Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions (National Alliance), discussed findings of the survey that was presented at the National Alliance 2022 Annual Forum and what concerns employers and business coalitions had regarding the current state of health care cost, delivery, and coverage.
Findings from the Pulse of the Purchaser Fall 2022 Survey presented at the 2022 National Alliance of Healthcare Purchaser Coalitions (National Alliance) Annual Forum highlighted drug costs, hospital prices, and high-cost claims as 3 key challenges facing employers in improving health care affordability, said Michael Thompson, president and CEO of the National Alliance.
Can you discuss how National Alliance’s Pulse of the Purchaser Fall 2022 Survey was conducted and what main themes were investigated?
So, the National Alliance Pulse of the Purchaser Survey is an annual survey that we release to coalitions across the country. And we get a very diverse set of respondents, both in terms of the size of the employers, as well as the industries of the employers, and geographic dispersion. This year was a very interesting year because we're coming out of the worst of the pandemic and we know the workplace environment has changed a lot. The question is, did employers’ priorities and focus on health care change as a result of that?
What we found is there are some things that have changed in the business environment. Employers agree that there has never been more pressure on attracting and retaining employees. But they also cited that health care is getting in the way of doing it effectively, that health care costs are impeding wage increases or, frankly, have become even more critical coming out of the pandemic. So, what were the biggest threats to affordability? Three things came up at the top of the list. Not surprisingly, drug costs, hospital prices, and third, high-cost claims.
The research from the survey was discussed at the National Alliance 2022 Annual Forum held recently. What key findings were of utmost concern among employers who attended the conference?
So, the concerns around hospital prices have emerged as big an issue as anything else in health care. It turns out that a lot of the transparency that has evolved over the last several years through studies, like RAND, and disclosures, like the Leapfrog Group, and other sources of quality data have been important, but nothing has accelerated this as much as the recent release of the [National Alliance] hospital cost data.
What that has allowed us to do through the Sage Transparency tool is actually examine not only are there differences in prices by hospital, but also are those differences explainable by their book of business—what they need to cover shortfalls on Medicaid, Medicare, or uncompensated care. The answer for the most part is they're not needed. They're just very high prices that are not warranted by some of these cost structures in other parts of the business. And frankly, it's leading to a significant amount of dysfunction in the market.
Maybe the most astounding finding in the Pulse of the Purchaser Survey is if an employer was familiar with these new transparency tools, they were 6 to 10 times more likely to believe that the hospital prices were not defensible. They were not reasonable, nor defensible. And I think that's what information does.
So, what did we do at our conference? We started exploring, what do you do about it? Where do you go from here? And we heard from employers and purchasers that are taking very active steps to get more discerning on who they contract with, how they contract, and frankly, take more progressive approaches around even design, like reference-based pricing and other type elements. We also entertained what are some of the policy options that are available if we need to work around the market, if there is no market due to consolidation. So, that was a big issue.
I think another area that we explored at the conference that builds on some of the concerns around drug prices was the role of the intermediaries in exacerbating our issues around drug prices. And we know there are misalignments in the incentive arrangement.
There's an orientation to chasing rebates and creating side deals where the business models become the beast as opposed to aligning with the the needs of plan sponsors, employees, and their families, and we have become very active in educating in that space, but also seeking reforms that will start to better align the incentives and the business models of our intermediaries with the people they should be serving, which is plan sponsors, employees, and their families.