Only a short time ago, consumerism in healthcare was not existent, like replay review in sports or Uber in the transportation industry.
The reason for the lack of consumerism is that in the past, employer health plans boasted no member cost sharing. Members paid relatively low paycheck deductions, had scant cost sharing, and didn’t think anything of the cost. Rich, high coverage HMOs were nice to have, but they shielded us from the cost of receiving healthcare. There was no need to be a healthcare consumer—out of sight, out of mind. Since there was no need, no tools or information about being a healthcare consumer existed.
Then during the 1990s, healthcare costs rose greater than inflation. In the late 1990s employers started to pass additional costs on to employees. This shift in cost sharing, plus the gradual realization of the sheer costs of medical and pharmaceutical services and goods, borne the need for transparency in the healthcare industry.
Transparency Tools Emerge
The need triggered the building of healthcare consumer cost and quality tools. But they were limited:
- Access to the data wasn’t readily available
- The tools were not promoted well
So, this whole process to achieve transparency was very slow. And quite frankly, it is still in process.
Old habits are hard to break. If a physician recommends an MRI or other service, the old habit is for the patient to go down the hall from the professional building to the hospital and have the MRI done. But new tools exist to identify less expensive options without sacrificing quality of care.
Independent healthcare consumer transparency tools like Healthcare Bluebook exist. Most healthcare carriers offer similar tools.
Employer Can Use Their Own Member Data to Control Costs
Also, as an employer, you can analyze your member data to see where you can improve health and reduce costs. I will show you how using an example of what we call site of care analysis. You have access to summarized, non-PHI data to perform a site of care analysis. In this analysis, an employer can see how many services are being performed at high cost facilities versus less expensive venues. Not all services can migrate to lower cost venues, but many can, like:
- High-end imaging
- Injectable drugs
Using employer data, the cost differential between services provided in on-campus outpatient hospitals versus independent sites can be calculated to identify savings opportunities of shifting members to more affordable sites of care. Below is an illustration depicting the cost differential of an MRI of the lower extremity by site of care.
Reducing Costs by Directing Members to Less Costly Care Providers
You can then project the cost savings you would realize if a certain percentage of members received care in less costly settings. I have calculated two scenarios showing yearly cost reduction opportunities:
- 10% of the members migrating to an independent site would save you $5,320
- 30% of the members migrating to an independent site would save you $15,960
You can achieve these savings without having to burden employees with more cost sharing. You would also probably save them out-of-pocket costs by redirecting them to less costly facilities. You own your employee healthcare and pharmacy data, so the ability to perform this analysis is at your fingertips.