Payer Dissatisfaction

Deloitte just released a very interesting study looking at how employers view the healthcare system and changes they anticipate over the coming years.  Many of the headlines across the country talk about the 9% of employers who think they will be dropping healthcare benefits for their employees.  This may or may not happen, but I really don’t think it is the key finding in the study.  A bigger story to me is the over 91% who for sure will continue coverage or who haven’t made up their minds despite the fact they think the system is broken.  The payers don’t have a full understanding of the system and quite frankly are not happy with what they are purchasing.  The environment seems to be ripe for massive change if only some viable alternatives were available.

When asked to rate the US healthcare system, only 35% of employers gave it an A or a B rating.  These are the ultimate customers, the ones that pay for healthcare, for over 160 million people.  It is very interesting to note that presidents and CEOs rate the system somewhat better than the HR executives who actually are more involved with the specifics of their plans.  The presidents and CEOs seem to like the access, availability and convenience of the current system.  Perhaps this is because they get a little better treatment when they utilize the system as money definitely still talks.  The main concerns employers have are the costs and inefficiencies.  Presidents and CEOs blame hospitals and lifestyle issues while HR folks place more blame on pharmaceuticals.

When asked about the Affordable Care Act, it was predictable that a majority thought it is a step in the wrong direction.  They claimed to understand the ACA, especially the parts stressed on cable news, the individual mandate and employer penalties.  They did admit that they do not really understand the inner workings of the bill and how healthcare delivery will be changed, including a lack of understanding of accountable care.  Despite the huge financial impact of healthcare, only 4 out of 10 of mid and large size companies surveyed claim their organization is ready for the ACA despite the fact it was passed over two years ago!

What does all this mean for the pharmaceutical industry?  First, it should be very disconcerting that those who pay for over half of our customers don’t have a real good understanding of what is going on and are very dissatisfied with the product they are purchasing.  They feel forced to buy coverage as they understand how important it is for them to attract and retain talent, but they don’t like it.  With their healthcare costs rising 9% a year, this is like putting salt in the wound.  This concern is magnified as the employer supported part of the industry is much more profitable to the industry than the rest that is paid for mostly by government.

On the plus side, if you and your company really think you are change agents, this level of dissatisfaction could be viewed as a huge opportunity.  One of the potential issues is that payers have turned so much control of their healthcare over to PBMs and others in managed care who at least from these data don’t seem to have delivered what they promised.  There might be an opportunity for more direct discussion and work with employers based on the high level of dissatisfaction.  Note that employers are already looking for more direct relationships with hospitals and physicians.  Why not with pharmaceutical companies?

Disruptive change is about to happen as nobody seems satisfied with the current system.  The time is ripe for some new thinking.  As Christensen and other change gurus teach us, this change usually comes from those not currently in the system.  It comes from outsiders who have everything to gain and nothing to lose from totally blowing up the status quo.  With all the struggles facing our industry today, perhaps we should be thinking about being the massive change people.  The upside to a new system may be much brighter than continuing down the current path.  It may be time to take some big chances.

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