Viewpoint
Changing Roles for Consumers
By Kevin E. Lofton
There are significant implications for hospitals and health systems when consumers become more proactive about their health care.
Patients increasingly expect to make the decisions about their own care. At the same time, their out-of-pocket costs for premiums, deductibles and co-payments are going up.
Given the significant shift in the consumer/patient role, the American Hospital Association’s Long-Range Policy Committee focused its 2006 activity on two major themes related to the growing presence of consumerism.
Consumer Empowerment
Baby boomers are the first generation of mass customers with a strong consumer frame of reference. Their experience in purchasing other goods and services is likely to create their expectations of how the health care marketplace will behave.
As a result, hospitals and health systems need to develop sophisticated methods for identifying, classifying and responding to the different reasons patients use their services.
Consumers want to know:
- What is my problem and its expected progression?
- What, if any, are the options for my treatment?
- How well does this hospital provide my preferred treatment?
- What will be my cost for the care?
Consumers will expect to access all of this information on or through the hospital’s Web site.
Increased Consumer Cost Sharing
It is not known if new insurance products will be rapidly or slowly accepted, widely or narrowly used, or exist for a few years or the long term. However, innovation is seldom as beneficial as its advocates envision, or as destructive as its critics contend.
The hospital community needs to document changes in utilization resulting from new forms of insurance, determine the impact on community health, communicate the findings to policy makers, and participate in developing new approaches to addressing adverse and unintended outcomes.
As deductibles and co-payments increase, four trends will likely have an impact on hospital and system finances:
- Bad debts will increase.
- Uncertainty will grow over which practitioners and providers the health plan will cover when a patient exceeds a high deductible.
- Consumers may be less willing to continue the implicit cross-subsidies that have been hidden by insurance.
- Accounts receivable are likely to increase, and working capital requirements are likely to grow.
As the administrative burden to cope with more complex reimbursement structures grows, hospital registration and collection systems will have to be updated to ensure that they capture correctly what the patient and insurer are expected to pay.
Hospitals were developed to meet societal needs. Consumer empowerment and increased consumer cost sharing will alter some historical needs and introduce new ones.
The American Hospital Association’s Long-Range Policy Committee believes that hospitals and health systems that respond to these issues strategically will increase patient loyalty by anticipating consumer expectations, will retain greater institutional self-control, will enhance their financial performance and maintain market share.
Kevin E. Lofton is president and CEO of Catholic Health Initiatives in Denver and chairman of the American Hospital Association Board of Trustees.
This article appeared originally in the May 2007 issue of Hospitals & Health Networks magazine. For the complete discussion paper compiled by the AHA’s Long-Range Policy Committee, go to www.hhnmag.com and click on the button labeled “Changing Roles for Consumers.”
This article 1st appeared in the July 2007 issue of Trustee Magazine.
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