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Patient Non-Compliance a Pricey Problem

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   September 24, 2012

Though there is a great deal of discussion about the $750 billion that the U.S. spends annually on ordering unnecessary medical procedures, the financial waste resulting from patient non-compliance gets less press.

Hospital financial leaders are all too aware of the scope of the problem, however.

It has been estimated by numerous studies that one-third to one-half of all patients are non-compliant with medical direction. So what can hospital and health systems do to drive out patient non-compliance costs? The answer lies in financial incentives and population health efforts—but don't expect too much too soon, say healthcare CFOs gathered at the recent HealthLeaders Media CFO Exchange in Kiawah Island, SC.

Patient non-compliance is perhaps most easily seen in how patients fill and use prescription medications. As many as 20% to 30% of prescriptions for medication are never filled, and up to 50% of medications for chronic disease aren't taken as prescribed, according to a recent article in the Annals of Internal Medicine. The analysis notes that the patients' failure to comply with medication prescriptions—albeit for a variety of reasons—costs the U.S. health system between $100 billion and $289 billion a year.

Yet most patients don't particularly care how their individual non-compliance affects the cost of care at their hospital or in the healthcare system overall. The resounding sentiment of most attendees at the CFO Exchange is that people just know they want to pay less for their own treatment.

"There's no easy answer. We've talked about what happens when we discharge a patient and they aren't compliant," said Elizabeth Ward, CFO at UT Southwestern University Hospitals, a two-hospital, 420-bed system based in Dallas that is one of the top academic medical centers in the country. Ward noted that her organization sees some chronically ill patients who rarely follow instructions and are consistently readmitted to the hospital.

Starting next week, healthcare organization can be penalized by the Centers for Medicare and Medicaid for these 30-day readmissions. During a group discussion at the CFO Exchange, Ward pondered whether hospitals should ever discharge a patient for non-compliance? "In the long run, [patient non-compliance] also goes against our mission to make the patient well," she noted.

With more patients moving to consumer-directed health plans, however, and the advent of greater population health management initiatives among providers, the hope is that patients will be more engaged in improving their own health.

The tide may be turning slowly in that direction, as patients are starting to ask more frequently about the cost of treatment, said James Dregney, CFO at Lakewood Health System, an independent, integrated rural healthcare system in Staples, Minn., which operates a 25-bed critical access hospital and primary care clinics across the region.

Price transparency is driving the need for healthcare finance leaders to try to arrive at a "truer cost" than in the past, but as CFO Exchange attendees noted, the costing process is still inexact.

"My board would like to know how much a pen costs, but I can't tell them that exactly. I can only give them an average [price]," said Benjamin Carter, senior vice president and CFO at Novi, Mich.–based Trinity Health, the 10th-largest health system in the nation and the fourth-largest Catholic health care system. And these "average" prices are still higher than most consumers would like to pay.

Moreover, there's still a great deal of debate in healthcare over how much influence cost really has on a patient's actions. For instance, many commercial payer health plans offer a monetary incentive for members to join a gym. However, there's no requirement on how frequently the member must exercise in order to get that incentive payment.

Jerry L. Miller, MD, a retired family practice physician and founder and past president of Holston Medical Group, a Kingsport, TN–based private practice with over 150 physicians and specialists, offered his thoughts on non-compliance during his keynote address at the CFO Exchange. He believes the phrase "patient non-compliance" should be eliminated from the healthcare vernacular.

Miller remarked that if patients aren't compliant, there's a reason, and it's a healthcare provider's obligation to find out what it is; understanding a patient's personal and social circumstances is crucial to caring for the patient and will ultimately drive down costs. The solution to this problem lies in the development of an open, co-operative doctor-patient relationship, he said.

Healthcare financial leaders at the CFO Exchange agreed with Miller that tackling patient non-compliance and saving on those costs rests with those on the frontlines and not in the financial back office.

"It's important to create a central organization, one that's high-touch and works with the patients on the frontline to bring the costs down," said Carter. "For us, that means applying for a [Medicare] ACO, and we're looking at bundled payments and risk-based contracting. We also have a number of patient-centered models we're looking at to address this problem."

While many healthcare providers are working with payers and employers to encourage better incentives for patients to participate, non-compliance is likely to remain a vexing problem. CFOs grudgingly agree that patient non-compliance, and its cost, is unlikely to decline any time soon.


Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.

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