The weak association between health risks and near-term health care utilization
There is a widely-held belief that companies can reduce healthcare costs by encouraging healthy behaviors. This presumption is based on decades of research showing that:
a) Health risks (such as smoking, inactivity, and obesity) increase the chances of chronic disease over time
b) Health risks are associated with higher costs. This body of evidence fuels the multi-billion dollar wellness industry and dictates the types of programs offered to employees.
But how strong is the relationship? And can it help with short-term cost management? Continue Reading
As we have shown in earlier blogs, “the 5%” is comprised of workers who are spending the most in total integrated benefits costs and are accounting for about 50% of all costs. On average, the 5% receive more than ten medications and see ten providers annually.
Because total benefit costs for the 5% are 20 to 30 times higher than the 95%, one can expect a higher rate of utilization in every area.
Pain medications are the most frequently prescribed class of medication. Pain is not usually a unique condition, but instead a symptom of another condition or a result of a procedure.
A question from the audience last month: “We spend the most in healthcare on a small portion of really sick people. You don’t expect them to shop for care during an emergency do you?”
I was giving a presentation about the important role that cost-conscious consumers can and should play in healthcare. The person asking the question, as everyone could tell, disagreed with the idea. While I doubt anything changed her mind, her loaded question illustrates some common misconceptions in healthcare: 1) high costs are driven by catastrophic medical events; and 2) treatments for these severe conditions leave little room for discretion and often require quick medical decisions.
In this context, it’s no wonder many people jump to an extreme conclusion when they hear the term “consumerism,” because they assume it means patients need to stop and compare prices in the height of an emergency. Continue Reading
Authors: Nathan Kleinman, Justin Schaneman, and Ian Beren.
Anyone who has selected health insurance in the past decade is probably familiar with the concept of “networks.” Under the rules of an insurance policy, patients will pay a different portion of treatment costs depending on whether specific doctors and hospitals are part of the insurance plan’s approved “network.” Some policies pay none of the costs when the patients gets care out-of-network, others pay some.
While provider networks are created in part to deliver higher-quality care (1,2), the primary purposes of networks are cost management and standardization. Insurers negotiate a standardized set of lower fees from provider groups in return for directing patients to those practices.
From experience with large employers, most of us notice that networks in large health plans are rarely very restrictive because new plan members often want to maintain an existing relationship with their current doctor. Similarly, when switching carriers, employers try to avoid the complaints that result from employees suddenly finding their doctors “out-of-network”. This gives an advantage to plans with a larger, more inclusive network. Continue Reading
It’s hard to imagine something scarier than a heart attack: crushing pain, combined with the realization that the organ you rely on to beat every second of every day is in trouble. Suddenly, you are mortal.
Many patients who experience a heart attack consider it a wake-up call, and a reason to take better care of themselves: “Maybe I should walk more and lose a few pounds.” Certainly, for heart-attack victims who are prescribed a medicine to drastically reduce the chances of another heart attack, there is a strong motivation to take it.
But here’s the surprising part: often they don’t. In the year after a heart attack, only about 40% of patients take medications as prescribed (1).
Nudging people toward making good choices
While virtually every other sector of the economy stays flat, healthcare costs will climb once again in 2012. The average cost of healthcare coverage for US employees will exceed $10,000 (1). Already squeezed to balance budgets, employers are looking for any cost savings they can find. Given their track record for reducing costs, it is not surprising that over 70% of employers offering insurance will provide a consumer-directed health plan (CDHP) in 2012, and one-in-five will ONLY offer a CDHP (2). But to many employees, the change isn’t a welcome one. Typical reactions:
This new plan is disappointing and frightening. It’s not right that you are adding both more cost and more risk to what I have already. What if something serious happens to me or my children? How will I afford a bigger out-of-pocket cost? This is not what I signed up for. I’m switching to my husband’s plan.
It is clear this has nothing to do with “consumers”, and everything to do with shifting costs onto the backs of workers. Shame on you.
What they really mean: “I’m mad because you are taking something away. I want health care costs completely covered like the old days and I don’t want to be asked to take a greater role in paying or assuming risk. I’m angry because you (employer, HR) inflicted this change on me.”
Let’s say you’ve invented a new product. Before you can sell it, you need to figure out its price such that you maximize revenue without pricing it higher than your customers will pay. If it costs more than similar products, you’ll need to figure out how to convince people to pay more for your product than they might elsewhere. This is how healthy, rational consumer markets work, promoting innovation that balances cost and quality. To contrast, now imagine you’ve invented a new product in healthcare. Guess what? You get to set the price without worrying what cost consumers will tolerate because they won’t be paying for it directly, and it doesn’t need to reflect how well the product works!
Because consumers don’t realize that the price of healthcare products and services is set very differently than prices in other markets, it leads to perceptions and behaviors that can be expensive and even dangerous. Here is a personal example:
An older relative of mine, Gladys, came to visit last year. While here, she became ill and I took her to my family physician. Among other outcomes of the appointment was a prescription refill, which she took to the pharmacy. Upon returning to my house, Gladys was clearly upset: “Why did your doctor give me a cheap medicine?” “I’m sorry, Gladys, what do you mean?” “My doctor gives me the good medicine, the $60 one.” “Gladys, I think she gave you the generic; it’s the same medicine, it just costs less.” “If it was as good as my medicine it wouldn’t be so cheap,” she grumbled.
Gladys kept the medicine during her visit, but told me a few weeks later that the ‘cheap’ medicine didn’t work so she went back to her own doctor to get the “good medicine.”
Gladys is a strong believer in the axiom: ‘you get what you pay for.’ And in most other industries, Gladys would be right. Continue Reading
A question: Does uncertainty in medicine mean consumers should be more or less involved in choices?
As the country watched wild swings in the stock market these past weeks, every investor faced unfortunate hindsight: if only I had cashed out at 12,500! Combined with the pain of continued uncertainty, many investors decided to remove their (remaining) funds simply to stop the discomfort of an unknown future.
While we all dread the anguish of downward market fluctuations and wonder daily what is in store for our dwindling nest eggs, no one can change the fundamental truths of investing: risk and uncertainty. Yes, experts can advise us and help us assess varying degrees of risk among options, but no one can guarantee the success of our investment decisions, no matter how well-informed.
If the world of financial markets is this uncertain, should investors be less involved in the decisions about where they place their money and how much risk they assume? One could easily argue that the average investor is not capable of making good decisions. So, should we all find a seasoned stock broker to make decisions for us, independent of our personal circumstances and preferences? After all, they are the experts—right?
What about letting someone else make decisions about our health?
Online consumer ratings of healthcare services are a reality. On sites like Yelp!, Angie’s List, and RateMDs, a growing number of patients can (and do) rate their physicians and hospitals on a variety of factors related to service and treatment. Other patients place a very high value on individually-reported experiences, so much so that researchers found that a single, emailed anecdote from a relative held as much weight as ten quality ratings graphs from the validated quality tool, HCAHPS (1).
What influence will online ratings have on healthcare? At this early stage, there is both great enthusiasm for and great resistance to their use in decision making.
Not all providers welcome consumer ratings.
It seems a significant subset of physicians believe that patients are incapable of assessing the quality of their healthcare services. Some doctors have even tried to prevent their patients from doing so by requiring patients to sign a “no negative review” agreement – restricting online reviews (2). One company actually specializes in creating contract language allowing physicians to legally remove any patient reviews from websites, preventing a forum for what some might call honest feedback (3).
What does it mean when an industry tries to block efforts to gather consumer input about services? Would we understand if airlines claimed that travelers should not be allowed to rate their travel experience because the average consumer cannot understand the complexity of aviation? Or if cell phone providers claimed that consumers are not qualified to judge technology because telecommunications is beyond their comprehension? Doubtful.
Faced with a difficult medical situation, it is not uncommon for patients to ask doctors for advice. But asking, “Doctor, what should I do?” is a very different question than, “Doctor, can you help me understand and weigh my options?” It may sound like semantics, but your involvement and participation in making personal health decisions can make a difference in your recovery.
A recent study showed that patients who make their own choices report better recovery than those for whom choices were made by doctors (1). Regardless of WHAT choice was made, the patients who did their own choosing reported better physical and psychological outcomes; active choice-making had its own healing power. It may also protect us from unwanted consequences.