If you read my January hfm column or if you’ve heard me speak at conferences, you may wonder how I came to be so passionate about consumerism. Before I became president and CEO of HFMA in 2012, I was on the frontlines of finance in a health system. That’s where it all started.
I remember clearly the day in 2004 when I was sitting in the office of Spectrum Health’s then-CFO, Mike Freed. He asked me to create a new web page to feature price information. Frankly, when I heard Mike talk through the logic, I loved the idea. One objective was to surface the practice of cost shifting, or as we called it, a hidden tax on our business community. The other objective — giving our patients better price information — was unique at the time, to my knowledge, and intriguing. That said, I did have doubts. Could we do it accurately? Would publishing rates make our managed care contracting harder? Would it create more confusion rather than less? All these thoughts ran through my mind. But my curiosity took over and, well, Mike was my boss. So, we pursued it with vigor. And his leadership was admirable.
Quick backstory: As part of a consent decree related to the formation of Spectrum Health by the 1997 merger of two hospitals, Spectrum agreed to limit rate increases (i.e., charges and payment from private insurance), make its annual budget public and hold public meetings to discuss major financial matters. But Mike didn’t think that was enough to assure the public that the merger would benefit patients. And he was frustrated that our commercial rate increases in excess of Medicare/Medicaid rates would likely be misunderstood by the business community. To address that concern, we posted the chargemaster charge, the Medicare payment, the Medicaid payment and the average commercial rate of payment for high-volume services. After my initial hesitation, I embraced the plan without reservations. I became the plan’s internal advocate and addressed the skeptics who shared the same concerns I initially had. Yes, other folks in management thought this was a mistake, and I gladly took on the challenge of addressing their objections head on. I knew, deep down, that introducing price transparency was the right thing to do. These disclosures put Spectrum Health among the nation’s earliest adopters of price transparency and shaped an organizational culture of consumerism that would continue to grow. The seeds of consumerism had been planted, and I was anxious to cultivate them.
Traversing uncharted territory
In 2006-07, HFMA issued two crucial Patient Friendly Billing Reports — Consumerism in Health Care, and Reconstructing Hospital Pricing Systems. The idea for the pricing report came to me as I was driving home to Michigan from an HFMA meeting in Chicago late one night. I called longtime HFMA President and CEO Dick Clarke the next day to float the idea, and he endorsed it immediately, validating that we at Spectrum were on the right track.
Spectrum, one of more than a dozen provider sponsors of the Patient Friendly Billing initiative, was featured in the pricing report as an organization that was passionate about building a better pricing system. Spectrum had set out to rebase its prices after discovering that its outpatient prices exceeded those of its freestanding peers, while its inpatient room charges were, in some cases, below its costs. I can tell you that rebasing prices was interesting. We ran model after model to come up with something viable. My comments during an interview for the HFMA report indicated it was straightforward: We made price rebasing a priority, we did the work, and we implemented it. The key piece here (which I’ll come back to later) is the prioritizing part. Payers were fine with the changes because they addressed member complaints about high outpatient prices, and we could show them the math demonstrating that the price hydraulic was budget neutral. Payers were also amenable to raising inpatient prices to cover costs and mitigate the impact on the bottom line.
By 2012, when Spectrum Health was first named a winner of the HFMA MAP Award for High Performance in Revenue Cycle, Spectrum was offering out-of-pocket estimates to all patients with scheduled services — inpatient and outpatient — during pre-procedure calls. Spectrum accomplished this before current technology tools were available and without adding staff or wreaking havoc with administrative costs. By the time I left Spectrum in June 2012 to take on my current role at HFMA, the culture of consumerism at Spectrum was firmly in place.
Coming to grips with reality
Fast forward to 2020. Patients have been paying for a growing share of their healthcare for years, through high deductibles and cost-sharing, with no ceiling in sight. Price transparency tools are weak in comparison with those for other consumer goods and services, such as air travel, and they are seldom used. Publicity about surprise out-of-network bills shocks the public. Hardly a week goes by without The New York Times, The Wall Street Journal, The Washington Post or other major newspapers telling a tale of patients who were harmed financially by healthcare encounters. In the social media sphere, outlets like Facebook’s Paying Till It Hurts and the podcast An Arm and a Leg offer a steady stream of financial horror stories. These anecdotal stories fan the flames of public outrage and sometimes reflect a lack of deep understanding — but they are very damning, nonetheless.
That’s a snapshot of the patient financial experience today, at its worst. It’s not a pretty picture. So where is the healthcare industry with this? After years of advocating for adoption of consumer-centric business practices, through HFMA channels, I have concluded that healthcare leadership is too often in a state of denial. When solutions are within reach, the industry keeps them at arm’s length. For example, consider HFMA’s Healthcare Dollars & Sense, a collection of common-sense guidance and best practices for improving price transparency, patient financial communications and medical debt resolution. Dollars & Sense offers a free roadmap for providers to build a strong, consumer-centric foundation for their revenue cycle business practices. I applaud the hundreds of forward-looking provider organizations that have formally adopted these best practices. Yet the adoption curve has flattened out considerably in recent years. Awareness and understanding, and even frequent reminders, do not translate to adoption.
In other cases, when a solution is within reach, the industry actively pushes it away. Case in point: the proposed surprise bill legislation that flamed out in December 2019 due to industry resistance, despite having rare bipartisan support. Another example is the chargemaster, the voluminous, clunky master list of charges, which has outlived its usefulness. It’s safe to say that virtually no one, inside or outside of the industry, actually likes the chargemaster. But when HFMA convened a group to prepare to work with CMS on chargemaster reform a few years ago, our first meeting was also our last. It was crystal clear that the industry was not ready for changing the industry’s standard pricing methodology, no matter how ill-suited it is to today’s healthcare marketplace. However, just saying no is not good enough. Not for the chargemaster, not for surprise bills and not for price transparency.
Seeking root causes
There is no doubt in my mind that no single group or event is to blame for the current state of consumerism in healthcare. Many factors have contributed to the industry’s widespread underperformance in this arena.All this leads me to ask: What went wrong? How did we get here? How did good, well-intentioned people — some of whom are not only my colleagues, but also my friends — get to this point? On a personal level, how did I contribute to this quagmire? Have I done enough? Has HFMA done enough?
I could cite complexity, and I would be right. The multiplicity of billing codes, the extreme fragmentation of the healthcare system, boundless societal expectations, pressures on providers from all sides — they all contribute to a revenue cycle mess.
I could cite government’s role in the current healthcare environment — programs that pay below cost, the resulting cost shifting (an increasingly unsustainable provider response) and the stickiness of outdated regulations that add administrative cost without benefiting consumers — and I would be right
I could cite healthcare leaders who stick their heads in the sand, saying, “We can wait this one out,” when faced with the public pressure to be more consumer friendly, and I would be right.
I could cite those who don’t put patients first, who enter into mergers to amass market pricing power or who pursue collection of full charges from those who have no ability to pay, and I would be right.
I could cite health plans that often wield equally strong market power, which, when combined with pricing opacity, often creates wide disparities in payments that are impossible for consumers to understand. And I would be right.
I could make a long list of who and what to blame. In fact, I could argue that all stakeholders — commercial insurers, providers, employers, government payers and yes, even patients are culpable. I could argue that we have all contributed to the current environment, and I would be right.
But I don’t want to be right; I want to be effective. As the CEO of the nation’s premier healthcare finance association, 50,000-plus members strong, I have an obligation to help turn this consumerism ship around. And sourcing problems only helps if there is a willingness to fix them. Frankly, I see little evidence that willingness to fix our industry’s price transparency problems is the prevailing attitude among healthcare leaders today. After extensive reflection, I believe that’s the core of the problem — our attitude. It’s not always a matter of active opposition to fixing problems; sometimes it’s apathy. Our patients are our customers, yet we don’t value them in their role as consumers. Sure, there are examples of organizations leading the charge toward consumer-friendly practices. But keep in mind, this is 10 years after we developed out-of-pocket estimate practices at Spectrum Health. Ten years with no measurable industrywide progress? It just isn’t a high priority.
That doesn’t make sense from either an ethical or business perspective. In fact, it’s a recipe for legacy stakeholders to be replaced by disrupters who do know how to value their customers. I know that’s hard to hear. But it’s time for industry leadership to take it to heart.
Enough is enough.
One thing I know for sure: The problem is not a lack of guidance. HFMA has produced an abundance of guidance for years, starting with Patient-Friendly Billing in the mid-2000s, continuing with Healthcare Dollars & Sense in 2014, and now introducing the Consumerism Maturity Model, designed to help providers assess their progress toward creating a consumer-centric patient financial experience. Add in all the feature articles in various HFMA publications, and we have published thousands of pages on consumerism. Searching “patient financial experience” on hfma.org returns nearly 400 results, and that’s primarily content from just the past two years. That doesn’t include the numerous webinars, podcasts, workshops and training programs on consumerism topics. So, “I don’t know how,” or “I don’t know what to do” as an excuse just isn’t going to cut it.
In the hope of jumpstarting change, I summarize, at left, the action steps that should be prioritized now by a few key stakeholders.
Calling key stakeholders to action
As I’ve said many times, everyone has contributed to the current state of affairs and everyone has a role in improving it. I’m calling you to action now, before consumer trust — our most valuable asset — is irreparably damaged.
To health system CFOs (and their bosses, CEOs): You must demand a consumer-focused environment. Become a Patient Financial Communications Adopter organization. Develop user-friendly price transparency tools. Reevaluate your debt collection practices with regard to lawsuits, wage garnishment and other extraordinary collection actions before the media are at your doorstep. And experience, personally, what it is like to navigate your revenue cycle processes. I bet you’ll be appalled. Additionally, go further beyond your comfort zone; get out in your communities and face the music. Talk frankly and openly about how healthcare finance works and what it all means to healthcare consumers.
To health plans: You must develop price transparency tools that are clear, transparent and easy to use. Then, go beyond to ensure the tools get used. Developing tools is only half the battle. Put price transparency tool utilization into incentive compensation plan goals. Apply the lessons of behavioral economics. Gamify the models. Do whatever it takes to increase healthcare finance literacy among your membership.
To CMS: Let go of the current chargemaster structure. Don’t simply expose it by requiring hospitals to post it. Stakeholders from across the industry agree that posting charges online is of no help to consumers because charges bear little or no relationship to what consumers are expected to pay. Stop the charge-posting madness and start decoupling charges from Medicare payment. Allow systems to develop market-based charges that can then be made transparent to consumers, and reflect actual expected payment, like any other consumer good or service. HFMA, in conjunction with 22 prominent health systems representing more than 560 hospitals, has developed a proposed solution. We ask for your thoughtful consideration of our proposal.
Yes, I left out consumers and employers. Although they are not off the hook by any means, leading change is best accomplished by a smaller group of people: Leaders.
I cannot sit idly by while relationships between healthcare stakeholders and the people we serve continue to deteriorate. I know that my message will not be well received by some. I’ll take the risk.
Why? Because it’s time. Will adopting a consumer-centric approach solve all healthcare issues? Will it eliminate the healthcare controversies that are roiling our politically polarized population? Will it reduce healthcare expenditures as a percentage of gross domestic product? Not directly. But it is still important.
Let’s set our sights on a goal that’s within reach. Will adopting consumer-centric business practices free up resources for other necessary improvements? I believe it will. At a minimum, it will heal our industry’s black eye, which is at risk of becoming permanent. It will enable us to shift our focus to better management of chronic conditions. It will facilitate improvement of population health, which is based on working in partnership with patients, thereby reducing the total cost of care. It will enable us, as finance leaders, to treat people the way we would like our family members to be treated. Remember, as present or future healthcare consumers, we are all in this together. And it will allow us to look back — at the end of a career, when we leave a job or simply when we leave work for the day — and feel like we left healthcare a little better than when we found it. That’s how I felt when I left my job at Spectrum years ago and I am still determined to scale it up.
There is no time to waste. It. Is. Time.
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