Managed care seminar explores impact of employer coalitions

Pharmaceutical and managed care executives debated the importance and impact of employer coalitions on health care at a Pinsonault Associates seminar in Parsippany, NJ in October.

Employer coalitions are employers who join together and form a coalition of common purposes to contract with health maintenance organizations. Pharmaceutical companies are interested in them as an emerging force in managed care because some employer coalitions have modeled benefit plans, developed performance standards for physicians and HMOs, and negotiated prices.

Topics that surfaced and were discussed throughout the two-day seminar ranged from predictions of higher drug costs, the growing acceptance of less restrictive formularies, the effectiveness of disease management programs and the disappearance of gatekeepers.

Cost vs. value

Helen Lippman, executive editor of Business & Health, was the seminar's first speaker. She outlined several general trends she predicted would continue in health care, including a decrease in competition as larger managed care companies emerge and dominate the market, rising rates, more-demanding doctors and a decline in the importance of gatekeepers.

Also, employers and plan administrators have learned that restrictive, or closed, formularies drive overall health care costs up, she added. Therefore, formularies, Lippman predicted, will loosen over time. Companies are becoming more concerned with the long-term value they receive for their expenditures on pharmacy costs. They are more willing to pay for newer, more effective medicines.

Ann Robinow, executive director of care systems and finance at Buyers Health Care Action Group, Minneapolis, supported Lippman's prediction in her presentation later that morning. "We've given doctors more leeway with the formulary because we don't want to micromanage our doctors," Robinow said.

She expressed frustration, however, that a 39% increase in her coalition's cost- per-prescription spending from 1995 to 1996 had not resulted in measurable declines in other spending areas. "We need to see quantified results," she said. "Show us the effect, the outcome, the money."

Russ Dennis, a human resources associate in policy and benefits for Shell Oil, expounded: "We say we've seen benefits of drugs versus invasive procedures but have no way of quantifying the relative cost."

Lessons in disease management

Several employers said they are interested in discussing how they can work with pharmaceutical companies to improve and implement disease management programs.

David Tucker, director of health care planning for Pitney Bowes Inc., acknowledged that his company's initial attempts at disease management were not resoundingly successful. Unrealistic expectations, enrollment challenges and the operational difficulties of pulling employees off assembly lines to participate in the programs worked against the program.

Patient education is an issue that employers feel needs to be addressed, and several speakers expressed hope that they could collaborate with pharmaceutical companies on this. For example, pharmaceutical companies could help share the costs of implementing these programs.

The employers' suspicions about pharmaceutical companies' ulterior motives to sell products could hinder true partnerships, however. As Otto Wilke, vice president of pharmacy in the health plans division of Penn State Geisinger Health Systems, said bluntly: "I'm skeptical of holding hands with the pharmaceutical industry when it comes to disease management." Ann Robinow added more cautiously, "We're willing, but wary."

Health care's loose cannons

Patients, particularly well-educated patients, were the subject of other discussions as well. Today's consumers are questioning and making more demands of their health care plans. They want their employers to give them more choices and they want the best quality of care available.

As a result, employers are allowing more flexible, point-of-service care options. Increasingly, a patient does not have to go through a gatekeeper, or primary care physician, in order to be referred to a specialist. While this may make employees happy, employers are uncertain of whether this will help them cut costs. They want tight management of care, but they want that management to be invisible to their employees.

What role will pharmaceutical companies play in creating more seamlessly delivered managed care? What became clear during the seminar is that employers want and need the pharmaceutical industry's help in monitoring the outcomes of aggressive drug spending. They also want pharmaceutical companies to help bring various managed care groups together, such as pharmacy benefit managers, physician practice management groups and employer coalitions. They want more cost-efficient care but they don't want to compromise value.

"One thing that became clear [during the seminar] is that employers have power but they don't know it," said Paul Pinsonault, the president of Pinsonault Associates and the coordinator of the seminar. "Large employers, such as IBM, Xerox and American Express, have sophisticated measurements and understand the use of their power. They understand their power and the power of the health care dollar. The smaller, less sophisticated employers are just beginning to learn that they are the emerging power in health care." PR