On the Record with Cheryl DeMars, President and CEO, The Alliance

October 26, 2012

On the Record with Cheryl DeMars, President and CEO, The Alliance

The Alliance is growing, CEO Cheryl DeMars told business executives at the purchasing cooperative’s annual meeting this week. Over the past year it’s added 28 members and expanded its service area to eight counties in northern Illinois.

“Growth and expansion is certainly a headline for us in terms of performance over the past year,” DeMars said.

In a recent interview with Wisconsin Health News, DeMars discussed the state of The Alliance, a new quality rating program it’s working on, and health care construction.

Read more below.

WHN: What is The Alliance?

CD: We’re a not-for-profit employer-owned health care purchasing cooperative. Our members are employers. They are both our owners and our customers. Shareholder and customer is one and the same for us, which is a model that we like. These are self-funded employers and some not-for-profit insurance trusts. We work on their behalf to help them control their health care costs, improve the quality of care, and engage their employees in their health and health care decision making.

WHN: What health care issues are your members most concerned with?

CD: No question, health care costs is number one. The health of their employees, number two. And questions about health care reform is probably number three.

WHN: In general, is the federal health reform law something that your members support?

CD: I don’t think any of our members would support the status quo in health care, but I think there are some questions about whether the Affordable Care Act will address some of the underlying problems that we are most concerned about.

WHN: This week, The Alliance held its annual meeting. What’s the state of The Alliance?

CD: We’ve grown fairly substantially in this past year. We’ve added 28 new members, representing 8,500 employees and their family members. We’ve expanded our service area to eight counties in northern Illinois. And with that, have added 243 new provider clinics, and over 1,400 physicians and other health care providers and 12 hospitals. Growth and expansion is certainly a headline for us in terms of performance over the past year.

WHN: At the annual meeting, attendees heard a keynote speech from Hank Orme, president of Nebraska-based Lincoln Industries. Why was he selected to speak at the meeting?

CD: We really like the story that Lincoln Industries has to tell. And it really goes beyond wellness. One of the things we like to do through our annual meeting, and our annual seminar, is bring in new ideas, new concepts, and cutting edge strategies to really test our thinking and challenge us to do things better and differently. I will have to say that for our members that’s getting increasingly difficult. We have some pretty sophisticated purchasers among our Alliance members. But what we liked about Lincoln Industries is that it’s not only a great story about a great company that has embraced wellness. Maybe more than that, it’s why they have done that and how they have gone about it. Wellness and investment in health at Lincoln Industries isn’t just a sidecar, it’s part of their culture. The reason why they are so invested is not about controlling their health care costs, it’s about achieving better business results. And that’s a fairly different rationale for investing in wellness programs. But as they see it, and their experience backs this up, their business results are inextricably linked to the health of their workforce. And so that’s the reason why they are so invested in employee health and well-being.

WHN: How many of your members engage in wellness programs?

CD: Based on a survey we do on an annual basis, 95 percent of our members that responded have wellness programs in place. Some of the most common components of those wellness programs include biometric testing, tobacco cessation, weight management, nutrition, and stress management.

WHN: The Alliance’s vice president of provider relations was recently quoted in a radio story about how doctor visits for your members have – which is consistent with national trends – stayed flat in recent years. What do you attribute that to?

CD: It’s probably a combination of things. One being, many of our members are using high deductible health plans and other strategies that are designed to not only improve employee health, but to get people to the most efficient site of care when they need care. And for a growing portion of our employers that includes worksite clinics. So we may see some flattening for use of office visits, because a portion of care that would have been in an office is now being handled in a worksite clinic. And I mentioned high deductibles as well as a potential reason for flattening of health care utilization. Preventive care is covered at 100 percent, but the strategy behind a high deductible health plan is to make people think twice about care that is more discretionary.

WHN: Auxiant, a third party administrator, is launching a new product in Wisconsin called FocusHealth, where clients will have to pay more to see providers that Auxiant deems as lower tier in terms of quality and cost. Do you think programs like this, overall, have the potential to lower health care costs?

CD: I am not familiar with all the specifics of FocusHealth, but what I will say is that the concept of differentiating cost and quality makes complete sense to encourage people to use the best value providers: where the providers are superior or comparable and the costs are less. That not only improves the quality and controls the cost immediately for the employer and employee, but it does what I think we need to do, which is create a market that recognizes and rewards better value providers. We need to create the business case for providers to focus on improving quality and outcomes, and lowering cost. And moving market share is a great way to do that. That’s something we have been working on through The Alliance for a while. And that’s one of the things we’ll be investing in in the coming months as well.

WHN: Could you elaborate on what The Alliance will be doing?

CD: The Alliance has been measuring cost and quality for its members for the last 12 years, producing our QualityCounts report that profiles the cost and quality of hospital inpatient care and also the cost of elective outpatient tests and procedures. We are going to be intensifying our efforts to further discern quality differences and take the step of designating providers that are best value.

WHN: The Alliance has been critical of the growing arms race in Madison. What effect does this new construction have on consumers and businesses?

CD: We think it will add to our health care costs. It is the business community and consumers that will pay the price. And we wonder increasingly if we are looking at overcapacity. One of the things we have called for repeatedly is an independent study that would help all of us understand how much of what type of health care infrastructure we need in this community, both today and in the future. We have yet to see data that substantiates the expansion we are seeing. In health care, more is not better. It is an industry where supply can create demand. The imaging equipment will get used, the beds will get filled. And we are concerned about the consequences of overutilization for people’s health, and for health care costs.

WHN: Would a certificate of need program help the situation?

CD: I hear certificate of need criticized in other states where it exists. So I don’t think it is necessarily a panacea or the silver bullet. But, done right, it might be effective. I don’t think what we have right now is working.

Wisconsin Health News is an independent, nonpartisan online news service. For a free trial to its daily email newsletter, contact Tim Stumm at tstumm@wisconsinhealthnews.com.

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