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Understanding How Employers Can Be Catalysts for Quality

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Insights for a Research Agenda

Employers have considerable potential to shape the health care market. More than 165 million people in 1997 received insurance through employers, representing over 60 percent of Americans. Are employers using their market power to drive quality improvements as well as cost moderation? The answer to this question has important policy implications .

An expert meeting was held April 4, 2001, to examine what we need to know about the role or potential role employers can have in influencing the quality of our nation's health care system, for use in developing a national research agenda. AHRQ's Center for Organization and Delivery Studies sponsored the meeting.

Meeting participants—employers, researchers and foundation representatives—assisted in identifying research gaps, and advised AHRQ how research, tool and talent needs related to value-purchasing might effectively be met. The 1-day meeting was structured around presentations of the following papers commissioned explicitly for the meeting:

  • Employer Incentives and Disincentives for Buying High Quality from Plans and Providers. Presented by Catherine McLaughlin, Ph.D., University of Michigan (co-authored by Teresa Gibson, Ph.D. candidate, University of Michigan). Dr. McLaughlin summarized past work on definitions of quality, employer incentives to promote quality, evidence of employers promoting quality, and barriers to promoting quality.
  • State and Market-Level Determinants of Employers' Purchasing Strategies. Presented by Bryan Dowd, Ph.D., University of Minnesota (co-authored by Michael Finch, Ph.D., United Health Care). Dr. Dowd presented highlights from his review of relevant theory; there has been very little empirical work conducted to date on if and how environmental factors affect employer purchasing practices. Dr. Dowd reviewed market factors not addressed by Dr. McLaughlin—those associated with health plans and providers—and how the marketplace web of incentives and constraints may affect value-purchasing. Next, Dr. Dowd reviewed examples and sources of market failure that may interfere with value-purchasing.
  • The Business Case for Quality: A Provider Perspective. Presented by Brent James, M.D., M.Stat., Intermountain Health Care (co-authored by Donald Berwick, M.D., M.P.H., Institute for Healthcare Improvement). Dr. James presented highlights from his review of relevant theory on providers' business case for quality, a perspective that can inform employer purchasing strategies. There has been little empirical work conducted to date on the business case for different quality interventions (from any perspective—plans, providers, purchasers and patients), nor on how provider payment strategies might be tailored by purchasers to align business case rationales to promote quality. Dr. James reviewed theory about how improvements in providers' quality of processes, products and services can decrease costs (specifically 'quality waste' and 'inefficiency waste'). Next, Dr. James reviewed barriers to quality-based cost-reduction.
  • Guide for Evaluating the Impact of Value-based Purchasing Initiatives. Presented by Dennis Scanlon, Ph.D., Pennsylvania State University (co-authored by Michael Chernew, Ph.D., University of Michigan, and Hilary Doty, M.S., Ph.D. candidate, Pennsylvania State University). Dr. Scanlon provided an overview of the purchasers' guide he developed, solicited participants' views about further refinements to the guide and the list of resources in the appendix, and how the guide might be most effectively disseminated to purchasers.

Drawing upon the presenters' comments and their own experiences and insights, participants brainstormed about unmet information needs and related research questions that the Agency or other funders might consider in developing their respective research agendas.

At the conclusion of the meeting, each participant selected two or three most compelling needs, drawing on his/her unique perspective and the day's deliberations. Plans are underway to submit the papers as a set for publication.

AHRQ Publication No. APPIP01-00
Current as of April 2001

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