Consumers are growing louder in their demands for value, for transparency in pricing and for affordability. The 181 million Americans covered by employer-sponsored insurance continue to grapple with rising healthcare spending. In 2019, the average employer-sponsored family insurance plan hit $20,576, an increase of 5 percent over the previous year, according to the Kaiser Family Foundation. HRI is projecting a 6 percent medical cost trend for 2020, an uptick over the previous three years.
Wildly diverging provider rates make it hard for employers—and their employees—to know whether they are getting a good deal. Provider prices negotiated by commercial payers can be significantly higher than Medicare rates, according to a study of charges paid by employer-sponsored plans conducted by Rand Corp. The study examined $13 billion in inpatient and outpatient charges by 1,598 hospitals in 25 states between 2015 and 2017 and found that, on average, relative prices for hospital outpatient services were 293 percent of Medicare rates in 2017 and 204 percent of Medicare rates for hospital inpatient services. And in a survey of provider executives in 2019, HRI found that many systems are failing to use many strategies to help consumers pay for their care.
The cost pressure has been building for years, of course. But in recent months, a sense of crisis has set in. Democratic presidential candidates are talking about reshaping wide swaths of the $3.6 trillion US healthcare system. Lawmakers from both parties have introduced bold legislation tying prices paid by Medicare for some drugs to those paid by nations overseas. Outraged consumers are sending journalists medical bills, hoping to be featured in “bill of the week” stories.
The billing and payment experience can help or harm an organization’s reputation with consumers. Data, along with consumer segmentation, can help determine what sorts of financing tools patients might need, or be most likely to use, and create positive experiences long after discharge, after the explanation of benefits is mailed or after the prescription is filled at the local pharmacy. Research conducted by HRI concluded that consumer segments valued different features related to payment and billing, with, say, millennials much more likely to ask providers for discounts on the price of a visit, and more affluent patients much less interested in using retail pharmacy apps.
Healthcare organizations that carefully segment their consumer populations and learn their preferences may be able to turn a pain point—billing and payment—into a positive experience that leads to return visits and good word-of-mouth.
Having a line of product and service options at different price points for customers is a smart growth strategy in a healthcare ecosystem in which average deductibles have tripled over the past decade, making healthcare costs a difficult financial decision even for the insured. Rather than building their own value lines, traditional health companies should consider acquiring or partnering with firms that have figured out how to deliver value to the uninsured and underinsured and turn a profit.
For citations, implications and insights, please read our full report, Top health industry issues of 2020: Will digital start to show an ROI?