Medical Device Daily
ATLANTA – Dramatic and continuing increases in healthcare costs to employers are causing them to tweak benefits by offering less care at higher costs to employees, such that the situation is not sustainable.
The driver toward consumer healthcare plans is a result of hospitals increasing and adding deductibles, increasing co-pays for both doctor visits and prescriptions and in many cases moving away from co-pays altogether.
So, what to do? Speaking at the VHA Leadership Conference here Tuesday, attended by about 2,400 executive representatives of hospitals and 400 suppliers, the answer from Michael Parkinson, MD, executive vice president and chief health and medical officer at Lumenos (Alexandria, Virginia), a provider of consumer-driven healthcare plans, is the need to move toward CDHPs.
In CDHPs, consumers – through such vehicles as health reimbursement and health savings accounts – create savings through a greater reliance on patients’ own money set aside to pay for healthcare costs. That approach is expected to refocus the healthcare system on quality care provided by physicians practicing evidence-based medicine, or a sort of medical best practices supported by scientific literature and reducing utilization by individuals’ better managing their own health.
“I see this as pivotal times in the healthcare industry in the U.S.,” Parkinson told attendees in one session. He added, “Providers have got to take back healthcare, and by providers I mean physicians . . . our allies in this war, or this campaign, are our patients.”
Parkinson was previously in the U.S. Air Force, where he was associate director of programs and resources for the medical service, with more than 2 million beneficiaries and a $4 billion budget. On May 4, WellPoint (Indianapolis) reported that it would acquire Lumenos, which has about 214,000 members and is expected to have about $45 million in revenue in 2005. The stockholders of Lumenos will receive about $185 million in cash in the deal.
With health savings accounts that they contributed to, employees are able to take that money with them from one employer to another, because it is essentially their money.
“Many small employers are adding HSAs to get back into insurance provision,” Parkinson said, noting that many small companies have been priced out of being able to offer health insurance.
As an example, healthcare premiums have increased about 15% since 1996, compared to workers’ earnings, which have remained fairly stable since at least 1988, and compared to inflation, which actually decreased in 2003-2004 compared to the early part of the decade. However, he said that 35% of all healthcare costs are wasteful or inefficient.
“HR [human resources] managers are getting it quite clearly from CEOs” that they are going to have to become more involved in controlling healthcare costs in creative ways, Parkinson said. And the reason consumers will support the move, he said, is because the cost of such things as drugs or MRIs varies from one healthcare plan to the next or one provider to the next. “Consumers don’t like that,” he said, and instead want cost “transparency.”
Quoting Cigna’s (Philadelphia) CEO from a news release issued in December, Parkinson said that about 5 million people in the U.S. are now enrolled in consumer-driven programs, a number that is estimated to be 90 million by 2007. The CDHP premium growth is expected to increase from about $7 billion today to $192 billion in 2008.
A 2004 national employer survey by Mercer (New York) showed that 30% of all employers have consumerism as part of their strategy. That includes 49% of companies with 500 or more employees or 67% of jumbo employers, or those with more than 20,000 employees. In addition, 32% had a web site on the cost and quality of healthcare and 19% had high performance networks, or those who provide high-quality care.
Of the large employers, 80% relied on the health reimbursement account if CDHP was offered, but also of that group, 35% said they were planning to convert to or add health savings accounts in 2005.
Such a new kind of healthcare system, which is shifted away from payers, will then be focused on “incentivized and integrated health management,” Parkinson said. That will involve putting more technology in the hands of consumers to enable them to play a greater role in their own healthcare and provider and procedure choices. It will require quality measurement based on standards and provider performance that is publicly reported, allowing consumers to make their own decisions.
He suggested that the traditional CPT method of coding may no longer be necessary, with the possibility of a simplified fee schedule and coding. He also suggested such measures as discounts for patients who pay the provider in cash, which would be possible due to lower administrative costs, as well as something called “all-inclusive fee” pricing each year. For example, a patient with asthma might be charged a specific sum for the physician’s help in managing his or her asthma, with a lower fee charged because the administrative costs of what may have been typically several visits are lowered with better healthcare management.
Parkinson also suggested the option of web-based consultations with physicians, rather than patients having to take time off from work or school for several hours to sit in a doctor’s office to wait for a 10- to 15-minute visit with the doctor. Another suggestion was personal health coaches who are allocated to a patient for about four to five months to help with behavior change. Parkinson said that between 50% and 70% of all healthcare costs and premature death, illness and disability are related to negative lifestyle choices, such as lack of exercise, proper diet or by habits such as smoking.
By increasing quality, the price of healthcare should decrease overall. And when patients/employees are required to pay more of the true cost of healthcare, they are likely to utilize it less or choose procedures and drugs that have quality but not necessarily the highest cost.
Currently, what Parkinson termed the “medical-industrial complex” is driving healthcare and patients toward drugs and procedures that have not been scientifically proven to improve a patient’s health, he said, which includes not only drug companies but medical device companies.
“We are the most overmedicated country in the world,” he said.
Overall, Parkinson said, the modes of healthcare in the country have very little to do with healthcare, and that alone should push us toward consumer-driven healthcare – a move that should be welcomed by providers.
“Healthcare should lead this movement – we shouldn’t be dragged into it,” he said.