Rick Abbott on lowering costs by focusing on quality
August 17, 2020
Suzanne Delbanco chats with Rick Abbott, VP of Product and Market Solutions at Premera Blue Cross. Premera Blue Cross is a health plan in the Pacific Northwest. Premera covers about 2.2 million members with employer customers ranging from large tech companies to family-owned grocery stores.
Suzanne and Rick discuss if narrow networks, also known as high-performance networks, represent a viable way to lower prices in the employer-sponsored health insurance market. Historically, employers have demanded broad access PPO networks that include the vast majority of providers and hospitals in their region. This trend has somewhat impeded health plans from using their volume to negotiate steeper discounts from providers. Rick Abbott describes how creating narrow networks based on provider quality provides a real opportunity to lower costs by both reducing wasteful spending on unnecessary or harmful care and by negotiating discounts from higher-quality providers in exchange for higher volumes of patients.
Suzanne and Rick also discuss the opportunities and obstacles for employers interested in pursuing alternatives to the incumbent health plans, like alternative third party administrators or group purchasing initiatives. Rick Abbott points to Premera’s 85-year history as an important value-add for customers, allowing the health plan to implement strategic initiatives at scale. For instance, Premera recently launched a “virtual-first” health plan that allows members to designate a virtual network of providers as their primary care providers.
This interview is part of CPR’s current work to understand whether group purchasing efforts can secure better health care value for employer-purchasers. Funded by the Commonwealth Fund, CPR is assembling insights into the forces that can facilitate or hinder purchaser efforts to amass volume. Keep an eye out for more interviews on this topic.