5 Best Practices for Increasing Volume Through Cultivating Relationships With Employers and Consumers

In 2006, leaders at Manitowoc (Wisc.) Surgery Center decided to shift their marketing dollars ways from traditional venues, like newspaper advertising and billboards, and into advocacy and educational programs that promote the ASC "story" — high-quality, cost-effective care — directly to employers as well as to consumers and community members. Manitowoc's out-of-the box approach has been successful with patient volume increases of 35 percent in one year as a result of its efforts.

ASCs around the country that provide high-quality care at a low cost are in a unique position to benefit from recent movements by employers and other entities to promote consumer-driven healthcare, but in order to take advantage of this opportunity, they have to get their message heard by these groups.

Kate Willhite, executive director of Manitowoc, offers the following five best practices for direct contracting with employers and selling them on the ASC "story."

1. Know your strengths and weaknesses. ASCs should take inventory of their current strengths and weaknesses. Awareness about the advantages of your facility over others in your area is the first step in preparing for discussions with employers.

"Most consumers are looking for a high-value surgical provider, as judged by quality, price and service; however, many consumers lack the information they need to make informed decisions," says Ms. Willhite. "In response, our business development focus has turned into getting that information out to the community."

In addition to examining possible strengths in regard to billed charges, ASCs should assess their contracts with insurance companies. Ms. Willhite recommends that ASCs identify where they have leverage such as quality outcome measures, complication rates, and patient satisfaction survey results, and then use those strengths to get out from under weak contracts that include inclusion of implants, percent of Medicare fee schedule, auto-renewal, etc.

2. Prioritize employers for discussions. Ms. Willhite recommends that ASC leaders prioritize employers to approach based on the savviness of the employer and its human resources executives.

"You have to be active and out in the community. Attend chamber of commerce programs, job fairs and other events. Get to know which employers are hungry for change and are looking for a new perspective on the dollars they're spending for benefits," says Ms. Willhite. "Prioritize your relationships based on who you think is willing to be a change agent. Look for someone who is looking to get aboard quickly and set an example for those on the fence."

Ms. Willhite started her direct contracting campaign by approaching the healthcare decision-makers from one large employer in her area, which she knew to be risk-taking and involved in healthcare reform.

When approaching employers, ASC leaders should clearly explain how a relationship with their facility can benefit the employer.

"I approached them with empathy for the hurdles they were facing; the struggle to keep employee benefits an option at their company. I put myself in their shoes and then gave them the good news — that our surgery center is here to help," says Ms. Willhite.

In addition to providing high-quality, low-cost services, Manitowoc also provides supportive services for employers such as employee-benefit plan design guidance which promotes cost-consciousness and employee/consumer accountability.

As a result, the employer devised a plan that would provide cash incentives to employees that selected the least-expensive provider within their insurer's network to perform their procedures. The employer began offering anywhere from $150-$1,500, paid directly by the employer, depending upon the procedure, to the employee who selected the high-value provider.

3. Use employers to drive insurance companies to change. Once ASC leaders have educated employers on the importance of designing benefit plans that promote cost-consciousness, employers who want to provide these programs should leverage this desire with their insurer and negotiate employee-benefit plan designs that support high-value choices and employee accountability.

The company that Ms. Willhite worked with pushed its insurer to provide online access to contract allowables so that the employees could accurately compare medical costs.

"The employer illustrated to the insurer that they were creating cost-conscious, quality-conscious consumers and how it benefited the insurer," says Ms. Willhite. "The employer pressed the insurer to provide the electronic venue for the transparency necessary to make comparisons among providers."

Transparency is the key to providing consumers with the information they need to make informed decisions, and employers, insurers and providers need to embrace this in order to successfully provide cost savings to consumers. Insurers often do not reveal contracted rates to their members, so comparing out-of-pocket costs, such as the cost of a percentage-based co-insurance, can be particularly difficult for consumers. Additionally, insurers are often wary about publicizing the information because providers will be made aware of other providers' contracted rates.

"Consumers must have access to contract allowables in order to compare the costs of different facilities. Insurers are uneasy about releasing that information," says Ms. Willhite. "Employers need to push them to let go of the reigns and release the information."

The insurer that Ms. Willhite mentions now maintains a Web site specifically for employees of the large company. The Web site contains the employer's contract allowables for 10 different procedures at three facilities — two hospitals and the Manitowoc Surgery Center. For example, a patient undergoing carpal tunnel can log on to the site and see the contract allowables for the procedure at the three different locations. The ASC may have a contracted rate of $1,250, while hospital A and B are contracted at $2,000 and $2,100. Thus, if the employee selects the ASC for the procedure, he or she will receive a cash incentive for selecting the least-expensive provider.

"Providing incentives for patients to use the provider at the lowest contracted rate can benefit ASCs," says Ms. Willhite. "Again, because we have a cost-base plus fair profit reimbursement, it is easy for us to provide the highest-value option 95 percent of the time. Employees being incentivized to choose the high-value option will only help to increase our volume."

4. Leverage employer relationships during managed care contract negotiations. Ms. Willhite says that her new-found relationships with employers have improved her negotiations with managed care contractors.

"I have been able to go to the payors and say, 'no, we are not interested in doing a contract based on a percent of Medicare,'" says Ms. Willhite. "Our cultivation of successful employer relationships has allowed us to show that individualized, employer-specific insurance plans can benefit the insurer, the employer and our center." It comes down to cost, quality and service. Contracts need to be cost-based to incentivize those that are efficient; this, again, can put ASCs in a winning position.

Manitowoc Surgery Center has completely changed its approach to contract negotiations as a result.

"We no longer have the goal of pitting one insurance contract against another and looking for the highest reimbursement rate; now, we're looking for the 'right' rate." says Ms. Willhite. "We've changed the focus to the consumer side. We're looking to find a rate that is fair and will be attractive to the consumer and easy for them to compare to other facilities in their plan, increasing our volumes as a result."

Most insurers and employers prefer to work from a "cookie-cutter" contract, such as a contract that pays a certain percent of Medicare, because these contracts are more efficient, administratively. However, these uniform contracts actually end up costing both parties more than a plan tailored specifically to the employer, says. Ms. Willhite.

"The payors often think it's a lot of work, even though it's beneficial to them in the long run," says Ms. Willhite. "We have all become too complacent in our business activities, and it's time to change. If you're complacent, you're regressing."

Ms. Willhite explains that her facility simply decided to put its relations with employers ahead of relations with insurers and promoted the center directly to the employer.

"Building relationships with employers are a higher priority for us than contracting with insurance companies," says Ms. Willhite. "We are working to get the employer back in a position of being truly informed, and we are no longer beating our heads against the wall with insurance companies who insist on cookie-cutter contracts."

5. Continue to promote the role of the employer in healthcare decision making. ASCs should continue to pursue direct relationships with employers by promoting this new role of the employer.

Manitowoc hosts an annual symposium on healthcare redesign and invites local business owners and leaders to attend free of charge. The event features presentations for area CEOs and healthcare experts at a local conference center. At the event, business leaders are encouraged to request transparency from their health plan provider and discuss healthcare access and cost issues facing the community.

The event not only promotes smart healthcare choices within the community, but also promotes the surgery center's services.

Contact Lindsey Dunn at lindsey@beckersasc.com.


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