CEO SUMMARY: Cerner Corporation is using a variety of strategies to reduce the cost of health benefits and improve the quality of care for its workers and dependents. Gluing the entire effort together is an integrated patient health record (PHR) and a host of electronic services, ranging from real time eligibility verification and claims adjudication for physicians to preventive and wellness programs for employees. Last year, Cerner tracked $2.6 million in savings from this Healthe initiative. It also began selling this innovative health benefits program to other corporations.
DISCUSSIONS ABOUT REFORMING the American healthcare system to improve quality of care and reduce costs mainly focus on what government should do.
Yet, many advocates of reform seem to ignore the innovations unfolding at some corporations. Faced with steady increases in health benefits costs—and observing how chronic conditions affect workplace productivity—these companies are developing innovative and highly effective health benefits programs and services.
One example of such innovation can be found at Cerner Corporation of Kansas City, Missouri. For the past three years, Cerner has achieved remarkable results in controlling the year-to-year increase in the cost of health benefits. At the same time, the quality of care delivered to workers and their family members has improved measurably.
To produce these results, Cerner has: 1) opened a medical clinic, a pharmacy, and a fitness center at its corporate site; 2) developed a sophisticated, integrated electronic patient health record, supported by innovative e-based services; and, 3) offered programs to its employees designed to help individuals with chronic, or pre-chronic, conditions to improve their health and gain financial incentives as they do.
An advocate of consumer-directed health plans (CDHPs), Cerner offers employees a high-deductible insurance plan, paired with a health reimbursement account (HRA). Cerner calls its program “Healthe” and is marketing this integrated employee health benefits program to other employers. To give pathologists and lab directors an inside look at how corporate health benefits programs are likely to evolve, Bill Wing, Cerner’s Vice President, Healthe Services, spoke at this year’s Executive War College in Miami on May 14. He opened by saying “Employers will be the early leaders in the efforts to transform healthcare.” He explained the six keys behind the company’s success in managing health costs (See sidebar next page).
The Healthe program delivers impressive results. Wing described how, last year, Cerner saved $2.6 million in spending for health benefits. Included in this amount are $1.2 million in medical cost savings, $791,337 in pharmacy savings, and $568,575 in productivity savings. Gains in productivity during 2008 could reach $1.3 million.
Cerner has the scale to demonstrate the effectiveness of its innovative health benefits program. Revenues for 2007 totaled $1.5 billion. It has 7,600 employees working in 23 countries, all of whom are connected with common Internet tools. Of the total workforce, 6,200 are in Kansas City. The average worker is 34 years old, and 30% are in engineering, 30% in IT services, 10% are clinical specialists, and 30% are in sales or administration. Last year, Cerner spent $32 million on health benefits for 11,151 workers and dependents.
A health information technology company, Cerner knows something about healthcare and productivity. “As we digitize healthcare, there is a great opportunity to save 10% to 30%, including 10% through automation, 10% by connecting and sharing data, and 10% by using data to improve performance in financial, operational, and clinical areas,” Wing said.
Cerner calls its healthcare program Healthe Employer Services. The program includes the Healthe Record (a personal health record or PHR), Healthe Advisors who counsel workers on wellness and ill- ness prevention, Healthe coaches who specialize in helping patients manage chronic conditions, and the on-site Healthe Pharmacy and Healthe Clinic.
Cerner’s health benefits program is a market-driven solution to problems that plague healthcare, in part because it uses consumer- driven health plans exclusively. “In 2004, 73% of our workers were enrolled in preferred provider organizations (PPOs) and 27% were in HMOs,” stated Wing. “Next, in 2005, Cerner introduced an HRA and 48% of workers participated, cutting PPO enroll- ment to 30% and HMO participation to 22%. In 2006, HRA enrollment rose 72%.
“Last year, it hit 99% allowing the company to eliminate its PPOs and HMOs,” added Wing. “The remaining 1% of workers had a health savings account (HSA). This year, 100% of workers have an HRA. Regardless of the plan an employee chooses, Cerner pays 70% of healthcare costs while the employee pays 30%.”
Each worker gets a Healthe card which functions as a health plan identification, debit, and credit card. The card contains some personal health information as well. “Cerner provides a card reader to physicians to speed up electronic settlement for physicians and other providers and cut costs by providing real-time eligibility verification, claims adjudication, and next- day payment,” explained Wing. “A physician can swipe a patient’s health plan card to verify eligibility and collect payment during the same visit.
“The card facilitates point-of-sale payment so that we can pull a claim through and adjudicate it within 30 seconds,” Wing noted. “Payment goes to the doctor the next day and this electronic transaction costs $1 instead of the $12 to $14 that it normally costs to process a claim.
“In addition, when a patient visits a doctor, the card creates an electronic clipboard for the doctor to see, thus facilitating the provision of care,” he added. This eclipboard contains a medical history, allergies, and medications.
Cerner uses sophisticated technology to support a patient-centered approach to care. Since 2006, the company’s goal has been to improve the health of its workers through its Healthe Advisors. These professionals help Cerner employees focus on wellness and illness prevention. In 2006, the company introduced a health risk assessment and 94% of workers participated. Last year, the company had biometric screening and 92% of workers participated.
Cerner now has baseline data on cholesterol, glucose, and blood-sugar levels; hypertension, body mass index; and tobacco use among workers. By combining these data with evidence-based recommendations, Cerner can help workers and dependents set goals to improve their health, Wing said.
Use of this data helped Cerner recognize, for example, that the annual cost per member with metabolic syndrome is $3,108. About one third of workers in the United States aged 20 to 49 have this syndrome, which involves a combination of factors, including high triglycerides, high blood pressure, and high glucose levels. Cerner also found that five conditions account for 40% of all medical and pharmaceutical costs: cardiac care, low back pain, asthma, diabetes, and cancer.
“Among workers and dependents with diabetes, annual cost per member is $13,243, versus $2,560 annually for each member who does not have diabetes,” Wing said. To address these costs, the company implemented a diabetes care plan of patient education, blood pressure checks, and glucose monitoring. Such education empowers workers and dependents to provide self care.”
Another example of patient empowerment comes from Cerner’s use of pharmacy data. A Web-based tool allows workers to see at a glance what a community pharmacy charges for a medication against what the worker would pay at: 1) Cerner’s in-house pharmacy; 2) through a mail order pharmacy; and 3) by choosing an alternative generic medication. Many generic medications cost workers 80% less than brand name drugs.
“One of Cerner’s most successful strategies has been the on-site Healthe Clinic,” stated Wing. “Among other services, the clinic offers health assessments, advice on illness prevention and wellness, primary care, a laboratory, and physicals. It is open weekdays, and a provider is on-call 24 hours a day and seven days a week.
“The on-site clinic and in-house pharmacy has been a significant source of improved productivity,” stated Wing. “These on-campus services helped boost productivity simply by saving workers from having to travel to a doctor’s office or offsite pharmacy,” Wing said. “The average on-site visit time is 30 minutes versus about three hours for a trip to an off-site doctor. In 2007, the on-site clinic and pharmacy generated savings to Cerner of $2.6 million through a combination of lower medical and pharmacy costs, along with increased productivity.”
THE DARK REPORT observes that Cerner’s innovative health benefits program shows how employers may play a major role in improving health outcomes and reducing the cost of care. It also shows how the unorthodox approach of an on-campus medical clinic and pharmacy, combined with integrated health information technology and the right financial incentives, can motivate employees and providers to improve the health of individuals.
Cerner Corp. Has Six Keys to Improving Healthcare
CERNER CORPORATION AIMS TO IMPROVE the delivery of healthcare by implementing six key strategies whenever possible, said Bill Wing, Vice President, Healthe Services, for Cerner Corporation in Kansas City, Missouri.
The first key is to reduce healthcare friction by making it easier for providers to deliver and get paid for delivering care.
Second, is to build trust and transparency by collecting and using data on the delivery of care.
Third, is to promote a person-centric healthcare experience, meaning one that serves patients.
Fourth, is to leverage technology by using efficient electronic systems throughout the process of delivering and paying for care.
Fifth, is to improve health status and reduce costs by focusing on high-cost illnesses to help reduce expenditures.
The sixth key is to develop repeatable and deployable processes that contribute to more efficient systems.