Cigna CEO: Stop Dwelling on Saving Money

Young_Chitlin

By Peter Coy

The alpine air of Davos is filled with talk about how health care is too expensive. That’s the wrong message to convey to the folks back home, says David Cordani, the chief executive of health insurer Cigna (CI).

People get nervous when they’re told that governments need to cut back on health-care spending, Cordani said in an interview today at the World Economic Forum in Davos, Switzerland. They conclude—understandably—that it’s code language for cutting back on their care. Hence the effectiveness of scare talk about death panels.

A smarter message, says Cordani, is for lawmakers and business executives to say that the quality of health care must improve. That’s something the public can get behind. Higher quality will cost less in the long run, not more, because people will be healthier and there will be less waste, Cordani argues. He cites an estimate that $750 billion of annual health-care spending goes to waste.

The key to getting higher quality for less money is to move away from the traditional fee-for-service approach, which gives doctors and hospitals an incentive to provide lots of treatment, and not necessarily the right treatment, Cordani argues.

About a year ago the company bought HealthSpring, a company that covers senior citizens enrolled in Medicare Advantage. For younger people, Cigna has set up “collaborative accountable care” arrangements with doctors that cover more than half a million customers in more than 50 cities. Cordani is bragging about both initiatives in meetings at the World Economic Forum.

Cigna’s HealthSpring clinics have social centers where customers can socialize, get some exercise, take a lesson in healthy cooking, or get on the Internet. The result is “a much more vital senior,” one who, statistics show, is more likely to take medicines on schedule and follow doctors’ orders on diet and exercise, Cordani says.

In the collaborations with physicians’ groups, Cigna sets up a bonus pool that pays out if the quality of care surpasses a certain threshold, measured by such things as avoidance of unnecessary readmissions to hospitals. This gives the doctors a financial incentive to care about the overall outcome for patients. The doctors suddenly start referring patients to the surgeons and hospitals that give the best care, because that produces bigger bonuses for them, Cordani says.

Doctors in these collaborations have to be willing to have their care monitored and compared in a way it hasn’t been before. But Cordani says that once they see the results—better care for their patients and bonuses they never got before—they like it. Some in Nashville, Tenn., have volunteered to travel to other cities to evangelize, Cordani says.

Cigna is hardly the only company pursuing this vision, which sometimes goes by the slogan of “medical home.” But Cordani is pushing the idea hard. He hopes to have 1 million customers in 100 collaborative accountable care groups by the end of 2014.

“Change is hard for everybody,” Cordani said in Davos. His point: Change only gets harder if the message people receive is all about cutbacks. Improve quality, he says, and the savings will follow.