The High Cost of Healthcare: Disconnection

cost-of-healthcare

Last week we discussed how employers can work with employees to reduce healthcare costs through increased pricing transparency. Today’s focus is on the power employers have to effect change with health plan carriers, service providers and healthcare professionals. Below is a simplified overview of five complex relationships that influence the healthcare equation.

  1. Disconnection between employers and employees:Businesses absorb a greater share of increased health plan costs and are obliged to pass an increase to employees. Employees don’t see the larger financial picture and feel burdened by higher deductibles, co-pays and premiums, causing dissatisfaction with employer decisions.
  1. Disconnection between employers and health insurers: Businesses are the last to receive information about actual healthcare costs, often months after the fact and information provided is rarely in a form useable for business decisions. Companies must provide health insurance to attract and retain quality employees, and employers with more than 50 full-time equivalent employees are required to provide health insurance or pay a fine, yet they have had little control over the costs involved. Employers have no easy way of assessing whether the price they pay for health insurance is fair. 
  1. Disconnection between consumers and medical providers: Consumers have not traditionally received information about the pricing of healthcare services until after the service is performed. Medical providers would prefer to address care rather than cost with patients. Consumers feel at the mercy of medical providers and their vendors, often owing a significant sum for a condition beyond their control and, similar to employers, end up feeling they have little say over healthcare costs.
  1. Disconnection between medical providers, service vendors and insurers: Pricing has long been a carefully guarded secret between medical providers, their service vendors and insurers. Network contracting has been done on a case-by-case basis, with different reimbursement levels to different practitioners for the same service, procedure or supplies. Understandably, there has been resistance to transparency and accountability for pricing.
  1. Disconnection inside hospitals and other healthcare organizations: Hospitals and multi-hospital systems operate independently of the business world other than relationships with their vendors. Medical facilities traditionally do not share costs in advance of service. The Hippocratic Oath places focus on practicing medicine first, leaving the business aspects to a few key administrators. Historically, departments work in silos and don’t share information internally about processes or cost. Being held accountable for performance and cost creates resistance due to concerns about fairness and the repercussions of evaluation.

What can employers do?

The problem of disconnection is big, but change has to begin somewhere. Employers are in a position to positively influence transparency and establish mutually beneficial relationships with carriers and employees. Armed with a sense of fair play yet firm resolve, they can insist that health practitioners, carriers and facilities provide open communication about pricing and quality of care. Employers raising the bar will push for a high quality healthcare system that is sustainable and works in the best interests of all invested parties.

In addition, you may want to consider joining a healthcare coalition. Coalitions are forming to serve just that purpose. For example, the Midwest Business Group is comprised of 120 organizations working to simplify the system and drive transparency. The Network for Regional Healthcare Improvement is a national organization dedicated to improving healthcare collaboration.

The bottom line: Get involved and make your voice heard!

If you’re in California, let your state leaders know that you support SB 26, California Healthcare Cost and Quality Database by Senator Ed Hernandez. This bill would state the intent of the Legislature to establish a system to provide valid, timely and comprehensive healthcare performance information that is publicly available and can be used to improve the safety, appropriateness and medical effectiveness of healthcare, and to provide care that is safe, medically effective, patient-centered, timely, affordable and equitable. To find out more about this bill check out California Legislative Information at http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB26.

At Beacon Path we are dedicated to helping employers gain control of business costs, streamline benefit processes and increase quality by offering tools that enhance transparency and strengthen relationships. Contact us to learn more and subscribe to our blog in the top right corner of this screen to stay informed on the latest healthcare administration issues.

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