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Why Collaboration is Key to Defining True Value in Health Care

| Health Care, Labor & Workplace

While predicting and managing health care costs consistently ranks as one of the top concerns for our members, it is also one of the issues that many of you feel you have the least control over. The fee-for-service system that continues to dominate the health care marketplace in the U.S. deserves some of the blame for this; its fragmented approach to services rewards providers on the basis of quantity over quality in medical care. Fixed annual budgets for providers, another popular approach, still fails to maximize quality in health care because of the inevitable disconnect between actual patient needs that arise in a given year. Even capitation, a value-based reimbursement model that measures quality by broad population-level metrics, struggles to provide patients with affordable, efficient care solutions to meet their specific needs and thus cut costs across entire systems.

In such a convoluted climate for determining health care value, the reasons for employer frustrations are no great mystery. But at the NC Chamber, we believe employers have a lot more to offer to this discussion than simply throwing up our hands in defeat. That is why the NC Chamber and NC Chamber Foundation have been working hard to foster a collaborative discussion among stakeholders along the entire health care supply chain to drive our state toward true health care reform that encourages cost-savings by maximizing value for patients and providers alike. And as two Harvard Business School professors, Michael Porter and Robert Kaplan, point out in this recent editorial published in the Harvard Business Review, we are in good company with our collaborative, employer-driven approach to achieving high-quality health care in North Carolina.

In the article, “How to Pay for Health Care,” Porter and Kaplan propose that rather than continuing to rely on top-down approaches like fee-for-service, fixed provider budgets, or capitation to increase health-care value, the U.S. health care system should instead transition to a bundled service approach. Under such a system, individual providers are paid for the treatment of a patient’s condition over the entire cycle of care. This not only encourages cooperation among specialists and supports the right kind of competition – the kind that gives patients greater choice – with the acceleration of multidisciplinary integrated practice units (IPUs). It will also help to drive better outcomes for patients and reduced costs throughout the entire system as “…the accountability built into bundled payments will finally bring to health care the systematic measurement of outcomes at the condition level, where it matters most.”

“The result will not just be a downward “bend” in the cost curve – that is, a slower increase – but actual cost reduction,” allege Porter and Kaplan. “Our research suggests that savings of 20 percent to 30 percent are feasible in many conditions.” Perhaps this sounds too good to be true? The authors point out that highly successful bundled care models have already been introduced in other nations like Sweden, where a bundled payment program for hip and knee replacements introduced by the County of Stockholm in 2009 resulted in a 17 percent reduction in costs and a 33 percent reduction in complications over two years. And right here in North Carolina, a cooperative bundled payment program between Blue Cross and Blue Shield of North Carolina and participating hospitals under the physician-owned OrthoCarolina group has achieved average per-patient cost reductions of 20 percent since it was introduced in 2014.

The specific solutions to comprehensive health care reform – whether they be bundled care models, accountable care organizations, or some combination of approaches – remain up for discussion, of course. But at the NC Chamber, we recognize three things as crystal clear regarding the current state of health care in North Carolina: first, our current climate of fragmented care and accountability is simply unacceptable; second, it will take engagement and collaboration between all stakeholders along the health care supply chain if we hope to achieve comprehensive health care reform solutions; and third, as the number one purchaser of health care coverage, both in our state and across our nation, employers like you have an essential role to play in driving that discussion toward a true definition of value in the health care marketplace.

You can become further engaged in this important discussion by joining us at the Sheraton Imperial in Durham on September 15 for the NC Chamber’s 2016 Health Care Conference. There, the NC Chamber Foundation will reveal the initial results of a study commissioned with the Benfield-Gallagher Group, a national health care research firm, which aims to take this statewide conversation to the next level. Contact NC Chamber Policy Development Manager Cassi Zumbiel at if you have questions about our efforts to support collaborative health care initiatives in our state.

Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber