Americans purchase healthcare differently than most other major expenditures, even as estimates are as high as 66.5% of household bankruptcies in the U.S. are due to medical debt. U.S. consumers are provided very little visibility into either price or quality of the healthcare they receive. This lack of transparency, along with the concomitant plague of an aging population, lifestyle choices and the increased cost of new technologies all drive up costs. The way we buy healthcare needs to change—to benefit employers and patients and improve the healthcare ecosystem. Many of us know someone who has forgone a medical procedure or at least delayed one due to cost. This often can lead to more complications, or in some cases, a missed diagnosis or death. A 2022 survey conducted by Kaiser Family Foundation found 4 in 10 U.S. adults say they have delayed or gone without medical care in the last year due to cost. In addition, a West Health-Gallup survey found nearly 50 million adults aged 50 and older at risk for more severe illness and even death due to the cost of healthcare and skipped treatment.
Employers and their employees (a/k/a patients) have major incentives to attempt to solve this set of problems. Employee health, satisfaction and productivity directly impact an employer’s revenue and bottom line. Healthcare systems and payers do not have that same direct impact. Healthcare systems keep raising their prices to meet their revenue targets. Many are dragging their feet when it comes to complying with new regulations like the Transparency in Coverage Rule, which were created to stem the “Wild West” of healthcare pricing. Compliance by certain hospitals to disclose costs is low, around 16%.
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With additional changes on the horizon, payors will be obligated to comply with new requirements taking effect in 2023 and 2024, to provide additional access to pricing information, which will enhance customers’ ability to shop for healthcare that best meets their needs, according to Centers for Medicare & Medicaid Services.
The industry has had its fair share of disruption including consolidation that has led to competition stifling monopolies in many metropolitan and rural areas throughout the United States. In addition, the advent of telehealth, consumerization of access to care and innovations like direct-to-employer contracting, all are doing their part to create affordability in a notoriously complex system.
The pressure of the rising cost of healthcare on employers is acute. As a result, they are increasingly getting involved in not just the selection of possible health plans to offer their employees, but also in the administration of the health plan, ensuring employees derive true benefit from the plan, and, in proactively managing the cost of healthcare.
Forward-looking payers are offering tailored solutions. Those who offer self-insured plans have increased the configurability, flexibility and transparency of their solutions to ensure the satisfaction of their customers. These payers are offering custom plan design, innovative claim pricing mechanisms, flexible network design, and reference-based pricing amongst other things.
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With the confluence of the effects inflation and rising costs across the board, including healthcare, coupled with the need to retain and recruit workers, savvier employers have begun to find solutions that transcend the same-old, same-old inefficiencies and opaqueness. Looking for cost savings while not sacrificing treatment quality, major companies like Walmart have begun solving these problems through innovations such as direct contracting with healthcare providers that incentivize them to keep patients healthy, rather than paying treatment by treatment. In a similar vein, a burgeoning number of employers, including Amazon, are offering on-site primary care clinics as well as virtual care for its employees. With intense M&A activity in primary care centers, employers are actively working to rein in the rising costs of healthcare, offer easy access to care and ensure a focus on employee wellness.
In addition, networks are morphing from platforms in which broad coverage is the most important value proposition, to narrower domains to control costs. High performance and cost effectiveness are the watchwords—and more questions are asked about utilization, like whether it’s necessary to perform a procedure. This requires access to the right data, and the technological solutions to put it to use.
Many struggled with the costly and complex requirement to share standard price ranges for services in machine-readable files. A recent study found healthcare systems are publishing incomplete price lists and many hospitals are still significantly out of compliance. Access to comparative data on transparent pricing is difficult as well, as noted in a 2022 Rand study hat looked at several hospitals’ participation with the CMS rule to transparently share their standard charges.
But to access such transparent care—and encourage its spread—employers and the patients they insure will need to become more aware of their options, and more insistent about exploring the kinds of parameters and variables related to healthcare, as they do with other types of major purchases.
Today, we know the majority of medical decisions are made without knowledge of cost and consumers are frustrated when surprised by a medical bill.
One solution that is gaining ground includes value-driven health plans, which can work with or without existing networks to help members gain visibility into expected costs, and what they cover. The information is accessible and provided up front, before a procedure. Our metrics show the average employer may save between 20% and 30% overall on healthcare costs. Deciding about a medical procedure, armed with the cost, can help members from accumulating the kinds of deep medical debts that can wreck a financial future.
The economic uncertainty of the past year, coupled with rising costs across the board, and the war for talent, which is constraining healthcare delivery, will continue to plague consumers of healthcare. However, taking advantage of innovations designed to help ease the burden is a first step.
It’s not enough to be hopeful that hospitals with the right tools—and incentives will put prices out there on a menu for all to see. Luckily, for employers and employees who want to access affordable healthcare, new and emerging solutions are empowering them with information and options.
Photo: atibodyphoto, Getty Images
Ryan Day is president of HST, a MultiPlan Company, where he oversees operations and product development, bringing to HST an extensive background in finance, developing innovative technology solutions, and strategy. He started his career with a boutique Wall Street firm specializing in investments and employee benefits for nonprofits and hospital systems.
Day is recently published in pricing technology and is considered a subject matter expert regarding pricing transparency in healthcare. He holds a Master of Science in Banking and Financial Services Management from Boston University as well as a Bachelor’s in Finance from California State University, Fullerton.
