Imagine a healthcare system where everyone in the U.S. is a knowledgeable, savvy consumer of medical services and plays an active role in purchasing and consuming the services they receive. With the advent of healthcare consumerism – a movement to make the delivery of healthcare services more efficient and cost-effective – it may be here sooner than you think.
What is Healthcare Consumerism?
Healthcare consumerism transforms an employer’s health benefit plan, putting the economic purchasing power and decision-making in the hands of plan participants. In short, healthcare consumerism’s goal is to enable patients to become wholly involved in their healthcare decisions.
However, many plans don’t ask much of participants in terms of how they consume healthcare services. As a result, patients tend to pay little attention to cost since they only have minimal skin in the game. Furthermore, unlike buying a car or a new couch, patients generally don’t like shopping for healthcare or managing their own health information; instead, patients are “eager to be cared for by an efficient and effective healthcare system that respects their preferences.”
To develop more conscientious healthcare users, plans and healthcare professionals need to provide the information, financial incentives, and decision-making tools to consumers to allow them to make educated healthcare purchasing decisions.
According to NRC Health, from the provider’s perspective, healthcare consumerism is designed to:
- Foster closer communications and cooperation between doctors and their patients
- Increase patient buy-in and compliance with treatment recommendations
- Increase patients’ knowledge and awareness of lifestyle and wellness practices
- Focus more on preventative medicine by encouraging healthy activities and habits
Ultimately, the goal is to provide better healthcare and improve patient outcomes while reducing costs and driving efficiencies throughout the healthcare industry.
The Impact of Consumerism Healthcare
Today’s consumers want to take responsibility for managing their own health. Yet, most feel they don’t have the information and tools to do so. In other industries, customers can easily access comparisons of features, benefits, and costs to guide their purchasing decisions. In contrast, the healthcare industry presents a huge array of confusing choices, contact points, and service flows without any upfront pricing information.
Seventy-five percent of consumers consider their healthcare decisions as the most important and expensive decisions they make. Yet, the process of choosing and paying for medical services can be so daunting that patients often decline treatment simply to avoid the confusion and expense.
To make better decisions, healthcare consumers are increasingly expecting – and demanding – better information and more transparency from healthcare providers. They’re also asking for more of a partner relationship rather than a one-way dialog from medical provider to patient.
At the same time, as healthcare costs continue to rise, consumers are being required to assume responsibility for a larger share of the costs of health plan premiums, co-pays, and out-of-pocket expenses. How do consumers pay for these costs?
Consumer Directed Healthcare Accounts
There are three major components to employer-sponsored healthcare benefits that are central to healthcare consumerism: Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs). Each of these tax-advantaged accounts allows participants to use set aside funds to cover out-of-pocket healthcare expenses. While each account is different in design, including funding and account ownership, they put the spending function directly in the participants’ hands. Moreover, due to IRS guidelines on how the money can be spent, consumers must make thoughtful decisions on how to use the accounts; if not, participants risk either overspending their set aside dollars or not being able to receive reimbursement for an expense they thought might be covered.
In addition to FSAs, HRAs, and HSAs, there are other variations including small employer HRAs and limited purpose FSAs, which are also a part of the healthcare consumerism landscape.
What Lies Ahead
Healthcare consumerism will require a massive change in the way healthcare professionals market, deliver, and charge for their services. In particular, healthcare providers will need to focus on building their brands as they strive to operate more like a retail business in a highly competitive market.
For 2017 and beyond we can expect the following:
- Consumers will continue to pay more for premiums and out-of-pocket expenses
- Employers will help mitigate some of the costs through HSAs and other tax-advantaged plans
- Healthcare organizations will increase the publication of verified patient ratings and provider reviews to drive consumer purchase decisions
- The delivery of healthcare services will become more marketing-driven
As healthcare moves toward value rather than volume as a central organizing principle, patient care and service provider compensation will undergo a profound transformation. The state of healthcare is constantly being refined, but the result, with healthcare consumerism on the rise, should be a more efficient, cost-effective system for all.
DataPath Summit is a cloud-based platform for CDH account administration, including FSAs, DCAP, HRAs,and QSEHRAs, and features secure, streamlined financial processing, including debit cards and electronic payments.