It's not brain surgery. People are more careful spending their own money than their insurance company's. In an effort to quell skyrocketing healthcare costs, employers are increasingly opting to pass the burden onto their employees, and providers need to be ready.
Some experts blame consumer overuse for the broken healthcare system, and say that consumer-driven healthcare (CDHC) might just be the prescription needed. The fix, they say, could be achieved through increased consumer involvement by way of high deductibles and health savings accounts (HSAs). HSAs work by combining high-deductible health plans and tax-deductible dollars. But what that also means is that providers need to be prepared for the new healthcare financing trend in order to stay competitive and give consumers what they want.
"Historically most consumers have not had a great interest in their purchasing decisions or even their selection of providers based on the fact that their health plan coverage generally doesn't require much thought relative to out-of-pocket expense," says Stephen Brenton, president and CEO at Madison, Wis.-based Wisconsin Hospital Association (WHA). "I think healthcare is something akin to an open bar at a wedding," he says. "When it's free, people take advantage of it."
The idea behind CDHC is to give consumers incentive to be more judicious with their healthcare usage. "I truly believe consumers need to pay more out of pocket," Brenton says. "As long as you get something for nothing, you're going to have a mentality of overutilization."
Ties and MRIs
And as much as CDHC is about containing use and cost, it's also part of an overarching consumerism push. "Why is it that I can go out to Lands' End and order a shirt and have selections of ties that go with that shirt automatically come up, but I can't go out to my insurance company and find out what claims I've incurred or find out what are the potential basket of services I might need based on my age and sex?" asks Robert Booz, research vice president at Stamford, Conn.-based Gartner Inc. What consumers want, Booz says, is useable, accessible, extemporaneous information.
Soon, Booz says, instead of comparing one healthcare provider's Web site against another, consumers will compare them to other industries. Like with automobile buyers, healthcare consumers will look for products and services they can tailor to meet their specific needs. They will look for "what they already receive from Travelocity, L.L. Bean or General Motors," he says.
The healthcare crisis isn't new, but CDHC is. HSAs were established in the Medicare Prescription Drug, Improvement and Modernization Act in 2003, and went into effect in 2004. Though only in its infancy, CDHC is already producing a number of IT trends.
"IT executives were taught to view data as an internal resource of the organization. Frankly, individual departments wanted to hold onto their information and not share it with the rest of the company," Booz says. CDHC will replace data ownership with data stewardship as IT employees share information across their organizations and with others, such as in the case of regional health information organizations (RHIOs).
In addition to data sharing, transparency will be fundamental. In order to decide where and how to spend their healthcare dollars, consumers will need to price procedures and even to track claims.
"What most insurance companies have done is to create pages around an audience, rather than information around a question," Booz says, referring to pull-down menu tabs which identify user type. "If I am asking a question, it doesn't matter what the source of inquiry is, the answer should be the same. It doesn't matter whether the question is coming from the member, from the provider or from the broker. A status-of-claim inquiry is a status-of-claim inquiry."
As to how to bridge the gap between the old systems and the new, Booz says there is a rich array of applications and architectures available, such as SOA and effective middleware. "Old monolithic legacy applications are either being replaced or surrounded by individual modules and components," he says.
The notion of application durability is also changing, and CIOs may have to accept the fact that customization will be an ongoing effort.
"It may be a better strategic move to buy an application that is 80 or 90 percent of what I want, do some configuration and then accept 'rip and replace' three, four, five years down the road if there's a fundamental shift in products," Booz says.
Making the grade
Providers understand the transition will be significant. "There is indeed a great deal of work that needs to be done, starting with implementing electronic health records (EHRs)," says Glenn Pomerantz, M.D., J.D., senior vice president and national medical executive, product and marketing innovation team at Bloomfield, Conn.-headquartered CIGNA HealthCare. "At some point, to have the information and to report on it, you have to be able to capture it. And if providers can't capture information, we can't report it," he says.
Benchmarking will be key as CDHC gains traction. Consumers will be able to do cost and quality research on providers who will be, in a sense, graded on topics such as hospital mortality, length of stay, cost of procedure and rate of complication. "From the provider perspective, what is really new is the idea that there are going to be report cards," Pomerantz says. "All doctors want to be A+ students, and yet we know that we are not all receiving A+ care."
Another major issue for providers will be how they are paid. Instead of looking to the health payers, providers will need to look to consumers, which according to David Josephs, vice president and head of consumer-directed healthcare at New York's JPMorgan Chase, might make them a bit leery, as billing individual consumers will cost more than bulk-billing insurance companies. Josephs calls CDHC on one hand a burden to providers financially, but he says it's mitigated by the fact that "when you talk about those 5 million people who don't have insurance through their employer anymore, you'd rather have that person have some insurance, than no insurance."
According to Brad Kimler, senior vice president of the health and welfare consulting group at Fidelity Investments in Marlborough, Mass., CDHC is a fundamental reform in the healthcare system. It's about understanding value, cost and accountability, he says. Through CDHC, Kimler says, consumers will be able to ask better questions once they see what things cost. "I think that a fundamental reform in the healthcare system is to start to understand what it costs to get where they want to be," he says.
As CDHC picks up momentum, so will the need for faster adjudication, perhaps even real-time adjudication. However, it's still early: early to see benefits and early to see stumbling blocks. According to Wisconsin's Brenton, there is plenty of playing time left. "I personally think we are only in the bottom of the second inning of an extra-inning ball game," he says.
