Healthcare is moving toward value-based care, with consumers at the helm.
Like other consumer industries — including travel and restaurants — healthcare providers are looking for ways to show they not only provide the best care but also give the best value for each dollar spent.
"Consumerism in healthcare is being driven in large part by the proliferation and ubiquity of healthcare information in so many different forms, coupled with the fact that more insured people are being asked or required to participate in a much higher level of payment for their healthcare," says Todd Ebert, CEO of Amerinet. "When an individual becomes more engaged, they will pay much more attention to price and quality, and really spend time to research and find the best value."
This new healthcare paradigm will impact providers in several ways, including:
• Place a higher premium on the need to reduce costs
• Force competition between providers on price
• Enhance quality of care
• Establish a more proactive and interactive pattern of care
• Engage in the entire care continuum to maximize quality
Physician-owned entities are focusing on best practices for their specialization to stay ahead and provide value.
"Examine every area of spend in operations and supply chain in order to maximize efficiencies on everything from nutrition services, medical devices, physician preference items and pharmaceuticals," says Mr. Ebert. "Expand their horizons. Educate and understand how other successful organizations operate, even how non-healthcare organizations operate."
One of the quick comparisons often made is the airline industry. After facing severe complaints and depleting profits, airlines sought new and innovative ways to improve the customer experience and encourage people to choose not only air travel, but one plane line over another. Another oft-made comparison is with the automobile industry, specifically Toyota, which effectively implemented Lean Six Sigma. Many healthcare organizations are now undergoing the program.
"Challenge the 'This is how we have always done it' or 'Dr. Jones will never go for this' mentality," says Mr. Ebert.
Driving efficiencies is great for patients, but healthcare providers still have a business to run and reimbursements continue to deplete. Implants remain one of the biggest cost burdens in surgical cases, but that could all change in the future.
"Because reimbursements continue to shrink, and available dollars become scarcer, they will be required to demonstrate their value and be at a cost point which will allow the provider to compete on price but also maximize outcomes," says Mr. Ebert. "They will need to move from a 'vendor' to a supplier partner that participates in the consumerism requirements and works more closely with all involved stakeholders to balance cost and quality requirements."
Insurance companies are also moving toward cost-savings and quality-improving healthcare settings. The California Public Employees Retirement System, for example, began using reference pricing on hip and knee implants to guide patients to facilities that provide these procedures below a certain price threshold.
"Along with directing patients to lower-priced hospitals, reference pricing also played a role in market dynamics by encouraging some hospitals to reduce their prices for these procedures," says Mr. Ebert. "They set a price, and anything above that price the consumer had to pay the difference. For comparable quality, this will get peoples' attention."
Going forward, there is still some uncertainty about how healthcare delivery will advance under the Affordable Care Act, as some programs may be adjusted. However, the financial stress on providers will remain — ACA or not. Here are five additional predictions from Mr. Ebert:
1. Revenues will be flat or overall declining and payments likely will not increase.
2. Consumerism will drive healthcare choices and facility development.
3. Data will help patients make decisions about their care and providers. Providers can use their data to market services.
4. There will be continued pressure on cost control from every angle, including supply chain, and the importance of the supply chain will increase.
5. The most successful organizations will think strategically to develop a supply chain strategy aligned with the organization's goals coordinate with other departments within the organization for consistency.