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Mike Sullivan: How to make benefit plans healthier

Mike Sullivan, left, is the president of Cubic Health and Chris Von Heymann the senior vice-president. Cubic has pioneered technology that allows Canadian employers to use health benefit data to manage the health of their employees, health benefit spending and predict future costs.

Peter Power/The Globe and Mail

Mike Sullivan was working as an insurance and health benefits consultant in the late 1990s when the first wave of "blockbuster drugs" – high-priced medications that target chronic conditions such as heart disease – rolled into the market.

"And I said, 'Wait a second, who's actually paying for this?'" recalls Mr. Sullivan, noting that most Canadians rely on employer-sponsored plans to cover the cost of prescription drugs for them and their families. "That was when I realized there was a potential business opportunity here."

In 2003, Mr. Sullivan, a licenced pharmacist, got together with two pharmacist colleagues and founded Cubic Health Inc., a Toronto company that helps employers design more efficient and cost-effective benefit plans. Today, Cubic Health has 11 employees and serves clients across Canada – mostly large companies with between 1,000 and 80,000 employees.

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"We save our clients between 8 to 10 per cent of their plan spending every year," says Mr. Sullivan, president of Cubic Health.

The category of business in which Cubic Health operates is far from novel; there are many health benefits consultants and companies in Canada. What is new and innovative in Cubic Health is its use of sophisticated data analytics technology to create plan models based not merely on historical trends but also on predictive insights.

For example, by applying algorithms to such data as prescription drug claims over a given time period, as well as age and gender of employees, Cubic Health can pinpoint the prevalence of certain diseases among a company's work force. It can then create a benefit plan model to address the current and future health needs of these employees.

Using data analytics also helps employers identify problem areas and provide better support for their employees. As an example, Mr. Sullivan cites the case of a company in which one out of four employees had taken a short-term leave of absence related to depression. After analyzing the company's insurance claims data, Cubic Health found that close to 25 per cent of these employees who took time off for depression had never taken medication to treat their illness.

"How was it that some employees got to the point where they needed to take a leave of absence but had never taken medication that would have helped them?" Mr. Sullivan asks. "That was a shock to the employer, so that got them thinking about what can they do in the future to ensure their employees get the help they need."

When they renew their benefit plans each year, employers typically get a report showing how much they paid over the past 12 months for drugs and health services. Cubic Health has access to detailed claims data – down to the individual level but scrubbed to remove employees' identities – provided by the insurance company that administers the plan.

This in-depth data, combined with in-house innovations that include a comprehensive drug database and classification system as well as financial modelling technology for future drug spending, allows Cubic Health to engineer plans that make the best use of companies' limited resources. That's a highly attractive offering, especially in light of a recent report that found about one-third – or more than $5-billion – of money spent on prescription drugs through private health plans was wasted.

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"The only way to keep these health plans sustainable is if we strip out the waste and focus on areas of greatest need," Mr. Sullivan says. "Our innovations are helping companies do that."

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