Becker's Hospital Review

13 CFO / FINANCE PwC: Efforts to curb healthcare utilization 'have run their course' By Emily Rappleye P wC's Health Research Institute estimates 2019's employer medical cost trend will be 6 percent, remaining "stable yet unsustainably high," ac- cording to its annual medical cost trend report. "Efforts by employers to cut utilization have mostly run their course," the report reads. "Employers and consumers are plagued by high prices that continue to grow because of new, expensive medical services and drugs, and other factors, such as consolidation." e employer medical cost trend is a projection of the year-over-year increase in the cost to treat patients in the employer-based market, excluding Medicare, Med- icaid and plans on the ACA exchanges. Factors such as new technologies, drug spending, government regula- tion, payment models, patient demographics, lifestyle factors and general inflation all play into the medical cost trend. However, PwC's HRI identified the follow- ing three factors as emerging inflators for 2019: 1. Retail and urgent care clinics have made care increasingly easy to access, driving utilization up in the short term. As healthcare providers strive to become more consumer-oriented, more patients are driven to use healthcare services. Providers hope this will eventually drive costs down as patients are treat- ed in lower-cost settings, hopefully preventing major illness or catching it early. 2. Provider mega-mergers are increasing prices. Almost all — 93 percent — of metropolitan hospi- tal markets will be highly concentrated in 2019, ac- cording to the report. is market concentration is expected to drive healthcare prices up in the short term as merging providers have to cover the costs of integration and find more power at the negotiating ta- ble. Eventually, economies of scale could reverse this trend, HRI suggests. 3. Growth in physician employment and consoli- dation will also drive up prices. As physicians join larger practices or hospitals and health systems, they typically become less efficient and adopt the larger organization's billing practices, which drives up costs. Physician practices acquired by hospitals may also bill a facility fee on top of the fee for a patient visit, ac- cording to the report. However, HRI identified three factors that are expected to help offset these inflators. ese include a less severe flu season, greater patient engagement and "high-per- formance networks" with limited providers. n BCBS lets Mayo in on decision-making with 5-year contract By Morgan Haefner R ochester, Minn.-based Mayo Clinic agreed to work directly with Blue Cross and Blue Shield of Minnesota to decide what emerg- ing technology BCBSM will cover. Under a five-year agreement, Mayo and BCBSM will co-decide whether advancements in treatments like organ transplants, radiation therapies and genomics are covered by the insurer. "Mayo's openness and willingness to be part of the solution to address rising healthcare costs is to be commended," Garrett Black, senior vice president of health services and enterprise solutions at BCBSM, said in a statement. "Our new agreement was designed with the goal of launching a new kind of long-term strategic relationship that can bring long-term pricing predictability and stability to the market while fostering continued innovation in the way care is accessed, paid for and delivered." The agreement, which takes effect Jan. 1, 2019, also ensures Mayo Clin- ic locations in Minnesota will remain in BCBSM's network through 2023. "This collaborative relationship provides opportunities to care for and manage patients in a more comprehensive manner with better out- comes through jointly developed innovative programs and care mod- els," Dennis Dahlen, CFO at Mayo Clinic, said in a statement. "Our for- mal governance structure will advance both organizations' capabilities to positively affect the health and wellness of consumers in our market- place, and provide long-term rewards for consumers." n University Hospitals launches bundled payment program with Walmart By Ayla Ellison W almart contracted with University Hospitals Cleveland Medi- cal Center for a bundled payment program for joint replace- ment procedures and orthopedic care for Walmart employ- ees and their families. Under the agreement, Walmart health plan enrollees will receive 100 percent coverage for joint replacement surgery at UH Cleveland Medi- cal Center, along with any travel or lodging costs. "The partnership between UH and Walmart focuses on quality care and value for the patient," said UH CEO Tom Zenty in a press release. "I ap- plaud Walmart for giving its employees access to the very best care while keeping affordability in mind." UH Cleveland Medical Center will review patients' medical records, use a team approach to develop a treatment plan, provide patient and care- giver education on treatment expectations, manage patients' transition home and collaborate with local physicians. Self-insured companies are increasingly contracting directly with pro- viders for specialty care and treatment to trim costs and help improve outcomes. In addition to UH Medical Center, Walmart has 10 other joint replacement Centers of Excellence across the nation, according to Crain's Cleveland Business. n

• Cover