The Role of Healthcare Performance Management in Controlling Costs and Improving Quality in an Enterprise Environment

Executive Summary:
In this report, we explore a new corporate discipline called healthcare performance management (HPM) that is achieving the dual objectives of reducing costs while improving healthcare outcomes. HPM is a technology-enabled business strategy that tackles the challenge of health care in much the same way that enterprises have approached the optimization of customer relations, supply chain management and enterprise resource management.

• In 2010, many employers who take responsibility for offering health insurance benefits to their workers will see premiums increase significantly. And as the cost of healthcare rises, executives will see the quality of the services offered to employees decline. In many cases, the reduction in service quality will be accompanied by a cost-shift to employees (often manifested as increased premiums and co-pay policies). The forces behind these cost and performance trends are many. One of the most important — and addressable — factors revolves around existing business models in the industry that hinder the effective sharing and management of information among key constituencies (employers, members, healthcare providers and insurance carriers).

• Despite these issues, enterprise leaders can take concrete steps to head off spiraling costs and new bureaucracy. There is a growing body of evidence that strongly suggests employers can achieve savings and better results for their companies and their employees by implementing proactive, hands-on business management strategies for employee healthcare benefits plans. Success, however, will depend on a complete re-evaluation of the current assumptions and business models that underpin healthcare administration practices.

• HPM applies proven business and management principles to company-provided healthcare benefits by giving C-level executives visibility and control over company healthcare benefits spending trends and risk management postures, while scrupulously protecting individual employee privacy. Companies that have effectively adopted HPM methodologies are reporting that their health benefits plan costs are stabilizing after years of unchecked growth, while improving the delivery of healthcare services to employees.

To better understand the principles and promise of HPM, the editors of BizTechReports.Com interviewed experts and executives associated with the recently formed Healthcare Performance Management Institute (www.hpminstitute.org). The institute is a research and education body dedicated to promoting the use of business technology and management principles that deliver better and more cost-effective healthcare benefits.

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