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Study Reveals Potential of Business Coalitions to Buy Health Care Quality as Well as Contain Costs

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Press Release Date: November 8, 1999

A study by the U.S. Agency for Health Care Policy and Research (AHCPR) and the National Business Coalition for Health (NBCH) suggests that most business coalitions—regional, state and local groups of employers with common interests in health care coverage for their workers and dependents—have processes in place that could be tapped to promote quality, just as their market power helped contain health care costs earlier this decade by encouraging the growth of managed care.

The analysis, which was based on data from a 1998 NBCH survey of business coalitions and on interviews with nine coalition leaders, shows that many coalitions are involved in a broad range of activities designed to exert influence in the marketplace.

Ninety percent of the 75 coalitions that participated in the survey said they collect or analyze data about health plans or providers, and nearly two-thirds of these said their involvement is extensive. Four of every five coalitions negotiate the terms of one or more health benefits with health plans, providers or others. These benefits can range from narrowly defined services to comprehensive coverage. Most commonly negotiated are narrowly defined speciality services—carve-outs—such as prescription drug benefits, vision care and psychiatric services.

Thirty-five percent of business coalitions bypass health plans and negotiate comprehensive coverage directly with providers. Almost six of every 10 coalitions that negotiate coverage, whether from health plans, providers or purveyors of carve-out services, write performance incentives such as bonuses and premium rebates, and penalties such as withholding payment, into their contracts.

AHCPR's Irene Fraser, Ph.D., who led the study, said, "These incentives can be used to foster cost reduction and improved customer service, but they can also be used to encourage and reward good clinical care if the coalition chooses to use them that way."

"This study clearly demonstrates that business coalitions have potential for holding health plans and providers accountable for quality of care," said AHCPR's administrator, John M. Eisenberg, M.D. "The real challenge, especially in the face of what appears to be an impending resurgence of rising health care costs, will be to use this market power for improving quality as well as containing costs."

Dr. Eisenberg said health services research can help business coalitions by developing tools for analyzing quality of care and by identifying strategies for improving quality and limiting costs at the same time.

NBCH president and CEO Gregg Lehman, Ph.D., said, "There is great value in AHCPR and NBCH collaborating to collect information that can be used to promote quality and other reform initiatives being undertaken by local business coalitions. We are pleased to have AHCPR's expertise and assistance in examining efforts to advance community-based quality improvement initiatives. This helps the goal of providing business coalitions with a template for data and quality measurement."

Details are in "Pursuit of Quality by Business Coalitions: A National Survey," published in the November-December 1999 issue of Health Affairs. Reprints (AHCPR Pub. No. 00-R003) are available from the AHCPR Publications Clearinghouse, P.O. Box 8547, Silver Spring, MD 20907; phone: (800) 358-9295.

For additional information, please contact: AHCPR Public Affairs, (301) 427-1364—Karen Migdail (301) 427-1855 ; NBCH Public Affairs—Kelli Moler (202) 775-9300.

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