Healthcare and EmployersVCC Healthcare Conference

June 7, 2012

Bob CramerNorfolk Southern Corporation

Chair, VCC Healthcare Committee

NORFOLK SOUTHERN CORPORATION

• Fourth Largest Railroad Operating 20,000 route miles in 22 states east of the Mississippi River,

• Roots go back 175 years, 30 years as Norfolk Southern• Historic Safety, Ethics and Work Culture – Accountability• HQ in Norfolk, Large regional offices in Roanoke and Atlanta• Fortune #243, $11 Billion Annual Revenues• 5,000 non-union, 25,000 union employees, and 6000 retirees

w/medical coverage Annual Healthcare Spend $400 Million

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Responsible for strategy, design, financial and vendor management for our healthcare and wellness programs.

Healthcare Why are Employers becoming engaged?

• We are told that US healthcare costs more than in other countries, yet may be of lower quality.

• We are concerned that the productivity of our workforce is compromised by sub-optimal healthcare

• We know that the increasing cost of healthcare services paid by employers is unsustainable.

Healthcare Employer awakening

• Cost-shifting to employees, besides unpopular with employees, is at best cosmetic, at worst a distraction.

• Consumer - directed medical plans require transparent cost and quality information.

• Health and wellness initiatives ultimately depend on quality primary healthcare delivery.

• Employers and our group insurance programs have been key contributors to problems with healthcare.

Healthcare What appears to be the underlying causes?

• Unlike other free-market enterprises, healthcare is not currently accountable for Value to its customers.

• “No-Value” payment systems have perverted care delivery.

• Each stakeholder in its commercial silo seeks to optimize its slice of the healthcare money pie, e.g.,– Who owns the X-Ray?, – Insurance Premium Increases, [PPACA 10% rule]– Provider/Plan Contract Disputes– ‘Profit-centered’ hospital services

• Employers want to bake a smaller money pie.

Healthcare Unsettling symptoms

Healthcare Unsettling symptoms - continued

Healthcare Unsettling symptoms - continued

“Primary care, characterized by continuity of care, an established relationship

between patient and physicians, was once the central grounding of our healthcare system. The United States healthcare system has been facing a decline in its primary care workforce,

infrastructure and access to primary care services for several years.  A number of factors, including poor reimbursements to primary care physicians, low comparative income, and poor quality of work life due to high patient loads, have contributed to more doctors choosing to train and practice in specialty medicine. This trend has lead to a

shortage of primary care providers across the country—likely contributing to fragmented care, inappropriate use of specialists, and less emphasis on prevention.” Kaiser Family Foundation April 2012

Healthcare Unsettling symptoms - continued

• Wide income disparities exist between family physicians, whose annual income averages $173,000, and specialties such as radiology ($391,000) and cardiology ($419,000).

• Graduating medical students perceive the lifestyle associated with primary care physicians as unfavorable.

• Only 8% of the nation’s medical school graduates go into family medicine.

• 56% of patient visits in America are primary care, only 37% of physicians practice primary care medicine.

Kaiser Family Foundation April 2012

Healthcare Unsettling symptoms - continued

A higher ratio of specialists to population has been correlated with higher mortality rates

A higher ratio of primary care physicians to population is better for health. One theory is that patients with a usual source of primary care tend to use more preventive health care and have health problems treated at earlier stages.

Many experts believe that the decline in primary care has contributed to overspecialization of care, fragmentation and inefficiency in the health system.

Kaiser Family Foundation April 2012

Healthcare Unsettling symptoms - continued

American Academy of Family Physicians:

“Don’t order annual electrocardiograms (EKGs) or any other cardiac screening for low-risk patients without symptoms.

There is little evidence that detection of coronary artery stenosis in asymptomatic patients at low risk for coronary heart disease improves health outcomes. False-positive tests are likely to lead to harm through unnecessary invasive procedures, over-treatment and misdiagnosis. Potential harms of this routine annual screening exceed the potential benefit.”

Yet, an EKG was ordered by an NS member’s physician as routine and paid as routine by the claims administrator.

Healthcare Employers must get involved with the big picture

Employers can take and have taken measures within their organizations to improve employee health and manage healthcare spend, however

the real fix requires market-level change.

The Virginia Chamber’s Healthcare initiative will enable an organized and collective employer engagement into the healthcare discussion.

Employer Healthcare Committee What’s its job description?

• Be a collective voice to other stakeholders,

• collaboratively prioritize, consider and advance quality initiatives/healthcare reforms,

• provide collective input for appropriate legislative action to effect healthcare system change, and

• with partners (VCHI, VBCH, et al.) collect and disseminate best practices.

Employer Healthcare Committee Employer Members

About 14 representative employers

Current Employer Members

Advance Auto Capital One

Estes Express Genworth Financial

MeadWestvaco Media General Huntington Ingalls Norfolk Southern

Rolls Royce SAIC

Smithfield Foods

Employer Healthcare Committee Activities to date:

• Prioritized for action the following “problem areas” in healthcare in order to enable true consumerism:

• Provider payment reform, [PCPs, Outcomes]

• Clinical outcome transparency, and

• Cost transparency

• Defined the Executive Healthcare Committee and extended membership invitations

Healthcare Executive Committee What is it?

• An employer-led inclusive collaboration of the various stakeholders, establishing

• a forum in which employers and other stakeholders exchange perspectives, to

• aid employers in contributing to and advancing thoughtful macro-level change of healthcare, and

• enable servicing stakeholders to better align their product and service development with the needs of customer employees and employers.

 

Healthcare Executive Committee (Proposed)What’s it look like?

VA Assoc. of Health Plans Members (3)

Issue-Based Sub-Commitees

1) All-Payer Claims Database

2) Healthcare Exchanges

Supporting/Sponsoring Organizations Associate Members

(All Others Interested)

VA Dept of HRM Members (1)

Employer Consultants Members (3)

Medical Society of VA Members (1)

VA Center Health Innov. Members (1)

VA Business Coalition on Health. Members (1)

VA Health Information Members (1)

Virginia Economic Development Member (1)

American Acad. of Pediatrics VA Members (1)

VA Hosp. & Healthcare Assoc. Members (3)

VA Dept of Medical Assistance Services

Members (1)

Virginia Chamber Executive Healthcare Committee (Proposed) Convener - Chair, Employer Healthcare Committee

Full Members (40) Associate Members (Open)

Mental Health Service Providers Members (1)

Virginia Oral Health Coalition Members (1)

Pharm. Manufacturers Assoc. Members (1)

VA Chamber Employer Healthcare Committee

Members (14)

Virginia Municipal League

Members (2)

Virginia Association of Counties

Members (2)

VA Academy Family Physicians Members (1)

Virginia Nursing Assoc. Members (1)