Strategic Integration Is Key to Controlling Health Costs, Improving Outcomes:

Transcription

1 Contributors: Henry Cha, President, Healthcare Interactive George Pantos, Executive Director, HPM Institute April 2011 Strategic Integration Is Key to Controlling Health Costs, Improving Outcomes: Adding Healthcare Performance Management to HR Can Generate ROI How Senior Executives Can Use Healthcare Performance Management as a Business Strategy

2 This paper is from a March 2011 HPM Institute podcast on The Last Mile: The Role Of HPM Rounding Out The Enterprise Human Resource Management Mission. The podcast featured HPM Institute Executive Director George Pantos and Henry Cha, a founding member of the Institute and President of Glenwood, Md.-based Healthcare Interactive.

3 Introduction In light of skyrocketing costs, organizations increasingly are looking to get more bang from their healthcare buck. While in the past that goal has translated into cutbacks in health plan options or increases in employee contributions, those tactics have met with only limited success. But leading edge technology advances are giving organizations another, more powerful tool in the fight against skyrocketing health plan costs strategic integration of Healthcare Performance Management (HPM) into the human resources (HR) environment. The purpose of HPM, for many companies, has been to save money, says Henry Cha, President of Glenwood, Md.-based Healthcare Interactive. But at the end of the day, it is to be able to apply corporate disciplines using software such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and other software based tools to help manage the healthcare enigma. Today, we re not using software to manage these elements. This is our opportunity to finally get control of healthcare using software. The concept of using software to achieve a more holistic view of a company s operations is well-proven. Organizations long have been using ERP and CRM software to control costs and manage the overall health of the company. But Cha says that enterprises can achieve even better results by integrating HPM tools into their HR departments. By using these tools strategically, HR departments can create a management environment whereby the health plan and employers can leverage healthcare data and analytics as part of a strategic platform that engages employees and helps them live healthier lives. But most organizations can t do that today because health data is separated from HR-oriented information on knowledge, skills and abilities (KSAs). If companies can integrate those two forms of data, they can achieve a far stronger base of knowledge that will empower them to more effectively manage employees. HR performance management for employees is the gathering of metrics, creating what is called KSAs, or knowledge, skills, abilities metrics in essence, employees performance abilities, Cha explained. So not only are companies gathering this information, but they are creating development plans for each individual or group of individuals. They are using technology platforms in HR to create real-time interactions, so you get the best performance from these individuals.

4 The Last Mile Think of it as The Last Mile of data, the topic of a white paper recently released by the Healthcare Performance Management Institute (HPM Institute). If organizations deploy HPM software that can be integrated into existing HR data, they can achieve a major shift in the corporate HR mission from a tactical to a strategic focus. The goal in all of this is to promote a high-performing, healthy workforce the human capital that gives companies a competitive advantage. This goal is accomplished by giving employees greater access to better care management. In the end, combining this data drives even higher performance and profitability, while promoting healthier employees. Since a successful program that can strategically integrate HPM into HR operations to drive their own healthcare requires having control of the master data elements, there are four important steps companies need to be mindful of: They need to be able to own their own data. They need to engage the different vendors that surround the health plan to create a healthcare strategic plan using predictive modeling and other analytics. They need to put in place the engagement tools, portals, smart devices and other apps that bring members, physicians, providers and plan sponsors into a collaborative environment. And they need to be able to effect a cycle in which the software actually drives continuous activity among all the interest groups referenced above. Because companies are not able to capture that last mile of data, they are missing out on many of the benefits technology offers to drive a healthier workforce, Cha said. We are capturing the health metrics on our employees, the populations, integrated into HRM systems, etc., he said. Can HR get more strategic without integrating these health metrics? Some of these new metrics and new data points will ultimately create a new master data dashboard or a new master data management system where the principles of healthier, more productive workforces can be monitored and managed to help drive a healthier workforce. That s important because of one simple truth: It is common sense that a healthier workforce is a more productive workforce. But the tough question is: How can you measure the impact of better health on employee productivity? The reality is that corporations are having a hard time understanding or seeing real ROI out of just their health initiatives, Cha said. That is because over the past decade, overall health plan costs are doubling and projected to do so again over the next 10 years. It is because the knowledge, skills and ability information is separated from the healthcare data. If you integrate that data, you will create a stronger knowledge base that really does help you understand absenteeism vs. presenteeism. You are using HPM principles to combine information for a better way to manage your employees. There are several positive ways that HPM can help managers mitigate rising healthcare costs in their plans. Research shows that such capabilities can deliver a higher level of employee engagement than would normally be the case. And if an employer can drive analytics that clearly identify its high-risk members, it can then engage those members to help them make healthier choices. 3

5 The purpose of HPM, for many companies, has been to save money, but at the end of the day, it is to be able to apply corporate disciplines using software such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and other software based tools to help manage the healthcare enigma. But if employers have all of this actionable information, what s the next strategic step to head off catastrophic health conditions before they arise? Predictive modeling has a significant role to play in that regard, Cha believes if it can be integrated with multifaceted data sets such as HRA, lab and biometric data. Now we re accessing new data sets that will continue to drive smarter and better targeted approaches for managing catastrophic conditions or managing predicted catastrophic conditions, Cha said. Basically what we are trying to do is head off the train wrecks before they occur. Participation Rate Industry Figure 1 Some of these new metrics and new data points will ultimately create a new master data dashboard or a new master data management system where the principles of healthier, more productive workforces can be monitored and managed to help drive a healthier workforce. One company using HPM principles and new data sets to help drive more targeted and cost-effective member outreach is Pa.-based WellNet Interactive. Last year, many of their customers achieved a much higher level of member engagement using targeted outreach and the analytic system, paired with the integration and consolidation of the master data management. (See Fig. 1.) The HPM engine, which is driven with workflows and numerous system capabilities, has lowered the companies healthcare spending and the number of serious medical conditions within their population. And the effectiveness is improving all the time. Comparing this information with the absenteeism and presenteeism data that s beginning to percolate is definitely creating a relationship between health and productivity and the members, Cha said. But we are just scratching the surface and using the HPM engine to drive down costs and increase productivity. We expect to continue to go down that road. 4

6 About the HPM Institute The Healthcare Performance Management Institute (HPM Institute) is a research and education organization dedicated to promoting the use of business technology and management principles that deliver better and more cost-effective healthcare benefits for employers who cover their employees. The Institute s mission is to introduce and develop a new corporate discipline called Healthcare Performance Management (HPM) a technology-enabled business strategy that tackles the challenge of controlling healthcare cost and quality in much the same way that enterprises have optimized customer relations, supply chain management and enterprise resource management. HPM provides C-level executives with visibility and control over company healthcare benefits spending trends and risk management postures, while protecting individual employee privacy.