Making consumer-directed health care work: CEOs must gradually change employee expectations.

When it comes to health care, chief executives are caught in a bind. The costs continue to rise at alarming rates, yet employees are demanding a continuation of longtime benefits. Many CEOs, at wit's end, seem ready to embrace new solutions. One solution involves making employees more accountable for their health care. Commonly referred to as consumer-directed health care, this model holds the promise of slowing usage, forcing competition among providers and helping consumers make more informed decisions. But will it work?

The answer is, it will work only if you can get your employees to willingly accept more responsibility. Consumer-directed health care is not a product. It is a pathway that requires a carefully crafted employee benefits and communication strategy that changes behavior over time. This process can take up to three years, involving phased objectives for employee education, benefit redesign and provider network realignment.

Here's a road map CEOs should share with their health benefits advisers:

Assess employee readiness. For decades, employers have nurtured an entitlement mentality by subsidizing plans that provide rich benefits and full coverage for many services. Before increasing employee accountability, you need to assess the following:

* Do your employees understand what's covered and not covered under their health plan?

* Do they use tools such as a nurse help line and Web-based services?

* Do they use the preventive care benefits offered to them?

* Can they evaluate their health care options in terms of cost and quality?

Next, you need to raise awareness among employees of the need for change. Be sure to explain their options in terms of health plans, service setting and providers. Just as your company's health benefits team worked diligently to get employees to participate in 401(k) plans, now they must draw on multiple tools--personal coaching, online calculators and on-site training--to support the migration to a new health benefits model.

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Engage your work force. Getting employees to become more active participants in health care requires them to be comfortable with contacting their insurer. Right now, consumer research shows that health insurance companies consistently receive low marks on service and responsiveness. Getting answers to simple questions can be an ordeal.

To go down the path I am suggesting, your health plan provider must offer a high-touch service model that engages members. A high level of personalized, 24/7 service with health and benefits coaching is required to support employees. Initially, health plan service representatives can recommend network providers and help make employees comfortable with using quality outcome comparison tools. This sets the stage for the more complex support needed when employees move to a high-deductible health plan supported by a health reimbursement account or health savings account.

Focus on the chronically ill. Care management programs assist the less than 20 percent of employees responsible for generating 80 percent of costs. These programs identify employees with costly but controllable diseases and provide a nurse case manager who can help them manage their conditions. These highly personalized approaches measurably improve quality of life and reduce costs.

Align the providers. Contracts with providers based on performance must replace the current fee-for-service contracts based on discounts and volume. Instead of focusing on obtaining discounts for medical services in exchange for patient volume, we need to develop incentives that reward providers for quality outcomes. The goal is to create a more transparent marketplace and to direct consumers to the doctors and hospitals that provide the best outcome at the best price.

One way or another, employees are going to become more accountable for their health care spending. Preparing your employees to thrive in this new environment is critical.

Ed Wristen is president and CEO of First Health, a health benefits company based in Downers Grove, III.