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V O L . X X I V N O. X X S E P T E M B E R 1 7 , 2 0 1 8 24 H E A LT H C A R E F O C U S Group-buying pharmaceuticals About 25% of a purchaser's health care spending is for pharmaceuticals, Putnoky says. If the trend continues, that could rise to 50% in coming years. Some of that cost goes to phar- macy benefits managers, who generate revenues that are mostly hidden from purchaser and patients. Hayes says the companies often keep significant rebate money and charge more for the drugs than they pay the pharmacies. "For instance a generic drug they pay the pharmacy $1 for, they may mark up several dollars and charge the purchaser," he says. e new plan offered by the alliance, partnering with "transparent PBM" Georgia-based ProCare RX, "follows every dollar," Putnoky says. ProCare makes a fixed amount on each script and there are no hidden or mystery costs. Putnoky says the change could save a middle-sized employer a million dollars a year. Centers of excellence-based bundled care Another major health care expense is that procedures have separate pay- ments for different pieces ere is also a wide variety in level of quality across providers, which can cost money when there are complications, infections and misdiagnoses. "ere are some things where it really does matter where you get it done," Hayes says. "e outcomes are so very different." e initiative, in partnership with Carrum Health, offers a set price for the entire procedure, as well as a warranty. For instance, if an infection puts a hip replacement patient back in the hospi- tal, there's no additional cost. e program is expected to save businesses 20% to 40% in lower prices. Because the program focuses on mak- ing sure the procedure is needed, it's also expected to save 10% to 30% in avoided procedures. e price also includes travel to and from where the procedure is being done, and a concierge service that helps with the logistics. Carrum Health, a center of excel- lence program provider, claims a 1.7% 30-day readmission rate (the average for center of excellence programs is 2.3%) and a 0.1% complication rate (the average is 2.7%). e nonprofit is starting with hip, knee and spine procedures. Putnoky says they're the most common procedures, and also have a specific treatment period. e program will likely expand to other types of care, he and Hayes say. SmartShopper program Hayes says this is the initiative he's the most excited about. Patients will be paid a bonus if they go to a lower-cost treatment center instead of a hospital, where it can cost twice as much to get a procedure done. An infusion of Remicade, which is used to treat illnesses like arthritis and Crohn's disease, costs on average of $5,160 at a doctor's office or infusion cen- ter, but $11,296 at the hospital. Yet, 57% of patients have it done at hospitals. Putnoky says patients who have paid their deductible and out-of-pocket expenses go where they've gone for the initial treatment, or where they're more comfortable. e rebate is an incentive to opt for the cheaper location. e initiative is also spurring provid- ers to make changes. "We're finding out what levers we can pull," that can lead to changes in the overall system, Putnoky says. Providers seeing results e new focus has already paid off at Penobscot Community Health Care, one of the alliance's provider members. Lori Dwyer, president and CEO, says the SmartShopper incentive prompted the Bangor-based health care system "to take the financial risk" to establish an outpatient infusion center. It opened July 23. Penobscot Health had been look- ing for ways to improve quality while reducing cost for years, she says. "However, it is a significant challenge — probably the challenge of this era in health care — to invest resources in improved quality when the return is uncertain and we still live largely in a fee-for-service world." She says the partnership between the two organizations "is and will continue to be critical to PCHC's success." She says it's an example that underscores how providers and payers are dependent on each other, and the importance of collaboration. Dwyer believes it's the first infusion center of its kind at a Federally Qualified Health Center in the country. "is is a terrific complement to primary care services, and a much more comfortable and affordable way for patients to receive infusion therapy," she says. At Central Maine Healthcare, another member of the alliance, the new focus "completely aligns with" the Lewiston-based provider's on quality, access, affordability and patient experi- ence, says Ryan McKeown, vice presi- dent for strategy and managed care. e health care system this sum- mer opened a center in Topsham that provides imaging and other services. McKeown says CMHC is "cur- rently working to 'disrupt ourselves' by exploring ways to proactively create lower-cost options." Partnerships like the one with HPA "bring consumer-priced options for labs and imaging into the same facility" as the system's clinicians, but without the cost of the hospital, he says. Emphasis on value over cost Hayes says when the members first asked for change, it was thought it might take years, but the new initia- tives will be in place Jan. 1. Purchasers who take advantage will realize cost savings immediately, he says. Purchasers in the alliance range in size from Bath Iron Works to Rising Tide Brewing Co. Chris Lockman of the law firm Verrill Dana, a purchaser member, says the new mission at the purchaser alli- ance "aligns well with Verrill Dana's commitment to emphasize value over cost, and select health plans provid- ing the greatest overall benefit to our employees." He says the firm's membership "assists us in ensuring that we can meet the health care needs of our employees and connects us with important issues challenging our cli- ents," says Lockman, who is the law firm's employee benefits and executive compensation attorney. While the initiatives are of more benefit to self-insured members, those that are fully insured can also exchange information, take part in workshops, and benefit in less direct ways, Hayes says. e alliance is talking to similar organizations in nearby states, like New Hampshire, about how they can collaborate. Hayes says the collaboration can include working together on addic- tion, mental health issues and other common challenges. "It's all part of that evolution," he says. "Over the next five to eight years, there's going to be dynamic change" in health care, he says. e alliance is hoping it's posi- tioned to anticipate that change. "e building blocks are there," Hayes says. Maureen Milliken, Mainebiz staff writer, can be reached at mmilliken @ mainebiz.biz » C O N T I N U E D F RO M PA G E 2 2 H I G H - VA L U E S I T E S O F CA R E : C O S T VA R I AT I O N B Y S E T T I N G F O R C O M M O N L A B T E S T S Average imaging costs Where patients are going S O U R C E : Healthcare Purchaser Alliance of Maine Comprehensive Metabolic Panel Lipid Panel Glycosylated Hemoglobin Test Independent Lab Office Hospital Outpatient $15 $20 $16 $18 $22 $16 $83 36,769 3,165 6,739 3,331 10,090 1,312 6,697 25,808 11,526 $75 $55

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