Employers Poised to Transform Health Care Market, says GE’s Immelt

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Faced with a massive, vague health care law, a stalled economy, and spiraling health care costs, GE CEO Jeffrey R. Immelt signaled the readiness of employers to begin to bring their muscle to bear on the health care market, even to the point of eventually bypassing insurers.

As a major health care technology manufacturer generating $18 billion in revenue, as well as an employer that spends $3 billion a year on health care for its employees, GE’s Immelt brought a dual perspective and a keen interest in the sector to a keynote address at a July 12 awards dinner during the inaugural Radiology Leadership Institute course, Evanston, Ill.

Jeffrey R. Immelt, GE CEOHe expressed frustration with the cost of care, passion for the future of diagnostics in which he predicted radiology and pathology would merge, and a contained admiration for President Obama for addressing the issue.

“I don't agree with many things in health care reform, but I applaud the president for taking it on,” he said. “We are going to be working on health care for the rest of our lives. The US spends about $2.5 trillion in health care, and this year it is going to grow about 9.5%. It is unsustainable.”

Immelt said that when faced with a problem of that scale, he breaks it into pieces. Switching hats with the deftness of a quick-change artist, Immelt laid out a four-pillared strategy to contain health care costs, driven in turns by the health care buyer that he is and the technology vendor that he leads.

The first is pillar is consumerism. “We are not going to be successful until we move to consumerism,” he stated. In 2009, GE moved its employees to a high deductible plan, equipped each employee site with a fitness center, added a web site to help educate employees about health care costs, and began paying 100% of preventive care.

“We saw a one-time decline of about 15%,” he says. “I’ve seen enough that this is going to be the way forward; we see a lot of businesses going that way now.”

The second pillar is bending the curve of chronic disease, which accounts for 75% to 80% of US health care dollars. Speaking as a manufacturer, Immelt was optimistic about what he called high-value diagnostics in neurology and oncology to address the impending surge of Alzheimer's disease. He alluded to a broad-based platform in which the company is investing a portion of its $1.5 billion in health care R & D dollars.

“We believe high-value diagnostics merged with radiology is a way to reduce health care costs in the long term,” he said. “To that end, we are placing bets that radiology is going to merge with pathology, and over time, we think this is the next leg of growth for you and us.”

Immelt’s third pillar is the deployment of low-cost systems and how to drive and translate them in health care around the world. He shared an anecdote about the executive who runs health care in India. Last year her executive physical cost $2,000 at Northwestern; this year it was $150 at a hospital in Bangalore.

“You are going to get more volume as health care reform takes place, not even CMS can stop that,” he joked, adding that proper application of information technology will be critical. “I think a lot of the investment in technology has been wasted so far because we have used it for connectivity and not decision support.”

The fourth pillar is payment reform, and for this Immelt adopted the employer perspective, noting a difference in health care costs of 80% between the city where employee health care costs are highest and the lowest-cost city.

“Ridiculous,” he said. “I think what you are going to see is more activity by employers on a city-by-city basis. We are self insured, and I say ten years from now, we will go straight past insurance companies. We won’t use insurance companies for anything at all. We will be working with other big employers, we will have on-site clinics.”

Immelt went on to recommend that radiology invest in cycle-time reduction and to not be afraid to take long-term risk. “People who do not assume risk are going to get hammered,” he said.


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