November 19–21 | Washington, D.C.
CFO VISION 2014
Navigate your world
Director
Deloitte Consulting LLP
Rick Wald
Pass the aspirin: Rx for your
health care headaches
Kenneth Weixel Partner
Deloitte & Touche LLP
Copyright © 2014 Deloitte Development LLC. All rights reserved.
ACA and the future state
Rising employer costs
Wellness and return on investment (ROI)
Overcoming waste and inefficiencies
Private exchanges
Pay or play? Public state exchanges
Managing rising costs
Agenda
2
ACA and the future state
Copyright © 2014 Deloitte Development LLC. All rights reserved.
While policies and mandates enacted by the Affordable Care Act (ACA) have made
significant changes to the health care environment, Deloitte’s 2013 Survey of U.S.
Employers shows that most employers are skeptical about ACA’s impact on cost reduction
and improved quality of care.
How do employers develop a long-term strategy in this new health care environment while
simultaneously managing costs?
ACA is here to stay. What does that mean for employers?
4
Looking ahead to 2019 at the policies implemented (and yet to be implemented) by the Affordable Care Act, do you believe it will
succeed in…?
47%
30%
22%
Improving access to insurance
ACA will succeed ACA will not succeed Maybe
22%
63%
14%
Reducing costs
19%
60%
21%
Improving quality of care
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
Copyright © 2014 Deloitte Development LLC. All rights reserved.
While it is not clear how the industry will shape up, it is clear that employer
activism will be a strong catalyst for meaningful improvement in the health care
system.
Future visions show that scenario planning should be central
to every employer’s long-term health care strategy
5
The empowered
consumer?
The perfectly managed
population?
The big data
panacea?
The seamless and
unending technological
network? The iron fist of
Government?
The weakened fist of
government?
The personalized
medicine scenario?
The status quo?
?
Rising employer costs
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Four out of five employers say their health care costs
have increased over the past three years.
• Average increase = 30%
• Amount of increase passed to employees = 26%
While not all employers are seeing health care costs rise,
those that are have experienced significant increases
8
Increased 80%
Stayed the Same 17%
Decreased 3%
75% Hospital costs
67% Prescription drug costs
67% Waste and inefficiencies in processes
62% Defensive medicine
58% Consumer unhealthy lifestyles and behaviors
56% Government regulation
Employers believe these drivers have a “high impact” on costs:
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Within organizations, stakeholders have differing perceptions on what strategies
have the greatest impact on cost. Often, anything deemed to be related to
health care is delegated to HR, but the CFO is uniquely positioned to view the
issues objectively and craft an evidence-based strategy.
Employer tactics to manage costs don’t necessarily align
to the approaches they believe are impactful
9
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
54%
36%
28%
20% 19% 18% 17%
38%
25%
21%
26%
20%
25%
29%
0%
10%
20%
30%
40%
50%
60%
Increasedemployeefinancial
responsibility
Healthimprovement
Plandesign
Reducedbenefits
Networkmanagement
Limit hoursworked
Definedcontribution
Tactics currently used to manage or reduce health care costs
Strategies considered to have a high impact on managing or reducing health care costsCFO
HR
CFO
HR
CFO
HR
Wellness and return on investment (ROI)
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Consumer behavior is considered to have a major influence on
cost, although the majority of employers do not offer rewards
12
Sources:
Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
Deloitte Center for Health Solutions: Health Care Consumer Survey, 2013
Deloitte Center for Health Solutions: Survey of U.S. Physicians, 2013
50%
58%
82%
2013
Sources: Deloitte Center for Health Solutions Health Care Consumer Survey, 2013 (N = 4,065)Deloitte Center for Health Solutions Survey of U.S. Physicians, 2013 (N = 613)Deloitte Center for Health Solutions 2013 Survey of U.S. Employers (N = 500)
Chart showspercentage who said
"major influence"
In your view, how much influence does consumer behavior, such as unhealthy lifestyles that can lead to obesity, have on
increasing overall health care system costs?
Consumers
Employers
Physicians
26% of employers offer
rewards or penalties to
motivate employees to
improve their health
status and health care
choices.
Only two in five
companies that offer
rewards or impose
penalties say they
measure the return on
investment.
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Financial incentives top the list of the kinds of incentives that might work best to
motivate individuals to engage in behaviors that would have a positive impact on
system use, outcomes, and cost.
Consumers are willing to participate in wellness programs—
at a cost
13
Sources: Deloitte Center for Health Solutions: Health Care Consumer Survey, 2013
62%
51%
23%
22%
16%
15%
Financial (such as direct payments, reducedinsurance premiums or reduced co-pays)
Rewards, perks, and points
Coaching (such as personal, online, patientnavigators)
Doubtful that any of the above would achievelongstanding improvement in health status
Employers acting as influencers/changeagents
Social networking and games to build a peersupport community
If incentives were widely introduced into the health care system, what types of incentives do you believe might work best to motivate individuals to
engage in behaviors that may improve clinical outcomes, reduce unnecessary use of services, and reduce overall costs?
Source: Deloitte Center for Health Solutions 2013 Health Care Consumer Survey
Chart shows percentage of the total sample (N = 4,065)
A minimum of $75,
on average, is
deemed sufficient
by consumers to
motivate individual
behavior change.
Overcoming waste and inefficiencies
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Executives in different functions have a varying view of what drivers have a
“major influence” on cost.
It is the fiduciary responsibility of the CFO to assure stakeholders that resources
are used appropriately and efficiently. How can CFOs overcome the waste
caused by fragmented purchasing habits, lack of incentives for cost-effective
care, and regional price disparities?
CFOs have the opportunity to lead efforts to overcome waste
and inefficiencies in their health care programs
16
Owner/CEO/President CFO HR executive
Hospital costs 72% Hospital costs 81% Hospital costs 70%
Waste/inefficiencies 68% Waste/inefficiencies 69% Government regulation 60%
Prescription drug costs 66% Prescription drug costs 67% Prescription drug costs 59%
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
Focus on the data
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Most companies have not analyzed their own clinical data
to determine value or quality
17
Has your company analyzed its own clinical claims data to determine:
23%
17%
29%
35%
44%
36%
25%
47%
48%
52%
69%
76%
63%
59%
36%
56%
68%
46%
41%
29%
8%
7%
7%
6%
20%
8%
7%
7%
11%
19%
Total
50-100 Employees
101-999 Employees
1000-2499 Employees*
2500+ Employees
Total
50-100 Employees
101-999 Employees
1000-2499 Employees*
2500+ Employees
Analyzed company's claims data Has not analyzed company's claim data Don't know
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
Health care provider compliance with evidence-based standards or identification of providers that engage in unnecessary testing or procedures
Employee utilization and costs for health care treatments, services, and medications
Private exchanges
Copyright © 2014 Deloitte Development LLC. All rights reserved.
27% of employers believe private exchanges will enable consumers to make
better health care choices, and nearly as many believe private exchanges will be
a viable alternative to public exchanges
Only about one in five employers “totally agrees” with the
effectiveness of private exchanges
20
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
To what extent do you agree or disagree with the following statements about private health insurance exchanges?
27%
26%
21%
20%
30%
27%
21%
25%
23%
26%
21%
14%
25%
22%
15%
13%
25%
27%
23%
20%
0% 20% 40%
Be a vehicle by which consumers use decisionsupport tools to make better choices in health
insurance and use of health care
Offer a viable alternative to state health insuranceexchanges
Enable consistent benefit design and choicesacross interstate locations
Make it easier to offer a defined contribution plan toemployees
Total 50-100 Employees 101-999 Employees 1000-2499 Employees* 2500+ Employees
Strategy that CFOs
consider to have a
high impact on
managing health care
costs
Copyright © 2014 Deloitte Development LLC. All rights reserved.
A private exchange option frees employers from many of the day-to-day
responsibilities of managing a benefits program, but allows them to hold onto the
perception of helping employees with the costs of benefits via pre-tax accounts.
About two out of three employers report they are likely to use private exchanges
for active full-time employees but will want evidence that private options deliver
greater value than the current model.
Most employers plan to take a wait-and-see approach
to private exchanges
21
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Employers
50-100 Employees
20% 19% 19% 19%
50% 47% 51% 49%
29% 34% 31% 33%
Likely (8-10) Somewhat likely (4-7) Not likely (1-3)
101-999 Employees 1000-2499 Employees* 2500+ Employees
On a scale of 1 to 10, where “1” is not at all and “10” is very likely:
How likely is your company to use a private health insurance exchange as a channel for providing health insurance for your employees?
Pay or play? Public state exchanges
Copyright © 2014 Deloitte Development LLC. All rights reserved.
“Pay or Play”: Employers will need to make the decision to either exit
sponsorship and pay a penalty tax, or continue to offer health benefits. Either
decision comes with its own set of challenges and implications.
ACA is driving employers to rethink health care strategy
24
Copyright © 2014 Deloitte Development LLC. All rights reserved.
What do we know about our current employees?
What do we know about our current benefit plans?
What do we know about the competitive landscape?
What do we know about our employees’ perceptions and expectations?
What will it mean to be an employer of choice in 2015 and beyond?
Each question creates a new group of winners and losers who potentially stand
to prosper or not based on the actions taken.
To develop a long-term strategy, employers must ask the right
questions
25
Managing rising costs
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Two out of three consumers agree that the use of cost sharing can have a
negative effect by leading people to delay or avoid treatment.
One in three consumers self-rations
to manage health care costs
29
Which of the following, if any, have you done in the past 12 months?
33%
15%
15%
8%
4%
Used home remedies or over-the-counter medicines
instead of going to see a medical professional
because it was cheaper.
Decided not to see a medical professional or get
health care services when you were sick or injured in
part or entirely because the cost was too high.
Asked about pricing before
agreeing to treatment of any kind.
Delayed or did not follow treatment recommended
by a doctor in part or entirely because the cost
was too high.
Negotiated a lower amount for your
medical bill or treatment of any kind.
Source: Deloitte Center for Health Solutions: 2013 Survey of U.S. Health Care Consumers
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Out-of-pocket direct costs are a considerable burden on the average household
and consumer price sensitivity about the cost of health care is likely to rise.
Innovative financial tools and products are needed to assist consumers in better
managing costs when making health care decisions. Deloitte’s survey shows that
many consumers are ready to use technology to find quality ratings and price
information.
Over 60% of consumers are also interested in using technologies for personal
health improvement or to manage and monitor specific health conditions.
Transferring costs to employees creates an opportunity
to use innovative tools to influence consumer behavior
30
In the past 12 months, have you looked online
for any of the following types of information
either for yourself or a family member?
52%
44% 12%
13%
A pricing tool to
compare and negotiate
prices with doctors
and hospitals
Quality rankings,
satisfaction ratings,
and patient reviews
How likely would you be to
use websites that offer the
following?
Source: Deloitte Center for Health Solutions: 2012 Survey of U.S. Health Care Consumers
Questions/opinions
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