“Death of the car salesman.”
So proclaimed The Economist in 2015, when it argued that technology and shifting consumer buying habits may soon doom automotive retailers, the middlemen in the car business, just as they had to consumer lending and insurance brokers a few years prior.1
Well, two years on and the imminent demise of the car lot is still uncertain. One thing is for sure though: Today’s consumers buy just about everything — cars, insurance, loans, groceries, you name it — in a much different way than their parents did. And healthcare is no different.
So just like contemporary car buyers, patients want to know exactly what they have to pay when it’s due and what it costs versus the competition — all while exhibiting very little, if any, brand loyalty. But understanding these shifting buying behaviors, as well as how healthcare overall is changing, can help providers find clarity in this new consumer-based landscape.
Goodbye, fee for service
Today, the U.S. healthcare system is transitioning away from a decades-old reimbursement model based on volume to one based on outcomes. And it’s a change that’s happening very quickly: By 2018, Medicare, which accounts for 20 percent of all healthcare spending in the United States, is expecting to base half of all of its reimbursements on outcomes.
Commercial payers, too, are exploring bundled, value-based payments models, a development that’s likely to accelerate industry-wide in the next decade. For example, UnitedHealthcare recently expanded a pilot program for orthopedic procedures to include 25 markets across the United States.2 The nation’s largest insurer also expects its bundled-payment programs will total $65 billion by next year.3
Increased patient responsibility
Along with expanding coverage, a primary goal of the Affordable Care Act of 2010 was to bend the cost curve of healthcare expenditures in the United States.4 One way U.S. policymakers attempted to curb domestic healthcare costs was by shifting more out-of-pocket expenses to patients, based on the assumption that they’ll be more frugal when spending their own money.
The most prominent example of this cost-sharing strategy is how health insurance plans on the ACA federal exchanges are categorized: Platinum-level ACA plans require patients to pay, on average, 10 percent of all out-of-pocket costs (deductibles, co-pays and co-insurance), while gold-level plans require 20 percent, silver-level plans require 30 percent and bronze-level plans require 40 percent.5
This cost-shifting also has affected the employer-based health insurance market in the seven years since the ACA became law: According to a 2016 study by The Henry J. Kaiser Family Foundation, 51 percent of individuals covered by employer-based insurance in 2016 had a deductible of $1,000 or more, up from only 10 percent in 2006.6
Enter the new healthcare consumer
The changes in healthcare go far beyond just the shift to value-based care and more patient financial responsibility. Take the quickly disappearing private-practice doctor, once a mainstay of the U.S. healthcare system. A 2017 American Medical Association study found the majority of physicians in the United States now no longer own their own medical practices; rather, younger physicians were choosing hospital employment over business ownership in droves.7 Specifically, the AMA study found:
“For the first time in 2016, less than half of physicians (47.1 percent) had a full or part ownership stake in their practice. Just four years earlier, in 2012, the owner share of physicians had been about 6 percentage points higher—53.2 percent. 2016 was the first year in which the employed percentage, also 47.1 percent, was as large as the owner percentage.”
Patients, too, are making different choices today. A 2017 McKinsey & Co. study found that today’s patients are quite fickle when it comes to their healthcare providers. Consider this: While 63 percent of the survey’s participants said they had a preferred pharmacy, only 57 percent indicated having a preferred primary care provider. And less than half of those survey by McKinsey had a preferred hospital, pediatrician or specialist.8 To remain relevant with today’s consumers, McKinsey recommends that providers adopt a more consumer-friendly model that — similar to car retailers — emphasizes education and decision support:
“To effectively guide consumers, payors and providers should be prepared to heighten consumer awareness by giving them the right information at the right time at each stop along the consumer decision journey. However, guiding consumers is more than simply making high-quality information available; thus, the second step in guidance is to ensure that consumers can easily connect with the information they need.”
Interested in learning how Alveo helps its clients find clarity in a complex healthcare landscape? Let’s talk. We provide clients with tailored business solutions that simplify workflow, minimize operating costs, and maximize reimbursements. Our services include patient eligibility verification, claims processing, remittance advice, patient statements, patient payment portal, customized reporting and analytics, and a unique electronic prior authorization solution set. We process more than $1 billion claims each month with a 98 percent annual client retention rate. And through our connections with more than 4,000 payers, we possess a 96 percent clean claim rate.