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Consumerism in Consumerism in Healthcare--Healthcare--

The Next “Best” Thing?The Next “Best” Thing?

Jon R. ComolaJon R. Comola

Marcia L. Comstock, MD MPHMarcia L. Comstock, MD MPH

Wye River Group on HealthcareWye River Group on Healthcare

June 7, 2005June 7, 2005

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What are you going to What are you going to hear?hear?

WRGH WRGH Who are we? Who are we? Do we know anything useful?Do we know anything useful?

CDHCCDHC How /why did we get here? How /why did we get here? Should we be here? Should we be here? What are we trying to accomplish? What are we trying to accomplish? What do providers think about it? What do providers think about it?

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WRGHWRGH

NP NFP health policy groupNP NFP health policy group Not a “think tank;” A catalyst for collaborationNot a “think tank;” A catalyst for collaboration OR…The “Marriage Counselors” of Health OR…The “Marriage Counselors” of Health

Care!Care! Philosophy: Philosophy:

““all the players playing” all the players playing” Engage communities in the healthcare debateEngage communities in the healthcare debate Define the problem before pushing solutions Define the problem before pushing solutions

Active in WDC and 12 “model” communitiesActive in WDC and 12 “model” communities

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WRGHWRGH We have opinions….on most We have opinions….on most

everything!!!!everything!!!! … …but we are not here to impose them. but we are not here to impose them.

Rather, we try to reflect the diverse Rather, we try to reflect the diverse perspectives of stakeholders we work perspectives of stakeholders we work with……….with……….

Do we know anything useful?Do we know anything useful?

YOU DECIDE!!YOU DECIDE!!

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CDHC: How/Why did we get CDHC: How/Why did we get here?here?

A natural evolution… ‘Back to the future’A natural evolution… ‘Back to the future’ 1945-1970: ‘mutuality of interests’ 1945-1970: ‘mutuality of interests’

enabled scientific progressenabled scientific progress 1964: ‘Great Society’ movement adds 1964: ‘Great Society’ movement adds

more demands through Medicare and more demands through Medicare and MedicaidMedicaid

1970’s: tension develops as consumer 1970’s: tension develops as consumer appetite for ‘medical marvels’ outstrips appetite for ‘medical marvels’ outstrips capacity to cover costscapacity to cover costs

1974: HMO Act1974: HMO Act 1980s & 90’s: Employers apply business 1980s & 90’s: Employers apply business

practices to health carepractices to health care

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It’s Cultural, Stupid!It’s Cultural, Stupid!We have no vision!We have no vision! Rugged individual self-determination wins Rugged individual self-determination wins

over social responsibility and equity!over social responsibility and equity! Latest attempt to navigate the tensions Latest attempt to navigate the tensions

between limited resources and unlimited between limited resources and unlimited expectations expectations

The shifting locus of blame…., I mean, The shifting locus of blame…., I mean, control!!control!!

Rejection of “Mother may I?”……cultural Rejection of “Mother may I?”……cultural mistrust/abhorrence of “Big Brother..”mistrust/abhorrence of “Big Brother..”

Costs…..costs…costs….costs….costsCosts…..costs…costs….costs….costs

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OK, REALLY, WHY??OK, REALLY, WHY??

It’s simple!!!….we’ve tried It’s simple!!!….we’ve tried everything else….and everything else….and culturally we react culturally we react negatively to any entity negatively to any entity that tries to substitute its that tries to substitute its priorities for those of priorities for those of individuals!individuals!

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Who should make the Who should make the tough decisions??tough decisions??

The health reform debate gets down to the The health reform debate gets down to the fundamental question: who will control fundamental question: who will control health care decisions - bureaucracies or health care decisions - bureaucracies or individuals? individuals?

If we cannot finance If we cannot finance allall the services that the services that mightmight provide provide somesome benefit to benefit to somesome people, choices need to be made! people, choices need to be made!

Who better to make those choices than Who better to make those choices than those whose lives are affected??those whose lives are affected??

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And then there is And then there is pluralism…pluralism…..

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

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CDHC: CDHC: The “Whys” & “Therefores”The “Whys” & “Therefores” Consumerism is ‘timely’Consumerism is ‘timely’

For consumers…”Put me in the driver’s For consumers…”Put me in the driver’s seat!”seat!”

For providers….”I’ll ride shotgun!”For providers….”I’ll ride shotgun!” For employers…”Give me predictability!”For employers…”Give me predictability!” For financial industry….”I see a piece of a For financial industry….”I see a piece of a

big pie!”big pie!” For insurers….”OK, I’ll analyze, explain For insurers….”OK, I’ll analyze, explain

and pass costs on!”and pass costs on!”

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ConsumerismConsumerism

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

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Consumerism in other Consumerism in other industries—industries—a model??a model??

Consumerism in other industries has Consumerism in other industries has largely supported the 21largely supported the 21stst century century notion of more choice, lower cost, notion of more choice, lower cost, higher quality……….higher quality……….

(BUT…Higher quality, lower cost has (BUT…Higher quality, lower cost has yet to be proven in healthcare, much yet to be proven in healthcare, much to the chagrin of purchasers….)to the chagrin of purchasers….)

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CDHPCDHP…..…..

How does this evolution How does this evolution translate?? translate??

(more on that later……..)(more on that later……..)

Will consumerism in healthcare Will consumerism in healthcare represent a true cultural shift, or represent a true cultural shift, or just a cost-shift??just a cost-shift??

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CDHP…..CDHP….. The market is well into the first generation and The market is well into the first generation and

moving rapidly into the second generation moving rapidly into the second generation 11stst generation: savings account + hi-deductible generation: savings account + hi-deductible

insurance policy; emphasis on plan design; not insurance policy; emphasis on plan design; not attractive to a diabeticattractive to a diabetic

22ndnd generation: add disease management, incentives generation: add disease management, incentives and rewards; emphasis on behavioral changeand rewards; emphasis on behavioral change

33rdrd generation: broaden focus to integrated health generation: broaden focus to integrated health and performance managementand performance management

44thth generation: personal health care based on generation: personal health care based on genomics, predictive modeling; focus back to the genomics, predictive modeling; focus back to the individualindividual

Ron Bachman, Ron Bachman, PWCPWC

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Is this the right Is this the right direction??direction??

Don’t know……..Don’t know…….. ““Consumer cost-sharing may contribute Consumer cost-sharing may contribute

to bottom up health system reform after to bottom up health system reform after the exhaustion of governmental and the exhaustion of governmental and corporate initiatives.” corporate initiatives.” [Jamie Robinson][Jamie Robinson]

……actuarial models in health care actuarial models in health care “conflict with a sense of justice and social “conflict with a sense of justice and social responsibility.” responsibility.” [Victor Fuchs][Victor Fuchs]

The question is moot if this is the only The question is moot if this is the only culturally palatable or politically viable culturally palatable or politically viable direction…..direction…..

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

Jamie RobinsonJamie Robinson

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What are we trying to What are we trying to achieve??achieve??

A A pluralisticpluralistic system that system that empowersempowers patients and demands patients and demands accountabilityaccountability from from individuals and healthcare organizations, individuals and healthcare organizations, while while supportingsupporting the needs of the the needs of the disadvantageddisadvantaged [from WRGH ‘Communities’ initiative][from WRGH ‘Communities’ initiative]

‘‘Collaborative careCollaborative care’ with an ’ with an engagedengaged patientpatient and a and a partneringpartnering physicianphysician sharing expertise, as contrasted with sharing expertise, as contrasted with ‘traditional care’ with a passive patient and a ‘traditional care’ with a passive patient and a dominant physician seeking compliance with dominant physician seeking compliance with instructions instructions [T. Bodenheimer][T. Bodenheimer]

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The Reality….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

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Some Purported Some Purported AdvantagesAdvantages

of CDHC of CDHC Creates a true marketplace and put Creates a true marketplace and put

the consumer-patient at the center the consumer-patient at the center of healthcareof healthcare

Helps contain health care costsHelps contain health care costs Helps address the problem of the Helps address the problem of the

uninsureduninsured

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Create a true Create a true marketplacemarketplace

TheoryTheory Enigma theoryEnigma theory ‘ ‘Back to the future’ theoryBack to the future’ theory Scrutiny theoryScrutiny theory Self-empowerment theorySelf-empowerment theory Doc-Patient relationship theoryDoc-Patient relationship theoryRealityReality Awareness realityAwareness reality ‘ ‘Skin in the game’ realitySkin in the game’ reality Competency realityCompetency reality Emotional vs rational realityEmotional vs rational reality

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Cost-ContainmentCost-ContainmentTheoryTheory High-deductible/lower premiumHigh-deductible/lower premium Decr admin expenses Decr admin expenses Decr ‘discretionary’ care & incr genericsDecr ‘discretionary’ care & incr generics More efficient networksMore efficient networks ?Healthier lifestyles longer term?Healthier lifestyles longer termRealityReality High users not impactedHigh users not impacted May overcompensate the healthyMay overcompensate the healthy May impact ‘necessary’ careMay impact ‘necessary’ care Largest tax adv to higher incomeLargest tax adv to higher income ‘ ‘Slightly’ & ‘moderately’ sick pay moreSlightly’ & ‘moderately’ sick pay more

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Increase options for Increase options for uninsureduninsured

TheoryTheory More small businesses will offer helpMore small businesses will offer help More can afford high deductible policyMore can afford high deductible policy Accumulate funds for future needsAccumulate funds for future needs

RealityReality High-deductible products never popularHigh-deductible products never popular Could fragment risk poolCould fragment risk pool Tax advantage not compelling to lower Tax advantage not compelling to lower

incomeincome ?Sufficient financial subsidies for the poor?Sufficient financial subsidies for the poor

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And The Providers And The Providers Reaction…Reaction…

As As THETHE social agents for the increase in health social agents for the increase in health care expenditures…..providers historically care expenditures…..providers historically added capacity, technology and services in added capacity, technology and services in pursuit of dual objectives: pursuit of dual objectives: better better outcomes andoutcomes andhigher incomes….. higher incomes…..

(Sort of “Who wants to be a Millionaire”)(Sort of “Who wants to be a Millionaire”)

The Good, the Bad, and the (potentially) The Good, the Bad, and the (potentially) Ugly Sides of CDHCUgly Sides of CDHC

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

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THE DOCSTHE DOCS As agents of patients….“Physicians As agents of patients….“Physicians

want to advocate for more social want to advocate for more social resources to be devoted to health care, resources to be devoted to health care, not for a balancing of their individual not for a balancing of their individual patients’ needs with the other patients’ needs with the other economic priorities of the nation.” economic priorities of the nation.” [Jamie [Jamie Robinson]Robinson]

Physician groups are generally supportive of Physician groups are generally supportive of ‘accounts’ and CDHC, but how it will all play out ‘accounts’ and CDHC, but how it will all play out remains to be seenremains to be seen

So far, little evidence that experience with patients So far, little evidence that experience with patients with HDHPs is different, but penetration quite limitedwith HDHPs is different, but penetration quite limited

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Physicians see a number of Physicians see a number of ‘Pros‘Pros’’

Clinical:Clinical: May strengthen the ‘doctor-patient’ relationshipMay strengthen the ‘doctor-patient’ relationship Opportunity for longer-term relationshipOpportunity for longer-term relationship Encourage greater communicationEncourage greater communication Emphasize preventive and behavioral servicesEmphasize preventive and behavioral services

Admin:Admin: Decreases non value-added bureaucracyDecreases non value-added bureaucracy More plan competitionMore plan competition Some let physicians set feesSome let physicians set fees May address some of purchasers concerns about May address some of purchasers concerns about

costscosts

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But then there are those But then there are those ‘Cons’‘Cons’

Clinical:Clinical: Impatient patients!!Impatient patients!! Questioning patients Questioning patients [will this really be any better [will this really be any better

than questioning MCOS??]than questioning MCOS??] Overly ‘netted’ patients [docs drowning in paper] Overly ‘netted’ patients [docs drowning in paper] The true meaning of ‘informed’…….The true meaning of ‘informed’……. Will this be the end for primary care docs????Will this be the end for primary care docs????

Admin:Admin: Transaction fees = more admin costsTransaction fees = more admin costs When capitation is gone…..will the money come in?When capitation is gone…..will the money come in? Price transparency—good or bad? No bargaining Price transparency—good or bad? No bargaining

please!!please!! ?? Bad debt?? Bad debt

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And the real And the real unknowns……unknowns……

What does more decision-making between doctor What does more decision-making between doctor and patient really mean?and patient really mean?

Patients are likely to pay more attention to Patients are likely to pay more attention to quality of care and service…..that’s good, right?quality of care and service…..that’s good, right?

Docs will have more Docs will have more ‘incentive’‘incentive’ to invest in their to invest in their business…..they will have to in order to compete!business…..they will have to in order to compete!

Competition may be broadened….how many Competition may be broadened….how many patients will travel from other cities (?countries!) patients will travel from other cities (?countries!) for higher quality, lower cost procedures?for higher quality, lower cost procedures?

(sort of “Dog Eat Dog!!!”)(sort of “Dog Eat Dog!!!”)

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Hospitals & Health Hospitals & Health SystemsSystems

In general, much less sanguine than In general, much less sanguine than physicians about the potential of physicians about the potential of CDHC ….. specifically HSAs and HDHICDHC ….. specifically HSAs and HDHI

Hospitals are in the unenviable position Hospitals are in the unenviable position of having to sort out what they will be of having to sort out what they will be in the future. Few experts see them in the future. Few experts see them at the center of the universe for care at the center of the universe for care in the 21in the 21stst century………… century…………

(sort of………”Survivor”….)(sort of………”Survivor”….)

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If you are a hospital, If you are a hospital, the future has its the future has its

challenges!!challenges!! Suits about tax-Suits about tax-

exemption statusexemption status Accusations of gauging Accusations of gauging

self-pay patientsself-pay patients Patient safety Patient safety

concernsconcerns Federal scrutinyFederal scrutiny End of specialty End of specialty

moratoriummoratorium CONCON

Thin margins/future Thin margins/future capital needscapital needs

Need for top-line Need for top-line growthgrowth

Payment reductionsPayment reductions Tiered benefitsTiered benefits Competition from Competition from

off-shore facilitiesoff-shore facilities Media target…Media target…

Greg ScandlenGreg Scandlen

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The Latest Media The Latest Media Villain!!Villain!!

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

Greg ScandlenGreg Scandlen

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And on top of all this……And on top of all this……

‘‘consumerism’ ……yada, yada, yada, consumerism’ ……yada, yada, yada,

……..patients demanding price ..patients demanding price transparency, quality information, transparency, quality information, and customer convenience, too!!and customer convenience, too!!

(the nerve of them !!!!!)(the nerve of them !!!!!)

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So hospitals have some So hospitals have some concerns….concerns….

Individuals may delay seeking care Individuals may delay seeking care until it costs more to treatuntil it costs more to treat

Limited benefit plans may cap Limited benefit plans may cap payments for hospital billspayments for hospital bills

More patient responsibility in any More patient responsibility in any form may lead to rising bad debtform may lead to rising bad debt

Need to review charity care policiesNeed to review charity care policies Need to identify patients at potential Need to identify patients at potential

risk at the front endrisk at the front end

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The reality is…The reality is… Perspectives of individual hospitals Perspectives of individual hospitals

are all over the map….for many it is are all over the map….for many it is not on the radar screennot on the radar screen

The jury is still out….so far the The jury is still out….so far the impact is negligibleimpact is negligible

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

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And a few whispers of And a few whispers of optimismoptimism

There is a level playing field…most There is a level playing field…most plans build on the insurance plans build on the insurance company’s existing provider network company’s existing provider network and negotiated ratesand negotiated rates

Plans, in theory, have the potential to Plans, in theory, have the potential to make patients more attentive to make patients more attentive to details of care and costsdetails of care and costs

As employers, hospitals recognize the As employers, hospitals recognize the potential for cost savingspotential for cost savings

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And the other health-And the other health-pros?pros?

Dentists: much dental care has been paid Dentists: much dental care has been paid OOP…duh!! what’s new here??OOP…duh!! what’s new here??

Nurses: strong supporters of ‘patient-Nurses: strong supporters of ‘patient-centric’ healthcare in broad sense…no centric’ healthcare in broad sense…no position on financing issues as don’t bill position on financing issues as don’t bill directly for servicesdirectly for services

NPs: see significant opportunity….”pay NPs: see significant opportunity….”pay me less for better care than your GP!”me less for better care than your GP!”

Pharmacists: Can play valuable role in Pharmacists: Can play valuable role in supporting self-care…want to get paid for supporting self-care…want to get paid for their services!their services!