Part II: What do employers mean by "value"?

Area of Science:

• Healthcare Economics
• Managed Care Evolution
• Employer-Provider Relations

Background:

• Rising healthcare costs are prompting a second employer revolt against managed care.
• First-generation managed care has reached market gridlock, failing to satisfy private purchasers seeking value.
• Consistent annual cost increases exceeding 5% pose a significant problem, especially during economic downturns.

Purpose of the Study:

• To analyze the impending employer revolt driven by escalating healthcare expenditures.
• To explore the potential of integrated health systems to offer superior value to employers.
• To identify the critical factors for provider systems to meet employer demands for accountability and patient-centered care.

Main Methods:

• Analysis of healthcare cost trends and managed care market dynamics.
• Examination of employer perspectives on healthcare value and purchasing decisions.
• Assessment of integrated health systems' capacity to address employer needs.

Main Results:

• Employers are poised to shift volume to organizations demonstrating clear value.
• Integrated health systems are identified as potential solutions but face significant challenges.
• Physician willingness to embrace accountability and measurement is key to gaining employer trust.

Conclusions:

• A second employer revolt is inevitable due to persistent healthcare cost inflation.
• Integrated health systems must overcome hurdles to become preferred providers.
• Physician commitment to value-based care and patient focus is essential for the future of healthcare delivery and cost containment.