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April 19, 2012, 9:26 am
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Eric Grossman, Senior Partner, Mercer

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Eric Grossman, Senior Partner, Mercer

Editor’s Note: Medical Travel Today recently featured news of the Johns Hopkins-PepsiCo deal. In an effort to better understand the future of medical travel for employer groups, we decided to connect with Mercer, the organization responsible for bringing some of the largest employers and providers together. We’re grateful to Eric Grossman, senior partner at Mercer, for sharing with us how these relationships came together and what future partnerships might – or might not – look like.

Medical Travel Today (MTT): How do the Lowe’s/Cleveland Clinic and PepsiCo/Johns Hopkins partnerships compare?

Eric Grossman (EG): The deals are pretty comparable at the highest level. They’re similar in terms of the procedures covered, methodology of payment, and the number of eligible members.

While both focus on cardiac procedures, PepsiCo added complex joint procedures, specifically revisions of hip and knee replacements – but only revisions.

MTT: Why is that?

EG: Revisions are much more complex than first-time replacements. Both programs could offer first-time replacements, but the issue is that there are many places that do that really well. That puts the whole value proposition into question. Why put someone on a plane for something that they can get within 50 miles?

MTT: Do you think either might expand coverage offerings in the future?

EG: There is potential to add certain types of spinal surgery. And we might look at first-time knees and hips, but I think that approach will be a regional one. It just makes more sense.

MTT: Is it possible to declare either of these programs a success just yet?

EG: In the case of Lowe’s, which has been up and running for two years, the answer is absolutely yes. They’ve had a meaningful number of people flow through the program, the clinical results have been extremely strong, and member satisfaction is through the roof. I mean at levels you don’t see in the world of healthcare. Plus, it’s been a really big employee-relations win for Lowe’s. Think about the message: “You’re willing to pay for me to go to one of the best places in world for my healthcare needs.” That’s a really powerful statement.

In the case of PepsiCo, it’s way too new to say anything credible.

MTT: Do you have a sense of how the programs have been promoted internally? Did they use similar approaches?

EG: Lowe’s has the benefit of the program being in place for a couple of years. Their employee awareness is very high thanks to periodic reminders and announcements. This type of program requires regular communication. A one-off mention just won’t cut it. Of course PepsiCo doesn’t have that kind of communication history yet just because it’s so new but even so, there’s a good flow of inquiries and people are already in the process of preparing to travel to Johns Hopkins.

MTT: I’m curious. What types of procedures are seeing the most action?

EG: In the case of Johns Hopkins, the inquiries are pretty balanced between both cardio and the joint surgeries. Ultimately, we expect a higher volume of cardio procedures simply because joint revisions are pretty uncommon.

MTT: What’s your sense of employer interest in the medical travel option, and are their expectations realistic?

EG: We have a number of employers in the process, a few of whom will be launching in the next couple of months, some a little later.

But overall, we don’t expect a large uptake of this for two key reasons.

First, programs like this, at least today, are really only for VERY large employers. It’s purely about prevalence. Let’s say you have a smaller employer. They might have two employees who might travel to Cleveland Clinic for heart procedures. You have to question whether entering into a contract is worth it. You need the scale to drive volume. Also, on the surface a partnership like this sounds easy, but it’s really not. There are contractual relationships to work out, administrative procedures to put in place, communication issues to be dealt with and then refreshed, and the program needs to fit in with the overall employee offering.

I think these types of programs will be restricted to large employers. And the number may be in the dozens, but it won’t be in the hundreds.

The second reason is that, for the most part, large employers have medical care covered with big carriers which all have centers of excellence. Some have centers in the area of heart and orthopedics. Those that don’t are developing them. For many employers those programs fit the bill. There are lots of hospitals in the carrier’s networks across the country so there’s very little travel involved.

MTT: In your opinion, where does the greatest potential lie for these types of programs? Is it domestic or foreign? Condition specific?

EG: Domestic. Without any question. We work with a LOT of employers across the full spectrum – from small fully-insured organizations to the jumbos with hundreds of thousands of employees.

If you go back three or four years, international medical travel surgery was all the rage. I don’t mean people were doing it, but it was a very hot area of discussion. The few companies that did it didn’t achieve much. At this point if international medical travel is a topic of discussion, it’s far down on the list, if it’s there at all. On the flipside, domestic medical travel is a hot topic.

MTT: Are there other trends or aspects of care that people should take note of?

EG: One thing that comes up quite frequently is the idea of negotiated, bundled episodic payments. This is the structure used in both the Lowe’s and PepsiCo deal. It’s very clean and attractive in that there are no individual bills that read like a great American novel.
With the bundled structure you can basically say to the employer that pays most, or all, of the bill, “A valve replacement costs $X” All-in, period.

This is very different than the way reimbursement works in pretty much every other area of healthcare.

This is proving to be very attractive to employers and to many hospitals. It’s the leading edge of where we expect to see a movement in the future.

MTT: What’s the appeal?

EG: On a smaller scale than major and very expensive procedures, the ability to bundle charges and payments supports accountability from providers and transparency for employers and patients.

If you need a medical procedure, whether something relatively simple like a colonoscopy or something complex like a cardiac bypass graft, you can see the cost and what your portion of the cost share is. It’s that clean. It’s much, much easier for members than having them look at the cost of surgery, the hospital, labs, anesthesia, and so on.

Honestly, if you ask the typical person to put together all those pieces, well, forget it. But if you give them an all-in estimate, they can put their arms around it. They understand it.
There is a lot of movement towards this approach. And not just for surgeries. There’s definitely movement around longer-term episodes related to chronic conditions, too. It’s an area to watch.

About Eric Grossman
Eric Grossman is a Senior Partner in Mercer’s Health and Benefits business. He is an expert in the strategic development, design, financing and management of healthcare and group benefit programs. Eric has contributed to employer innovation in health and cost management, including the measurement and evaluation of provider performance, and the application of performance metrics to yield advantages for plan sponsors and their plan members.

Eric consults with major employers on a broad range of strategic benefits issues. He is the U.S. innovation leader for Mercer Health and Benefits.

Eric has over 30 years of experience in the benefits business, including over 20 years with Mercer. He has been a frequent speaker at regional and national forums on employee benefit issues and has contributed to a variety of studies and surveys on corporate benefit practices.

Eric received a B.A in Mathematics and Economics from the University of Pennsylvania. He is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries.

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