Hospitals systems struggle financially partly because they fail to analyze where their profits come from.  Those profits come from employers.

Our average client loses on Medicaid.  Loses on self-pay.  Most lose money on Medicare.  Many think they make money through insurers.  But a new mentality is needed, one that looks beyond insurers to the root source of the profits:  employers.

Misperceptions about employers cause hospitals to abdicate these relationships to insurers.  Healthcare executives think all the employer is worried about is rates.  That is a concern, but the good news is most employers also understand that rates are not the same as costs.  Most understand that care processes and preventative focused models (like PCMH) can make a difference, too.

The other good news is that health systems are well-positioned to take advantage of this opportunity.  Their investments in Value-Based Care organizations (ACOs) and clinically integrated networks (CINs) lay the groundwork for effectively working directly with employers.

Due to two factors, these vehicles create a better chassis to deal with the real concerns of the employer market than do insurance companies.   First, the deep engagement of physicians in health system CINs creates a definite advantage with employers.  The medical direction of United Healthcare, for example, is distant and disconnected from your market.

The second factor is the local knowledge.  Your team understands the local culture, gaps in care, health trends that are costing employers money, and the weak links in the system.  Because of that intimate knowledge and proximity, you can effectively work directly with employers to address the root causes of escalating healthcare costs.

It is also important to recognize that employers are not likely to remain static.  They will pursue alternatives to unsustainable growth in health care expenses.  Working closely with employers, responding to the local market needs, will keep them from pursuing insurer proposals that are more radical and may harm the provider community in the long run.

To learn more about this strategy and developing an implementation plan, view our on-demand webinar Direct Contracting: The Essential Strategy.


David W. Miller

Founder and Chairman