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August 2015

From HBR: "Intel's Employer-Led Health Care Revolution"

BR1507_500The July-August issue of Harvard Business Review had an interesting article about Intel's approach to "tame its soaring health care costs". Consumer-driven health care offerings such as higher-deductible plans with lower premiums, tax-advantaged accounts and tiered-provider options, as well as primary care clinics at Intel work sites and wellness/fitness incentives generated improvements, but by 2009 it became clear to Intel that they would not be enough because "they didn't affect the root cause: the steadily rising cost of the care that employees and their families were receiving." 

Some staggering numbers: "Intel projected [in 2009] that expenditures for its 48,000 U.S. employees and their 80,000 dependents would hit $1 billion by 2012 - triple the amount it spent in 2004." Intel's solution, as suggested by one of the article's co-authors herself at the time, was to "use its purchasing power in markets where it had operations to influence health care players - care providers, health plan administrators or insurers, and other employers - to rise above their competing self-interests and work together to redesign the local health care system." Intel was helped in this endeavor by Virginia Mason Medical Center in Seattle, WA, and Intel's health plan administrator, Cigna, "to contribute the claims data required to establish priorities and track progress."

The pilot Healthcare Marketplace Collaborative (HMC) was launched in Portland, OR. The authors explain that "over five years, it successfully implemented new clinical processes for treating six medical conditions and for screening patients for immunizations status and illnesses such as diabetes and high blood pressure." As a result, the direct costs for treating three of those conditions were reduced by 24% to 49%. It also "emphasized evidence-based care, eliminated unnecessary care" and more. 

The elements presented as critical to the HMC's success are a bit vague, although accompanied by several paragraphs of text each, but here they are anyway:

  1. "make explicit what each player is bringing to the effort",
  2. "establish a shared aim",
  3. "don't reinvent the wheel",
  4. "make it flexible",
  5. "prioritize on the basis of impact and difficulty",
  6. "choose simple metrics and goals",
  7. "use one improvement methodology",
  8. "fix the business side". (Administrative costs were estimated to consume more than 25% of U.S. hospitals' expenditures, according to a Health Affairs study. Intel was able to decrease that thanks to its Rapid Integrated Lean methodology, leading to an estimated $2.6 million in annual savings.)

The most interesting parts of the article were the "Understanding the challenges" section (p.49) and the graph showing "Two approaches to treating back pain" (p.48). In the HMC's process, the rehab office assistant "uses a screening tool to determine whether the patient can go straight to physical therapy". In the traditional approach, the patient must first undergo a PCP visit, a specialist visit, a PCP follow-up and a specialist follow-up before going to physical therapy. The "Building a Collaborative" chart, describing the responsibilities and frequency of meetings of certain stakeholders and the time commitment of team members to staff the HMC initiative, will certainly be helpful for other large companies that would like to emulate Intel's example.

The article is available for free in its entirety on the HBR website. Enjoy!