November 7, 2018 / 12:51 PM / 5 days ago

U.S. companies team up with hospitals to reduce employee maternity costs

NEW YORK (Reuters) - General Electric Co (GE.N) and other large companies are trying to chip away at rising childbirth costs for U.S. employees, working directly with hospitals to reduce caesarean sections and related complications.

Samantha Domenget, a GE employee, who participated in the GE maternity care program, holds her daughter, Norah, who was born one day earlier at the Waukesha Memorial Hospital in Waukesha, Wisconsin, U.S., August 8, 2018. Domenget, 27, initially thought she might have a C-section despite having a low-risk pregnancy, but her doctor explained the risks and benefits and changed her mind. Norah was born in a regular delivery after 24 hours of labor. Courtesy Samantha Domenget/Handout via REUTERS

The efforts are in very early stages, with few details on their impact outside of cost savings of a few million dollars so far. But they illustrate yet another path companies are taking to bring down U.S. medical costs by working with doctors and hospitals to set health goals.

GE’s maternity strategy is designed to steer its employees to hospitals that are believed to provide better care and less likely to recommend unnecessary and costly interventions, company officials told Reuters.

U.S. employer spending on maternity care rose 50 percent in the last decade, fuelled by a jump in C-section rates despite years of efforts to curb the practice, according to research firm Truven Health Analytics. For a graphic, see: tmsnrt.rs/2P1MPRs

“Maternity is one of the main drivers of high cost claims,” for employers, said Ellen Kelsay, chief strategy officer at the National Business Group on Health. Avoiding unnecessary C-sections and minimizing complications “decreases turnover in the workforce following the birth of a child,” she said.

General Motors Co (GM.N) said it has included maternity goals, including reducing C-sections, in a new contract with a Detroit-area hospital. Dow Chemical demanded explanations from hospitals that care for its employees when its C-section rate hit 44 percent several years ago. Now part of the merged company DowDuPont Inc (DWDP.N), it is working on new payment agreements with doctors and administrators.

“We went to them and said how do you explain this?” said Steve Morgenstern, Dow Chemical’s North American Health and Insurance Plan Leader, who called the rate “unacceptable.”        

(GRAPHIC: U.S. rise in caesarean sections outpaces global rate - tmsnrt.rs/2P1MPRs)

“BUNDLED” PAYMENTS TO CUT COSTS  

GE launched its Maternity Care Select Program in Cincinnati, Ohio, home to its aviation business, where nearly 300 babies are born to employee families every year. 

Local hospital system TriHealth agreed to a single “bundled” payment rate to care for low and moderate-risk mothers from the start of pregnancy until 90 days after the baby is born, rather than charge for each visit and delivery separately. That typically removes the financial upside for C-sections, which cost nearly 60 percent more, on average, than a regular delivery.

Adam Malinoski, GE’s manager of health services, said none of the company’s health insurers offered bundled payments on maternity care when it designed its programme, so it decided to work directly with providers.

GE pays the out-of-pocket costs for women who enrol, saving them up to several thousand dollars. TriHealth and GE would not disclose the bundled payment rates or how they compare with other hospital rates.

New deliveries under GE’s programme began in 2016, when only 78 pregnant women enrolled. In 2017, 136 women enrolled, TriHealth told Reuters. C-section rates for first-time, low-risk deliveries, which represent a small group within the programme, dropped to about 6 percent in 2017 from 24 percent in 2016. That comes in well below the U.S. rate of 26 percent for low-risk births.

TriHealth would not disclose the C-section rate for the total group.

GE expanded the programme to hospitals in Wisconsin, South Carolina and Massachusetts in 2017 and announced a fifth location in New York in August, but says it is too early to provide data for other locations.

GE executives said the programme so far has saved the company nearly $2 million because of lower negotiated fees for maternity care. It represents a fraction of its spending on the 113,000 employees and family members enrolled in the GE health insurance plan, but a step in the right direction, they added.

“WE WERE SHOCKED”

The rise of C-sections has been fuelled in part by fears about malpractice litigation, as well as expecting mothers with health issues or who are older, which raise the risk of complications.

Hospitals say that makes them reluctant to set maternity goals. The Stanford Health Care medical system works directly with employers on health targets, such as diabetes care, but has so far refused to set specific goals on C-sections.     

In such higher risk cases, “it’s entirely appropriate and (there’s) no way to determine upfront” who will need a caesarean, said John Jackson, who handles corporate health partnerships at Stanford Health Care.

Suzanne Delbanco, executive director of the nonprofit Catalyst for Payment Reform, has worked with large employers seeking to reduce C-section rates. But some companies “are still leery about wading in too much,” she said. “They don’t want to alienate people, they don’t want to be accused of being Big Brother.”

GM is taking its own shot at lowering costs and improving care with a new health programme, announced in August, that was created directly with Henry Ford Health System in Michigan . Three of the programme’s 19 health metrics involve maternity care such as lowering C-section rates, the company told Reuters.      

The automaker’s total C-section rates vary widely, from about 40 percent in the Dallas/Fort Worth area to 30 percent or lower in Detroit.             

“We were shocked,” said Sheila Savageau, U.S. health care leader for GM. “We have to change the system.”

Reporting by Jilian Mincer; Editing by Michele Gershberg and Edward Tobin

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