CFO VISION 2014 Navigate your world · 2020-05-12 · While not all employers are seeing health care costs rise, ... 101-999 Employees 1000-2499 Employees* 2500+ Employees ... “Pay

November 19–21 | Washington, D.C.

CFO VISION 2014

Navigate your world

Director

Deloitte Consulting LLP

Rick Wald

Pass the aspirin: Rx for your

health care headaches

Kenneth Weixel Partner

Deloitte & Touche LLP

Copyright © 2014 Deloitte Development LLC. All rights reserved.

ACA and the future state

Rising employer costs

Wellness and return on investment (ROI)

Overcoming waste and inefficiencies

Private exchanges

Pay or play? Public state exchanges

Managing rising costs

Agenda

2

ACA and the future state


While policies and mandates enacted by the Affordable Care Act (ACA) have made

significant changes to the health care environment, Deloitte’s 2013 Survey of U.S.

Employers shows that most employers are skeptical about ACA’s impact on cost reduction

and improved quality of care.

How do employers develop a long-term strategy in this new health care environment while

simultaneously managing costs?

ACA is here to stay. What does that mean for employers?

4

Looking ahead to 2019 at the policies implemented (and yet to be implemented) by the Affordable Care Act, do you believe it will

succeed in…?

47%

30%

22%

Improving access to insurance

ACA will succeed ACA will not succeed Maybe

22%

63%

14%

Reducing costs

19%

60%

21%

Improving quality of care

Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers


While it is not clear how the industry will shape up, it is clear that employer

activism will be a strong catalyst for meaningful improvement in the health care

system.

Future visions show that scenario planning should be central

to every employer’s long-term health care strategy

5

The empowered

consumer?

The perfectly managed

population?

The big data

panacea?

The seamless and

unending technological

network? The iron fist of

Government?

The weakened fist of

government?

The personalized

medicine scenario?

The status quo?

?

http://www.polleverywhere.com/app

http://www.polleverywhere.com/app/help

https://www.polleverywhere.com/multiple_choice_polls/gbbwkxTENm4Yfmv?preview=true#!/my/polls

Rising employer costs


Four out of five employers say their health care costs

have increased over the past three years.

• Average increase = 30%

• Amount of increase passed to employees = 26%

While not all employers are seeing health care costs rise,

those that are have experienced significant increases

8

Increased 80%

Stayed the Same 17%

Decreased 3%

75% Hospital costs

67% Prescription drug costs

67% Waste and inefficiencies in processes

62% Defensive medicine

58% Consumer unhealthy lifestyles and behaviors

56% Government regulation

Employers believe these drivers have a “high impact” on costs:



Within organizations, stakeholders have differing perceptions on what strategies

have the greatest impact on cost. Often, anything deemed to be related to

health care is delegated to HR, but the CFO is uniquely positioned to view the

issues objectively and craft an evidence-based strategy.

Employer tactics to manage costs don’t necessarily align

to the approaches they believe are impactful

9


54%

36%

28%

20% 19% 18% 17%

38%

25%

21%

26%

20%

25%

29%

0%

10%

20%

30%

40%

50%

60%

Increasedemployeefinancial

responsibility

Healthimprovement

Plandesign

Reducedbenefits

Networkmanagement

Limit hoursworked

Definedcontribution

Tactics currently used to manage or reduce health care costs

Strategies considered to have a high impact on managing or reducing health care costsCFO

HR

CFO

HR

CFO

HR



https://www.polleverywhere.com/multiple_choice_polls/N3NKVLaKYbZMxZw?preview=true#!/my/polls

Wellness and return on investment (ROI)


Consumer behavior is considered to have a major influence on

cost, although the majority of employers do not offer rewards

12

Sources:

Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers

Deloitte Center for Health Solutions: Health Care Consumer Survey, 2013

Deloitte Center for Health Solutions: Survey of U.S. Physicians, 2013

50%

58%

82%

2013

Sources: Deloitte Center for Health Solutions Health Care Consumer Survey, 2013 (N = 4,065)Deloitte Center for Health Solutions Survey of U.S. Physicians, 2013 (N = 613)Deloitte Center for Health Solutions 2013 Survey of U.S. Employers (N = 500)

Chart showspercentage who said

"major influence"

In your view, how much influence does consumer behavior, such as unhealthy lifestyles that can lead to obesity, have on

increasing overall health care system costs?

Consumers

Employers

Physicians

26% of employers offer

rewards or penalties to

motivate employees to

improve their health

status and health care

choices.

Only two in five

companies that offer

rewards or impose

penalties say they

measure the return on

investment.


Financial incentives top the list of the kinds of incentives that might work best to

motivate individuals to engage in behaviors that would have a positive impact on

system use, outcomes, and cost.

Consumers are willing to participate in wellness programs—

at a cost

13

Sources: Deloitte Center for Health Solutions: Health Care Consumer Survey, 2013

62%

51%

23%

22%

16%

15%

Financial (such as direct payments, reducedinsurance premiums or reduced co-pays)

Rewards, perks, and points

Coaching (such as personal, online, patientnavigators)

Doubtful that any of the above would achievelongstanding improvement in health status

Employers acting as influencers/changeagents

Social networking and games to build a peersupport community

If incentives were widely introduced into the health care system, what types of incentives do you believe might work best to motivate individuals to

engage in behaviors that may improve clinical outcomes, reduce unnecessary use of services, and reduce overall costs?

Source: Deloitte Center for Health Solutions 2013 Health Care Consumer Survey

Chart shows percentage of the total sample (N = 4,065)

A minimum of $75,

on average, is

deemed sufficient

by consumers to

motivate individual

behavior change.



https://www.polleverywhere.com/multiple_choice_polls/6NwGBlrLYn8Z1PJ?preview=true#!/my/polls

Overcoming waste and inefficiencies


Executives in different functions have a varying view of what drivers have a

“major influence” on cost.

It is the fiduciary responsibility of the CFO to assure stakeholders that resources

are used appropriately and efficiently. How can CFOs overcome the waste

caused by fragmented purchasing habits, lack of incentives for cost-effective

care, and regional price disparities?

CFOs have the opportunity to lead efforts to overcome waste

and inefficiencies in their health care programs

16

Owner/CEO/President CFO HR executive

Hospital costs 72% Hospital costs 81% Hospital costs 70%

Waste/inefficiencies 68% Waste/inefficiencies 69% Government regulation 60%

Prescription drug costs 66% Prescription drug costs 67% Prescription drug costs 59%


Focus on the data


Most companies have not analyzed their own clinical data

to determine value or quality

17

Has your company analyzed its own clinical claims data to determine:

23%

17%

29%

35%

44%

36%

25%

47%

48%

52%

69%

76%

63%

59%

36%

56%

68%

46%

41%

29%

8%

7%

7%

6%

20%

8%

7%

7%

11%

19%

Total

50-100 Employees

101-999 Employees

1000-2499 Employees*

2500+ Employees

Total

50-100 Employees

101-999 Employees

1000-2499 Employees*

2500+ Employees

Analyzed company's claims data Has not analyzed company's claim data Don't know


Health care provider compliance with evidence-based standards or identification of providers that engage in unnecessary testing or procedures

Employee utilization and costs for health care treatments, services, and medications



https://www.polleverywhere.com/multiple_choice_polls/wJYdCTSCjTFgUAy?preview=true#!/my/polls

Private exchanges


27% of employers believe private exchanges will enable consumers to make

better health care choices, and nearly as many believe private exchanges will be

a viable alternative to public exchanges

Only about one in five employers “totally agrees” with the

effectiveness of private exchanges

20


To what extent do you agree or disagree with the following statements about private health insurance exchanges?

27%

26%

21%

20%

30%

27%

21%

25%

23%

26%

21%

14%

25%

22%

15%

13%

25%

27%

23%

20%

0% 20% 40%

Be a vehicle by which consumers use decisionsupport tools to make better choices in health

insurance and use of health care

Offer a viable alternative to state health insuranceexchanges

Enable consistent benefit design and choicesacross interstate locations

Make it easier to offer a defined contribution plan toemployees

Total 50-100 Employees 101-999 Employees 1000-2499 Employees* 2500+ Employees

Strategy that CFOs

consider to have a

high impact on

managing health care

costs


A private exchange option frees employers from many of the day-to-day

responsibilities of managing a benefits program, but allows them to hold onto the

perception of helping employees with the costs of benefits via pre-tax accounts.

About two out of three employers report they are likely to use private exchanges

for active full-time employees but will want evidence that private options deliver

greater value than the current model.

Most employers plan to take a wait-and-see approach

to private exchanges

21


50-100 Employees

20% 19% 19% 19%

50% 47% 51% 49%

29% 34% 31% 33%

Likely (8-10) Somewhat likely (4-7) Not likely (1-3)

101-999 Employees 1000-2499 Employees* 2500+ Employees

On a scale of 1 to 10, where “1” is not at all and “10” is very likely:

How likely is your company to use a private health insurance exchange as a channel for providing health insurance for your employees?



https://www.polleverywhere.com/multiple_choice_polls/aTIX3DyB4Zc7VFt?preview=true#!/my/polls

Pay or play? Public state exchanges


“Pay or Play”: Employers will need to make the decision to either exit

sponsorship and pay a penalty tax, or continue to offer health benefits. Either

decision comes with its own set of challenges and implications.

ACA is driving employers to rethink health care strategy

24


What do we know about our current employees?

What do we know about our current benefit plans?

What do we know about the competitive landscape?

What do we know about our employees’ perceptions and expectations?

What will it mean to be an employer of choice in 2015 and beyond?

Each question creates a new group of winners and losers who potentially stand

to prosper or not based on the actions taken.

To develop a long-term strategy, employers must ask the right

questions

25



https://www.polleverywhere.com/multiple_choice_polls/1CTQovyJbqDQm2f?preview=true#!/my/polls

Managing rising costs



https://www.polleverywhere.com/multiple_choice_polls/kBff42iq3hpCawr?preview=true#!/my/polls


Two out of three consumers agree that the use of cost sharing can have a

negative effect by leading people to delay or avoid treatment.

One in three consumers self-rations

to manage health care costs

29

Which of the following, if any, have you done in the past 12 months?

33%

15%

15%

8%

4%

Used home remedies or over-the-counter medicines

instead of going to see a medical professional

because it was cheaper.

Decided not to see a medical professional or get

health care services when you were sick or injured in

part or entirely because the cost was too high.

Asked about pricing before

agreeing to treatment of any kind.

Delayed or did not follow treatment recommended

by a doctor in part or entirely because the cost

was too high.

Negotiated a lower amount for your

medical bill or treatment of any kind.

Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Health Care Consumers


Out-of-pocket direct costs are a considerable burden on the average household

and consumer price sensitivity about the cost of health care is likely to rise.

Innovative financial tools and products are needed to assist consumers in better

managing costs when making health care decisions. Deloitte’s survey shows that

many consumers are ready to use technology to find quality ratings and price

information.

Over 60% of consumers are also interested in using technologies for personal

health improvement or to manage and monitor specific health conditions.

Transferring costs to employees creates an opportunity

to use innovative tools to influence consumer behavior

30

In the past 12 months, have you looked online

for any of the following types of information

either for yourself or a family member?

52%

44% 12%

13%

A pricing tool to

compare and negotiate

prices with doctors

and hospitals

Quality rankings,

satisfaction ratings,

and patient reviews

How likely would you be to

use websites that offer the

following?

Source: Deloitte Center for Health Solutions: 2012 Survey of U.S. Health Care Consumers

Questions/opinions

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

Documents

CFO VISION 2014 Navigate your world · 2020-05-12 · While not all employers are seeing health care costs rise, ... 101-999 Employees 1000-2499 Employees* 2500+ Employees ... “Pay