Years
ago, my wife and I went to a show in New York. As we left the theater late that
night, a pedicab came by. "Wouldn't that be fun?" she said. We weren't
going far, and it was raining, so we hopped in.
When we
got to our destination, the driver told me the ride cost $150. I thought, are
you kidding me? Sure, I should have asked him how much the ride would
cost before we got in. But I didn’t, and the driver had no incentive to tell
me. I paid him, but I was mad—and I'll never get in another pedicab.
Pedicabs
aren’t nearly as important as healthcare, but the healthcare system treats
patients a lot like I was treated that night in New York. Getting sick or
injured can feel like stepping out to a dark, rainy street. You’d love a ride
to a warm, dry place; but if you don’t know the cost—and especially if you’ve
been burned before—you are unlikely to seek help.
When
consumers’ fear of the price of healthcare outstrips their fear of illness,
they delay or skip care. So it’s not just affordability of healthcare that is a
barrier to access—it’s also the fear of the unknown cost of that care.
A toxic
cocktail of high deductible health plans, rising out-of-pocket costs, and
surprise out-of-network bills has unnerved patients across the board. And with
good reason: 66 percent of bankruptcies in the U.S.
are due to medical expenses. No wonder 33 percent of Americans delayed or
avoided medical care due to concerns about its cost in 2019. Meanwhile, Gallup
reports that visits to emergency departments have climbed by 20 percent, an indicator that lower-cost
routine care is being replaced by higher-cost emergency care. Today, one
of the fastest growing categories of bad debt for hospitals is from people with
commercial insurance—those who keep the health system precariously viable.
Big
pharma is demonized for its pricing strategies, yet the retail pharmacy side of
the business tackles the fear of those prices by allowing consumers to know
what to expect at the register. Medications may not be cheap, but you can drop
off a prescription, ask how much it will cost, get an answer, and then make
a decision. Your pharmacist may even tell you about GoodRx and other ways to
lower your out-of-pocket burden. One-third of U.S. adults may leave their
prescriptions unfilled due to cost, but at least they know the cost. When fear
is allayed with information, consumers can make informed purchase decisions.
It’s different
on the health services side. There’s no one to ask and nowhere to go to learn
the price you will pay before potentially risking financial disaster. As
hospitals and health systems perpetuate byzantine, opaque billing systems,
retail care is stepping into the void. Have you seen Walmart Health’s price list for primary,
dental, and behavioral healthcare?
The
affordability crisis in healthcare is real and won’t be resolved anytime soon.
That shouldn’t stop us from trying to reduce people’s fear of
the price of their care, which alone can increase access and lower costs.
Here’s how:
1. Talk
about it. Pick five hospital websites at random and try to find the
price for various kinds of care. You won’t because it doesn't exist. So, the
first step—one that is not complicated—is for health systems to talk about
openly about the expected price of care. This is how health systems avoid
inadvertently delivering this frightful story to their consumers: “We are
hiding the price you will pay for care because it will be very bad news for
you.” Note that merely posting a list of prices isn’t talking. Speak with your
consumers, in plain English and with the compassion that aligns with your
mission and values. This is a real conversation that needs to be held
everywhere, from online to on the phone to face-to-face with scheduling staff
and physician practice managers. Simply talking about the price of care will go
a long way toward alleviating your customers’ fear of the unknown.
2. Give
consumers tools and resources to help them understand.
Provide your consumers with simple, easy-to-use tech tools like estimate
calculators so that people can figure out their likely out-of-pocket expenses.
Equip your billing or scheduling staff with the education and resources to walk
people through their coverage and expected out-of-pocket costs before they book
surgery or other care. Then they can discuss available payment options with
clarity and empathy. Does the unknown cost of developing an estimating tool or
training staff alarm you? Welcome to your patients’ world. But unlike your
patients, you can find out how much it will cost to build such a tool. If they
are too expensive or difficult, consider a call-in option for consumers and
physician office staff.
3. Practice
strategic pricing in a new way. Historically,
“strategic pricing” has been code for maximizing payments from payors. While
most organizations have gone through chargemaster optimization exercises that
help keep the doors open, it’s time to look at pricing through a different
lens, one of minimizing consumers’ financial fear and pain. Within the natural
cycles of managed care contracting with each commercial payor, it is possible
to shift dollars paid by consumers for retail-oriented services into areas less
likely to generate out-of-pocket costs and where consumers may feel less
impact. Much of the control of those cost assignments is with health plans and
benefit plans, but hospitals can go to large employers and say, “We want to
help protect your employees from high out-of-pocket costs. Here are some
suggestions for designing a benefit plan as your next insurance cycle
approaches, including preventive services that we’ll do on a zero out-of-pocket
basis.” The process may require three or more years to reach 75 percent of your
commercial volume, but over time will reduce both your consumers’ fear of price
and their actual out-of-pocket burden.
Why is
reducing fear your responsibility? The same question has been asked in terms of
social determinants of health. Why should a hospital build housing for the
homeless or run a food pantry? The answer is the same: Because if you don’t
address it, the problem is still there, no one else is solving it, and it’s
preventing people from getting the care they need.
So,
at a certain point, it is your responsibility to consider the health of your
consumers’ financial lives as well as their physical lives. Yes, putting your
pricing in daylight risks blowback. Saying nothing may seem safer, but it feels
downright dangerous for your consumers. Hospitals spend millions to advertising
and marketing and cultivating physician networks to attract patients. Yet 45
percent of American still avoid your services—shrinking your potential market
by nearly half—because they fear the unknown costs of your care. That’s an access
problem we can solve together.
Brandon Edwards January 10, 2020
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