Pogo Knows Analytics

To borrow a phrase from Pogo, “We have met the enemy and he is us.”  Those of us practicing analytics must change the ways we do our job.  Quite frankly, there are huge opportunities to improve healthcare and many analytics solutions to support it, but we are only scratching the surface of our potential.  We need to expand the scope of our work from doing things with data to using data to change the organization for the better, as depicted below.

But this is an overwhelming list of functions and competencies.  No one person can do it all.  It requires a village (team) to have all the skills and accomplish all the functions.  Some suggest that a new chief is needed to lead us.

Salvation from the CAO

CAO stands for Chief Analytics Officer.  (It also stands for Chief Administrative Officer.)   The role is new for the C-suite.  Michael Bloomberg, the data-driven mayor of New York City, in his last State of the City Address, appointed the city’s first ever CAO, Michael Flowers, to “improve the way all agencies share information and to make the data available to the public so that the community can hold the city accountable.”   Flowers used to be the city’s Analytics Director.  It’s not clear why there was a title change. The job description sounds better in the previous job.  “Mr. Flowers leads a team of data scientists in analyzing city data from over 20 city agencies to allocate its resources quickly and efficiently to prevent fire, crime, safety hazards, and unhealthy conditions.”

Chiefs are becoming very popular.  Forbes lists new C-suite titles including Chief Internet Evangelist, Chief Happiness Officer, Chief Privacy Officer, Chief Digital Officer, Chief Knowledge Officer and Chief Customer Officer among others.  In healthcare, the new CAO role joins forces with other information leaders including the CIO (information), CDO (data), CIO (innovation), CMIO (medical informatics), and CNIO (nursing informatics).  I bet there are more to come. 

I guess the reason for chiefs is to bring visibility to the function, get the ear of the CEO, collaborate with peer chiefs for the good of the enterprise, provide better management oversight, and be accountable for results.  All good things and it’s important that analytics is recognized as an important function along with the dozens of others.  And it is good to have the executive talent.  But, leadership is not just for the few chiefs.  It’s for all of us.

Remake ourselves

Mahatma Ghandi said “Be the change that you wish to see in the world.”  We need to expand our technical and people skills to increase the utility of analytics in healthcare.  We need to work locally and make teams work better through communications and collaboration and dedication to a common goal.  We need to focus on the immediate tasks at hand such as working through an algorithm or building a database and also be sure there is a receptor site to absorb our work.  We need to visualize how analytics improves business and society.    We need to lead by our own example.

This blog is an abstract from my chapter, Health Analytics:  The Way Forward in the forthcoming book I am editing, Analytics in Healthcare and the Life Sciences: Strategies,Implementation Methods, and Best Practices, to be published in December 2013.

Don’t Play, Be Happy

Employers can get out of healthcare and do right for employees, the company, and country.  Most employers are reluctant agents in providing health insurance and would be happy to find a clean exit.  Obamacare gives them the opportunity.  Let me be clear.  It is not about evading responsibility, e.g. reducing employee working hours to avoid providing insurance or spinning off separate companies to get the number of employees down to under 50, but about making wise investment decisions for the benefit of all stakeholders. 

Employers got into the health insurance role during WWII in a deal to provide tax free benefits during a wage freeze.  The freeze thawed but the “temporary” measure has continued for 70 years.   It costs the U.S. Treasury $260 billion in reduced tax revenues and is the largest single tax expenditure.  Most economists would agree that providing insurance through employers does not make sense.  Employees do not realize that benefits are provided in lieu of increased wages.  Employers are sick of the volatility of premium increases and increased medical costs.  But, if employers leveraged this tax advantage to actively improve health and productivity it might be a good deal, but few do.

 

Large employers who do not “play” in providing insurance benefits must “pay” a penalty of $2000 per employee per year starting in 2015.  Yet, the average insurance premium per employee in 2013 is over $11,000 with the employer paying about $9000.  Do the math.  According to a survey by McKinsey & Company, between 30 and 60 percent of employers will stop offering health insurance after 2014 and at least 30% would gain economically even if they paid the penalty and made employees whole through other benefits or increased wages.

How can this be?  The bottom line is that the health insurance exchanges provide subsidies to low to mid income people (up to 400% of the federal poverty level or about $46,000 per individual or $94,000 for a family of four) such that their out of pocket insurance expenses are low and in some cases can be zero (if they chose a plan of lower cost compared to the benchmark plan).  About 67% of households have income below the 400% level.  Other advantages of the exchanges are that people also have a choice of plans to meet their needs, not usually available from employers.  And their total out of pocket costs for health care expenses are capped at lower levels than most employer plans.  So, the majority of Americans could be better off in an exchange if the employer provided a minimal subsidy in addition to the large subsidy provided by the government.  Higher paid employees may need alternative benefits or compensation to remain whole.

The pay or play rules for large employers have been delayed until 2015.  And it is possible that some state exchanges will make insurance available to employees of large companies in 2017 which could be funded by employers on a tax free basis with a health reimbursement arrangement.  So, many employers may be wise to do watchful waiting and see how the exchanges emerge and succeed over the next few years.

The inevitable slide away from traditional employer sponsored health insurance is underway and will be accelerated with the presumed success of the exchanges.  Some employers may find a competitive advantage to pull the trigger earlier rather than later.  The competitive advantage will come from lower benefit costs and from providing a better deal for their employees which may reinforce the primary purpose of compensation…to attract and retain employees.