How Health Consumers Think About Cost and Quality

Nick Vailas

Posted 4/24/12 on Healthcare Transparency Now

Recent focus groups conducted as part of a study funded by a federal agency reported the following:

  • People are loathe to make cost and resource use a consideration in choosing health care providers and treatments, even when they are in high deductible plans
  • People will assume higher cost = higher quality if only given cost data
  • People assume more tests and treatments are better, unless information is framed explicitly in terms of potential harms and risks
  • People are interested, for the most part, on what it costs them to get care
  • There are some measures that people think could be very useful that are“cost” measures that they can see are also “quality “ measures
  • Example: costs/level of “avoidable complications”

Much of the data currently available will not respond to what consumers care about: (1) It doesn’t address their costs, (2) It doesn’t take into considerations variations in insurance design that affect what different individuals pay and (3) It cannot be clearly linked to quality measures.

It has been my experience that lower cost providers tend to be high quality providers.  The explanation for this is that providers that end to do high volume services of a particular kind tend to have greater efficiencies.

The price variability among healthcare providers is extreme and what patients are paying for their services in many cases is not a reflection of what it costs to deliver the services.  Thus pricing is all over the place.  Often time’s people will go and seek services based on a doctor’s recommendation and patients are given the information and share it with their doctor.  This will often influence the doctor as to where patients should receive their services.

There is no doubt that price transparency in services will change purchasing behavior of physicians and patients in seeking alternatives.

Source:  Engaging consumers with a high value healthcare system, by Shoshana Sofaer (2011)

Cost-Consciousness: An Essential Physician Competency

Nick Vailas

Posted 3/05/12 on Healthcare Transparency Now

Only very recently has the medical profession begun to change a professional culture that perpetuates an “evasion of cost consciousness.”

As a Harvard Medical School student recently remarked on a blog, doctors are clueless about the cost of the care.  Physicians must start educating themselves about the economics of their patient care methods. This will require a culture shift.

Continue reading “Cost-Consciousness: An Essential Physician Competency”

Employer Incentives for Healthy Behaviors on the Rise

Nick Vailas

Posted 2/28/12 on Healthcare Transparency Now

Mercer in late 2011 reported that employer incentives for healthy behavior of employees have grown.

Tougher wellness program design, coupled with price transparency of care, lead the American household to greater accountability for their health.

It is obvious when issues of the heart effect people’s pocketbook, you get greater participation.  It’s called “skin in the game”.  By giving people firm incentives to take care of their health is an essential component in solving our healthcare cost problem.

Any solution to the healthcare cost problem devoid of personal responsibility or “skin in the game”, price transparency will fail.

It is essential that to get desired behavior, people need to have “skin in the game” or a firm incentive as well as the tools to be able to take responsibility.

Continue reading “Employer Incentives for Healthy Behaviors on the Rise”

CalPERS Innovative Program for Hip and Knee Surgeries

Nick Vailas

Posted 1/24/12 on Healthcare Transparency Now

CalPERS – the California Public Employees’ Retirement System – covers 1.3 million retirees, managing both their retirement and health benefits.  It recently introduced a program for knee and hip surgeries that effectively tells beneficiaries that it will pay up to a specified amount for hospital reimbursement. If the beneficiary elects a hospital for which its reimbursement is higher, the beneficiary is 100% liable for additional charges.

CalPERS has brought two essential ingredients into play – both transparency in price and “skin in the game.”

Continue reading “CalPERS Innovative Program for Hip and Knee Surgeries”