It’s what every employer and worker wants from their health plan: better care at a lower cost.
Mercy has helped Springfield Public Schools (SPS) achieve both, conserving tax dollars while keeping about 5,800 employees and their family members healthy.
In fall 2014, Mercy Springfield took its biggest risk to date on a direct health care contract, in which employers skip a traditional insurance company to contract directly with a health system for care. Mercy guaranteed it could continue providing the highest-quality care while also reducing costs. If it didn’t, the health system would pay SPS the difference.
By the fall of 2015 SPS had saved $1.9 million and in the second year, another $514,000.
“This is a groundbreaking concept, because there’s transparency about the correlation between cost and health outcomes,” said Dr. Alan Scarrow, president of Mercy Springfield Communities. “Even a health plan with big discounts won’t save employers money if there’s a high, unnecessary utilization of tests and procedures.”
“We thought we could achieve this goal in a commercial population based on our experience with a similar Medicare project we had been participating in for more than 10 years,” Dr. Scarrow said. Back then, the government wanted to see if providers could better coordinate care for Medicare patients through things like screening tests and management of chronic conditions. Through a number of efforts including the implementation of an electronic health record, Mercy got costs down while achieving high benchmarks for health.
“The secret sauce on the SPS contract was the level of collaboration between SPS, Mercy, and district employees,” Dr. Scarrow said. “Finally we have the incentives aligned. SPS has encouraged its staff to obtain care in the appropriate place, whether that’s at home via telemedicine, with their family doctor or at urgent care. Mercy doctors and co-workers are responsible not only for the quality of the care they provide but are also accountable for the cost of that care to make sure it is appropriate. School employees have done their part, too. They’re exceptionally good about getting immunizations and preventive screenings, as well as taking their medications. They’re helping us prevent illness or catch it early when it’s the most treatable.”
Most businesses plan for increases, not decreases, in health care costs each year. That negative trend has been a welcome addition to the district’s bottom line. “Through this collaboration with Mercy, we have been able to positively impact our health care costs, which enables us to continue to cover 100 percent of our employees’ health plan premiums,” explained Carol Embree, SPS chief finance and operations officer. “That is a benefit our employees value and one that helps us attract and retain high quality employees to serve our 25,000 students.”
Since this agreement with SPS, Mercy has made similar arrangements with other employers in the Springfield area. All have proven successful, and Mercy hopes more are on the way.
“This is so exciting for our community because we now have evidence that we can improve care and lower cost at the same time. It’s what everyone has always wanted, and now we’ve figured out how,” Dr. Scarrow said. “I believe this is an example of where health care in the U.S. is headed. It’s a system where everyone gets what they want - high quality and low cost. It’s innovative and consistent with Mercy’s culture and values. Improving the value of what we do is vital to our future from both the perspective of patient care as well as for our economy. Local businesses involved in this type of plan can free up money they used to spend on health care, and direct it instead toward growth, just like SPS.”