Rising healthcare costs, uninformed patients, burdensome paperwork, impersonal care, unresponsive insurance companies, slow-paying insurance companies. All medical practices deal with these issues on a daily basis. We know the system is too complicated, too paperwork-intensive, too expensive and, perhaps most conspicuously, lacking in direct consumer input. We know the system is broken, and that there has to be a better way.
HMOs attempted to change the delivery of healthcare in the US by employing three principal tactics: (1) controlling costs for 15 years, (2) removing the patient from any responsibility for the costs of his or her healthcare, and (3) taking many medical decisions out of the physicians' hands.
Because patients have been taken out of the financially responsible equation, HMOs have become overused and overhead from the nonpatient-care expenses associated with a paper-intensive product have increased. Many times, ophthalmologists and other subspecialists stop providing care to patients in their offices, even while administrative staff call and fax paper documents back and forth to insurance companies and primary care offices requesting approval to perform routine tests and procedures. This requires a full-time employee in the doctor's office, as well as countless numbers of employees at the insurance companies to handle the paperwork to secure approvals and referrals. Contrary to popular belief, almost 100% of the procedures are approved. So why have all the healthcare dollars been consumed by these types of administrative overhead expenses? It would be more efficient to leave the medical decisions directly with the doctor. Doctors are paid less and less, as more of the healthcare dollar is spent on nonpatient-care overhead. After 15 years, HMOs are now becoming the most expensive healthcare delivery system, and consequently, they will slowly fade away.
CHANGE ON THE HORIZON
New products and a new marketplace will soon evolve in the US. The new products will be known as E-Health products, Digital Healthcare, Personal Healthcare Systems, or similar variations. Whatever the resulting marketing name, the fundamental design will be built around a concept known as defined contribution. Defined contribution plans are already familiar to the marketplace in the form of 401(K) plans. Employers defer an amount to their employees' 401(K) plans; employees spend this amount, the defined contribution, on investments of their choice. Defined contribution healthcare may work in a similar fashion. In this new paradigm, the defined contribution models will evolve around the patients, doctors, and hospitals. Notice that employers and traditional insurance companies have been left out of the loop (this is by design). Presently, healthcare delivery systems often require employers to act as health-benefits administrators—a thankless and expensive job. In the future, employers will drop their health insurance benefits and give employees a set amount of money (the defined contribution) to spend on their healthcare.
A NEW MARKETPLACE FOR A NEW SYSTEM
The new healthcare system will also enjoy a new marketplace: the Internet. This is where employees will shop for their doctors and hospitals. Several different approaches will be taken in building the marketplace. One approach will be to build an entirely new network of doctors and hospitals. In this scenario, the doctors will not be on any insurance company panels because the insurance companies will not exist under this approach—only patients, doctors, and hospitals. Doctors will post per-member/per-month charges. Patients will choose their doctors and hospitals based on cost and quality. In this approach, similar to capitation, employers will be involved in a much less burdensome way than they currently are; they will simply deduct their employees' per-member/per-month charge from their employees' paychecks and send it on to the doctors and hospitals. No claims will be filed. The monthly amount received from the patients will require the doctor to deliver whatever is necessary to care for the patients. This will result in tremendous savings to the patients and doctors. Unnecessary tests, surgeries, and office visits will not be performed; the doctor will automatically control utilization. If the care is not of the highest quality, the patient will reject that doctor or hospital and choose another during the open enrollment period.
ANOTHER INNOVATIVE APPROACH
An additional approach will be to allow insurance companies to rent out their doctor panels. The advantage with this is that doctor and hospital panels are already built and credentialed by the insurance companies. This could potentially result in a higher quality of doctors and hospitals from which to choose. Humana, headquartered in Louisville, KY, and serving approximately 6.5 million members, primarily in 18 states and Puerto Rico, is already testing the market with new products revolving around this concept. For instance, Humana has a new product known as Emphesys,™ which is currently being testing in Memphis, TN. Emphesys™ is paperless from start to finish. Employees enroll, receive identification cards, find doctors, and do all their own maintenance via the Internet. Doctors check eligibility, claim status, and benefits online in real time. The administrative savings should be enormous, which means less cost to employees and a fairer reimbursement to doctors, which are factors that are currently missing, but sorely needed under the current healthcare system. Humana designed Emphesys™ with the high hopes which accompany any ambitious streamlining process—for, just as in surgery, the more efficiently a process can be made to perform, the more rewarding the outcome.
IN CONCLUSION
The time for a new healthcare delivery system is ripe. Consumers want more choices, doctors want and need higher reimbursements, employers need to be relieved of their current excessive responsibility in the healthcare benefits-administration business (healthcare costs to employers are increasing in excess of 10% annually, which is more than three times the rate of inflation). The most efficient way to control healthcare costs is to restore the financial responsibility relationship between the patient, consumer, and the doctor. Putting utilization control back into doctors' hands will go a long way in controlling healthcare costs. Allowing patients to buy their healthcare directly, through a defined contribution product, could result in patients and doctors sharing in the 25% savings that will be available from eliminating mountains of paper. Luckily, companies such as Humana are responding proactively to start the revolution to a consumer-driven healthcare system in the US.
