Companies are joining coalitions and purchasing groups not just to cut health care costs but to improve quality fortheir employees.

Executives of coalitions from around the country spoke at the Employer Health Care Conference presented by theConference Board and sponsored by Hewitt Associates. Speakers at the January conference expressed theircompanies' concern about preventable medical errors that kill thousands of hospitalized Americans each year.

A Coalition of Coalitions

Nearly 100 coalitions around the United States today are members of the National BusinessCoalition on Health (NBCH). These coalitions represent more than 8,000 employers and more than 34 millionemployees and dependents.

"The main thrust of what we do is give tools to help employer members do value-based purchasing" that looks atcost, quality, and the final outcome of services, says Gregg O. Lehman, NBCH president and CEO.

"Our mantra for the year 2000 is to work hand in glove with the provider community to come up with some groupsolutions," Lehman tells HRMN. "We want to dispel the myth that employers only buy on price. Some do, but inour organization they look at quality."

In the long run, quality health care costs less because it helps prevent and manage the most expensive diseases,Lehman notes. "We try to teach employees to have a long-term view, not just a knee-jerk reaction" to health carecosts.

Employers join coalitions for better leverage, according to Lehman. "They can go in as one unified voice and havea lot more capability to make intelligent purchasing decisions. If you have 1,500 employees but you go in with 50like-minded employers, you can cut a better deal."

Coalitions may want to give incentives to providers similar to the kinds of incentives they give to suppliers,Lehman says. "Not to beat up on providers but to encourage and maybe reward them."

Lehman doesn't believe employers will stop providing health benefits but will change their role, becoming morelike ombudsmen than decision makers.

"They will force more decisions down to the employee," he says, adding that "they've got to figure how toeducate employees" about their health care purchases.

Stuck in the Middle

The problem with the prevailing model of managed care is that it leaves companies stuck right in the middle, saysSteve Wetzell, executive director of the Buyers Health Care Action Group, a coalition of Minnesota companies.

"We give employees allowances and send them shopping for their own care. It gets us out of the middle," Wetzellsays.

Consumers respond to the right incentives, he believes. "They want to shop. We just stood in their way."

And doctors will compete if given a chance, he says. "We say, 'You set the price and explain why you are moreexpensive than others providers who do as well on the coalition's scorecard.' It's the myth of Americanmedicine that if you pay more, you get better treatment."

Make Drastic Move

Patricia E. Powers, executive director of the Pacific Group on Health in San Francisco, agrees that companieshave allowed themselves to be stuck in the middle and need to make a drastic move.

"We've been focusing on the flesh wound. We haven't focused on the fundamental changes needed to move theindustry," says Powers.

Pacific Group on Health is a nonprofit coalition of public and private sector purchasers whose member companies' healthexpenditures for approximately 3 million people exceed $3.5 billion annually.

Like Lehman, Powers sees the value of strengthening provider incentives. She calls for "linking dollars to qualityand data" to create a type of pay-for-performance system for providers.

Powers also sees the need to create consumer economic incentives to choose high-value providers. Health plans should standardizeincentives "to migrate folks toward the better-performing end," she says.

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