Consumer directed health care: zeroing in on physician practices.

The "consumer reigns supreme" philosophy is finally spilling into health care with profound ramifications for medical organizations across the country.

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More and more consumers are taking charge of personal health care spending accounts, demanding information on price and quality, and shopping around for the healthiest deal.

As health insurance expenses continue to climb, employers--the primary source of health coverage for most Americans under age 65--are exploring new avenues to contain costs. One such avenue, part of a growing trend, is consumer directed health care (CDHC). In CDHC plans, consumers control purchasing decisions and dollars. They manage provider selection and they purchase health care services directly.

For physicians, CDHC means caring for patients without the burden of preauthorization or other external controls, with ample leeway to decide how to measure and document the quality of care provided.

Proponents herald CDHC as the "holy grail" of the health care system. They believe that consumer driven market forces will drive reduced costs, improve quality/outcomes and increase access.

CDHC critics see just another attempt to shift more cost to the consumer. They believe that consumers, especially those who are ill, may not have the capability to make complicated health care purchasing decisions on their own.

Whoever is right, CDHC products are making significant inroads in the market. Initially tendered exclusively by small vendors, they have become mainstream products offered by national insurers. Blue Cross and Blue Shield now markets CDHC products in 38 states and expects to cover the country by year's end.

Providers need to start now to prepare to manage patients who will be paying out of pocket.

Groundbreaking ramifications

Experts predict that CDHP, much like managed care did in the 1980s, will upend the medical marketplace, ushering in a new era of responsibilities and relationships. The impact on care delivery will be dramatic. Some of the key changes on the horizon--or already here--include:

The patient will be the hub of care. The health care system is shifting to revolve around patient wants and needs, and not necessarily physician requirements and preferences. More insurance plans will provide health care advisors, usually specialized nurses, who will not only help enrollees gather health care decision-making information, but offer advice to guide and direct care plans. Funded by the insurer, health coaches will work with the chronically ill, prompting these patients to demand certain tests and procedures, and proof that physicians are following best practices.

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People will take advantage of the Internet. Savvy shoppers will use Internet tools provided by insurers to gather information and guide decision making. Web-based prescription calculators, for example, provide patients with information about medication costs and contraindications.

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These sites enable consumers to gather information about brand name vs. generic drugs, so they can ask providers informed questions and discuss alternative therapies. E-checkups churn out personalized health profiles, risk analyses or preventive care guidelines to help patients manage their own chronic conditions.

These Web-based medical facts and figures are not necessarily a threat. When patients receive information that is medically sound and easily understood, physician efficiency is improved. Interactions with the provider can focus on the patient's questions about treatment rather than general information about the condition. The quality of the interaction is enhanced and the cost is diminished.

Patients will self-monitor the quality of care. Capability is not up for discussion. Web-based tools will make it easy for consumers to compare and contrast hospitals and health organizations, analyzing data for various criteria such as patient volume, mortality, morbidity, unfavorable outcomes and pricing.

The Internet will publish the cost of office visits and procedures by specialty, physician and market. Price transparency will enable consumers, who are accustomed to Web-based purchasing, to use online tools for comparison shopping on cost and quality. Insurers will provide quality of care ratings to help enrollees select doctors and institutional providers.

Linking performance information with choice is key to helping enrollees maximize their financial and health goals. Consumers will use published data on patient satisfaction ratings--including ease of access, helpfulness and friendliness of nurses and office staff, and overall satisfaction with care and service--to be more discriminating buyers of medical services.

Consumers will have great expectations. Spending out of their own accounts, and empowered with information, consumers will likely have higher expectations that the service their provider recommends or performs is the best and appropriate care.

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They will hold providers to a higher standard than in the past, and will challenge physicians to prove that what they're recommending is indeed "best practice." Patients will want to discuss costs and benefits of various treatments and will press for information on results and outcome.

They'll reason that because they are paying out of pocket, they deserve more provider time. Physicians would do well to polish listening and communication skills, sure to be paramount for success in a CDHC-dominated era. Longer visits and interactions could--by virtue of the fact that there are fewer patients per day--impact the bottom line.

The structure of care delivery will change. Today's self-service generation will impel health care to mirror the banking industry, which has moved beyond the bank teller with traditional banking hours, to ATMs for 24/7 access to funds, and satellite banking facilities for convenience and ease.

Who says care has to take place in the office? In order to attract more patients, providers are locating ancillary clinics in mall kiosks and grocery stores for easier access. More providers are communicating with patients online, and charging them for email consultations.

Telemedicine units placed in the home make "virtual" visits a reality, monitoring, among others, glucose, oxygen, pulse and blood pressure. Caregivers review home-based data, evaluating and educating patients via real-time audio/visual conferencing.

Customized care centers will target specific diseases. Quality-oriented, focused and customer-friendly, these specialized centers will deliver care for specific conditions, such as cancer, heart disease and orthopedic ailments. Consumers will welcome and comply with chronic care management programs, understanding that stemming disease progression will ultimately be more cost-effective than paying for acute interventional services. The focus of care will shift increasingly from treatment to prevention.

Investments in information technology will be imperative. To compete, health care organizations will be forced to rethink how they capture and manage patient health information. Medical leadership must be prepared to invest in information technology and stay abreast of software and hardware advancements.

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Electronic medical records, portable medical information, online patient scheduling and communication and automated payment systems are essential for business profitability, patient satisfaction and quality of care.

Moreover, these management information tools must be seamlessly integrated into practice operations so as not to hinder patient flow and impede efficiencies.

The CDHC climate will dictate enhanced practice efficiencies. Physician leaders will have to re-examine how care and services are currently delivered and then tighten operations by reconfiguring provider and staff responsibilities and tasks to ensure streamlined efficiencies.

A consumer-driven market will tolerate nothing short of same-day access, zero wait times, and convenient locations and hours. Those who succeed will profit and those who fail will be drummed out of business. Administrative and clinical support staff will have to coordinate as much care as possible--before, during and after the visit--to ensure that all patient/provider interactions are seamless and result in payment.

The health care delivery stream, and the providers within, will become less fragmentary and increasingly collegial. Cooperation and coordination among independent providers will be key for financial success and to offer value-added benefit to patients and families. Those who can differentiate their services, by managing coordinated specialty care and community assistance for elderly shut-ins, for example, will stand out in the marketplace.

Consumer involvement will drastically alter the financial landscape. Reasonable and customary fees may be a thing of the past, replaced by fixed prices that are in line with market, not insurer, expectations. Direct competition will reward service and quality.

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Billing, collections and accounts receivable will all have to be managed electronically. Small practices using small billing companies will be severely disadvantaged by groups employing state-of-the-art IT systems, in-house or out. Paper claims processing is rapidly becoming obsolete for all plans.

Providers will need to worry about whether the patient has adequate funds in his or her account to take care of the service, and implement safeguard measures--not unlike major hotels--by requesting a credit card upfront.

Poised to potentially dismantle the medical marketplace as we know it today, consumer directed health care cannot be ignored. A seismic shift from "the system is there to serve doctors" to "the system is there to serve consumers" is already under way.

Significant changes beg difficult questions, which the best and brightest industry experts will need to address in the coming years. Will physicians be marginalized under CDHC or put themselves in the center of care decision making, in partnership with the patient? How best to take that leap--and when? And what will become of single shingles?

To succeed, will CDHC dictate that providers become part of a sophisticated organization that has effective management and access to capital? Surely the providers who will win in this new scenario will be those who can demonstrate value by improving quality, reducing costs and enhancing patient access, service and convenience.

Jayne Oliva is a principal with The Croes * Oliva Group, a Massachusetts-based medical group management consulting firm, specializing in developing outpatient operational improvement plans for physician practices, major academic medical centers and integrated delivery systems throughout the U.S. She can be reached at [e-mail] or 781-272-5055.