January 11, 2006
The advent of health savings accounts (HSAs) and other consumer-directed health initiatives promises to bring dramatic changes to how healthcare providers operate and compete. As the number of self-pay patients increases, so does the number of organizations positioning themselves to tap into that growing pool of healthcare dollars that are free from the insurance administration hassles.
As the December issue of hfm magazine reports, one of the latest competitive challenges to emerge is to provide medical care in convenient retail locations at competitive prices. CVS, Rite Aid, and Wal-Mart have all begun offering care such as immunizations and screenings in their stores. The introduction of these new entry points into the healthcare delivery system creates a threat to traditional referral patterns. Hospitals and physicians need to develop a strategy for addressing these new providers and their role within the system.
New Kid on the Block
A prominent sign that this new trend has "legs" is the Revolution Health Group, the brainchild of Steve Case, co-founder of AOL. The private firm is aimed at buying up promising companies that offer a range of consumer-focused health services. The company's goal is to put patients "at the center of the health system, with more choices, more convenience, and more control over their healthcare," according to the company's press release.
Just three months after its July 2005 launch, the Washington, D.C.-based company announced that it is already ahead of schedule. It has acquired six start-up health companies, made an investment in a seventh company, and hired its senior management team. It plans to bring its first major offerings to consumers in 2006. Those offerings will be in three key areas -- content, coverage, and care.
To bring content to consumers, the group will launch a consumer-friendly web site to help patients manage their health needs with news and information, aid them in finding doctors and scheduling appointments, and managing their healthcare spending.
To help individuals with health coverage needs, the company plans to offer consumers new, easy-to-understand healthcare coverage services. And to help consumers with access to care, Revolution has purchased a minority position in a provider of retail health screenings and immunizations delivered in retail outlets and at employer work sites. Revolution is also providing the capital to support the rollout of "RediClinics," retail-based healthcare centers that provide fast, affordable treatment for routine medical conditions.
How Healthcare Organizations Can Prepare
By anticipating this changing market, healthcare providers have an opportunity to gain market share and client loyalty. Now is the time to ensure that policies, procedures, and methodologies create an experience attractive to consumers with HSAs. This will not be a simple process; it will necessitate changing systems and business practices, and it may require changing a healthcare organization's culture. Senior management needs to evaluate the potential impact of all the changes surrounding consumer-directed health care, create relevant policies and procedures, educate the organization, and design a consumer-directed culture.
Physicians will likely be the first to feel the impact. They will be determining how they are going to respond, and will likely want to know what other providers are doing to address the concerns of patients who are shopping based on price. Some may choose to change their business models; others may wait and see. Either way, hospitals should share their position and strategic approach with their physicians.
SOURCE: "The Next Big Thing: Health Care When the Patient Pays," one of the feature articles in the hfm December 2005 issue on payment trends written by John M. (Jay) Shiver and Kevin T. Ponton. (On-line access available to HFMA members only. Not a member? Join now!)
Additional Resources
- HFMA's 2006 Executive Spring Summit -- A New Era in Healthcare Finance: Consumer-Directed Health Care and Pay-For-Performance, February 26-28, 2006, San Antonio
- HFMA Executive Roundtable: Meeting the Challenges of Consumer-Directed Plans
- Healthcare Financial Management (hfm) articles (On-line access available to HFMA members only. Not a member? Join now!):
- "Consumer-Directed Health Plans a New Force in Health Insurance?" October 2005
- "Consumer-Driven Health Care: Freeing Providers to Innovate," March 2004
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume V, Issue 1. Copyright 2006, Healthcare Financial Management Association. All rights reserved.