https://mailchi.mp/0ee433170414/the-weekly-gist-february-14-2020?e=d1e747d2d8

I’ve had two conversations this week with health system leaders who have been struggling to navigate conversations about direct contracting with large employers in their market. A system chief innovation officer expressed frustration about the pace of discussions with a regional employer: “They’re clearly interested in our network, and we’ve been designing a program for them. They’ve seen our performance results from our accountable care organization (ACO) and the savings we generated. But even after a year of meetings, I’m not sure it’s going anywhere.”

Direct-to-employer (DTE) contracting has proven much more difficult for health systems than anyone anticipated a decade ago, in the wake of highly publicized DTE contracts with Boeing and Intel. Most employers, even large ones, lack the sophistication and bandwidth to co-create DTE offerings with health systems.

But those two deals may have led health systems to mistake what employers are looking for in a relationship. Both Boeing and Intel keep their employees for decades, and are interested in solutions, like chronic disease management, that have a longer-term return on investment (think heart disease management for the 55-year-old engineer).

The average employer, on the other hand, keeps a worker for just a few years. They don’t have a “population health” problem: from a healthcare cost perspective, they won’t see an ROI from management of chronic conditions.

Their pressing healthcare cost problems result from high-cost events, like a premature baby in the NICU, an unexpected spine surgery or a new cancer diagnosis.

Most health system ACOs have been designed to manage the cost of aging Medicare beneficiaries with multiple chronic diseases via enhanced primary care—and are a mismatch for delivering what the average employer needs the most: high-cost episode management, behavioral health support, and ready, available, guaranteed access.

Striking successful DTE deals will require providers to augment their service offerings beyond traditional population health, and to demonstrate their success in managing the benefit costs of their own employees.