The key to understanding consumer-centric healthcare

The changes that have occurred thus far are likely to pick up speed, in part because of who will be working for the White House. Trump’s choice for Secretary of Health & Human Services, Tom Price, MD, is a supporter of consumer-centric health plans. Further, Vice President Mike Pence brings with him experience as governor of Indiana where he oversaw the implementation of consumer-centric healthcare policies. Adding to that, Pence’s health plan architect was Seema Verma, who’s been tapped to head the Centers for Medicare & Medicaid Services (CMS).

The essentials of consumer-centric healthcare include empowering the patient to make choices, be involved in the decision-making process for her/his care and, it should be emphasized, understand what the costs are upfront by way of transparent pricing and candid conversation.

The driver behind this consumerism is the emergence of high-deductible health plans (HDHP). Back in the day, a patient’s financial responsibility for their healthcare was often a single digit percentage of the cost, if that. Now, with HDHPs, a patient is confronted with 30% to 50% of the financial responsibility for their care.

It is simplistic to label high deductibles as the villain. At the heart of Indiana’s Healthy Indiana Plan (HIP 2.0) for Medicaid patients, is an HDHP along with a health savings account (HSA) that is built by plan members paying 2% of their income into it each month, along with subsidies from the state. Until their deductibles are reached, patient payments can be made from the HSA. On the surface, this is pretty standard stuff. Interestingly, a report issued in July 2016 by the Lewin Group found that the plan helped to:

● Reduce the number of uninsured low-income Indiana residents and increase access to healthcare services

● Promote personal health responsibility

● Promote disease prevention and health to achieve better health outcomes

Along with those accomplishments, the study found plan member satisfaction rates were high, with 80% indicating they were satisfied with the program. These members also engaged with their healthcare process. For example, 42% checked the balances in their accounts every month and 27% asked providers about the cost of care. Just 1% to 2% of members missed an appointment because of cost. Lastly, Indiana reported that a varying co-payment feature for emergency department use resulted in fewer inappropriate uses of emergency services as compared to the traditional Medicaid benefit.

The point of highlighting the Indiana experience is to show that consumer-centric healthcare must be a true, balanced collaboration involving the health plan (or insurer), the medical group and, of course, the patient.

Everyone needs to make smart decisions as it regards the actual health of the patient and the business health of healthcare.

Regardless of the health plan, medical groups are seeing a greater portion of the financial obligation as the patient’s responsibility. Unlike the process of filing claims with insurance companies and getting paid every couple of weeks, collecting from patients is a real challenge.

It costs more, and takes more time to collect, as many aspects of patient billing woefully underutilize information technology and digital communications like email. Remarkably, nearly 9 out of every 10 healthcare bills issued by medical groups in the U.S. is in paper form and sent through the U.S. Postal Service. However, from a medical group perspective, this results in a payment cycle of 90 to 120 days or more, plus the total cost of sending these statements is incurred regardless of whether payment is remitted. That’s inefficiency that directly affects a medical group’s cash flow, hampering its ability to operate profitably and, perhaps, charge less.

All too often, attention is placed on the clinical side of healthcare. Granted, that’s done for good reason as positive, enhanced outcomes are what healthcare professionals strive for each day. Nonetheless, consumer-centric healthcare will create competitive forces in the marketplace that will demand that providers become more efficient in their business practices as well, in part by employing low-cost, high-quality technologies.

Anyone who thinks this can wait is wrong. Healthcare is consuming more of the U.S. economy than ever before. CMS notes “the delta between healthcare spending and GDP growth reached a six-year high in 2015,” representing 17.8% of GDP. It estimates that healthcare will total 20.1% of the economy by 2025.

William Blair, an investment house that concentrates on the healthcare industry, offers the view that “...recent healthcare reform legislation—while having positive attributes—does little to fundamentally alter the broken, siloed care delivery system in the United States. Similarly, we believe the law [ACA] does little to control healthcare expenditures. Rather, the legislation focuses on expanding health insurance coverage—a noble goal, but one that falls short of solving the underlying quality and cost issues that drove such a high level of uninsured individuals to begin with.

While digital interactions between provider and patient are moving “in the right direction,” according to the American Hospital Association, it is seen by William Blair as “still short of ubiquitous.” Interestingly, most of that digital interaction centers on patients looking up medical records online.

In its report, the firm suggests there is “still room to grow the trend of hospitals moving more administrative functions online.” Shifting patient billing from paper to electronic is just one area that can realize meaningful savings as well as provide a better experience for the patient. It should not seem surprising that 70% of healthcare consumers surveyed by Deloitte would prefer to get their bills electronically. But as I noted earlier, 87% of all medical bills go out in paper form.

The Centers for Disease Control and Prevention (CDC) National Health Interview Survey claims 39% of Americans under 65 years of age are currently enrolled in an HDHP. That means much of the cost of healthcare comes out of their pockets and is expected to reach $608 billion by 2019. The CDC suggests consumers will make better healthcare decisions and healthier lifestyle choices when it’s their money.

While that logic is tough to take issue with, it represents one element, albeit a critical one, of the equation that can result in better healthcare that costs less.