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WASHINGTON-As employers attempt to get the most for their health care dollars, they should focus more on value than cost.

Employers today are really managing costs when they approach health care, said Dr. David B. Friend, global director-health care consulting for Watson Wyatt Worldwide in Wellesley Hills, Mass.

There is "very little effort to benchmark" plans, he said. Instead, there is a situation where the supplier is the enemy, and there can be an annual ritual of vendor-switching when there should be efforts to create longer-term relationships, Dr. Friend said during a discussion of evaluating health care choices during the recent National Managed Health Care Conference in Washington.

Decisions are made on what Dr. Friend described as a "primitive system" of three Cs: cost, clerks and control.

While the factor of cost is self-evident, clerks means thinking a plan is working well if someone answers the phone within a certain amount of time. But timeliness doesn't necessarily mean that person can give the right answers, he said.

Control is focusing, for example, on how quickly to get a new mother and baby out of the hospital, when more emphasis should be placed on how they are doing after delivery, he said.

Dr. Friend predicted health care costs will "explode" in the near future, which will put tremendous pressure on quality. Employers should focus instead on "value," he said.

"It's not just looking at quality, it's not just looking at costs, it's making tradeoffs," he said.

He went through the steps of a Watson Wyatt proprietary value creation process to explain how value can be achieved in a health plan. The first step for the employer is deciding exactly what it wants in a health plan; then comes going to the marketplace and demanding it; that is followed by the employer's analysis to ensure it is getting what it's paying for; finally comes employer efforts to improve performance.

Dr. Friend emphasized that creating longer-term relationships with health care service providers is key to creating value.

The long-term relationship can help cut administrative costs, for example, by eliminating expenditures for such things as marketing, he said.

Andrea B. Castell, health services consultant with Castell & Associates of Bellevue, Wash., described how so-called "boutique tools" can help improve both employee health and an employer's bottom line.

These tools, which are used only in particular situations, include such things as inventories of covered populations and services available within a certain community, she said.

For example, using these tools can allow the employer to focus on enrollees prior to medical care and thus anticipate what types of services an enrollee would need, she said. That improves the health of the coverage population. It improves the bottom line by allowing employers to anticipate care needed and make arrangements for chronic care management, among other things, she said. They also help achieve both ends through such means as identifying service gaps in given areas, Ms. Castell noted.

Mark Ryan, an official of the Office of Policy and Management for the State of Connecticut, accompanied Dr. Friend and spoke briefly.

Marianne Fazen, executive director of the Dallas/Forth Worth Business Group on Health in Dallas, moderated the session.