As I write this blog, I find myself frustrated with by the never-ending hand-wringing about the health care affordability crisis and the unsustainability of the cur rent benefit models for both employers and their employees. The time for action is now. It is my fervent belief that the opportunity for a paradigm change does exist and that we are rapidly approaching the tipping point; that valuable analogs exist and can guide us, and that there are offerings and platforms in the marketplace that can be repositioned or refined to enable the needed re-anchoring of the benefit commitment to a more stable care delivery model.

1. Addressing the Oncoming
Paradigm Shift in American
Healthcare
By Lawrence Lesiure

2. As I write this blog, I find myself frustrated with by the never-ending
hand-wringing about the health care affordability crisis and the unsustainability
of the current benefit models for both employers and their employees. The time
for action is now. It is my fervent belief that the opportunity for a paradigm
change does exist and that we are rapidly approaching the tipping point; that
valuable analogs exist and can guide us, and that there are offerings and
platforms in the marketplace that can be repositioned or refined to enable the
needed re-anchoring of the benefit commitment to a more stable care delivery
model.
To that point, I believe that this article can offer a useful guide on how we can
approach the question surrounding health care affordability anew. In doing so, it
will build the framework for a new approach that will reset misaligned employee
expectations and deliver healthcare solutions that are both affordable and
demonstrably improve patient outcomes and experiences.

3. Current Situation
The current benefits promise (or construct) between
employer and employee is hollow at best for many
Americans, as evidenced by the lack of affordability for
both employers and their employees. For an employee
earning even $60,000 a year, supporting a family is difficult
enough without having to endure the multi-thousand dollar
out-of-pocket costs for the increasingly “skinny” health
plan benefits provided them by their employers.
Sure, there are pockets — particularly in tech — where
current economic strength and an ongoing war for talent
have temporarily insulated those employers and employees
from the issue. Lest we put our head in the sand, the raging
national debate and push by most of the Democratic
presidential contenders for Medicare For All should serve
as clear evidence of the problem.

4. Central Question
How do we reframe the employee benefits promise in a way that employers can deliver a credible
offering that is affordable, given the current realities of the healthcare marketplace, and effectively
addresses employees’ needs from an affordability, quality, and access perspectives

5. Historical Context
Immediately after World War II, there was an implicit social contract with employees based on rewarding a lifetime employment commitment
with a defined benefit retirement plan and pre- and post-retirement healthcare. By the late 1980s, however, 401k plans had led to the death of
defined benefit pension plans, FAS 106 to the demise of retiree medical, and increased cost-sharing to the ever-diminishing value health plan
offerings. No wonder employees were uncertain what their expectations should be. Managed care offerings that featured a point of service
(POS) plan design emerged as a response to the need for a viable alternative to the existing paradigm.
After the dot com meltdown in March 2000 and the September 2008 financial crisis, we saw similar efforts to address escalating costs: in the
first case with consumer-directed healthcare, and the second with digital health offerings and direct care delivery models. Each of these
evolutions was based on the notion of providing consumer choice while still anchoring the basic benefit commitment to an ever-narrower
network and adhering to increasingly complex and often cumbersome rules for coverage and reimbursement.
To illustrate the point of just how challenging this has become for consumers, one has to look no further than the rise of a generation of
navigation and advanced second-opinion companies such as Accolade, Castlight, Grand Rounds, and Quantum, all of which have become
necessary to help guide and support consumers directly.
Here’s the bottom line: Current employer health management strategies and their over-reliance on cost-shifting have run their course, and
there is scant room to raise deductibles and coinsurance for consumers who increasingly look to finance their out of pocket expenses. We need
to take a fresh look at the problem, develop a more sustainable approach, and ultimately re-anchor the benefit commitment.

6. Complicating Factors
There are several impediments that constrain
both the way the problem is framed and the
solutions that are presented.

7. These include
● The misalignment of incentives in our
current health care “fee for the service”
system where providers get paid to do
more rather than for delivering superior
outcomes.
● The power of incumbency where the
entrenched players — both payers and
health systems alike – are disinclined to
do anything that negatively impacts
their near term economic interests.
● The consolidation of health systems,
which has resulted in a concentration of
power and higher, not lower, costs.

8. The Tipping Point
Inevitably, too, we will be forced to wonder whether we’re ready for a paradigm change. It’s a fair question — and my
response is no, at least for now.
Having said that, the tipping point is not too far in the future. Experience has taught us that the confluence of two
factors creates that tipping point. The first is an inflection in healthcare costs where incremental cost management
strategies are either ineffective or untenable. The second is the advent of an economic downturn, wherein senior
management challenges the benefits community to rethink their underlying assumptions of design, network, cost
sharing, etc.
Managed Care 1.0 > Next Generation Personalized Care Model (PCM)
To pick up on the analog of the shift to managed care and rise of consumer-directed care programs: there are some
interesting parallels. At the inception of managed care, the employer shifted their benefits commitment from a
fee-for-service/PPO model into a managed care network wherein the employee had their pick of providers but were
required to pay the actuarial difference should they choose to go outside that network.

9. Under the next generation offerings advanced
and/or enabled by companies like Centivo,
Collective Health, and Bind, employers will have
the opportunity to drive a step change
improvement in quality and affordability by:
1. Providing the critical navigational support
to help guide the individual journey with
the goal of optimizing for cost and quality
based on their unique needs but
2. Anchoring the new benefit commitment to
a more highly curated set of providers who
commit to evidence-based care guidelines
and accept accountability for the
outcomes.

10. Yes, the employee retains choice but has a tougher economic decision — they can either participate in the curated
network with a demonstrated quality and benefit both from navigational support and demonstrably lower out of pocket
costs, or not. Should they choose not to play, there will be economic consequences. I think this approach has a far better
chance of success than waiting for health systems and payers to curate their own networks and more aggressively
manage referral patterns. Shifting employees away from low-performing providers and towards high-performing ones
should be best practice, coming as it does with material benefits in both cost-avoidance and enhanced care quality.
I’ll illustrate the problem and opportunity via a personal example. Recently, I saw a presentation at an Employer Health
Innovation Roundtable (EHIR). At this roundtable, much of the conversation revolved around the material costs that
were incurred as a result of the disproportionate use of low-quality high-cost providers, a lack of adherence to
acknowledged care guidelines and the inability payers to hold the big health systems accountable for policing
problematic providers. One of their members shared that over a third of their employees were disproportionately using
low-performing/low-quality providers. Of those providers, between 2% and 3% were sanctioned — and yet remained in
the network. It’s no surprise that these providers and the care they directed contributed directly to higher cost or
less-than-optimal quality. This is the problem, but also the opportunity.

11. Accelerating Market Adoption
So, what will drive this paradigm shift to these next-generation health plans and care delivery models? I believe that there are
six key factors.
● Financial Crisis – We need a precipitating event. I wish it weren’t so, but that seems to be a critical factor.
● Higher-Order Framing – This is not an incremental shift; it requires a step change. As such, it needs to be framed in a
higher context that enables the decision-maker to understand both the magnitude of the problem and why the
incumbents are unwilling or unable to make the journey. While the notion of “re-anchoring” an employer’s benefit
commitment may be a bit esoteric, it captures the magnitude of the problem and the opportunity to tie into the new
national dialogue.
● Definition of “It” and Key Attributes – It is important that “it” (the new care model) is defined as a new category with a
catchy acronym like PCM (Personalized Care Model design), that has a specific set of attributes that distinguish it from
the existing PPO and POS managed care programs approaches.
● Impact Model – We need to develop a financial model that enables the employer to estimate the economic impact of
adopting the above-mentioned approach. This model would use existing demographic and utilization data as well as
savings assumptions generated by the adoption of care paths for specific chronic conditions, and more predictive AI
tools.
● Market Adoption – It’s important to engage in existing and new partnerships with key thought leaders at benefits
consulting firms, innovation forums like EHIR, and other major players to establish credibility of the new models and
accelerate adoption.

12. Where do we go from here? I have a few thoughts...
First, it is imperative that there be a call to action and a recognition that the current incremental solutions
aren’t delivering and can’t be expected to deliver real affordability.
Second, the emerging players advocating for the new paradigm need to demonstrate proof of concept for the
early adopters.
Third, these early adopters need to evidence the sustainable financial impact of their intervention, and then
translate that proof into a user-friendly impact model that can enable employers — and their financial
executives specifically — to demonstrate a meaningful P&L impact.
Fourth, we need to be poised to take full advantage when the inevitable downturn does occur to accelerate
the new health benefits paradigm.

13. As the former Obama Chief of Staff, Rahm Emanuel
is famously quoted as saying during the 2008
meltdown: “You never want to want a serious
(financial) crisis go to waste.”
Let’s ensure that it doesn’t.

14. Thanks for Reading!
www.lawrencelesiure.com