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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?

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consumerism in healthcare the next best thing

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
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
  • OR…The “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
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
  • 1970’s: tension develops as consumer appetite for ‘medical marvels’ outstrips capacity to cover costs
  • 1974: HMO Act
  • 1980s & 90’s: Employers apply business practices to health care
it s cultural stupid
It’s 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, control!!
  • Rejection of “Mother may I?”……cultural mistrust/abhorrence of “Big Brother..”
  • Costs…..costs…costs….costs….costs
ok really why

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

who should make the tough decisions
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
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
CDHC: The “Whys” & “Therefores”
  • Consumerism is ‘timely’
    • For consumers…”Put me in the driver’s seat!”
    • For providers….”I’ll ride shotgun!”
    • For employers…”Give me predictability!”
    • For financial industry….”I see a piece of a big pie!”
    • For insurers….”OK, I’ll 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 industries a model
Consumerism in other industries—a model??
  • Consumerism in other industries has largely supported the 21st century notion of more choice, lower cost, higher quality……….
  • (BUT…Higher quality, lower cost has yet to be proven in healthcare, much to the chagrin of purchasers….)
  • 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 change
  • 3rd generation: broaden focus to integrated health and performance management
  • 4th generation: personal health care based on genomics, predictive modeling; focus back to the individual

Ron Bachman, PWC

is this the right direction
Is this the right direction??
  • Don’t know……..
  • “Consumer cost-sharing may contribute to bottom up health system reform after the exhaustion of governmental and corporate initiatives.” [Jamie Robinson]
  • …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 direction…..
“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
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 engagedpatient and a partneringphysician sharing expertise, as contrasted with ‘traditional care’ with a passive patient and a dominant physician seeking compliance with instructions [T. Bodenheimer]
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

some purported advantages of cdhc
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
Create a true marketplace


  • Enigma theory
  • ‘Back to the future’ theory
  • Scrutiny theory
  • Self-empowerment theory
  • Doc-Patient relationship theory


  • Awareness reality
  • ‘Skin in the game’ reality
  • Competency reality
  • Emotional vs rational reality
cost containment


  • High-deductible/lower premium
  • Decr admin expenses
  • Decr ‘discretionary’ care & incr generics
  • More efficient networks
  • ?Healthier lifestyles longer term


  • 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
Increase options for uninsured


  • More small businesses will offer help
  • More can afford high deductible policy
  • Accumulate funds for future needs


  • 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
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.
the docs
  • 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 Robinson]
  • 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
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 costs
but then there are those cons
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 transparency—good or bad? No bargaining please!!
    • ?? Bad debt
and the real unknowns
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…..that’s good, right?
  • Docs will have more ‘incentive’ to invest in their business…..they will have to in order to compete!
  • Competition may be broadened….how many patients will travel from other cities (?countries!) for higher quality, lower cost procedures?

(sort of “Dog Eat Dog!!!”)

hospitals health systems
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 of………”Survivor”….)

if you are a hospital the future has its challenges
Suits about tax-exemption status

Accusations of gauging self-pay patients

Patient safety concerns

Federal scrutiny

End of specialty moratorium


Thin margins/future capital needs

Need for top-line growth

Payment reductions

Tiered benefits

Competition from off-shore facilities

Media target…

Greg Scandlen

If you are a hospital, the future has its challenges!!
the latest media villain
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
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
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
the reality is
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 out….so far the impact is negligible
  • 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
And a few whispers of optimism
  • There is a level playing field…most plans build on the insurance company’s existing provider network and negotiated rates
  • Plans, in theory, have the potential to make patients more attentive to details of care and costs
  • As employers, hospitals recognize the potential for cost savings
and the other health pros
And the other health-pros?
  • Dentists: much dental care has been paid OOP…duh!! what’s new here??
  • Nurses: strong supporters of ‘patient-centric’ healthcare in broad sense…no position on financing issues as don’t bill directly for services
  • NPs: see significant opportunity….”pay me less for better care than your GP!”
  • Pharmacists: Can play valuable role in supporting self-care…want to get paid for their services!