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27 Aug, 2019

U.S. Healthcare Costs Soar as Patients Seek New Kind of Provider Relationship

Editor’s Note: Useful insights for the health and wellness tourism sector.

What the conversation is missing is a focus on actually reducing the costs of serving the patient. Health spending per person in the U.S. was $10,224 in 2017, which was 28% higher than Switzerland, the next highest per-capita spender, with the United Kingdom spending $4,246 per patient – with patients living longer in the U.K. than in the U.S.

According to Kaiser Family Foundation statistics, in 1970 the U.S. spent about 6% of its GDP on health. The U.S. was relatively on pace with other countries until the 1980s when health spending began to soar against other countries. In 2017, the U.S. spent 17% of its GDP on healthcare-related consumption, whereas the next highest comparable country (Switzerland) devoted 12% of its GDP. The U.K. is even lower at 9.7%.

In 2017, health care spending in America hit $3.5 trillion. The Center for Medicare and Medicaid Services (CMS) has projected that this amount will increase to $6 trillion by 2027. Given the magnitude of the impact of these costs on our national economy, merely focusing on who will pay for them may be misdirected. If we’re serious about world-class healthcare at a reasonable cost, it’s time to reframe the conversation.

According to a United Healthcare Group study, factors contributing to this increase include avoidable emergency room visits, physician specialists’ high rates, and hospital costs for blood tests and beds, which have gone up significantly in recent years. Healthcare costs have defied the law of supply and demand. The number of people checking into hospitals decreased by 5% between 2013 and 2017, but over the same period, according to the report, prices for hospital care increased 19%. Physician prices over the same period saw a 10% rise.

The Role of Government

As observed in a recent article for Forbes focused on efforts in Congress to address the healthcare crisis in the U.S., most of the bills in Congress have little chance of passing. And the ones that may pass will not meaningfully reduce healthcare costs. Federal and state governments are all concerned with the cost of healthcare as Medicare and Medicaid costs are significant budget items. Yet with over 700 bills in Congress addressing healthcare, most do not propose bold solutions to reduce costs.

The Senate Health Committee’s recent passage of the Lower Health Care Costs Act which includes 14 separate actions designed to lower the cost of prescription drugs, protect patients from surprise medical bills, increase price transparency in health care, improve public health, and protect the private data of patients. These are all important and significant steps in administrative accounting, transparency and privacy, but except for prescription drugs, there is little effort to reduce healthcare costs.

Addressing the Issue

In order to effectively reduce the cost of serving the patient while at the same time improving the effectiveness and outcomes of services to patients, we must address four key challenges:

1. Improve price transparency and price competitiveness

Price transparency would allow a patient to effectively compare various treatments and their relative costs, compare patient service costs across different providers (hospitals, ambulatory facilities, physician’s practices and specialists) and easily shop for the “best result at the best price”.

Leveraging available technology systems, providers can support robust telehealth delivery, achieve price transparency, offer affordable payment options and engage digitally – enabling satisfying self-service wherever and whenever a patient chooses it. By doing so, providers can also reduce costs through operating efficiencies and improve staff and physician satisfaction. And because data is gathered at every patient touch-point, system analytics can be mined for business intelligence to drive continual improvement thereby honing provider competitiveness.

One such solution enabling financial comparison and transparency is Loyale’s Patient Financial Manager, the healthcare industry’s most widely deployed patient financial engagement solution. Combined with a hospital’s patient clinical portal, Loyale’s platform-enabled integrated solutions give patients and providers the tools they demand, so patients can get the care they need the way they prefer. All while helping providers achieve their goals for cost containment, growth and patient satisfaction.

2. Change the “brick and mortar” provider model

Americans use the emergency room over 100 million times each year, and over 40% of visits to the hospital each year entail a trip to the emergency room. Many of these emergency room visits could be effectively covered by low-cost, urgent care centers such as those operated by U.S. HealthWorks, a division of Dignity Health, and other low-cost care delivery providers.

Urgent care began in the early 90s because many patients were frustrated with the fact they could not receive treatment from their primary physician during the night or on weekends. Urgent care centers offer close-to-the-patient convenience, reduced wait times and lower costs. The average wait time for urgent care is between 15 and 45 minutes, while the average emergency room visit will be closer to 2 hours. Urgent care can save patients from one-sixth to one-third or more compared to emergency room visits. Frequently, the cost of urgent care treatment is provided on a fixed basis, in stark contrast to the opaque prices and confusing bills a patient expects from a hospital.

Increased expansion of urgent care centers, which are much less costly to build than hospital expansions and which can have significantly lower labor costs due to their limited scope of services has the potential to dramatically reduce provider costs of providing services to patients.

3. Reduce costs across the board from prescription drugs to hospital supplies and labor.

If hospital price increases for all inpatient services were moderated by just two percentage points per year between 2020 and 2029, hospital inpatient spending for privately insured individuals would be reduced by over $50 billion in 2020 and $250 billion over the decade. Hospital labor costs can be reduced by reducing staff requirements through improved productivity, minimizing overtime through improved scheduling, realigning administrative tasks and by reviewing the use of outsourcing services.

4. Implement Artificial Intelligence technology

Artificial Intelligence (AI) is already demonstrating clinical effectiveness. AI can be implemented in the diagnostic and treatment processes to enhance the doctor’s skill and experience with data-driven assistance to make correct diagnoses and prescribe the most appropriate course of treatment . With supplemental machine learning, providers and physicians can reduce the number of expensive exploratory tests and missed diagnoses. Now in its infancy, AI is predicted to effect healthcare in three ways:

(+) The first is Diagnosis, the determination of whether you have a health issue. AI can be very effective at helping doctors analyze a patient’s previous health records, symptoms, integration of family and ancestral issues (think commercial DNA testing like “23 and me”), locational issues, work and stress issues and diet and collectively determine the likelihood and type of a medical issue a patient may be facing.

(+) The second step is Treatment, probably the most difficult step given the myriad of treatments, their effectiveness, and the consideration of experimental drugs and treatments. Add to this an analysis of expected results, side effects and – last but not least – cost. Generally, a doctor guides treatment decisions, but doctors typically demonstrate bias based on the types of treatments they have provided in the past. Additionally, doctors may not be knowledgeable about newer treatment options given the very rapid pace of new drug and treatment development. The application of AI would enable the doctor to consider all of the information available across virtually unlimited sources of data. When combined with a patient’s Diagnosis results, AI could help determine the treatment with the highest chance of success.

(+) The third is Choice of the treatment provider. Patients want the best medical team available for their condition. Their selection is often based on word of mouth and recommendations from friends and relatives that have had treatment or have heard of others who have had treatments, which may or may not be similar to what the patient needs. AI can apply computer learning, analyzing doctor and hospital experience and outcomes to help patients choose the “right” provider and increase the probability of a successful treatment outcome.

The U.S. healthcare system needs bold and innovative solutions, which will provide patients with world-class services at reasonable costs. Our healthcare debate should focus on how we can make healthcare more affordable first which may lead to a better solution to the “who should pay” debate.

About Loyale

Based in Lafayette, California, Loyale Patient Financial Manager™ is a patient Financial engagement technology platform leveraging a suite of configurable solution components including predictive analytics, intelligent workflows, multiple patient financing vehicles, communications, payments, digital front doors and other key capabilities.