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Consumerism in Healthcare-- The Next


Consumerism in Healthcare--The Next Best Thing? Jon R. Comola Marcia L. Comstock, MD MPH Wye River Group on Healthcare June 7, 2005 What are you going to hear? – PowerPoint PPT presentation

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Title: Consumerism in Healthcare-- The Next

Consumerism in Healthcare--The Next Best Thing?
  • Jon R. Comola
  • Marcia L. Comstock, MD MPH
  • Wye River Group on Healthcare
  • June 7, 2005

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?

  • 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

  • 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?

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
  • 1974 HMO Act
  • 1980s 90s Employers apply business practices
    to health care

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,
  • Rejection of Mother may I?cultural
    mistrust/abhorrence of Big Brother..
  • Costs..costscosts.costs.costs

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

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??

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..

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
  • For insurers.OK, Ill analyze, explain and pass
    costs on!

  • 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

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

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

  • 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
  • 3rd generation broaden focus to integrated
    health and performance management
  • 4th generation personal health care based on
    genomics, predictive modeling focus back to the
  • Ron Bachman, PWC

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
  • 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

  • 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

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

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

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

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

  • 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

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

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

  • 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.

  • 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
  • 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

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

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!

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
  • ?? Bad debt

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
  • Competition may be many patients
    will travel from other cities (?countries!) for
    higher quality, lower cost procedures?
  • (sort of Dog Eat Dog!!!)

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.)

If you are a hospital, the future has its
  • 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

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

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

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

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

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 far the impact is
  • Some consultants say fear of bad debt is
    overblown as the bulk of in-patient costs will
    still be covered by insurance

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
  • As employers, hospitals recognize the potential
    for cost savings

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
  • NPs see significant me less
    for better care than your GP!
  • Pharmacists Can play valuable role in
    supporting self-carewant to get paid for their
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