GM contracts with health system for direct-to-employer option
The automaker joins the growing list of employers partnering directly with health systems to provide care for their employees
The automaker joins the growing list of employers partnering directly with health systems to provide healthcare for their employees.
General Motors in August inked a deal with Detroit-based hospital system Henry Ford Health System to provide a new direct-to-employer healthcare option to 24,000 of its salaried employees and their dependents in Southeast Michigan.
The agreement — which will require GM employees who choose the Henry Ford plan to get all of their healthcare and wellness services, including surgeries, through the Henry Ford Health System or face expensive out-of-network rates — is a strategy model being embraced by employers as they try to reduce employee healthcare costs and improve care by bypassing traditional insurers.
Though the strategy is not widely used, it’s gaining momentum as companies including Walmart, Intel and Boeing partner directly with providers. In fact, the percentage of self-insured companies who have some form of direct contracts with providers jumped from just 3% in 2017 to 11% in 2018, according to the National Business Group on Health.
“If you talk to a lot of brokers and consultants around the country, they’ve been pushing for direct contracting as a way to save money and narrow not only the healthcare spend, but exposure to various levels of quality and cost variation,” says Bret Jackson, president of The Economic Alliance for Michigan. “I think this is a move that we knew was coming. But [GM’s move] to contract where their headquarters are, and being in a market where there is a lot of hospital competition, sends a strong signal of what the future means for employee benefits.”
General Motors’ new plan, called GM ConnectedCare, will be added as a new option for the company’s salaried employees this fall, with service beginning Jan. 1. The plan will provide employees access to more than 3,000 providers from an expansive network of primary care and specialty care doctors. Blue Cross Blue Shield of Michigan will manage claims-processing and other functions.
The automaker still will offer PPO plans to employees, but the company expects that employees who choose the ConnectedCare option can save anywhere from $300 to $900 a month. Seeking to “offset rising healthcare costs for both the employee and the company” was one reason for the partnership, says Sheila Savageau, GM’s U.S. healthcare leader.
Though the benefits of such arrangements may sound tempting to employers, the contracts are typically complicated to administer and generally work only if an employer has a sizable employee base in one region, experts warn. “It takes a lot in order to pull this type of agreement off,” Jackson says. “There has to be constant communication in terms of employee benefit owners, and you have to keep track of a lot of moving parts.”
Employers who enter into a direct contract with a healthcare provider need expertise and bandwidth, “a luxury that not many have,” adds Suzanne Delbanco, executive director of the Catalyst for Payment Reform, an employer-led healthcare think tank and advocacy group.
That’s why Jackson says that while he expects other large employers to jump on the trend in the coming years, he doesn’t expect a widespread movement because “most employers aren’t in the right situation.”
But for employers that are capable, Delbanco says, “it can be a powerful way to forge a strong relationship with an important source of healthcare for employees built on the employer’s expectations around quality, cost and patient experience.” In GM’s case, the company hopes the partnership will improve employee wellness and take aim at chronic conditions. Henry Ford will help ConnectedCare patients keep track of their health with regular wellness exams, monitoring of chronic conditions and preventive screenings for diseases like colon cancer and depression. GM hopes the health system also will help employees choose the right care options, such as walk-in clinics rather than emergency rooms for minor illness and injury.
When employers contract with providers directly, it can have a ripple effect on other employers — even those who aren’t in a position to partner like this, Jackson says. “It’s beneficial not just for the GMs of the world, but for small or medium-sized companies that don’t have the leverage that a General Motors has,” he says. Other health systems will have to adapt to changing expectations, which may include “patients getting same-day or nextday appointments, or being able to see a specialist in 10 days.”