Part II: What do employers mean by "value"?
With health care costs clearly on the rise again, and First Generation Managed Care having matured itself into market gridlock, it is inevitable that there will be a second "employer" revolt. As long as private purchasers do not see organizations fully focused on "value" as they see it, they will not be content with rising costs as "unavoidable". And whereas I do not believe we will see the double digit increases of the 1970's and 80's, consistent annual increases of greater than 5% (or 2-3 times the general inflation rate) will become a major problem, particularly when the current economic expansion ends, and top-line growth in revenues and profits outside the health care sector are once again under pressure. The timing of this second employer revolution is anyone's guess, but it is likely to occur with lightning speed on the heels of a major and sustained correction in the global market. Employers will be looking to move volume to organizations that can offer the best value. Integrated health systems have the potential to become these organizations but, they have significant hurdles to overcome. However, from the private sector point of view, if doctors are willing to listen, learn a new language and become committed to accountability and measurement, employers innately believe that those closest to the "customer" (i.e. patients) are best able to manage. Whether, provider systems can rise to this challenge is unclear. But the stakes, for physicians, purchasers and ultimately patients, have never been higher. And employers, as a group, are hopeful that these organizations can live up to their promise.
Galvin
R S
RS
General Electric, USA.
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