Consumerism and Price Transparency
Redefined and Emerging
Consumer-driven healthcare has become a permanent part of the big picture. What it means and how it is being achieved has changed.
A few years ago, “consumerism” meant High Deductible Health Plans coupled with Health Savings Accounts. This form of consumerism provided a short-term shift in cost, with dollars coming from patients’ pockets rather than from their employers. The thinking was that putting buying power in the hands of patients (forcing them to spend their own money) would make them better consumers. However, an essential part of the consumer equation was missing: accessible, understandable, relevant, comparative information on healthcare costs, patient satisfaction, and quality of physician and hospital outcomes.
Healthcare costs have been virtually opaque at provider levels. A few leading hospitals have taken steps at the local level to present patients with pricing information before procedures, sometimes in tandem with up-front payment. However, lack of uniform requirements and reporting systems make provider comparison difficult if not impossible. According to the National Conference of State Legislatures, as of December 2006, 33 states had passed various laws affecting price transparency.
Slightly more than a year ago, America’s healthcare was estimated to be a $2 trillion industry growing at 10 percent each year, costing $7,000 per person and consuming 17 percent of the Gross Domestic Product. Experts predict by 2015 the total healthcare expenditures will double to $4 trillion. And yet, the “buyers” of the products and services are unaware of price and are doing little to alter their unhealthy lifestyles, which escalates the cost.
The complexities of healthcare — often a matter of life and death — not surprisingly create complex obstacles to systematic solutions. Slowing the movement toward informed consumerism and transparent pricing are factors such as:
- Competition among providers at the local level
- Incompatible patient, procedure and price data systems
- Lack of patient/consumer education on purchasing power
- Political posturing with conflicting “solutions”
- Provider resistance to quality measurement
- Annual insurance cycles driven by cost-cutting mentality
These obstacles are being addressed on many fronts. Candidates of both political parties in the 2008 presidential race are placing transparency in the spotlight of national debate. At the state level, government is compelled by economic necessity — if not by moral imperative — to take the lead.
Former U.S. Secretary of Health and Human Services Tommy Thompson recently noted in a message to the National Governors Association that in 21 states, 50 percent or more of new revenues will be needed to meet healthcare obligations.
Consumerism and price transparency are recognized not as panaceas, but as part of the bigger picture and as an important step toward system reform. Taking the step offers benefits across the board to patients/consumers, healthcare providers, health plan providers, and employers alike. Getting there requires commitment to change and investment in the process.
For a large part of the population who lives from paycheck to paycheck, cost and choice information can help them make smarter, value-driven — not just dollar-driven — decisions. Part of consumer education must include comparative information on provider quality and the long-term health impact which stems from personal lifestyle choices as well as physician, clinic, and hospital selection. Personal accountability must be built into the curriculum for change.
For healthcare providers, consumerism and transparency (through streamlined and shared medical record access) can provide vital insight into patient conditions. Cost savings increase when duplication of testing and treatment are eliminated and administrative costs are reduced. With resulting improved outcomes, the provider’s quality ranking rises.
Health plan providers are taking the lead in developing transparent comparison information about pricing, outcome, and quality of healthcare. As payers for services, the insurance industry has a vested interest in standardizing information and providing decision-support tools. Employers benefit beyond cost-shifting when consumerism works effectively for their employees. Studies have shown adverse effects of consumer-driven healthcare include patients postponing physician visits, delaying clinical or surgical procedures, and failing to fill needed prescriptions because the payment comes from their own pockets. Such failure to act early often exacerbates a condition, resulting in poorer health and higher costs. As such, consumer-driven healthcare plans should be offered in combination with a wellness program to encourage the correct preventative behaviors.
Accountability translates into employees paying a greater share of coverage costs for not participating in employersponsored wellness, lifestyle-change, and disease-management programs. Because the employer shares the cost and suffers from reduced productivity, the employer is in the best position to hold employees accountable. Accountability also demands patient behavior change at the point of service. Patients must learn to ask their healthcare providers the right questions about treatment options, outcomes, quality of care, and cost comparisons.
Obviously, such questions don’t apply in emergency situations. However, training for this shift from passive patient to active consumer can be provided by employers with the help of their health plan providers. With the assistance of a well-thoughtout healthcare plan, the responsibility for living a healthier life is returned to the individual.