In an ominous symptom of consumerism, patients overburdened by financial obligations are constricting cash flow to providers.
As the Trump administration and Congress bear down on Obamacare, the battle lines are being drawn in the struggle to attain a cost-effective transformation of healthcare services.
"Whether it is the delivery of services, or pharmaceuticals, or how we pay—we are playing politics with healthcare," says Olusegun Ishmael, MD, MBA, an emergency room doctor at Paris Community Hospital in Illinois and former health plan executive.
"It is not like building cars. Healthcare is about people's lives and the quality of life. Most people are going to be alive for a long time, and healthcare helps determine the quality of the life you are going to have."
The evolution of healthcare economics is placing a heavy financial burden on patients, who face a consumerism crossroads, the former health plan vice president says.
How Real is Healthcare Consumerism?
"I have talked with some of the nurses I work with; and, overnight, their deductibles have gone up and everybody has health savings accounts. The employer-sponsored insurance model is slowly being whittled away; and, when it is gone, the private individual is going to be left holding the bulk of the cost of their healthcare."
Thrusting higher levels of financial obligations on patients is having both positive and negative impacts, Ishmael says. "The good is [that] patients are going to be asking questions, and challenging people about costs and what treatments are for. The bad is that most patients are not going to be able to meet their costs."
Cost-shifting Constricts Provider Cash Flow
Jeff Goldsmith, PhD, associate professor of public health sciences at University of Virginia, healthcare futurist, and national advisor at Navigant, says overburdening patients financially threatens healthcare-provider cash flow.
In an article published by the Healthcare Financial Management Association in February, Goldsmith sounds alarm over the proliferation of high-deductible health plans (HDHPs) and President Trump's prediction for health savings accounts (HSAs).
"As recent experiences with the sharp growth in HDHPs have conclusively demonstrated, many patients with such accounts have trouble paying their portion of healthcare costs, even with the modest help of money saved in tax-protected consumer accounts like HSAs," Goldsmith wrote.
Of the 160 Americans who have employer-sponsored insurance (ESI), one-third have HDHPs, Goldsmith estimates. He identifies two primary drivers:
- Employers shifting health-benefit costs to employees during The Great Recession
- The relatively high proportion of HDHPs purchased on the PPACA health insurance exchanges.
"The circumstances mean [that] almost one in five working American families are being billed significant amounts for their healthcare use, representing an important new claim on their wages and savings," he wrote.
Goldsmith concludes that cost-shifting to consumers can constrict healthcare-provider cash flows.
"For households with limited resources, the simple fact is that the growing financial responsibility for out-of-pocket healthcare expense must compete with other more formal and established forms of debt, such as mortgages, credit cards, and student loans, effectively tying the future financial position of hospitals much more directly to the economic cycle than at any time since the advent of health insurance."
Patients face peril at the Consumer Crossroads, Ishmael says. "I don't think enough of the people who are delivering care or enough consumers are at the table to say, 'This does not make any sense.'"
Christopher Cheney is the CMO editor at HealthLeaders.