Events have converged to force healthcare in America to a tipping point. Stressed by overwhelming financial burdens, better consumer experiences in other sectors and with the support of regulators, patients are flexing their consumer might to force change and stimulate disruption. Traditional providers are taking steps to remain relevant and protect market share.
Recently, former Apple CEO John Scully predicted that Walmart Healthcare will cause a consumer revolution. More precisely, upon comparing Walmart Health’s prices for a wide variety of primary care services, he was quoted saying “These prices and the convenience of providing healthcare at a well-known location is going to cause a consumer revolution.” He went on to say that, “Because if the Walmart tests are successful, and I suspect they will be, people will be able to go in and get these kinds of health services at a lower cost than if they had insurance.”
A portion of that last sentence bears repeating, because it represents the trigger that will actually, finally make the consumer revolution healthcare has been warned about a reality - “People will be able to go in and get these kinds of health services at a lower cost than if they had insurance.” Think about that…labs, xrays, EKG scans, even mental health counseling at costs that are lower than other providers’ even when the patient has insurance.
Coinciding with the advent of “retail healthcare”, the average American household now spends more than $20,000 per year on healthcare coverage premiums, a high-level mark according to research published late last year by the Kaiser Health Family Foundation. That’s before expenses for deductibles, copays and uncovered balances. Any way you look at it, the overbearing financial burden on patients has become unsustainable. In a trillion-dollar industry, that kind of producer-to-consumer imbalance screams for disruption, even in an industry as resistant to change as American healthcare.
In his comments, Mr. Scully went on to acknowledge other advantageously positioned companies aiming to win a portion of Americans’ healthcare business, including CVS Health (with its 1,300 easily accessible Minute Clinics), Walgreens and BestBuy. He also commented on the tremendous opportunity for disruption through technology, something that has already taken place to some degree in every sector of the economy but healthcare.
The delivery of healthcare in America has reached a tipping point. Up to now, the high personal cost for care has done relatively little to influence consumer choice, except for the most important choice of all - whether to get care at all. In recently published research, more than half of patients reported either avoiding or delaying needed care because of concerns about being able to pay for it. Still, for the most part, those who do seek care have been faithful to their familiar healthcare providers.
That’s changing, and it’s changing fast. In addition to the financial stressors described above, millennials and younger generations have lost interest in the traditional primary care delivery model for healthcare, a topic we covered in a recent article. These tech-savvy consumers have grown up in an economy driven by convenience and conditioned by consumer-friendly experiences from companies like Amazon, Apple and others. It’s no coincidence that these companies also see opportunities in healthcare, e.g. Haven Healthcare, the joint venture of Amazon, Berkshire Hathaway and JP Morgan.
Lastly, there’s regulatory and legislative pressure, as explored in another recent Loyale article. At no time in history has the call for transparency and consumer-empowerment been so urgent or insistent. This is an issue that will only become more prominent as the election year proceeds.
How Providers are Adapting to the New Healthcare Marketplace - Patient Financial Engagement
Faced with market demands, regulatory pressures and increasingly aggressive competition from new, more consumer-centered competitors, traditional healthcare providers have no choice but to get in the game. Initially, this challenge can be perceived as insurmountable, especially in an industry whose complexity and organizational interdependencies are nothing short of dizzying. But there is one relatively simple step that some innovative providers are taking to successfully enter the competitive fray - namely patient financial engagement.
You may be asking why patient financial engagement is the logical starting point. Ask most people about the last time they went to the doctor and they’ll tell you they had no idea how much their care would cost when they made their appointment and entered into treatment. For many consumers today, that is a problem. This lack of transparency is forcing them to avoid care, or it’s pushing them into the arms of eager new providers who are more than happy to tell them how much their care will cost.
Next, think about the last time you received a medical bill and the process of paying for it after the covered portion had been taken care of. Most patients are frustrated and confused about their bills and uncertain about what they owe and what has been covered. In many instances, they’re receiving bills from multiple billing parties - the hospital, physician, radiologist and others. And some appear weeks after the service was delivered. It’s no wonder why patient balances after insurance are so difficult and costly to collect.
In our view, the patient’s journey is bookended by financial events. From the moment a patient begins to consider the possibility of care, asking themselves, “Can I afford to do something?” to the day they have finally fulfilled their financial responsibility. Ask most patients how they feel about these events and the majority will tell you they are not satisfied. In many instances, they’re so unhappy that even a great clinical experience has faded. In a competitive marketplace, these financial shortcomings place traditional healthcare providers are at a huge disadvantage.
As mentioned above, patients have been conditioned by their experiences with other, more consumer-centered companies. Regardless of the fact that the delivery of medical care is much more complex than the purchase of a simple product or service, they have the same expectation when it comes to their healthcare. And now that companies like Walmart Health are promising to deliver it, consumers will soon feel entitled to it (unless, like millennials, they already do). Healthcare provides who fail to deliver will find themselves on the endangered list.
It’s important to mention here that patient financial engagement is not about commoditizing healthcare and a “drive-to-the-bottom” for healthcare prices and margins. Price transparency, improved affordability options and better billing experiences are about leveling the playing field, opening the door to better patient care and giving providers the opportunity to compete based on their most compelling competencies. Competencies which could expand to include low-cost delivery enabled by partnerships or more scalable business models. Difficult as the transition is likely to be, the end result will be good - for patients, for the industry and for medicine.
Defining Patient Financial Engagement
In our work with some of America’s largest healthcare providers, we’ve learned that all patients ask three questions when considering care. These are:
- What will my care cost?
- How will I pay for it?
- How difficult will the process be?
Patient financial engagement is the application of systems and processes to ensure that these three questions can be answered reliably, predictably and consistently across the healthcare enterprise. Just as important, the answer to every question is part of a patient-first operating model. More specifically, the systemic functionality needed includes:
- Price transparency - upfront cost estimates with automated patient preregistration to calculate a patient’s insurance eligibility and personal exposure
- Affordability options - We all purchase items that we can’t afford at the point of sale or service. Smart phones, home appliances, cars… the list goes on. When that happens, the company we’re trading with works with us to bring the product or service within reach, with options that make the purchase affordable and support a more collaborate approach to “getting to yes”.
- Personalization through automation - One of the great untapped assets for most healthcare providers is data. By collecting, analyzing and acting on data, healthcare providers can deliver highly personalized digital patient experiences that look and feel like the ones they love working with other popular companies. Best of all, this high level of personalization can be delivered with less work and at lower cost, covering everything from payment plan generation to patient communications.
Easer said than done, right? Well, yes and no. Sure, it’s not simple. But it is being done. Leading healthcare providers like HCA, a Loyale client, have made patient financial engagement and the patient experience strategic priorities. Loyale is proud to be their partner and to be a part of the consumer revolution in healthcare.