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October 6, 2006

You say you want a revolution (part 2 of 3): you better shop around

As we look to transform our healthcare system into something that is more manageable, more affordable and more logical, we have to reacquaint ourselves with the concept of shopping for healthcare services doing cost comparisons, understanding differences in quality of service and using a personal cost-benefit equation to determine when the expense is worthwhile.

Most consumers spend more time shopping for a new television than they do for healthcare services. As health costs continue to stretch the family budget, consumers are realizing that they must understand the true cost of health care services effectively hidden behind co-pays and drug cards and take increased responsibility for healthcare purchase decisions.

The consumer-driven healthcare (CDHC) revolution is a positive force in this transition. Not only does it empower the individual to make the right choices for personal well being, but it also sets the system up to work more efficiently by encouraging that kind of decision making at every level.

Basically, it puts the incentives in the right places for individuals, providers and employers to take responsibility for the elements they can control. This new reality gives consumers a reason to keep costs down by avoiding unnecessary care, staying healthy, participating in disease management programs and shopping, not just on quality, value and service, but on price perhaps by negotiating lower fees with their physicians or by insisting on generic prescriptions.

All this shopping around encourages healthy competition at all levels of the healthcare food chain, and that kind of competition leads to the development of tools to further help the consumer.

For example, innovations such as call-in health advice (where a nurse on-call evaluates symptoms) help patients determine whether to rush to the doctor or wait a few more days, while third-party providers are now offering easy-to-navigate databases of health information designed to help patients find and compare doctors and hospitals. This type of information puts power into the hands of consumers and forces healthcare providers to compete for business.

At the employer level, many companies are beginning to offer online calculators designed to help plan and manage Health Savings Accounts.

All of these changes are beginning to create measurable changes in our consumer behavior. For example, a recent study released by McKinsey and Co. showed that CDH enrollees were 50 percent more likely to ask questions about cost, and were 33 percent more likely to identify treatment alternatives independently, even after exceeding their out-of-pocket maximums, than were people enrolled in more traditional health plans.

Among patients with a chronic illness, those enrolled in traditional health plans typically focused on convenience when selecting a provider. CDH enrollees, by contrast, tended to be more price sensitive and were three times more likely to have selected a less extensive, less expensive treatment over the twelve-month survey period.

Further research shows that consumers could save billions of dollars a year on prescription drugs simply by calling two or three stores and asking for prices before they fill prescriptions, which doesn’t begin to approach the potential savings potential from choosing generic versions, or even older brand-name drugs that are as effective and maybe significantly cheaper. The McKinsey study bears this out.

CDH enrollees were twice as likely to ask their doctor about less expensive prescription drug options than were other health plan enrollees.

“That came as a bit of a surprise to us,” says Vishal Agrawal, an engagement manager in McKinsey’s Boston office who led the team that conducted the study. “When I talked with employees, they said they now understood the cost of care and were thinking of it not as an entitlement but as something they can control even in areas where they didn’t have an increased financial incentive.”

Consumer-driven healthcare is such a powerful movement precisely because it has the power to change the face of healthcare, within your own family, while also bearing a positive force of change on the system as a whole. Competition may not be the whole answer to today’s healthcare dilemmas, but it is a move in the right direction.

This is the second of a three part series of articles on the larger impacts of the consumer-driven healthcare revolution. Reprinted with permission from www.consumerdrivenguy.com. For more information, contact Mike Turney at 614/326.4875 or mike.turney@hrh.com. HRH is the endorsed insurance agency of the Columbus Bar since 1989.