Healthcare spending became a huge concern in the early and mid-2000s for Jackson Laboratory.
The 1,500-employee biotech nonprofit based in Bar Harbor, Maine, is focused on health sciences research in genomics, but at its flagship coastal Maine location especially, its self-insured health plan was seeing the implications of a confluence of trends leading to budget problems: chronic diseases in an aging workforce and costly regional hospital-based care.
“We were avoiding making an effort,” said Wayne Gregersen, Jackson Labs’ manager of benefits and compensation, outlining the company’s journey at the Maine Health Management Coalition’s annual symposium. “We didn’t have a business plan.”
Since the start of an incentive-based risk screening and wellness plan and numerous other initiatives in 2007, per employee costs per month have held pretty much flat, at around $600, without any across-the-board increases in premiums or deductibles.
Gregersen calls the strategy “enlightened consumerism,” with disease screening programs, health coaching and tiered provider networks.
The “cornerstone of the wellness program,” borrowed from the Bath Iron Works, a General Dynamics’ military contractor, is a “passport” platform through which employees who complete screenings and healthy activities can earn rewards to lower their premiums and deductibles — $300 for a health risk assessment, $500 for a blood panel, $400 for coaching.
Sometimes, Jackson Labs raffles off screenings or activities, like the chance to win $5,000. “It’s much more cost effective and seems to be a more effective tool to get people engaged,” Gregersen said. The company, relying on Aetna as its third-party administrator, is also working with the startup Newtopia, which uses gene tests to guide lifestyle interventions for diabetes and metabolic syndrome.
Another big factor in the results has been the development of a quality- and cost-based provider network.
When Jackson Labs joined the Maine Health Management Coalition in 2008, HR leaders learned that its costs were 25 percent higher than other employers in the organization. That was in large part “driven by high costs in the local hospitals,” which were 50 percent higher than the coalition average, Gregersen said.
“We thought that it wasn’t us that was the problem, but the healthcare facilities,” he said, noting that employee morbidity incidence was actually more than 10 percent below the coalition average in areas such as cancer, heart disease and respiratory disease.
They decided to “put it out to bid,” sending an RFP to five local hospitals and asking for their prices on the most prevalent ICD and CPT codes.
St. Joseph Healthcare, a one-hospital provider overshadowed by the giant Eastern Maine Health System, ended up as the winner, agreeing to reimbursement at 14 percent below the average cost of others.
A challenge in this strategy is that St. Joseph, in Bangor, is “40 miles away from where most workers live,” Gregersen said. But it’s not an unreasonable choice for employees, given the lower out-of-pocket costs and the fact that many Mainers have 50-mile or more round-trip commutes to work.
For knee and hip replacements, Jackson Labs went even further, establishing a distinction program with St. Mary’s Hospital, a member of Maine Health, 150 miles away in Lewiston — with 100 percent of the cost of the surgeries, travel, lodging and food covered for workers.
The company also has a speciality telemedicine consult program to connect employees with experts at Harvard teaching hospitals, via Partners HealthCare’s Center for Connected Health, and no-cost lab tests through Quest Diagnostics. “Aetna has a great relationship with Quest and gets a huge, huge, huge discount to use Quest,” Gregersen said.
Since 2007, when the company embarked on this wellness and value journey, hospitalizations have decreased by 43 percent and claims above $50,000 have decreased by 50 percent.
“It’s a risk-management program rather than a cost-management program,” he said. “I think that focus on risk results in better outcomes.”
This article originally appeared on Government Health IT sister site Healthcare Payer News.
Related articles:
Pay-for-performance: Patient centered care? Or just bureaucracy?
CMS clears the air about Medicaid tax
Can payment reform succeed while providers' risk-sharing evolves slowly?
