Employers are looking for effective solutions enabling employees to compare healthcare services on both price and quality. Unfortunately, study after study, find that do-it-yourself transparency tools, which rely on patients use of databases, provide few real benefits to employees or employers—for all the reasons outlined below.
On the other hand, sophisticated healthcare navigation services succeed. Unlike do-it-yourself transparency tools, healthcare navigation services combine advanced databases with live experts who help patients with the immensely complicated process of sorting through and evaluating their healthcare options.
A Potentially Important Healthcare Benefit
Value for Employees and Employers: As healthcare costs have risen, employers have shifted more of the costs to employees, while attempting to give them the tools to mitigate those costs. For employers, the value of effective healthcare navigation services is still evolving but appears to be high. One provider, for example, reported average 2016 savings for members at 2,000 companies of $813 per colonoscopy, $617 per MRI, and $1,910 for all surgeries. When employees reduce their healthcare spending, they lower employer healthcare costs.
High Price Variation for Medical Procedures Creates the Savings Opportunity: The marketplace for healthcare services is opaque to patients. The costs of the same procedures offered at hospitals and outpatient centers vary widely, and useful services illuminate these differences. For example, in June this year, the Chicago Tribune, citing data from UnitedHealthcare, states that within the Chicago area, between October 1, 2016, and September 30, 2017, the median cost of a knee MRI ranged from $142 to $4,736, while a tonsillectomy cost anywhere from $3,318 to $23,484.
Growing Employee Demand: Employer-sponsored high deductible plans (HDHPs) provide a strong financial incentive for employees to minimize healthcare expenses. HPHPs now cover an estimated 28% of employees and their dependents. Increased cost-sharing in employer-sponsored PPOs provides a similar motivation.
Why Healthcare Transparency Tools Fail
Most transparency tools are ineffective, with low employee participation. The New York Times, Modern Healthcare, Slate, and Reuters have all written detailed pieces discussing the failure of these services. The reasons most commonly cited include:
- The tools are not personalized, and prices are not insurer-specific. Employees want to know the costs of their own healthcare. Tools that don’t account for the prices insurers have negotiated with specific individual providers and facilities are of little value. Moreover, employees must be able to easily assess how potential costs apply to them, considering their progress toward meeting their deductible, co-insurance and any ongoing cost-sharing.
- Patients lack proper education on how and when to use these tools. If patients look for primary care physicians (PCPs), most of the available tools are of little use in assessing quality or price, as all PCPs on an insurance plan are likely charging the same prices, and there are no peer-based quality ratings of PCPs. If patients attempt to use these tools to find PCPs and they are not useful, then they are less likely to come back in instances where these tools could be useful— such as for surgery and radiological procedures.
- The tools provide incomplete information. A transparency tool may list only the hospital fee or the doctor fee. Patients, who are unfamiliar with all the elements of a specific medical procedure or service, are ill-equipped to determine what other pieces will comprise the total fee.
- Patients trust doctor recommendations. Transparency tools, which compare price or quality, may be at odds with the recommendations of a patient’s own trusted physician. While a recent survey found 79% of physicians recommend out-of-network providers to patients, these tools must, nonetheless, generate a level of confidence that overcomes the patient’s impulse to follow the advice of his or her recommending doctor.
- Patients have difficulty securing appointments with highly rate physicians.
- Quality measures are absent or hard to understand.
- The price information is just wrong.
- Information is often limited to common procedures. This constraint eliminates a tool’s usefulness for the many patients with less common needs.
- Employees are unaware of these employer-provided tools.
Why Healthcare Navigation Services Succeed
Several distinctive elements lead healthcare navigation services to succeed, while price-transparency tools fail:
First, effective healthcare navigation services provide knowledgeable guides who assist employees and inspire trust. Experts create essential ease of use by interpreting the data, explaining options, and ensuring the results are actionable. Many of the failings of transparency tools reflect their do-it-yourself model for patients.
Second, these services have developed mechanisms for gathering accurate insurer-specific prices and can account for a patient’s health spending to date. As a result, an expert who talks with the patient can assess the total costs of the procedure involved, explain the quality metrics available, and use data that’s insurer- and patient-specific to assist the patient and inspire trust.
Third, these services assist with scheduling the necessary appointments. By helping patients navigate the healthcare system in a manner that aligns with patients’ health plans, these services provide actionable value, which solidifies trust.
Finally, these services actively build awareness among employees.
As healthcare costs continue to increase, employers can reduce employee healthcare expenses and improve their bottom lines by avoiding do-it-yourself transparency tools and choosing healthcare navigation services that meet the above criteria for success.