In this healthcare podcast, I am speaking with Cora Opsahl, who directs the 32BJ Health Fund. This is the second conversation I’m having with Cora (last one was EP372), but these two conversations are not really linear—so listen in whatever order you want to.
Important to know about Cora’s background, in previous roles, she has worked deep in the inner sanctums of the healthcare industry. So, she came to 32BJ armed with a BS meter that’s finely tuned, which is, as I said last week, an unfortunately essential skill for anyone trying to help patients and members relying on them to successfully navigate the healthcare industry.
Here’s a pivotal fact: 56% of total spend at the 32BJ Health Fund goes to hospitals. So, from a “making the juice worth the squeeze” perspective, focusing on hospital prices can have a lot of impact.
This is doubly true because of the seriously huge price variations for the same exact types of services at different hospitals, even in the same local market. Because the 32BJ Health Fund demands and gets all of its own data, it can actually run reports and see the impact and nuances of hospital spend very clearly—unlike, frankly, the majority of employers and unions who have zero clue this is all going on behind their backs because they think some other party is actually the fiduciary and not them, which is false, of course.
So, let’s just linger on this really high hospital prices that are various across a market for one moment. Here’s a Tweet from Rik Renard: “The price of CABG [coronary artery bypass graft] varies more than 10-fold across US hospitals (ranging from $44,824 to $448,038). There was no evidence to suggest that hospitals that charge higher prices provide a better quality of care.”
WHAT?! An employer could pay $44,000, or it could pay $448,000. Seriously? This is why we can’t have nice raises—because some employer spent $400,000 not on raises but on overpriced hospital services. Ugh … so frustrating. When employers, almost willfully at this juncture, turn a blind eye to all of this because they think it might be disruptive, meanwhile they’re worrying about employee retention and trying to figure out how to give raises. Okay, well, here’s a suggestion: Get your healthcare house in order and then you’ll have enough money for raises, but that aside …
In the New York City market, 32BJ used all of the data that we talked about in the last episode (EP372). They used all of that data to deduce, quite crisply, that NewYork-Presbyterian is really, really expensive—even in comparison to other expensive health systems in the New York metro area.
Furthermore, the Fund realized that it could not be sustainable without tackling the challenge of hospital prices. As Cora Opsahl says, “You can’t reduce spend by benefit design alone.” Which reminded me of that famous quote by Uwe Reinhardt, “It’s the prices, stupid.” Which, of course, reminded me of what David Contorno has said a million times, “You can’t pay less for healthcare unless you pay less for healthcare.”
I can’t overemphasize these points and their impact on employers and workers. It’s really hard to be competitive in the global marketplace when shelling out an extra $400,000 here and an extra whatever tens of thousand dollars there for fringe benefits that do not actually add any value from the workers’ standpoint and/or confer any additional health. This is just blatantly throwing money away.
So, there’s gonna be a few health system peeps listening here who will reflexively mutter under their breath a sentence including the terminology “razor-thin operating margin.” It must be an AHA talking point because I talk to a lot of health system people from all over the country, and “razor-thin operating margin” is invariably the term that gets used.
But let’s just dig into that marketing-speak for a moment. While there are some hospitals who assuredly suffered under COVID (or were suffering even before COVID and definitely after), mostly these are rural ones—but let’s not talk about them for a moment. Let’s talk about the large, consolidated health systems who got billions in COVID relief. Are you kidding me with their razor-thin operating margin crocodile tears? Check out “New Study—Hospitals Hike Charges by Up to 18 Times Cost.”
Here’s a few bullet points from that study:
Hospital charges play a major role in mounting healthcare costs, with health expenditures closing in on one-fifth of the gross domestic product (GDP).
Hospital profits/margins have mushroomed by 411% since 1999 to a record $88 billion in 2017.
The rise in charges coincides with growing hospital mergers and acquisitions by large systems. (This is brutally apparent at this juncture.) The result is increased market consolidation, which leads to, again, higher profits and increased charges, not savings for patients as hospital systems often claim.
Listen to the show with Kevin Schulman, MD (EP366). It explains a lot about how these “razor-thin operating margins” and the “oh no, we’re losing money on Medicare, so we must cost shift” manifest if you actually follow the dollar. As Dr. Schulman says, it’s not A; it’s not B. I mean, it’s not like payers aren’t taking their own piece of the action. You just got to look at their stock valuations to see all that going on. We have a dysfunctional health benefits market and a lot of rational actors in that market doing what you’d expect rational economic actors to do.
So anyway, 32BJ sees in their own data that all this is going on with hospitals, and they aim to stop covering a super expensive hospital in their local market, which is just making bad even worse. It was a whole thing to do this, and in this episode, Cora Opsahl relays the dramatic tale.
You can learn more at 32bjhealthfundinsights.org.
Cora Opsahl is the director of the 32BJ Health Fund, a self-funded plan that provides affordable, comprehensive, and innovative health coverage to 200,000 union members and their families. During her time at the Health Fund, Cora has led the implementation of multiple benefit changes: removing NewYork-Presbyterian Hospital System and physicians from the network, transitioning to a new pharmacy vendor and pharmacy group purchasing coalition, and implementing an expanded Centers of Excellence program administered by Mount Sinai Hospital System. These efforts are projected to save over $35 million in 2022. Prior to joining the 32BJ Health Fund, Cora spent 12 years with Express Scripts, a pharmacy benefit manager. During her time there, she held a variety of roles, including Medicare Part D, strategy and acquisitions, operations, and account management.
07:02 What motivated the decision for 32BJ to cut NewYork-Presbyterian out of their network?
09:14 How did 32BJ compare their spending at each hospital in their network?
13:01 “We cannot be sustainable as a health fund … without really tackling the challenge of hospital prices.”
13:38 “It is one of the challenges as a self-funded plan that, even having this data, there’s not a lot we can do with it.”
16:10 What is 32BJ Health Fund’s maternity program?
19:34 What is the HEAL Act, and why did 32BJ Health Fund support it?
21:39 “For us, we just don’t feel it’s right that anyone gets to dictate our benefit.”
22:43 EP368 with Ashleigh Gunter.
23:34 Why did 32BJ Health Fund reprice their claims using Medicare rates?
24:58 “It really goes to show you how high the commercial prices are in comparison to Medicare.”
25:52 EP366 with Kevin Schulman, MD.