Under the consumer-driven healthcare model, providers, employers, payers and patients all have a role to play in ensuring that patients get the care they need and providers are fairly compensated for it. However, the conversation around “cost of care” continues to be driven by concerns that current regulations are doing little to stem the tide.
According to the Physicians Practice Great American Physician Survey, over one-third of physicians believe the largest barrier to good healthcare is higher cost of care, higher deductibles and patient cost sharing. While expanding access to care with the primary initiative of the Affordable Care Act, controlling the cost of healthcare was a secondary cause. However, there has been significant increases in premiums and deductibles since the bill was passed, and the model has not been successful for long term cost control.
Healthcare Costs Outpacing Economic Growth
In the past 25 years, federal tax revenue has doubled, but healthcare expenses have more than tripled, costs growing faster than the economy. Increasing medical prices and an aging population are driving Medicaid and Medicare spending more rapidly than private insurance as the baby-boomer generation ages, and by 2022, government at all levels will account for nearly half of all healthcare spending.
The high cost of healthcare can be a barrier to access for insured patients, particularly those with high deductible health plans, and the uninsured. Costs can be particularly burdensome for patients in worse health. Even for those who may not have had difficulty affording care or paying medical bills, over 50 percent worry about being able to afford needed, unexpected healthcare services.
Costs Falling on Consumers’ Shoulders
In addition to high costs paid by government payers, out-of-pocket costs paid directly by consumers continue to increase. In a striking shift for healthcare costs, patient payments now account for 35 percent of provider revenue, the third largest source of provider income behind only Medicare and Medicaid. By comparison, in 2000, patients paid just 5 percent of healthcare provider revenue.
High-deductible policies are also more popular than ever: 29 percent of all U.S. workers are now covered under a high-deductible health plan, up from 20 percent just two years ago. In addition to the high-deductible plans commonly offered to full-time, salaried workers, industries such as hospitality, retail, light manufacturing and technology have moved toward a Gig Economy model, focusing mostly on part-time and contractor hiring, both of which usually exempt employees from benefits such as health insurance, 401k contributions and paid time off (PTO).
What Can Physicians Do?
While physicians bear the burden of demonstrating medical necessity to collect earned reimbursement for services, they have very little control over the cost of healthcare at a macro level. Due to this cost shift, providers are responsible for financing care, not just performing care. This integration of delivery and financing comes as patient populations request price transparency, technology-based, scheduled payment plans and economic relief based on their ability to pay.
To alleviate some burden, physicians can focus on establishing processes that balance patient concerns and their ability to pay. For example, focusing on price transparency and better billing procedures can clear up misunderstandings about a patient’s financial obligation. Offering flexible payment options can further help improve accessibility of care through affordability of care. No matter the strategic approach, clinicians and their patients should be able to concentrate on one thing and one thing only: maintaining and restoring health. Integrating financial systems and technology keeps patients informed and shields caregivers from financially-related distractions and conflicts.
Thriving in this new healthcare economy requires providers to understand megatrends driving patient satisfaction, provider reimbursement and delivery of care, and learn new approaches to drive innovation and success. Our healthcare industry brief, Priorities for Providers: Understanding How Healthcare Megatrends Impact Your Medical Practice, outlines four major industry shifts affecting the business and practice of medicine, including advice on where physicians and practice staff should focus their attentions in the future.