Archived: Hospitals, Insurance Companies, Pharmas: Who Benefits From the Affordable Care Act

The U.S. Supreme Court’s recent decision upholding the major provisions of the Affordable Care Act (ACA) shocked many in and out of the healthcare industry. Leaders of hospitals, health-insurance organizations and pharmaceutical companies agree on one thingorganizations that have had a long-term commitment to serving underrepresented groups will now have a strategic advantage under the new rules.

Those organizations are most ready for the influx of an estimated 32 million new consumers, most of themlower-income Blacks and Latinos, and the need to care for them on a sustainable basis emphasizing wellness as opposed to constant crisis management. The critical factor in their business strategies, they tell us, is the ability to offer culturally competent healthcare and connect on a large scale to the communities they serve while being more cost effective.

“Our assessment is that the Supreme Court decision on health reform will accelerate existing trends in healthcare and the marketplace,” says Dr. Patricia Simmons, executive medical director for Health Policy at the Mayo Clinic. Those trends include consolidation of facilities, new organizations that combine hospitals and insurance companies, increased accountability for metrics-driven results, and a strong focus on community outreach.

Successful implementation of diversity-management initiatives is giving organizations such as Kaiser Permanente, Eli Lilly and Company, WellPoint, Mayo Clinic, University Hospitals, Blue Cross Blue Shield of Michigan, Health Care Service Corporation, Blue Cross Blue Shield of Florida, Massachusetts General, Cleveland Clinic and the Henry Ford Health System a competitive edge in the new world of expanding affordable healthcare.

“Healthcare reform challenges diversity and inclusion to keep and expand our place at the table,” says Linda Jimenez, chief diversity officer at WellPoint.

Diversity Management Connects to Community

In interviews with DiversityInc, these 11 organizations tell a similar story, with minor variations depending on their business model. All have been long-time diversity leaders, appearing either on The DiversityInc Top 50 Companies for Diversity list or The DiversityInc Top 5 Hospital Systems list (and one company is on The DiversityInc Top 10 Regional Companies list). All anticipate (and are already seeing) an influx of new patients/customers, mostly from lower-income families, predominantly Latino and Black.

They stress the need to offer culturally competent healthcare and to emphasize wellness prevention and disease management instead of frequent, costly trips to emergency rooms and urgent-care sessions. All are looking at ways to serve far more people, operating more efficiently and streamlining costs. Several of the hospital systems are worried that Medicare funding might not cover their increasing treatment costs.

The resounding sentiment from leaders in these organizations is that their long-term commitments to culturally competent care through diversity-management initiatives have left them in a better strategic position to improve market share. They point to the importance of resource groups in reaching the community and promoting health education. They cite diversity training for customer-facing employees and the need for an employee and leadership base that represents the communities they serve.

Here is an industry-by-industry look at their changing business models and how critical diversity management is to their sustainable success.

The Affordable Care Act emphasizes preventive care, to save costs by helping more low-income Americans take care of themselves before expensive and life-threatening diseases such as diabetes, cancer, AIDS and high blood pressure develop and to minimize the damage of these diseases in those who already have them. The law specifically calls for investments in community health teams, community health centers and expanded initiatives to increase racial and ethnic diversity in healthcare teams.

Cost Containment: Hospitals

The dilemma for hospitals is how to provide more access while lowering costs at the same time. “It really requires a lot of innovation to reduce costs, and no one’s figured out how to do it,” says Jeff Davis, senior vice president of Human Resources at Massachusetts General, No. 5 in The DiversityInc Top 5 Hospital Systems.

“It’s clear that the new normal in healthcare will involve getting paid less to do more,” says Oliver Henkel, chief external affairs officer at the Cleveland Clinic, No. 3 in The DiversityInc Top 5 Hospital Systems. “There will be more patients with access to healthcare, but private and government insurers will pay hospitals and doctors less and less to care for patients. Therefore, we have to drive efficiencies and cost containment to be able to accommodate the increased demand for healthcare.”

There are healthcare models in place, however, that offer best practices in increasing the prevalence of care to underserved communities without adding employees.

Kaiser Permanente, which has both hospitals and health insurance, has made eliminating healthcare disparities through community outreach a key part of its mission for decades.

“Many in the industry are trying to move toward an accountable care model and there will be more people in the marketplace trying to compete on that basis (alliances between insurance, hospitals and physicians). We’ve been in that business for over 60 years,” says Christine Paige, senior vice president of Marketing and Internet Services at Kaiser Permanente (No. 3 in the DiversityInc Top 50).

The difference now is in volume and the impact of having a substantial number of people entering the market in a short period of time, she says. To that end, Kaiser has been expanding its system capabilities through more bilingual employees, increased communications and more personalized experiences for patient populations through more detailed electronic health records. Kaiser Permanente shared its bilingual program at DiversityInc’s Innovation Fest!

University Hospitals, located in the greater Cleveland area, is moving toward an accountable care organization (ACO) to address the changing marketplace. ACOs rely on metrics and cost-care reductions for assigned groups of patients by making hospitals and doctors directly accountable to the patients and the insurance companies for the quality and efficiency of the healthcare delivery. ACOs were piloted with Medicare patients and now, under the Affordable Care Act, will be used for Medicaid patients as well.

“We are facing a doctor shortage in Ohio,” says Dr. Eric Bieber, chief medical officer for University Hospitals, No. 2 in The DiversityInc Top 5 Hospital Systems. “We can handle it but we need to be efficient and do what’s right for the patient. We now have an integrated delivery system that helps us touch more patients with our primary-care physiciansand not in the emergency rooms.”

At the Mayo Clinic, the hospital is working on creative reimbursement models for insurance companies to “control costs and increase value and make care more affordable,” says Dr. Simmons. Mayo Clinic is also working on improving relationships with other hospitals and medical institutions to provide better access. For example, an affiliate-practice network from various medical institutions sends physicians to treat patients at local affiliates and helps patients stay in their communities. Mayo Clinic is No. 4 in The DiversityInc Top 5 Hospital Systems.

The Henry Ford Health System in Detroit last year bought a Medicaid health-maintenance organization (HMO) so it can offer Medicaid patients comprehensive care. “Hospitals need to better provide care. It’s really about how we can survive financially when more people have insurance,” says CEO Nancy Schlichting. But she worries that the act, as it stands now, isn’t giving hospitals enough funding for the addition. “The population is the same; it’s just how we pay for them. We’re advocating very hard for the expansion of Medicaid funding.”

Henry Ford, she says, now receives more than $200 million a year in uncompensated healthcare, but under the act as it stands now, that amount is cut to $30 million. “It’s really how we can survive financially,” she says. “When people have insurance, as they now will, they won’t wait to go to the doctors. We don’t need to change our operations, just our payment system.” Henry Ford Health System is No. 1 in The DiversityInc Top 5 Hospital Systems.

At Massachusetts General, the situation is a little different because the state has had universal healthcare in effect since 2006 and 97 percent of state residents already have health insurance, according to Davis.

“We adjusted to meet access demands but are still trying to increase the number of primary-care physicians, nurses and physicians’ assistants. Nationally, the first few years of the law will be all about access. It will require a lot of innovation to reduce costs,” he says. He believes the increase in ACOs will allow more people community access.

Cost Containment: Insurance Companies

For the health-insurance companies, the Affordable Care Act literally turns the landscape upside down. In addition to providing insurance for millions of low-income Americans, they can no longer deny care to those with pre-existing, and often expensive, conditions.

For these organizations, the urgent business shift is in focusing on consumers rather than business sales. And cost-savings are critical. “Right now we know that we have to do a lot of work to be a viable player in the consumer market,” says Jon Urbanek, senior vice president, Sales and Marketing for Employer Markets, Blue Cross and Blue Shield of Florida (BCBSF), No. 6 in The DiversityInc Top 10 Regional Companies. “Our focus is on significantly improving our consumer capabilities. At the same time, we’re the leader in the group market and we’ve got to maintain a significant presence there.”

BCBSF has addressed this in the long term by investing in retail centers throughout Florida that will put 90 percent of the population within 30 minutes’ drive of a center. In addition to selling health insurance at the centers, there will be free wellness and screening facilities as well as culturally competent health coaching. The organization also is putting much more health information online, as well as having bilingual call centers. “The information has always been out there, but it’s been in 10 different places in language you can’t understand, and there’s nothing like the ability to see it simply and in one place,” says Urbanek.

Like the hospitals, the insurance companies are often combining efforts to be more efficient. WellPoint, Health Care Service Corporation and Blue Cross and Blue Shield of Michigan (all part of the Blue Cross Blue Shield network) now have a joint effort to create a private exchange with a defined contribution approach to give employers information on managing their healthcare offerings.

These efficiencies enable them to focus more on healthcare disparities, says Carolyn Clift, chief diversity officer at Health Care Service Corporation (No. 19 in the DiversityInc Top 50). “We can offer the providers training. We can help them help us determine if they have a language capability they have not included before in a directory these plans were in place before the Affordable Care Act started to take fold. As a result of the ACA, we’re moving more steadily to implementing more of these programs and projects so we can reach the broad diverse audience.”

Kirk Roy, vice president of National Health Reform at Blue Cross Blue Shield of Michigan (one of DiversityInc’s 25 Noteworthy Companies), notes that the act has direct regulations requiring insurers to communicate in a culturally and linguistically appropriate manner. To meet this requirement, the organization partnered with a translation service and now can communicate in more than 100 languages.

Innovation: Pharmas

For pharmaceutical companies, the challenge to stay competitive is in new drugs that reach the increasingly diverse population. And that requires innovation, which all of the drug firms say requires diversity of thought, experience and background.

“The firms that are already there understand the benefit of a holistic diversity-management approach that makes them better run, have better leadership, have better creativity, better innovation, better productivity and better bottom-line impact,” says Shaun Hawkins, chief diversity officer of Eli Lilly and Company (No. 29 in the DiversityInc Top 50).

While drug manufacturers were relatively untouched by the Affordable Care Act’s specific regulations, they will be strongly affected by expanding rebates for Medicare and Medicaid that will enable more patients to have access to more drugs. That will create a rise in sales volume and patient demand, especially for the influx of new people who are insured.

Because health-insurance companies are looking to cut costs, pharmaceutical companies also will have to demonstrate more cost/benefit of their products. For a company like Eli Lilly, which has had a strong focus on clinical trials aimed at Blacks and Latinos, the emphasis is on developing drugs that effectively prevent and treat the diseases so prevalent in these populations: diabetes, obesity and high blood pressure.

“We are an innovation-based company in an innovation-based industry, focused on breakthroughs for the next round of diseases and how they impact race, ethnicity, gender and age,” Hawkins says.

Solutions: Diversity-Management Resources

For the hospitals, resource groups are an increasingly valuable means of connecting to the increasingly multicultural patient base. A critical part of that is the role they play in community education.

At University Hospitals, for example, the resource groups are working with Black and Latino community leaders to conduct prevention screenings and health-education screenings. They recently partnered with corporate and other Cleveland-area healthcare organizations to support a cultural arts fair called Fairfax, primarily aimed at Blacks. The resource groups helped the hospital bring in a team of nurses and health professionals to conduct screenings and encourage them to interact with primary-care physicians.

“Trust is often an issue in the community. The resource-group employees often live in those communities as well,” says Donnie Perkins, chief diversity officer at University Hospitals.

Increasing the level of cultural-competence training is a high priority for the hospitals as well. While Kaiser Permanente has been a leader in this area for years, other hospitals increasingly recognize the importance of this to the new marketplace.

“We are training clinicians to understand what health means and that preferences vary by culture,” says Dr. Sharonne Hayes, director, Office of Diversity and Inclusion, Mayo Clinic. “The idea is that we are treating diverse populations and each individual in them. The tendency is to treat populations as market segments we are customizing care to the culture and then further to the individual.”

Cultural-competence training is key for healthcare providers, notes Clift. “We have already required all of our internal clinicians to complete cultural-competency courses. Training is around attitudes and how patients actually may have trust issues with providers,” she says.

Jimenez has a good example from WellPoint: Its Latino resource group, SOMOS, has been encouraging healthcare providers to emphasize family care as opposed to individual care. Latino parents, she says, will go out of their way to provide preventive care for their children but are far less inclined to do it for themselves. WellPoint is No. 34 in the DiversityInc Top 50.

The Affordable Care Act also requires hospitals to increase the racial and ethnic diversity of doctors, nurses and other healthcare professionals. Hawkins notes that having a workforce representative of the new marketplace is a big plus for Lilly as it expands its clinical trials. “The patient population we serve is more likely to connect with customers from a sales standpoint,” says Hawkins.

Deep relationships with community organizations developed by companies that are diversity leaders is paying off in efforts to promote wellness and connect with the expanded patient base. Lilly has worked with organizations such as the National Council of La Raza and the Urban League on wellness programs in areas such as depression.

The end result for these companies is the diversity-management strategies that they have put in place are helping them negotiate this brave new world of healthcare accountability and expanded patient populations. Diversity management is critical to their very survival, they all say.

“Everyone is realizing how important diversity and inclusion is in the course of business,” says Health Care Service Corporation’s Clift.

Barbara Frankel, with Robyn Heller Gerbush and Stacy Straczynski

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