Employer Strategies to Improve Health and Healthcare Value. SUMMARY OF KEY FINDINGS October 2015

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1 Employer Strategies to Improve Health and Healthcare Value SUMMARY OF KEY FINDINGS October 2015

2 Thank You! You are receiving this summary because you participated in our survey on Employer Strategies to Improve Health and Healthcare Value. Employers are believed to be a key stakeholder and influencer on population health and the healthcare market. Your input helps us capture the employer mindset and your priorities, and understand the initiatives you re pursuing to improve the health of your employees and your surrounding communities. We hope you find this report valuable. Don t hesitate to contact us with your questions and comments. Thank You, The Benfield-Gallagher Team 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS

3 Contents Research Objectives Research Participants Key Research Topics o Approaches to Managing Employee Health o Employer Perspectives and Strategies: Healthcare Value (HCV) o Employer Perspectives and Strategies: Community Health (CH) Research Conclusions 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS

4 Research Objectives Assess the status and trends related to employers health management strategies Understand employer awareness of/participation in national and regional/local initiatives focused on improving health and healthcare value Gauge employer interest in: o Learning more about initiatives, strategies, tactics and tools to help drive marketlevel healthcare value improvement o Becoming trained to drive collaborative action at the market level o Identifying peers who are interested and involved in market-level healthcare value improvement initiatives 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS

5 Employer Research Panel 205 COMPLETED SURVEYS 11 INTERVIEWS Jumbo Employers (5,000+ Employees) Employer Participant Size Number of U.S. Employees 60% 40% Mid-size Employers (500-4,999) Industries Represented Manufacturing Service 13% Healthcare 11% Finance 10% Retail 10% Transportation/Communications/Utility 10% Education 8% State/Local Government 5% Mining/Construction/Wholesale 4% Technology 3% 26% Organizational Role of Respondents 7% 7% 4% 20% VP/SVP HR/Benefits HR/Benefits Director HR/Benefits Manager 27% 34% HR/Benefits Analysts/Specialist Corporate Medical Director n=205 Employers Other 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS

7 Health Plan Funding Most (91%) employer respondents self-insure their health plans Approach to Funding for Active Employee Health Plans 9% Self-insure Fully-insure 91% n= Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 7

8 Health Management Philosophy A majority of employers hold a core philosophy of proactively managing employee benefits, with the goal of improving health and productivity Philosophy for Managing Employee Health 78% 7% 15% n=205 Provide financial protection for unforeseen costs, catastrophic illness or accidents Provide benefits for prevention and support employees trying to manage health conditions Proactively manage benefits and programs to improve employee health and productivity 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 8

9 National vs. Regional Health Management Strategies Most employers prefer national strategies, but a majority are engaged in regional/local strategies either occasionally or primarily Employer's Preference for National vs. Regional/Local Management Strategies 42% 29% 29% n=205 We focus exclusively on strategies that can be implemented for all our employees nationally We prefer national solutions but will pursue regional/local strategies when needed We focus substantially on identifying and pursuing regional/local strategies 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 9

10 Employer Involvement on the National Stage Employers have limited involvement in national health organizations and initiatives Employer s Level of Involvement with Organizations/Initiatives Active participant Active leadership NBGH - National Business Group on Health (n=157) WELCOA - The Wellness Council of America (n=153) NBCH - National Business Coalition on Health (n=123) 9% 8% 15% 1% 9% 1% 8% 4% 19% HERO - Health Enhancement Research Organization (n=65) 8% 8% Leapfrog Group (n=137) 7% 7% Catalyst for Payment Reform (n=35) 7% 7% Choosing Wisely (n=46) 3% 2% 5% IOM - Institute of Medicine (n=88) 4% 4% HC13 - Health Care Incentives Improvement Institute (n=63) Healthcare Transformation Task Force (n=24) 4% 4% 1% 2% 3% Consumer Purchaser Alliance (n=25) 3% 3% 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 10

11 Adoption of Innovative Approaches About a third of employers view themselves to be innovators, while nearly half consider themselves fast followers in adopting innovative health management approaches Employer s Approach to Innovations in Managing Employee Health and Healthcare Value 47% 31% 23% n=205 We wait until innovations have been popularized and proven before adopting them We typically don't want to be the first mover, but we monitor innovative approaches and are relatively quick to adopt those that make sense for us We consider ourselves innovators with a history of inventing newer and better solutions to health, healthcare cost and quality challenges 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 11

13 Improving Value in Health Management Some HCV-related initiatives are among the most critical to employers in terms of improving value, while others are lower priority Most Critical Objectives for Improving Value in Health Management Strategy (percentage selecting as one of top five among objectives currently in place or planned) Improve health and well-being (n=200) Increase informed/wise use of healthcare services by employees (n=199) Provide better care management for employees with the highest health needs/costs (n=177) 85% 84% 77% Drive employees toward CDHP plan options (n=134) Increase utilization of Centers of Excellence for complex and costly treatments and procedures (n=151) 57% 55% Few employers rank use of narrow networks, patient-centered medical homes or ACOs as a top-5 most critical objective for improving value Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 13

14 Performance-Based Payment Models Current/planned shared savings or pay-for-performance payment models are most common in arrangements with ACOs, narrow networks and COEs Healthcare Provider Contracts with Shared Savings or Pay-for-Performance Provisions (have or will have provisions for payment adjustments by 2018) Accountable Care Organizations (n=73) 55% Narrow networks based on differentiated quality/value (n=93) 54% Centers of Excellence for complex and costly treatments and procedures (n=96) 52% Care management services for employees with multiple complex chronic conditions (n=120) 47% Provision of healthcare services at worksite clinics (n=79) 35% 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 14

15 Driving Use of New Payment Models A majority of the employers focused on new payment models are playing an active role in driving them; About 60% are either encouraging or demanding their carriers/tpas to develop and implement new payment models Employers Actions Regarding New Payment Models (among employers currently driving transition away from fee-forservice models ) 48% 40% 12% We are responding to new payment models being made available by our carrier(s) We are encouraging our carriers to develop and implement new models We are demanding our carriers offer new payment models as a condition of our doing business with them n= Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 15

16 Employer Engagement with Healthcare Providers A majority of employers are engaging directly with healthcare providers; about 40% have had substantive discussions about solutions, and half of those are currently working with providers on solutions Engagement in Discussions with Healthcare Providers About Local Healthcare Cost and Quality Issues 40% 18% 21% 20% We have not engaged in such discussions. We have had discussions about challenges only. We have had substantive discussions about challenges and solutions. We are currently working with healthcare providers on solutions. n= Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 16

17 Employer Contracting with Healthcare Providers Employers increasingly expect to contract with providers for selected services: care management services is the most common choice currently, but many expect significant expansion of contracting for narrow networks and ACOs by 2018 Services for Which Employer Contracts with Healthcare Provider (directly or through an alternative intermediary not through their carrier/tpa) Currently in place (2015) Expected to contract (by 2018) Care management services for employees with multiple complex chronic conditions 36% 23% Provision of healthcare services at worksite clinics 31% 7% Centers of Excellence for complex and costly treatments and procedures 25% 22% Narrow networks based on differentiated quality/value 12% 33% Accountable Care Organizations 9% 26% n= Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 17

18 Employer Involvement in Local HCV Initiatives At best, only 1/3 of employers are active participants or leaders (in at least one location) for any one type of HCV initiative Involvement in Initiatives in Any Key Workforce Location: Active Participant or Leader Promote healthcare literacy and smart healthcare consumerism in the region Develop consistent and transparent reporting of COST measures from healthcare providers Develop consistent and transparent reporting of QUALITY measures from healthcare providers Drive adoption of payment approaches that pay for value rather than volume 33% 29% 28% 24% Assure healthcare information can be shared among providers in the region Drive broad adoption of electronic healthcare information technology 18% 17% n=205 Not shown: Don t know, No engagement, Supportive responses 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 18

20 Employer Approach to Engaging in CH Initiatives Nearly 60% of employers leave the decision to engage in CH up to local management, while about 40% either actively select initiatives or set expectations for participation Employer's Approach Toward Involvement in Community Health and Well-Being Improvement Initiatives (among those supportive/active in at least one health issue) 57% 22% 17% 4% Participation in community health and well-being initiatives is left to the discretion of leadership in each major location, no explicit concerns We actively select and engage in community health and well-being improvement initiatives in communities where we believe there is a concern There is an expectation for business leaders in major locations that their organization will participate in community health and well-being initiatives Other* n=190 *Other includes: Actively involved in local community in partnership with the Department of Health, both local/county and state level, Involvement is left up to the employees, None, We do not promote leadership involvement in community health and well being initiatives, We have dedicated units for community programs 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 20

21 Importance of CH to Employers Most employers (over 80%) believe community health is at least moderately important relative to the health of their employee population Importance of Health and Well-Being of the Overall Population Relative to Employer's Goals and Interests 46% 37% 17% n=205 Not important Moderately important Important 2015 Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 21

22 Employer Involvement in CH Initiatives A moderate share of employers (19% to 37%) are active participants or leaders for the most popular types of initiatives Employer Involvement in Community Health Initiatives Active participant Active leadership Recreation and fitness Chronic illness Obesity Cancer Behavioral health Disabilities Health disparities Hunger Homelessness Teen pregnancy Other* 17% 15% 16% 14% 11% 9% 9% 5% 6% 1% 4% 3% 2% 1% 9% 8% 6% 5% n=205 17% 14% 20% *Other includes: Employee wellness, National Obesity Initiative, healthy campus initiative, student wellness Not shown: Don t know, No engagement, Supportive responses ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 22

23 Employer Reasons for Engaging in CH Active employers engage in CH initiatives to promote a healthy environment for their employees. Corporate social responsibility is another important driver of participation, and some interviewees also identified the positive impact on corporate branding that attracts desirable employees Reasons Employers are Interested in Investing in Efforts to Improve Community Health and Well-being (among those supportive/active in at least one health issue) We want the culture in which our employees live to be a healthy one 74% We consider it part of our corporate social responsibility 46% A healthier community is more competitive economically 31% We want to improve the health of our local labor pool 26% n= Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 23

24 Barriers to Employer Engagement Most employers believe that the main barrier to engagement in HCV and CH is organizational capacity or resources not a lack of expertise or importance. Many employers (especially mid-size) also believe that they are not large enough to exert market influence Challenges to Participating in National or Market-Level Initiatives (employers were asked to select up to 3 factors) We do not have organizational capacity or resources to engage in market-level healthcare initiatives We do not have organizational capacity or resources to engage in national healthcare initiatives 60% 67% We are not a large enough purchaser to impact the market(s) where we operate It is too difficult to achieve meaningful progress when multiple stakeholders are involved 32% 39% We find it difficult to identify initiatives that we want to support 17% We do not have enough expertise in healthcare to contribute effectively We don't think benefits from such initiatives are worth the effort 16% 13% n= Benfield, a division of Gallagher Benefit Service, Inc. All rights reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 24

RESEARCH CONCLUSIONS 2015 Benfield, a division of Gallagher Benefit Services,

26 Research Conclusions There is a reasonably strong foundation of employer interest and engagement in HCV and CH More than 2 out of 5 employers are already active in either HCV initiatives (44%) or CH initiatives (41%) and most of these are active in both kinds of initiatives Most employers have a preference for national initiatives, but many are willing to engage in regional/local markets where they have a substantial presence Most employers believe that it is moderately-to-very important for employers to engage in HCV initiatives and CH initiatives Employers are increasingly adopting health management approaches that align with HCV, including value-based purchasing strategies and direct engagement with healthcare providers 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS

27 Research Conclusions (cont.) Employers tend to engage in regional/local CH initiatives that address health conditions impacting their employee populations Most employers are not aware of national employer health initiatives beyond a few large membership organizations, and active participation is limited to a small share of employers Employers face barriers to market-level engagement chiefly the perception that they lack the organizational capacity/resources but employers with strong, disruptive leaders have overcome these barriers 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS

28 Thank You! We value your insights and hope that you will continue to support our research efforts! Again, do not hesitate to contact us with your questions and comments. Contact us: Jack Nightingale Vice President (703) Sarah Daley Research Director (314) x 203 Sarah_Daley@ajg.com 2015 Benfield, a division of Gallagher Benefit Services, Inc. All Rights Reserved. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS