Partnerships That Work

Trustee Magazine 03.30.2011

By Henry Ross

Hospital trustees know all about the power of relationships regardless of what hat they wear. Whether they are local business owners trying to build lifetime customers or community-based physicians developing their practices, they know that forging relationships that endure is the single, most important ingredient to long-term success and sustainability.

Hospitals themselves are no different which is why, today more than ever, attentive hospital boards and management are looking for creative, new ways to build trusting relationships with one of their most valuable constituents – local employers. By cultivating and nurturing relationships with this critically important audience, these hospitals have found a way to attract new patients, build profitable market share and distinguish themselves as the healthcare destination of choice in their communities.

Since the early 1980s, hospitals have collectively spent billions of dollars in mass media advertising trying to increase ”brand awareness.” While such attempts may have been marginally successful in building a brand or promoting an image, they failed to deliver an acceptable ROI for one simple fact: n healthcare, all customers are not equal when it comes to their impact on the bottom line.

Just like everyone on the same airline flight from New York to Los Angeles is paying a different rate for the same objective, every patient in your hospital represents a different reimbursement rate. And just like that plane needs enough “retail” customers to cover fuel costs, so too hospitals must fill a certain percentage of its beds – and perform a certain percentage of its outpatient services – on patients who bring with them a desirable reimbursement profile. That is why hospital boards concerned with both strategic planning and fiscal stewardship are looking not only at census, but also at payer mix. Simply filling beds is not the road to sustainability.

Since a large percentage of American’s health benefits originate at the worksite, local employers represent a logical place for a hospital to direct its business development strategy. On a daily basis, local employers are making purchasing decisions that can positively or negatively impact hospital and physician practice revenue growth. Whether interested in reaching commercially insured consumers in the workplace, influencing group health benefits and open enrollment decisions, or gaining access to valuable occupational health customers, intelligently targeting local employers offers the best approach to smartly increase market share and enhance revenue.

Working in partnership with area employers means developing programs that identify employee health risks, both on a cumulative, aggregated basis and also specific to each employee. Once this data is accumulated, hospitals can then craft customized early detection, prevention and educational initiatives that help employers mitigate potential health-related claims and, in turn, reduce their rising healthcare costs in a very meaningful way. Such a strategy truly makes the hospital and employers allies in their quest for affordable, accessible quality healthcare and, perhaps for the first time, positions the hospital not as the cause of the problem but as part of the solution.

ProHealth Care in Wisconsin is one of the many hospitals around the country that is seeing the tangible ROI of launching such an employer-focused program. In 2005, they expanded their pre-existing occupational medicine program into a comprehensive worksite wellness program for employers. As a result, the hospital saw net revenues increase by nearly $1.5 million in the first 21 months of the initiative and another $1.3 million in the following 12 months.

Since the time the program was introduced, ProHealth Care’s overall market share in its historical service area has increased from 43.6 percent to 46.4 percent. Most importantly, all of these new patients are favorably insured individuals, meaning that the hospital isn’t just building market share but is doing so through a targeted and strategic approach that mass advertising or other mass communication tactics simply cannot match.

Loma Linda University Medical Center in Southern California has been one of the nation’s leaders in providing employer-based health management programs for more than a decade. Their program began by identifying the largest and most desirably insured employers in the hospital’s catchment area and then collecting data on each employee’s health plan participation, physician relationship and health history including baseline biometric data. Using this information, a personal health report was prepared for each respondent along with specific recommendations for health maintenance or improvement and directing those at risk to appropriate services offered by the hospital.

For employers, the collected data was de-identified and aggregated into an overall workforce profile that provided a snapshot of the health issues existing within a specific workforce. The bottom line result of all of this effort as far as the hospital was concerned? In 2008, net revenue generated by employees of employer partners exceeded $2.7 million, accounting for 20 percent of inpatient net revenue and 33 percent of emergency room net revenue.

Baptist Health System in Alabama launched its program in 2008 and today works with nearly 30 local businesses representing 8,000 enrolled employees. A large slice of this (about 3,000 lives) is Baptist’s own employees as Baptist, like any other large employer, faced its own challenges with rising healthcare costs. From year two to three of the program Baptist Health saw its own health claims decrease by $1.7 million. They also helped some 100 employees stop smoking.

Looking beyond its own walls, Baptist took their primary care physicians to local employers to conduct “lunch-and-learn education programs,” held numerous screenings and participated in many health fairs. Not surprisingly, they found that a huge percentage of male employees didn’t have a primary care physician, so they quickly introduced them to one. Baptist also collected blood pressure, body mass index, cholesterol and other baseline data and began to educate employees on what they should be concerned with based on health risks or family history. In doing so, the hospital has begun to build trusting relationships among local employees, the health system and its medical staff.
Implementing programs such as these succeed because it is one where everyone wins. Hospitals win by driving desirable patient volume into their facilities (and medical staffs) and establishing themselves as the provider of choice in the community. Employers win because by working with the local hospital they are able to identify employee health risks and implement early detection initiatives that ultimately save them dollars in insurance premiums, absenteeism and worker’s compensation claims. And, employees win by learning more about their health risks and gaining the knowledge and tools they need to lead a healthier lifestyle.

The Deloitte 2009 Survey of Healthcare Consumers reports that 20 percent of survey respondents said they participated in a wellness program in the last 12 months, up from 17 percent in 2008. A striking 76 percent of those with a chronic condition said that they would participate in a disease management program.

Clearly, consumers are becoming increasingly prepared to change their behavior and begin to adapt healthier lifestyles. Employers want that too. Now is the time for hospitals to capture this largely untapped need. Failure to do so risks ceding the opportunity to health plans, their competition or to other providers. By working closely with local employers in sincere partnership, hospitals and their trustees can truly balance their margin and mission and rightfully claim the healthcare leadership mantle in their communities.

Nine Steps to Engaging Local Employers

Hospital boards around the country are challenging their management teams to find new streams of revenue, grow market share and enrich the hospital’s brand within the community. For an increasing number of hospitals, the answer is found in launching a strategically focused and highly measurable employer-directed strategy.
Here are nine steps to success:
1. Perform a market analysis to identify appropriate employers in your hospital’s catchment area. Employers can be based on size of workforce, insurance profile, industry, etc.
2. Approach these employers and offer to provide them with a program that has very little (or no) cost to them but high value for themselves and their workforce. If properly presented, they can’t say no.
3. Establish a baseline at each worksite by administering a health risk survey to employees (and, in some cases, spouses and insured family members). The survey helps identify overall health risk trends as well as current utilization of health services.
4. Share the results of the survey with each employee through a confidential report that they can take to their doctor for follow-up.
5. Share aggregated, de-identified results with each employer so they know the potential costs if they do nothing. Many employers have said that simply understanding the reasons for rising healthcare costs is an “eye-opener” and something no one has been willing to spend time doing before.
6. Work with each employer to develop health and wellness programs that directly match the needs of their workforce. Topics could include smoking cessation, diabetes, stress, obesity and more.
7. Engage your medical staff by inviting them to visit the worksites to conduct lectures and screenings. This is a good way for physicians to meet potential patients with favorable insurance profiles.
8. Maintain open dialogue with employers so they know you’re their ally, a trusted source they can turn to for health insight for themselves and their employees with confidence and trust.
9. Remember you are an employer, too, participate in your own programs. Doing so speaks volumes about your belief in employer-directed wellness.

Henry Ross is chief executive officer of Aegis Health Group, the nation’s leading healthcare business development company that has been helping hospitals increase
market share and grow revenues since 1989.

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