What We Learned From Saving the System $11 Million
By Mitch Rothschild
Last year, the incentive and engagement program, Vitals SmartShopper, saved more than $11 million in overspending charges for health plans and employers.
I recognize that $11 million is a drop in the bucket compared to the $105 billion wasted every year in overpriced treatments and procedures. But two developments occurred as a result of the savings that have me optimistic about cost reduction in health care.
1. People Shopped
There’s no denying we’re a nation of consumers. From our mega-malls to our cyber-Mondays, shopping is a national past time. Which is why it’s not surprising that, with the right incentives, consumers will start shopping for health care like they shop for any other major purchase.
That’s not to say people will ever window shop routine mammograms – but they will look for the satisfaction that goes along with getting a quality service at a fair price. On average, people saved $540 per medical encounter through shopping. Vitals gave back $1.3 million in cash incentives to reward those who shopped for better-priced, high-quality care.
Getting a good deal is a powerful thing. In fact, 61 percent of the people who used Vitals SmartShopper in 2013 shopped again for a medical episode through the incentive program in 2014.
Every restaurant and retail establishment knows customers won’t put up with businesses that overcharge, provide poor service or treat their customers rudely. It should be no different in health care.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
In a June report from PwC, Brian Marcotte, president of the National Business Group on Health said, “Consumers are often only presented with one treatment option, but when you can actually empower them with good information and financial incentives, the outcomes are positive.”
Backed by quality and cost information, informed shopping allows consumers to chip away at overpricing and put ineffective practitioners out of business. In the end, incentives encourage people to not only improve their bottom line, but create a better system overall.
2. Providers Dropped Their Prices
In our New Hampshire market, one hospital noticed the number of MRI appointments at its facility had dropped.
The reason? A local imaging center was priced far below what the hospital charged. Administrators from the hospital called the health plan to renegotiate their rates.
This was not an isolated event. The heath plan received multiple calls from doctors and other medical facilities offering to lower their rates in order to compete effectively in their market: A doctor who performed hip surgeries; An infusion center that administered chemotherapy drugs.
Increased transparency will create a more competitive market environment that will force providers to compete on price. An MRI shouldn’t have a price variation of $4,500 – but in many markets it does. Providers who want to keep charging those prices are going to have to explain why a patient should pay exorbitantly more for the same procedure.
While we look forward to generating even larger savings for health plans and consumers alike, the larger promise is the power of incentives to deliver better care at a lower cost. That’s hard to put a price on.
