It’s no secret that healthcare in the United States has become unaffordable. In fact, a recent Gallup survey found nearly one in five U.S. adults—a whopping 46 million people—reported they would be unable to pay for high-quality healthcare if they needed it. Healthcare spending has steadily risen over the past several years, and what’s more, high healthcare costs tend to disproportionately impact individuals with the most complex care needs. For example, those living with chronic conditions spend five times more in medical costs than those who aren’t living with chronic healthcare conditions.
The challenges of healthcare affordability have created significant cyclical repercussions across the entire healthcare ecosystem, which in turn, have further strained providers who are still working to recover from pandemic-related revenue dips. These financial ramifications will ultimately drive overall healthcare costs higher over time, deepening healthcare affordability’s impact on all stakeholders.
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Straight out of patients’ pockets
Challenges surrounding healthcare affordability often lead to financial toxicity for patients, especially for those with the greatest healthcare needs (and thus, the highest medical bills). The cost of care can result in financial hardship, often creating significant medical debt. For example, approximately 41% of Americans currently face medical debt, with 12% owing $10,000 or more. Moreover, 63% of Americans with current or recent debt in the last five years said this setback has caused spending cuts on food, clothing, and other basic items and necessities. In short, healthcare affordability can pull resources away from other life necessities, further impacting patients’ quality of life and overall well-being.
High costs can also result in care nonadherence. Faced with an impossible choice between necessary living expenses and life-saving care, far too many patients skip or delay critical appointments, treatments, or medication. This can be a detrimental decision for many patients. Not seeking proper care leads to disease progression and more extensive treatment down the line. For example, patients may require more diagnostics and testing, more expensive therapies, hospitalization, or extended time-on-treatment. The inability to pay for healthcare can result in worsened patient experiences and outcomes, which have their own financial ramifications.
A provider’s bottom line
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Srulik Dvorsky Srulik Dvorsky is the Co-Founder and CEO of TailorMed, a leading healthcare technology company dedicated to removing financial barriers to care. Driven by its best-in-class platform, TailorMed offers the nation's largest network of providers, pharmacies, life science companies, and other partners focused on ensuring all patients across all medical conditions can afford treatment. After […]
While heightened healthcare costs continue to impact patients, providers are also feeling the looming financial effects. A recent survey found at least $195 billion in medical debt is owed in the U.S. Patient debt translates to uncompensated care for providers, as this is payment for services rendered that they’re not collecting. With this negative financial impact, combined with continued spikes in inflation, input pricing growth, and the pandemic’s severe impact on hospital finances, the American Hospital Association estimates billions of dollars in loss with more than 33% of hospitals forced to operate in negative margins.
Additionally, care nonadherence on the patient side can have negative consequences for health systems and providers. Worse outcomes and sicker patients cost health systems more. This situation can be especially true when treating patients with chronic healthcare conditions. For example, it’s important to slow further damage for patients living with heart disease. However, unless those patients take their medications as prescribed to monitor blood pressure, cholesterol levels, etc. or identify whether early surgical intervention is necessary, it’s not only possible, but likely that their conditions will worsen. This means they will require greater intervention down the road – reactive (read: costly) rather than proactive and preventative care.
In both cases – mounting uncompensated care and treating sicker patients due to care nonadherence – provider financial health suffers, continuing a recurrent impact that drives overall care costs up.
Pharmacies and drugmakers also feel the financial burn
Another form of care nonadherence that’s driven by financial strain is medication abandonment, negatively impacting pharmacies and life science companies. Higher out-of-pocket drug costs result in higher rates of prescription abandonment. In fact, less than 5% of prescriptions are abandoned when there are no out-of-pocket costs; however, when costs hit $125, prescription abandonment rises to 45%, and 60% when costs are greater than $500. Unsurprisingly, specialty pharmacies, who often handle and prepare more costly prescriptions for chronic care patients, experience significant revenue loss due to prescription abandonment.
Medication abandonment rates are on the rise, with an overall 9% prescription abandonment rate in 2020, and other reports finding between 20-30% of new prescriptions are never even filled by patients. Now imagine how much prescription abandonment has risen due to Covid, let alone wider economic factors over the past couple years. More broadly, the pharmaceutical industry shells out $637 billion in nonadherence costs annually, with $250 billion coming from the U.S. Not only are these stakeholders impacted financially, but we return to the cyclical impact on the entire healthcare ecosystem as well. Medication abandonment costs the healthcare system an estimated $672.7 billion each year – sicker patients, worse outcomes, greater need for preventable medical interventions. You know the drill.
So, the question remains, what can be done to combat high healthcare costs for all stakeholders involved?
Embracing innovation to break the cycle
It’s taken years to reach today’s healthcare affordability problem – and the solution certainly won’t present itself overnight. After all, affordability is a multifaceted problem; it impacts different stakeholders in various ways, making it even more challenging to solve with a single silver bullet. Looking at the financial hardship tied to chronic conditions paints a particularly grim picture of this pervasive issue.
Fortunately, financial resources are available to help patients afford the care they need. However, the process of connecting patients with these resources is often fragmented, inefficient, and reactive. By harnessing the power of technology, the healthcare industry has the opportunity to tackle affordability comprehensively, offering respite to all parties involved. For example, financial navigation technology can help healthcare organizations proactively identify patients with the highest financial risk and automate enrollment in relevant cost-saving opportunities. As a result, patients have the means to access care, which can have lifesaving implications. At the same time, providers and pharmacies see improved treatment adherence and outcomes, greater patient engagement and better patient experiences–all of which have tangible benefits for these organizations’ bottom lines.
As healthcare’s digital transformation accelerates, innovative solutions stand to unite all stakeholders and help address affordability across the continuum. I look forward to watching the industry embrace these solutions–and ultimately, break the cycle of insurmountable medical bills.
Photo: Ta Nu, Getty Images
Srulik Dvorsky is the Co-Founder and CEO of TailorMed, a leading healthcare technology company dedicated to removing financial barriers to care. Driven by its best-in-class platform, TailorMed offers the nation's largest network of providers, pharmacies, life science companies, and other partners focused on ensuring all patients across all medical conditions can afford treatment. After serving as the primary caretaker for several family members following a cancer diagnosis, Srulik started TailorMed with a personal mission to leverage technology to tackle the financial challenges of care delivery. He brings to the company more than a decade of experience in the medical device industry.
