HRO Today July/August 2017 - 64

The Mercer Report
Value Over Volume
Data is driving a new approach to healthcare benefi ts:
accountable care organizations.
By Molly Loftus
With the new American Health Care Act now in
the hands of the U.S. Senate, there's no doubt that
employers will play a major role in true healthcare
reform. More than 70 percent of Americans receive
health insurance through their jobs, so organizations
must actively infl uence improvements in the quality and
cost of care.
At this point in the evolution of employer-sponsored
healthcare, reimbursement changes are very much a
part of the conversation. Organizations are no longer
passive consumers of insurance products; they expect
their healthcare investment to yield better patient
outcomes, more effi cient care, and an improved
member experience.
It is widely recognized that the U.S. healthcare system
is fl awed and has high costs and an inconsistent quality
of care. According to research from the Dartmouth
Institute for Health Policy and Clinical Practice, nearly
30 percent of U.S. healthcare spending is considered
waste: unnecessary care, inappropriate care settings,
and medical errors. Driving this troubling statistic
is a reimbursement system that rewards healthcare
providers for doing more rather than for accomplishing
more. As policymakers struggle for consensus on how
to address these core problems, employers are taking
action.
For example, in an effort to rein in costs and
unnecessary procedures, more organizations are
offering access to an accountable care organization
(ACO), a type of value-based care system that offers
incentives to groups of providers to deliver coordinated,
high-quality care that saves money. Healthcare
providers in these systems are measured on both cost
and quality outcomes for an entire patient population.
If costs come in lower than expected, and quality
standards are met, providers are paid a portion of the
savings. What many people don't realize is that lower
cost does not necessarily mean lower quality. Investing
in preventive care, eliminating duplicative tests, and
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HRO TODAY MAGAZINE
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avoiding costly ER visits by extending doctor's offi ce
hours are all examples of ways that costs can be lowered
without sacrifi cing care quality.
However, only 13 percent of employers offering ACOs
are able to report some cost savings, while most can't
measure results, making it impossible to know if they
are working.
What employers need is hard data about the
geographical locations in which they operate, but
such information has traditionally been diffi cult to
come by. But the digital transformation underway in
today's organizations makes a new approach possible.
Organizations can collect and integrate detailed
information about healthcare providers in their top
locations and tailor it to their specifi c needs. As an
example, Mercer has been actively analyzing claims
data to understand differences in practice patterns of
different geographies, such as unusually high c-section
rates or knee and hip replacement rates. This data can
help organizations understand where opportunities
exist to lower cost and improve quality.
The data-analysis approach can help determine the
extent of the opportunity for cost savings, improved
quality, and a better patient experience. For each
location, data on three types of problems are collected
from healthcare utilization and claims data, and
compared with the national average:
1. Underuse. Is there too little preventative care in the
market, such as screening for cholesterol or for breast,
cervical, or colon cancer?
2. Misuse. Is care being delivered ineffi ciently? For
example, are there more complications resulting from
hospital stays, requiring a high rate of re-admissions?
3. Overuse. Are there too many procedures, such as
c-sections or knee and hip replacements, that may not
always be necessary?
HRO Today July/August 2017

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