There is a growing trend in Wisconsin where an increasing number of healthcare providers are offering value-driven pricing, but is it going to last? Employers are the key to success for maintaining this trend.
Throughout Wisconsin, there are physician groups, surgery centers, and independent clinics that are moving toward lower costs, high quality, and better value. It’s a trend that employers and health plans have been demanding for the last several decades. But are employers, in particular those that self-fund for health benefits, really supporting this movement?
According to most providers in this space, the answer is: “Not as much as you might expect.”
Many employers continue to offer health plans from large insurance companies and count on transparency and high deductibles to activate consumerism, which they believe will reduce spending. The sad fact, however, is that very few patients use transparency tools, and employees whose spending could be most impacted by cost-controlled provider services are the least likely to shop for healthcare because their extensive treatment satisfies their deductibles early in the plan year.
The reasons that most patients do not use transparency tools are many, but most commonly reported are difficulty to use, inaccuracies in reported prices vs actual charges, the need to go to yet another website, and the idea that once they have met their deductibles the costs do not affect them.
High deductible insurance programs had the short-term effect of lowering rates and passing a greater percentage of costs on to patients. The unintended consequence in many cases is an insurance plan that employees find difficult to afford when they actually need care. The combination of monthly premiums and a fulfilled deductible means total healthcare spend of well over $10,000 for most employees. Having spent that much, a large percentage of employees feel that they are now deserving of “all the care they can get” regardless of the cost to the plan/employer.
Achieving savings requires the efforts of 3 parties: a value-oriented provider, an activated patient, and an employer that supports value-driven decisions through plan incentives, network restrictions, or an enhanced shopping experience that is more than an app or website. Increasing the number of activated patients falls on the employer/plan as the fiduciary of the plan’s financial resources.
Value-driven providers have a tremendous stake in communication and access. Providers need to contract appropriately with Insurance Networks and PPOs, have a strong web presence that clearly identifies them as a value provider, advertise directly to consumers, and offer an exceptional patient experience. Numerous orthopedic groups, surgery centers, imaging centers, and primary care groups have clear value propositions, excellent representation online, and highly visible marketing to the public.
Large Hospital Provider Systems market themselves as the highest quality, having tremendous compassion and “services you can’t get anywhere else”. In the case of rare services such as kidney transplants that may be true, but for the type of non-emergency care that drives nearly 80% of all costs for employers, there are outpatient solutions that are equal to or even better than hospital-based care and at much lower prices. Hospital systems employ nearly all of their physicians, encourage them to keep all care within their system (employer), and have remarkable power to influence. Most patients (plan members) have a level of resistance to questioning the advice of their doctors, especially if there is little to no reason to do so.
Well-informed employees of self-funded companies will make smarter economic choices when they have health plans that reward making better financial decisions. When employees make the decision to choose value over “sticking with the system”, the savings for the health plan can be tremendous. Whether it’s making the best choice for orthopedic surgery or for where to have an MRI, savings of 50% are available without sacrificing quality or accessibility. In many cases, value-based providers offer better outcomes and far better service that will delight employees and the health plan’s bottom line, but only if patients make those choices.
Providers are stepping up across the state and a growing number of specialists and others are watching to see how well they do. If employers assist providers in changing where and how patients get care, Wisconsin can become a much better place to run a company with great health benefits, but it’s going to take a partnership between value-driven independent providers and employers that both satisfies and rewards employees. Getting a slightly better discount from health systems that charge some of the highest prices in the nation might be a start but saving 30-80% by using high-quality independents is a more powerful solution and something that is increasingly available. The biggest threat to the progress being made is that employers, especially the largest ones, will continue to support the very providers they blame for prices being too high by making them the centerpiece of their health plans, assuring that most of their employees will continue to consume healthcare in the same way they always have.