Over the past decade, higher deductibles have become standard for the majority of health care plans in the United States. That standard could change, however, as consumers gain a louder voice in the health care value equation.
Nearly half of individuals covered by employer-sponsored health plans have a high deductible plan, or HDP. Of those individuals, many would have a very hard time coming up with the funds needed to pay their annual deductibles, which typically average $1,491 for individuals and $2,788 for families, according to the International Foundation of Employee Benefit Plans.
Consumers are gaining more leverage in the health care ecosystem; unemployment at or below 4 percent for over a year means that would-be hires can be selective about choosing jobs with more desirable health care benefits
Consumers are gaining more leverage in the health care ecosystem; unemployment at or below 4 percent for over a year means that would-be hires can be selective about choosing jobs with more desirable health care benefits. Additionally, employers are being pressured by existing employees to lower costs; those companies that don’t comply risk losing valuable staff to rival companies offering more competitive benefits.
Perspective from a Medical Alley Association event
Earlier this month, the Medical Alley Association, an industry group advancing issues related to technology in health care, held an event that focused on the perspectives of value-based care from providers, health plans, and medical device manufactures. The sessions addressed three critical themes:
- Definition of value
Interestingly enough, the association held this event in Minnesota; according to Definitive Healthcare, a provider of analytics, Minnesota had the highest amount total quality adjustments of any state, based on information about value-based programs aggregated from the Centers for Medicare and Medicaid Services.
Data has become most valuable asset for many organizations, including health care. However, the health care industry’s ability to harness and monetize data is limited by many factors, the foremost being the complicated regulatory framework that dictates the collection and oversight of personal health information.
To define value, you need first to define whose perspective you are measuring. Generally speaking, the consensus determined that value should be measured from the patient’s perspective. This would be the common approach in consumer products and many other industries, but it’s a shift for health care, because for so long the payor was not the patient; now, with the rise of HDPs, the payor is increasingly (at least in part) the patient.
Leadership needs to take a long-term, holistic view of value-based care. Consider the move to value-based care as an important innovation—it is highly innovative to pivot from a fee-for-service to a fee-for-value approach. With innovation, you need to reconsider your view of measuring the return on investment and your willingness to accept risk. One panelist described viewing this innovation the way a private equity fund views its investment portfolio; the fund may hold positions in 100 companies, with the expectation that only ten of them will provide long-term value.
The key takeaways for health-system and health-plan executives are:
- Define your data strategy and start exploring with your legal team your ability to monetize your data. It is also important to determine how you accumulate your company’s proprietary data, as well as the data you obtain from others. The term “data lake” is being used quite often, referring to the location where your firm accumulates data. However, just like a real lake, a data lakes is at risk of invasive species, so be careful not to create a data swamp.
- As consumerism rises within health care, the health care ecosystem needs to put the focus on patients—not just clinically, as it has historically, but also financially. Consumers expect a more consumer-centric business model, and not delivering on this expectation puts you at risk. Consider the fate of Blockbuster, which charged late fees and demanded higher prices for releases of newer movies, or taxi cabs that refused to take credit cards. When businesses lack awareness of what their consumers want, disruptors will look to grab market share.
- Leadership needs to embrace the long-term view and redefine the investment mind set. Immediate ROI cannot be the most important criteria to determine your willingness to invest in an innovative idea.
For more information on health care issues, please visit the RSM website.