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Unless consumers demand innovation, there’s no end to the rising cost of healthcare.

Written on May 27, 2011 by Wendy Lynch, Ph.D. in Costs, Healthcare Reform

In 1992, I worked for a data analysis firm that had to spend a considerable portion of its revenue to purchase data storage. I recall that a computer storing 10 gigabytes of data cost over $60,000 and measured several feet across. Today, the same capacity (at one hundred times the speed, in the palm of your hand) goes for under $60.

Technology advancements hold amazing promise for virtually every aspect of our lives. In the case above, information technology now provides exponentially more function, yet sells for 1/1000^th the price! We all own communication and computing devices that are almost obsolete within months, while prices continually drop. Affordable cars are more powerful, while at the same time more fuel-efficient and safer. In other industries our gains have been in the form of convenience and flexibility. In a single generation, consumers have completely changed how they manage services like banking and travel, receive information through online sites, meet and connect through text, tweets, and social sites, and purchase billions of products and services every year through eBay, Amazon and Groupon.

Then there’s healthcare, where prices only go one direction: up.

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Imagine a football team without a front line. That’s medicine when (if) primary care declares independence.

Written on April 25, 2011 by Wendy Lynch, Ph.D. in Policies and Incentives

Behind closed doors trouble is brewing, and maybe it’s about time.

The situation has all the elements of a daytime drama: an exclusive cartel dictating price; a powerful committee with secret members and closed-door meetings trying to avoid exposure; members threatening mutiny; and media “spin” making it hard for the public to tell good guys from bad guys.

No, I am not referring to the NFL dispute between owners and players. This is medicine.

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Incentives Matter – Ask Primary Care Physicians

Written on April 25, 2011 by Hank Gardner, M.D. in Healthcare Reform, Policies and Incentives

The article “A Family Doctor Looks to Retire, but Finds No One to Take Over” strikes at the root of our current healthcare access, quality and cost problem on two fronts. One of our five economic truths about healthcare is “what gets paid for get’s done” and insurance reimbursement for preventive and cognitive care makes it virtually impossible for primary care physicians to make a living. In Wyoming (not unlike much of small-town USA…and many urban areas as well) less than 10% of public and private insurance is for preventive and cognitive care (medical providers talking to patients). Yet everyone needs access to that kind of care, and without it, the funnel to highly technical specialty care (including high cost testing) is widened and reimbursement from third parties is much higher. Getting these incentives right for both providers and patients is a central focus in the new health plan being implemented in the State of Wyoming for the uninsured.

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Yes, Healthcare Reform is About Jobs!

Written on March 12, 2011 by Hank Gardner, M.D. in Healthcare Reform, Policies and Incentives, The 5%

Last week, Wyoming governor Matt Mead signed into law new legislation that moved the Wyoming Healthcare Reform model into Phase 2. We had a significant role in the design of the new model, which connects access to health insurance with jobs and carries a premium that is roughly 30% less than the current Medicaid premium cost the state pays.

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