Health insurance companies are likely to pursue more mergers and acquisitions in the near future, making it possible to provide coverage more cost effectively. That doesn't necessarily mean those savings will be passed on to their customers.
Healthcare organizations and insurance companies are both likely to see more mergers and acquisitions (M&A) in the coming year as they continue competing for purchasing power in the healthcare marketplace.
Health plan mergers should result in significant savings for the companies, but it remains to be seen if those savings will be passed on to the consumer.
Multiple mergers and merger attempts happened in 2016, most notably the Anthem and Cigna deal, and the Aetna and Humana move, both currently on hold pending the outcome of Justice Department efforts to block them on antitrust grounds.
M&As will continue to be attractive to health plans and providers no matter what happens to the Affordable Care Act under the Trump administration, says Munzoor Shaikh, a director in the Healthcare practice at business and technology consulting firm West Monroe Partners.
Market Forces Trump Political Forces
"I think we're getting caught up in the drama and nothing is going to change that much in the healthcare arena," he says.
"The market forces are so much greater than the political forces at play here. The disease level has not changed, the number of hospitals has not changed, and economic conditions are essentially the same. People are still going to the hospital[s], and the only question now is who is going to pay for that."
Consolidation through M&A allows payers to reduce expenses and increase profit margins, but consumers may see no benefit and may even be harmed, Shaikh says.
"Combining their size and assets will give the payers more purchasing power, which means they can put downward pressure on providers for costs," he explains.
"So costs will come down eventually, but quality could be compromised if providers find it challenging to meet those thresholds. When you look at cost and quality, I don't see both of them changing favorably for the patient."
Narrow networks will emerge as the gains in purchasing power give health plans the ability to pick the providers that they like working with, Shaikh says. Until health plans and providers start collaborating in a more meaningful manner, consumers may come out on the losing end as hospitals and health systems are forced to find new ways to meet the lower fee schedules of the insurers, he says.
'Buying Like There's No Tomorrow'
"This is still a bit of a dream, but a few of them are starting to do it. Some of the payers are looking more at how to perform better as a care delivery system, starting to buy providers like Kaiser in the western United States," he says.
"I think we will see more of the Kaiser-type moves toward a hospital system integrated with an insurance company. That's when a potential win-win could happen."
Healthcare organizations also are pursuing more M&A deals, with the prospect of increased purchasing power leading many providers to pursue the strategy before they are ready, Shaikh says.
"You look under the covers and they really aren't M&A-ready," he says. "They haven't done any planning for the post-M&A integration, but they're buying like there's no tomorrow. That potential for purchasing power draws them into an arms race with payers."
Revisions to the Affordable Care Act may be inevitable, but emergency medicine providers are pushing to keep protections for pre-existing conditions, lifetime limits, and coverage for young adults.
As the Affordable Care Act is begins its path toward GOP-vowed repeal, healthcare interest groups are taking stands on which components of the law they believe should be preserved. Don't throw out the good with the bad, they say.
The American College of Emergency Physicians has outlined tenets it says are indispensable to any replacement legislation if it is to maximize access to medical care while improving quality and lowering costs:
Maintain emergency services as a covered benefit for any insurance plan.
Ensure that the federal Prudent Layperson Standard extends to Medicaid fee-for-service and that compliance measures are in place for all other health plans.
Require health insurance transparency of data used to determine in- and out-of-network reimbursement rates for their patients' medical care. Ensure appropriate reimbursement rates for emergency services.
Eliminate the need for prior authorization for emergency services and guarantee parity in coverage and patient co-payments for in- and out-of-network emergency care services.
Retain protections for pre-existing conditions, no lifetime limits and allowing children to remain on their parents' insurance plan until age 26.
Enact meaningful medical liability reforms, including protections for physicians who provide federally mandated EMTALA-related services, care for patients in a federally declared disaster area and who follow clinical guidelines established by national medical specialty societies.
In addition, ACEP says Congress should ensure that any continuation or expansion of Health Savings Accounts, Health Reimbursement Accounts, Association Health Plans, and Individual Health Pools provide meaningful health insurance benefits and coverage for individuals and families, including access to emergency care services.
ACEP also calls for eliminating the Independent Payment Advisory Board (IPAB) and the excise tax on high-cost employer health benefit plans, and delaying repeal of the Center for Medicare and Medicaid Innovation (CMMI) until at least 2020 or amending it to eliminate mandatory provider participation in Medicare models.
That would allow an adequate transition period for the Transforming Clinical Practice Initiative (TCPI) grants aimed at lowering costs, improving health outcomes and delivering more effective care, ACEP says.
"Although the nation's emergency departments continue to focus on our traditional mission of providing urgent and life-saving care, our role has expanded over the last several decades to encompass safety net care for uninsured and under-insured patients, public health surveillance, disaster preparedness and filling gaps in care caused by physician shortages," said ACEP's president, Rebecca Parker, MD, FACEP.
"Reimbursement reductions from public and private payers have substantially curtailed hospital capacity, which is extremely concerning for any community which might be faced with a severe disease outbreak or mass casualty event. ACEP believes all Americans must have healthcare coverage and we urge lawmakers to consider the following principles as they develop new healthcare policies."
Insurers are lamenting the wasted investment in complying with the Affordable Care Act, but they might be pleased by where a repeal leads them. Consumers may be less pleased.
Selling healthcare insurance on the free market? What a novel idea for a product that has become so different from the way consumers buy almost everything else.
The incoming Trump administration's promise to repeal and replace the Affordable Care Act may mean the millions insurers spent on complying with Obamacare will just be money down the drain. But it may bring the industry back to operating in the free market, says Cynthia Borelli, a principal in the insurance practice group of the law firm of Bressler, Amery & Ross.
Insurers are already fretting about what will happen to their Obamacare investments if the law is significantly changed, she says. One of her clients has already spent $125 million in ACA compliance software alone.
At a recent National Association of Insurance Commissioners conference, she attended, the consensus was that repealing the law will cost the industry hundreds and hundreds of millions of dollars already spent.
"What a waste of money," she says. "I think the insurance companies are saying even if they didn't like all of it, Obamacare is the devil we know. Now we're going to abandon all that money we spent on it and we don't know what's coming next?"
Since President-elect Trump is a big believer in competition and the free market, Borelli says, he probably will get rid of most of the subsidies embodied in the ACA. "By doing that, we take the Internal Revenue Service and the Department of Labor out of having jurisdiction over parts of the ACA," she says.
Trump is also likely to support legislation which is dependent upon a private exchange or a series of private exchanges, with free competition setting the price, she says.
The president-elect will probably will get rid of the government-funded marketplace, but he has to leave in some parts of the ACA that are popular with the public: prohibitions on pre-existing conditions, portability, and perhaps employer mandates to continue to promote access to healthcare.
Insurance is a 'Strange Animal'
"He definitely will get rid of the subsidies, and that will free up a lot of money for the insurers, who are responsible for paying for many of them," she says. "The question is how Trump will find a way to get the insurance companies to funnel that money back into the healthcare system."
Borelli says she supports a free market, but that healthcare insurance is a strange animal that doesn't necessarily belong there. Healthcare is deeply intertwined with public policy and concerns, so putting it in a free market may mean that those who need healthcare benefits the most are unable to compete, she says.
"We had a free market before with healthcare and we had high costs that impeded access, so I don't know if that is the answer," she says.
"Insurance companies are wondering if it is going to be a free market to the benefit of the insurers or for the marketplace, which means the public. Or is it going to be for the medical providers? Those are opposing interests and we're waiting to see who comes out on top with what we call a free market."
The high premiums that have hindered acceptance of Obamacare plans can be reduced if certain steps are taken by insurers.
The high insurance premiums that took the shine off so many health plans from the insurance marketplaces created under the Patient Protection and Affordable Care Act could be lowered with the right policies, according to a report from the Urban Institute.
To be effective, policies must address three major reasons why premiums are higher than consumers can tolerate:
1. Adverse selection: Sicker people who are more expensive to cover may be more likely to enroll in ACA non-group insurance than their healthier and less expensive counterparts.
2. Lack of competition: Premiums tend to be higher when an insurer or provider group has a monopoly or near monopoly in its area.
3. Inadequate risk adjustment: Moving premium dollars from insurers with low-cost enrollees to insurers with high-cost enrollees.
Premiums are not high in all areas, according to the report, which received funding from the Robert Wood Johnson Foundation. And the reasons for high premiums can differ, as should the remedies.
The 2017 premium increases are largely an adjustment to compensate for prior underpricing, said Kathy Hempstead of the Robert Wood Johnson Foundation, in a media statement.
"There are important geographical differences, and not all markets are performing equally well, but there are signs that financial performance is improving for many carriers," she said.
The report recommends a series of remedies that policymakers could enact to help mitigate high premiums, applied as appropriate in different communities:
More financial assistance for consumers to purchase insurance while simultaneously increasing the penalty for not having coverage to alleviate adverse selection.
A reduction in the number of limited and short-term health plan options, which generally cost less and appeal to healthier customers, the report states.
A cap on the amount doctors and hospitals are paid for services could help rein in premiums in areas with high insurer or provider concentration.
New policies slated to kick in this year improve the ACA's risk adjustment mechanism, and other changes have been proposed for 2018. These changes could result in lower premiums, but face an uncertain future in the Trump administration, the report acknowledges.
Catholic Health Initiatives' ambitious plan to sell health insurance has faltered. Other providers are likely to learn from the CHI experience.
When one of the country's largest hospital operators can't make a go of it in the health insurance business, it pretty much confirms that running a health plan is a tough way to make a dollar.
Catholic Health Initiatives' recent announcement that it is pulling back sharply from the market is another sign that health insurance has become so complex and the risks so high that hardly anyone is willing to enter anymore, and those that have are either poised to retreat or likely considering it.
CHI entered the health insurance business three years ago with an ambitious plan for its own national insurance plan. It bought a managed care plan in Arkansas and interests in a Washington State insurer so it could market to employers and direct them to CHI physicians and hospitals.
It was an aggressive business move, but it did not seem unreasonable for a non-profit with 103 hospitals in 18 states.
But reality hit CHI hard. Its insurance arm lost $109.6 million for the fiscal year ended in June, according to the Wall Street Journal, and now Catholic Health is selling off a substantial portion of the business.
CHI's experience may make other providers think twice before jumping into the insurance market, despite the lure of millions of people (still) required to buy their product, say David Kaufman, JD, and Deborah Dorman-Rodriguez, JD, healthcare attorneys and analysts with the firm Freeborn and Peters.
Diminishing Margins, Market Unpredictability
Though CHI's trouble is particularly noteworthy because of its stature as a major hospital operator, others have had similar experiences since the Affordable Care Act was enacted the attorneys, say.
"New entrants saw that health insurance is a particularly complicated business, requiring substantial investments in personnel and the technology necessary to be successful in a business with diminishing margins and competitors seeking to maximize efficiency," Kaufman says.
"As a result, many insurers, those both established and new entrants, lost a lot of money in the new markets. The lack of success demonstrates the substantial capitalization requirements needed, complexity of the business and unpredictability in the market and the regulatory system."
One lesson from the CHI experience might be that, even though the industry is dominated by a few big players, size isn't everything. Even giants Aetna and Blue Cross have had setbacks, and a big name like CHI doesn't come with immunity.
"Contrary to what some may expect, the successful companies have not necessarily been the established large insurers. Those insurers have the resources to stay in the market regardless of profit, but other insurers have found success in the early years," Dorman-Rodriguez says.
"Insurers familiar with the Medicaid managed care market that are effective at managing population health continue to grow."
She notes that some smaller insurers have found success in the new markets and may provide a model for integrated health systems that remain.
The greatest unknown is, of course, uncertainty regarding legislative and regulatory changes expected from the incoming administration, both attorneys note. Those plans and how they are implemented may equal or even exceed the impacts experienced with implementation of the ACA, they say.
More than 6 million Americans signed up for Health Insurance Marketplace plans for 2017, despite the likelihood that it will be significantly altered or repealed by the new presidential administration.
The final days of Open Enrollment saw record numbers of people sign up for 2017 healthcare coverage under Obamacare, which the Centers for Medicare and Medicaid Services is calling proof that the law is popular despite the incoming administration's plans to change it.
More than 700,000 people signed up on December 12 and December 13, CMS reported. December 15, the original deadline for January 1, 2017 coverage, was the busiest day of any Open Enrollment to date, with 670,000 plan selections, breaking last year’s December 15 record of 600,000.
To meet high demand, CMS extended the deadline for January 1 coverage by two business days.
"Through the extended deadline for January 1, 2017 coverage, Americans are demonstrating clear demand for quality, affordable coverage," CMS stated.
As of December 19, 6.4 million Americans had signed up for Health Insurance Marketplace plans through HealthCare.gov, an increase of 400,000 plan selections compared to last year at this time, CMS stated.
By the time enrollment closed, there more than 2 million new enrollees and 4.3 million returning consumers had actively renewed their coverage or 2017. The high numbers indicate that Americans still have a "strong demand for quality, affordable coverage," CMS stated.
The number of new enrollees and returning customers—even in the face of possible major changes to the law—may bolster supporters who are mobilizing to save Obamacare from cutbacks or elimination.
Although Congress may try, "I don't think they're going to repeal the Affordable Care Act," said House Minority Leader Nancy Pelosi (D-CA), in a recent CNN report.
One challenge for the GOP is many voters like some aspects of Obamacare, and keeping some features while cutting others, which President-elect Trump has said he supports, might be very difficult politically, she added.
Regional differences can affect how much patients are moving toward consumerism, and how healthcare entities are responding.
In areas where people have not been hit as hard with high deductibles and restrictive health plans, costs probably won't be the paramount issue for most patients, says Kimberly Boynton, president and CEO of Crouse Hospital, a 400-staffed-bed general medical and surgical hospital in Syracuse, New York.
Patients are asking more questions and seeing more information online about providers and suggested treatment, but their actual decisions usually are not based on price, she says. That may be due in part to the fact that the Syracuse market is behind the curve regarding health plans and high deductibles, with many employers maintaining their traditional plans.
But even the most motivated consumer will find it difficult to obtain the information needed to truly price shop among healthcare options.
"With all that New York State regulates, I can't believe they haven't made us post our prices yet," she says. "I think the state would like to, but some hospitals are driving the conversation by saying 'No way.' It's because they are higher-priced and they know it, so they're going to oppose making it easier for patients to compare."
Crouse Hospital posts prices online, but Boynton says making costs and quality metrics transparent is more difficult than it might seem. The information that can be made available publicly is limited by the hospital's ability to calculate the many variables that go into determining a patient's actual costs, she explains.
For most procedures and treatment options, the Crouse Hospital website provides data such as the number of surgeries performed at the hospital, the typical age, approximate payer mix, the average price to the hospital, and the average amount reimbursed by the payer.
The commercial health plans have to be combined for the average price and reimbursement figures because their contracts do not allow the hospital to disclose detailed information on their agreements.
Boynton pushed for making cost information available to the public two years ago when she was chief financial officer, contending that other hospitals across the country (although none in the hospital's market) were leading the way and that posting prices just made sense. No other industry could get away with not disclosing prices, she says.
"If your car dealer calls and says the car needs more work, he tells you how much it's going to cost," Boynton says. "But you go to the doctor and they order a long list of tests and office visits, and nobody even talks about how much this is going to cost you."
The price listing received a lot of favorable attention when Crouse Hospital launched it in July of 2014, but other hospitals in the area were not quick to follow suit, she says, noting that the level of consumerism in upstate New York is not high enough to make hospitals feel obligated to make the move.
While Crouse has not seen changes directly attributable to its price transparency initiative, the feedback from patients and families who have accessed the information has been very positive, Boynton says, adding that the online page receives between 40 and 60 hits a week.
A similar situation is found in North Carolina, where the healthcare industry is seeing a "rising but moderate amount of consumerism," says Doug Luckett, president and CEO at CaroMont Health, a 435-licensed-bed nonprofit hospital in Gastonia.
Consumerism is still in the early stages, where people are learning more about their healthcare options and the related costs but not necessarily acting in a proactive manner.
It's only been in the past two or three years that CaroMont has seen a rise in consumer behavior, first noted when CaroMont's financial counselors spent more time on the phone helping patients understand their options and their out-of-pocket expenses.
CaroMont is responding by increasing the educational opportunities for patients.
"We try to set expectations so that there are no surprises in the end, and that seems to be what they want most at this point. They don't expect a firm dollar figure, but they want to understand what range they can expect," Luckett says.
Luckett says the hospital encourages patients to call a financial counselor to talk through the financial questions. With so many managed care plans and the offshoots of those plans, it can be difficult for a patient to do his or her own calculations.
Speaking to a financial counselor is still the best way to go because the counselor can ask the right questions to find out that, for instance, a patient has a certain managed health plan and not the plan's general coverage.
"This approach, combined with an increase in our commercial payer mix, which could be attributable to a number of things like ACA and an improving economy, has led to a decrease in bad debt for our system," Luckett says.
Medicare itself was not a debating point during the presidential race, but the ACA was, and now advocacy groups are on alert for changes that may negatively affect older Americans.
It's an understatement to say that the fate of the Patient Protection and Affordable Care Act is a hot topic for conversation in the nation's capital.
Advocacy groups for older Americans are among those working to ensure that Medicare benefits are not cut back in all the negotiating and deal making to come.
The ACA boosted Medicare benefits in ways that are popular with the 57 million seniors and disabled Americans who depend on the program. Increased availability of free preventive health services and phasing in of reduced Part D prescription drug prices are making a real difference in the lives of elderly Americans and should not be sacrificed as the Trump administration revamps the healthcare insurance landscape, they say.
Republicans have said they want to approve repealing the ACA early in 2017, but even if they do, dismantling the system will take a while.
A repeal, or even significant reform of the ACA threatens to leave older Americans with less healthcare and higher costs, according to the AARP, which is organizing its members to lobby for safeguarding Medicare.
Unlike some presidential elections in which Medicare cost was a focus of debate, the issue received little attention this year, says Terry Fulmer, PhD, RN, FAAN, president of The John A. Hartford Foundation, a non-profit, non-partisan organization that works to improve conditions for the care of older adults in the healthcare system.
"We noticed during the election that there was almost no discussion of the concerns of older adults," Fulmer says.
"We have 10,000 people turning 65 every day and the way we care for them will affect our economy. We have to wait and see what happens, but we have no reason to believe that there are plans to focus on improving care for the elderly, because we heard nothing from the Trump administration about that."
Concerns for Dual-eligibles
The lack of attention during the presidential campaign and since the election isn't the only concern.
"We're also worried about people who are dual-eligible, those who are elderly and poor," Fulmer says. "Anything that adjusts Medicare of Medicaid, options like block grants that go to the state, those are things that we should look at very carefully to see how it impacts older people."
Medication costs are a particular concern, after recent price increases for insulin, Epi-pens, and other commonly used drugs, Fulmer notes. Any increase in medication costs can have a significant impact on older patients who often are on fixed incomes, and the dual-eligible are affected the most, she says.
Fulmer holds out hope that the Trump administration will work to improve healthcare for the elderly, and her wish list includes things like more support for family caregivers. About 30 million in the United States care for elderly relatives and they can be overlooked when politicians start tinkering with healthcare legislation, she says.
"There's no such thing as paid family leave for caring for an elderly relative. We'd like to see some positive steps in that direction," Fulmer says.
"We'd also like to make sure there is support for older people at the end of life and no retraction of what we're doing to support palliative care and hospice care."
AHIP, the health plan lobbying group, acknowledges the Trump administration probably will eliminate the individual mandate and offers to work on a plan to avoid lapses in coverage.
It is apparent even before president elect Donald Trump takes office that the Patient Protection and Affordable Care Act will undergo significant changes and the often criticized individual mandate is likely to be one of the first targets.
AHIP, the insurance industry's lobbying organization is acknowledging that fact and urging the Trump administration to work with it on a plan that will ensure the individual market is not rattled by people suddenly dropping their coverage.
Rep. Tom Price, (R-GA), Trump's pick for health and human services secretary, has promoted a plan for years that would modify or replace the Affordable Care Act.
It includes eliminating the individual mandate. His Empowering Patients First Act would ban coverage denial and higher premiums for people with pre-existing conditions, but only if they had continuous insurance coverage during the previous 18 months.
With that individual mandate repeal looking more and more likely, America's Health Insurance Plans is suggesting Congress can avoid disruption in the individual market by financing cost-sharing reduction payments and the ACA's temporary reinsurance program through 2019, addressing special enrollment periods, adjusting the certification process time frame and reducing regulatory burdens.
"The Affordable Care Act will see significant changes," AHIP says.
"Those changes can either begin a stable transition to a better approach, or they can bring about even more uncertainty and instability. Everyone wants an individual market that works. That's why we should all work together to find solutions that deliver both short-term stability and long-term improvement."
AHIP stresses that the foundation of an effective individual insurance market is continuous coverage for everyone, both those who utilize their coverage and those who are healthy but still have insurance. Finding effective incentives for continuous coverage is essential to avoid even higher premiums and fewer choices for consumers, it says.
The group says lawmakers should follow key principles as they begin the process of improving the individual market: A strong commitment to continuous coverage; delivery of affordable coverage, including tax credits and potentially high-risk pools; protecting taxpayers by boosting consumer choice and cost controls; and providing more flexibility to states.
"Millions of Americans are selecting and purchasing individual health plans now, and will continue to do so through January 2017," AHIP says. "Millions more have enrolled in Medicaid. Making sudden, significant changes now or mid-year will jeopardize the coverage they depend on."
AHIP urges Congress to replace the individual mandate with "strong, effective incentives," such as late enrollment penalties and waiting periods, that can help expand coverage and lower costs.
To help mitigate premiums, AHIP urges Congress to make the reinsurance payments for the 2016 plan year and eliminate both the health insurance tax and the Patient-Centered Outcomes Research Institute Fee (PCORCI) fee.
The insurance industry also wants the administration to implement a pre-enrollment verification system for the special enrollment periods, and to stop people eligible for Medicare or Medicaid from being steered into commercial plans.
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.
"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."