Is old time transparency kaput?

In this article by Tom Emerick and David Toomey, founders of Thera Advisors, we describe the challenges in “transparency”.

 

During the ‘90s, a new medical plan, called Consumer Directed Healthcare, was introduced to the market. These new plans were based on the premise that through a high deductible coupled with a funded account, employees would be incented to become better consumers of healthcare. To maximize the account dollars, employees have access to a transparency portal either through their carrier or a private vendor, and the tools would help individuals make a more informed healthcare decision. The belief – physicians and hospitals would be motivated to win patient volume by competing on price and quality, and healthcare costs would finally be reduced with the consumerism movement.

A recent article from Health Care Cost Institute (HCCI) reported that only 43% of healthcare expenses are for services that may have been shopped by a motivated employee.

For the 8% of the population consuming 80% of plan dollars, how motivated are they to shop for healthcare services if they are receiving 100% coverage once their deductible is satisfied?

For the remaining 92% of the population accounting for 20% of the spend, how much savings can be attained for the 43% of their “shoppable” healthcare services? Let’s see…43% of 20% is 8.6% shoppable services. That’s not much and many shoppable healthcare services don’t cost much anyway.

If the majority of a covered population accesses healthcare on an occasional basis, do we really expect them to remember the various portals and 800#s available to them, so they pause and think about the cost and quality of the recommended provider for the prescribed service? How does infrequent healthcare use correlate to the effectiveness of the transparency portals?

One of the private transparency portals recently released their 4th 2015 quarter results, and for the quarter, they experienced a net decrease in user count (number of clients).

So how do we solve the healthcare challenge since most individuals are not regular healthcare users? And how do we address the 80% of the spend? What role can a primary care physician play to educate the patient on the cost and quality of providers and to impact the “8%-ers”? Similar to most other industries, the purchaser (the employer) has the opportunity to work more closely with the supplier (the providers) to drive the removal of the non-value added waste and of the cost inefficiencies. The silver bullet to solving the healthcare challenges – the employers! There are employers taking this logical next step to address their challenges. Are you ready for meaningful solutions?

 

Tom Emerick and David Toomey are founders of Thera Advisors. Their focus is to help employers maximize their role as the purchaser of healthcare services in working with suppliers to impact their population’s health and to lower costs.

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