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How Employers Can Help Create a High Performance Health System

In the United States, we rely on employers to provide health insurance coverage to 160 million workers and their dependents, or almost two-thirds of the non-elderly population. Most employees who receive job-based coverage are happy with it—and employers who offer health benefits are committed to continuing to serve as the backbone of our insurance system, according to a Commonwealth Fund survey.

Yet, as other Fund studies have demonstrated, few American business owners would be satisfied with the performance of the system if health insurance were their core business. Spiraling supply costs, variable and inadequate quality, dissatisfied customers, and little or no access for millions of Americans—these are not ingredients in the recipe for success. Not surprisingly, the U.S. does not stack up well when it comes to overall health system performance. The National Scorecard released by the Fund's Commission on a High Performance Health System found that the U.S. fell short on every benchmark of health system performance, scoring a 66 out of a possible 100.


What Are the Goals?

As the largest collective purchasers of health insurance, employers can and should drive the fundamental health system reform our country needs—and that Americans want. And the good news is that employers want to play this role. In launching the Coalition to Advance Health Care Reform a few weeks ago, the Safeway CEO Steve Burd said, "As major employers, we are engaging in one of the most crucial domestic policy debates of our time—fixing our nation's health care crisis, reducing out of control costs and ensuring every American has affordable health care."

U.S. Health and Human Services Secretary Michael Leavitt has called upon employers to commit to four "cornerstone" goals to improve quality and lower costs: implementing standards for health information technology, so that information can be securely shared with patients and among providers; reporting on quality of care measures; providing information on prices and costs of health care services; and promoting quality and efficiency through incentives. Last week, Secretary Leavitt announced that 775 companies had committed to the plan.

These cornerstones will unquestionably contribute to a new and stronger foundation for our health system. But will this foundation be enough to build a cathedral—a new structure for the health care system? I'd like to suggest a blueprint that will ensure that the U.S. has not only building blocks, but a plan for a health system that performs at a high level across all dimensions of care—providing access to efficient, high-quality care for all Americans.

The blueprint should include:

  • extending health insurance to all,
  • aligning financial incentives, including the fundamental payment reform needed to enhance value and achieve savings and engaging patients as active partners in their care,
  • organizing the health care system to ensure accessible and coordinated care,
  • pursuing excellence in safe, effective, efficient care and enhancing capacity to innovate and improve, and
  • providing national leadership and public/private collaboration to ensure coordinated and cost-effective care, streamlined administration, and shared national goals for improvement.


Blueprint for a High Performance Health System

Extending Coverage. What can employers do to help realize this blueprint? The first is to agree to share responsibility for covering all Americans, which employers have indicated they are willing to do. According to the recent Fund survey of employers, two-thirds of employers—including those who provide health benefits and those who do not—agree that all employers should share in the cost of health insurance for employees, either by covering their own workers or by contributing to a fund to cover the uninsured. This basic commitment is also at the heart of state reform efforts in Massachusetts and California.

By providing health insurance or contributing a percentage of wages or a fee per hour worked or per employee into a state or federal health benefits pool, large and small employers alike can promote a healthier, more productive workplace.

Employers who want healthy and productive workers need to get involved in shaping state and federal heath coverage legislation. Maine, Massachusetts, and Vermont have already passed coverage laws, and states such as California and Pennsylvania are working out proposals. A number of bills to extend health insurance coverage to all have been introduced in Congress, but need employer support to move to the top of the legislative agenda. Some would make it possible for employers to purchase more affordable coverage through Medicare, while others call for regional health insurance pools that would combine purchasing power of all employers.

Aligning Incentives. Employers can simultaneously improve health system efficiency—and save themselves money—by aligning how they pay for health benefits with accountability and performance through value-based purchasing. Leading employers are already urging the insurers from whom they purchase coverage to support innovative payment methods that reward quality and efficiency. The New York Times recently featured the Proven Care guaranteed performance fee for coronary bypass surgery offered by Geisinger Health System, on whose Board of Directors I serve and whose president and CEO, Glenn Steele, M.D., is a member of the Commonwealth Fund Commission on a High Performance Health System. As the Times explained, Geisinger charges a flat fee that includes 90 days of follow-up treatment.

The Partnership for Value-Driven Health Care, a coalition of major employer groups formed to support Secretary Leavitt's cornerstones, has released several guides that give purchasers specific actions to request of their insurance plans. To achieve interoperable health information technology, one of the guides suggests that purchasers "request that health insurance plans and third-party contractors encourage ambulatory care providers to use electronic health records that have been certified by the Certification Commission for Healthcare Information Technology and that meet other interoperability standards as they are developed."

With support from The Commonwealth Fund and the Robert Wood Johnson Foundation, the Leapfrog Incentive and Rewards Compendium has compiled a collection of ways private insurers and public programs are rewarding physicians, plans, and/or hospitals for improving the quality of patient care. Additionally, The Commonwealth Fund has provided support to assist the development of a new payment model that aligns incentives with quality and efficiency, based on evidence-informed case rates (ECRs) by the nonprofit Prometheus Payment. An ECR is a single, risk-adjusted payment given to providers across inpatient and outpatient settings to care for a patient diagnosed with a specific condition.

More employers are engaging patients in improving their own health, from changing the work environment to support healthy behavior to providing preventive and primary care services on site. Others are switching away from high-deductible health plans, which can form a financial barrier to early care, to value-based insurance designs that lower cost-sharing for effective services and medications required to control chronic conditions. Employers are helping improve the information available to workers and dependents that help them understand their health risks and health conditions, and the steps they can take to better manage their care and conditions.

Promoting Accessible and Coordinated Care. Employers can also encourage health plans to promote organized care systems that provide patients with accessible, continuous, and coordinated care. Making organized care systems the norm in health care delivery in the United States is critical to spreading patient-centered care that achieves savings by improving preventive care and better managing chronic disease. Again, there are a number of resources for employers and other purchasers. Bridges to Excellence, for example, is a nonprofit organization that develops reimbursement models that reward health care providers who provide patient-centered care that is also effective and efficient. These models include recognition of physician practices that meet high standards of patient-centered care adopted by the National Committee for Quality Assurance, with support provided by The Commonwealth Fund.

Enhancing Capacity to Innovate and Improve. One way employers can drive innovation is by supporting the creation of a Center for Comparative Effectiveness and Evidence-Based Decision Making. In a Fund-supported Health Affairs article, Fund grantee Gail R. Wilensky, Ph.D., senior fellow at Project HOPE, assessed the feasibility of an agency devoted to comparative clinical effectiveness and appropriateness research, and examined various options for structure, placement, financing, and functions. Last week, Representatives Tom Allen, D-Maine, and Jo Ann Emerson, R-Mo., announced plans to introduce legislation that would increase federal investment in research to determine the most effective and appropriate medicines and medical treatments. There is also insurer support for this initiative: America's Health Insurance Plans, the trade association of health insurers and health plans, has endorsed the concept, and The Blue Cross and Blue Shield Association last week urged Congress to pass legislation to create an independent, public–private partnership to compare the effectiveness of medical treatments and technologies.

Forging Partnerships. By joining with other private and public purchasers, employers can become leaders in the push to transform our health care system by improving access, quality, and efficiency. Along the way, employers can take advantage of the many coalitions and resources already at their disposal, such as the Partnership for Value-Driven Care, The Leapfrog Group, and Bridges to Excellence. In many geographic areas, coalitions of multi-stakeholders have been formed to advance health system performance—including the Massachusetts Health Quality Partners, the Minnesota Smart-Buy Alliance, the Puget Sound Health Alliance in Seattle, and the Wisconsin Collaborative for Healthcare Quality, among others. Through collaboration, purchasers can streamline administrative costs, improve access and quality, and reform the health care payment system. Taking the initiative now will ultimately prove a "win-win" for American employers—and their workers.

As always, I'm interested in your feedback. Please e-mail me at [email protected].


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May 2007


Written with the assistance of Christine Haran, web editor.