Consumerism in Healthcare-- The Next

1
Consumerism in Healthcare--The Next Best Thing?

• Jon R. Comola
• Marcia L. Comstock, MD MPH
• Wye River Group on Healthcare
• June 7, 2005

2
What are you going to hear?

• WRGH
• Who are we?
• Do we know anything useful?
• CDHC
• How /why did we get here?
• Should we be here?
• What are we trying to accomplish?
• What do providers think about it?

3
WRGH

• NP NFP health policy group
• Not a think tank A catalyst for collaboration
• ORThe Marriage Counselors of Health Care!
• Philosophy
• all the players playing
• Engage communities in the healthcare debate
• Define the problem before pushing solutions
• Active in WDC and 12 model communities

4
WRGH

• We have opinions.on most everything!!!!
• but we are not here to impose them. Rather,
  we try to reflect the diverse perspectives of
  stakeholders we work with.
• Do we know anything useful?
• YOU DECIDE!!

5
CDHC How/Why did we get here?

• A natural evolution Back to the future
• 1945-1970 mutuality of interests enabled
  scientific progress
• 1964 Great Society movement adds more demands
  through Medicare and Medicaid
• 1970s tension develops as consumer appetite for
  medical marvels outstrips capacity to cover
  costs
• 1974 HMO Act
• 1980s 90s Employers apply business practices
  to health care

6
Its Cultural, Stupid!

• We have no vision!
• Rugged individual self-determination wins over
  social responsibility and equity!
• Latest attempt to navigate the tensions between
  limited resources and unlimited expectations
• The shifting locus of blame., I mean,
  control!!
• Rejection of Mother may I?cultural
  mistrust/abhorrence of Big Brother..
• Costs..costscosts.costs.costs

7
OK, REALLY, WHY??

• Its simple!!!.weve tried everything else.and
  culturally we react negatively to any entity that
  tries to substitute its priorities for those of
  individuals!

8
Who should make the tough decisions??

• The health reform debate gets down to the
  fundamental question who will control health
  care decisions - bureaucracies or individuals?
• If we cannot finance all the services that might
  provide some benefit to some people, choices need
  to be made!
• Who better to make those choices than those whose
  lives are affected??

9
And then there is pluralism.

• The pluralistic nature of our country and
  increasing diversity in health-related attitudes
  and preferences, which vary across communities
  and even over the lifespan, is another strong
  argument for choice..

10
CDHC The Whys Therefores

• Consumerism is timely
• For consumersPut me in the drivers seat!
• For providers.Ill ride shotgun!
• For employersGive me predictability!
• For financial industry.I see a piece of a big
  pie!
• For insurers.OK, Ill analyze, explain and pass
  costs on!

11
Consumerism

• Consumerism is a powerful force that has
  transformed industries like telecommunications,
  financial services, travel and entertainment in
  ways that could hardly have been predicted a
  decade ago

12
Consumerism in other industriesa model??

• Consumerism in other industries has largely
  supported the 21st century notion of more choice,
  lower cost, higher quality.
• (BUTHigher quality, lower cost has yet to be
  proven in healthcare, much to the chagrin of
  purchasers.)

13
CDHP..

• How does this evolution translate??
• (more on that later..)
• Will consumerism in healthcare represent a true
  cultural shift, or just a cost-shift??

14
CDHP..

• The market is well into the first generation and
  moving rapidly into the second generation
• 1st generation savings account hi-deductible
  insurance policy emphasis on plan design not
  attractive to a diabetic
• 2nd generation add disease management,
  incentives and rewards emphasis on behavioral
  change
• 3rd generation broaden focus to integrated
  health and performance management
• 4th generation personal health care based on
  genomics, predictive modeling focus back to the
  individual
• Ron Bachman, PWC

15
Is this the right direction??

• Dont know..
• Consumer cost-sharing may contribute to bottom
  up health system reform after the exhaustion of
  governmental and corporate initiatives. Jamie
  Robinson
• actuarial models in health care conflict with a
  sense of justice and social responsibility.
  Victor Fuchs
• The question is moot if this is the only
  culturally palatable or politically viable
  direction..

16

• The revolution of rising expectations, coupled
  with the elastic definition of health,
  accentuates the sentiment that health care is a
  matter of satisfying diverse individual
  preferences rather than providing a
  one-size-fits-all solution.
• Jamie Robinson

17
What are we trying to achieve??

• A pluralistic system that empowers patients and
  demands accountability from individuals and
  healthcare organizations, while supporting the
  needs of the disadvantaged from WRGH
  Communities initiative
• Collaborative care with an engaged patient and
  a partnering physician sharing expertise, as
  contrasted with traditional care with a passive
  patient and a dominant physician seeking
  compliance with instructions T. Bodenheimer

18
The Reality.

• We have a science-based model created to support
  the healthcare industry. We need a
  humanistic-scientific model that is designed to
  support consumers

19
Some Purported Advantages of CDHC

• Creates a true marketplace and put the
  consumer-patient at the center of healthcare
• Helps contain health care costs
• Helps address the problem of the uninsured

20
Create a true marketplace

• Theory
• Enigma theory
• Back to the future theory
• Scrutiny theory
• Self-empowerment theory
• Doc-Patient relationship theory
• Reality
• Awareness reality
• Skin in the game reality
• Competency reality
• Emotional vs rational reality

21
Cost-Containment

• Theory
• High-deductible/lower premium
• Decr admin expenses
• Decr discretionary care incr generics
• More efficient networks
• ?Healthier lifestyles longer term
• Reality
• High users not impacted
• May overcompensate the healthy
• May impact necessary care
• Largest tax adv to higher income
• Slightly moderately sick pay more

22
Increase options for uninsured

• Theory
• More small businesses will offer help
• More can afford high deductible policy
• Accumulate funds for future needs
• Reality
• High-deductible products never popular
• Could fragment risk pool
• Tax advantage not compelling to lower income
• ?Sufficient financial subsidies for the poor

23
And The Providers Reaction

• As THE social agents for the increase in health
  care expenditures..providers historically added
  capacity, technology and services in pursuit of
  dual objectives better outcomes and
• higher incomes..
• (Sort of Who wants to be a Millionaire)
• The Good, the Bad, and the (potentially) Ugly
  Sides of CDHC

24

• Regardless of issues with personal care accounts,
  the rising cost of health insurance premiums
  could leave providers saddled with more
  uncompensated care as more people are priced out
  of the market.

25
THE DOCS

• As agents of patients.Physicians want to
  advocate for more social resources to be devoted
  to health care, not for a balancing of their
  individual patients needs with the other
  economic priorities of the nation. Jamie
  Robinson
• Physician groups are generally supportive of
  accounts and CDHC, but how it will all play out
  remains to be seen
• So far, little evidence that experience with
  patients with HDHPs is different, but penetration
  quite limited

26
Physicians see a number of Pros

• Clinical
• May strengthen the doctor-patient relationship
• Opportunity for longer-term relationship
• Encourage greater communication
• Emphasize preventive and behavioral services
• Admin
• Decreases non value-added bureaucracy
• More plan competition
• Some let physicians set fees
• May address some of purchasers concerns about
  costs

27
How might it affect income?

• Internist in TN who went all cash
• Gross 275,000
• Exp 115,000
• Net 160,000 similar to ER doc in rural TN
• MGMA average for IM
• Gross 460,000
• Exp 300,000
• Net 160,000
• The difference is in expenses!

28
But then there are those Cons

• Clinical
• Impatient patients!!
• Questioning patients will this really be any
  better than questioning MCOS??
• Overly netted patients docs drowning in paper
  
• The true meaning of informed.
• Will this be the end for primary care docs????
• Admin
• Transaction fees more admin costs
• When capitation is gone..will the money come in?
• Price transparencygood or bad? No bargaining
  please!!
• ?? Bad debt

29
And the real unknowns

• What does more decision-making between doctor and
  patient really mean?
• Patients are likely to pay more attention to
  quality of care and service..thats good, right?
• Docs will have more incentive to invest in
  their business..they will have to in order to
  compete!
• Competition may be broadened.how many patients
  will travel from other cities (?countries!) for
  higher quality, lower cost procedures?
• (sort of Dog Eat Dog!!!)

30
Hospitals Health Systems

• In general, much less sanguine than physicians
  about the potential of CDHC .. specifically HSAs
  and HDHI
• Hospitals are in the unenviable position of
  having to sort out what they will be in the
  future. Few experts see them at the center of the
  universe for care in the 21st century
• (sort ofSurvivor.)

31
If you are a hospital, the future has its
challenges!!

• Suits about tax-exemption status
• Accusations of gauging self-pay patients
• Patient safety concerns
• Federal scrutiny
• End of specialty moratorium
• CON

• Thin margins/future capital needs
• Need for top-line growth
• Payment reductions
• Tiered benefits
• Competition from off-shore facilities
• Media target
• Greg Scandlen

32
The Latest Media Villain!!

• Theme Hard working consumers are being
  overcharged by dangerous and poorly run
  facilities that have conspired to retain a
  monopoly position in the health care system.
• Greg Scandlen

33
And on top of all this

• consumerism yada, yada, yada,
• ..patients demanding price transparency, quality
  information, and customer convenience, too!!
• (the nerve of them !!!!!)

34
So hospitals have some concerns.

• Individuals may delay seeking care until it costs
  more to treat
• Limited benefit plans may cap payments for
  hospital bills
• More patient responsibility in any form may lead
  to rising bad debt
• Need to review charity care policies
• Need to identify patients at potential risk at
  the front end

35
And a bit of schizophrenia..

• Interviews conducted by the CSHSC with more than
  1000 health system leaders in 12 communities
  revealed
• deep skepticism about the ability of market-based
  reforms to produce urgently needed change
• dread of imminent but poorly conceived government
  intervention
• agreement about 'shared blame' for renewed
  healthcare inflation

36
The reality is

• Perspectives of individual hospitals are all over
  the map.for many it is not on the radar screen
• The jury is still out.so far the impact is
  negligible
• Some consultants say fear of bad debt is
  overblown as the bulk of in-patient costs will
  still be covered by insurance

37
And a few whispers of optimism

• There is a level playing fieldmost plans build
  on the insurance companys existing provider
  network and negotiated rates
• Plans, in theory, have the potential to make
  patients more attentive to details of care and
  costs
• As employers, hospitals recognize the potential
  for cost savings

38
And the other health-pros?

• Dentists much dental care has been paid
  OOPduh!! whats new here??
• Nurses strong supporters of patient-centric
  healthcare in broad senseno position on
  financing issues as dont bill directly for
  services
• NPs see significant opportunity.pay me less
  for better care than your GP!
• Pharmacists Can play valuable role in
  supporting self-carewant to get paid for their
  services!