The CEO of Holy Family Memorial in Manitowoc, WI says his organization's Right Care efforts have reduced utilization costs for consumers and increased clinic visits by 20%.
This is an excerpt from the April 2016 HealthLeaders magazine cover story, How Real is Healthcare Consumerism?
The trend toward consumerism has advanced far beyond where it was just a few years ago, and the healthcare industry is responding with outreach and initiatives intended to help patients in their quest for value.
Trust is the touchstone of consumerism and the way healthcare organizations respond to it, says Mark P. Herzog, FACHE, president and CEO of Holy Family Memorial in Manitowoc, WI.
With high deductibles putting more of their own money on the line, patients are looking for data and healthcare professionals they can trust to provide the most cost-effective care.
The 62-staffed-bed general medical and surgical hospital, along with its network of clinics, pharmacies, and other facilities, has more experience than most in dealing with high deductibles, Herzog says, in part because the Manitowoc community has many family-owned businesses and they have been more innovative in designing their health plans than larger employers.
"We've been in a high-deductible market since 2008, so we are much further along in learning what that means for us and for patients," he says. "Ninety percent or more of our insured population has a high-deductible plan.
The typical family deductible in our market is about $8,000, and we have more than a handful of $14,000 deductibles in our community."
Those figures prompted Holy Family Memorial to address consumerism earlier than most hospitals. One of the first signs of the high-deductible impact was suppressed utilization of healthcare—some appropriate, but much of it may be inappropriate, Herzog says.
Not only were patients avoiding high-cost care, but they were also avoiding inexpensive or fully reimbursed care because they didn't want to risk having to pay for follow-up treatment.
For instance, a false positive mammogram, which happens about 15% of the time, would necessitate an office visit that the patient would pay for, so some women elected to forgo the mammogram, he says.
High deductibles force more dialogue with patients, and cost is almost always part of dialogue. That discussion changes the course of treatment about a quarter of the time, he notes.
How Real is Healthcare Consumerism?
"Providers have had to become more aware of what the cost of services are," Herzog says.
"For the services that they commonly order, our providers are pretty aware of the costs and can discuss treatment options with the patient. Patients will ask directly about the cost and whether this test or therapy is really necessary, so our providers have to be able to discuss that instead of passing them on to someone else."
The Right Setting for a Patient's Care
Responding to that consumer move by the patient, Holy Family Memorial adopted a corporate philosophy called Right Care, striving to provide each patient the right care in the right setting, with the right outcome.
The right setting is the one that presents the patient with the lowest financial risk and the lowest physical risk, Herzog explains.
The hospital also has worked to provide more cost information directly to the consumer. For 10 years, the hospital has offered price estimates that outline the patient's out-of-pocket expense for almost all procedures.
When Herzog recently underwent knee surgery, he didn't specifically ask for the cost estimate but found one in his mailbox a week before the procedure, detailing all the costs and the out-of-pocket expense from his health plan.
"A strict focus on cutting costs and suppressing utilization purely driven by insurers can be seen as bad, mostly because of the way it is being forced on consumers and providers, but I think it can start a healthy dialogue," Herzog says.
"We've been trying to help those we serve by intentionally lowering utilization of expensive hospital services for over a decade now, and it's been not good for hospital finances. But because our mission statement is to serve communities and not our own corporation, we decided to do this because it's the right thing for the community," he says.
The efforts to lower utilization costs at Holy Family Memorial has resulted in lowering inpatient admissions by 45% in the past decade.
"We saw a 20% increase in clinic visits during the same time frame, which, when correlated with the decrease in admissions, provides some indication that our efforts to shift patients from hospital to clinic is working," Herzog says.
"There is one other competing hospital which has not embraced a community-focused value philosophy like Holy Family Memorial has. In fact, if Holy Family Memorial had been the only provider in the county, the increase in hospital bills individuals, government, businesses, and insurers received would have increased only 22%," Herzog says.
"If all hospital services in our county used our Right Care approach, it would have avoided more than $90 million in hospital charges over the past decade."
Herzog notes that the hospital's Right Care value focus directly caused group health insurance premiums in his county over the same time period to increase 38% less than neighboring Green Bay, reflecting how hospitals and doctors can improve the economic environment.
Also, Holy Family Memorial's bad debt (as a percent of gross revenue for the hospital—not consolidated), decreased from 1.47% in 2004 to 1.13% in 2014.
Herzog notes that the commitment to serving the community has forced Holy Family Memorial to transform its delivery system and cost structure considerably faster than if it had stayed in the traditional volume-driven mindset.
Herzog's hospital also formed the Consumer Transparency Theme Team in January 2015, responsible for making Holy Family Memorial as transparent as possible so that the patient knows what to expect from the entire experience.
That means providing information on not just the cost, but also issues such as how the patient can expect to feel during and after a procedure or test, and who will be calling to follow up after discharge.
The transparency team also works to provide quality information to patients in a form they can understand.
"Very few people can make use of the quality data that is out there because it is written from a provider or regulator point of view. It just doesn't resonate with the average citizen," Herzog says. "This team works to translate all the healthcare gobbledygook about healthcare costs, quality, and outcomes into the way two women at the hairdresser would talk about it, or two guys over a beer and a football game."
Holy Family Memorial also empowers the consumer by providing direct access to scheduling lab tests, therapy, and other care.
The hospital's direct-access lab testing, for instance, allows the patient to schedule a lab test online without a physician referral, with results mailed the next day. The website lists the cost of 73 available lab tests.
The hospital also is working to accommodate patients' schedules, rather than the traditional approach that puts the convenience of the hospital first.
Clinic hours were extended, e-visits were made available online, and Holy Family Memorial also implemented same-day appointments at its clinics.
The overall impact of consumerism is a positive one for the healthcare industry, Herzog says. "My greatest concern is that while the healthcare system is changing, albeit at a glacial pace, employers are struggling to make sense of this shift to consumerism," he says. "Employers rushing to high deductibles often give little or no help to the employee about how to appropriately access healthcare in this new environment."
Gregory A. Freeman is a contributing writer for HealthLeaders.