My high school senior recently fell and hurt her knee, and as the captain of the high school volleyball team, everyone was anxious for her return. After a week with little improvement, we scheduled an appointment with an orthopedic specialist, and he ordered an MRI for that evening. When we checked in for the image, I asked for the price of the MRI, and I was told insurance reimbursed $1,400. Based on my knowledge that other providers charged $420, I asked for a lower price as I was not willing to pay $1,000 unnecessarily under my high deductible plan. The provider eventually agreed to a cash price of $400.
When we got the favorable results from the orthopedist the next day, I asked if he knew how much the provider charged for the MRI. He was shocked to learn it was $1,400. I, then, asked why he sent patients to a provider that overcharges by $1,000, when this excess expense could bankrupt a patient. He asked that I speak with their referral manager, and her response, “Well, I hope you didn’t pay that much.” I did not leave with confidence that they were going to change their process for future patients. This is a serious gap in the care process that leaves the patient and the employer to bear this unnecessary financial burden.
Waste in healthcare
Healthcare waste is estimated at 30%, or $1 trillion. It is heavily influenced by the 300+% price variation amongst healthcare providers as well as the lack of some providers following evidence-based standards of care, resulting in unnecessary services. The health of our economy, both locally and nationally, will continue to be negatively impacted until we get healthcare costs under control.
The efforts over the past 20+ years around wellness, consumer-directed healthcare, and performance-based contracts have produced national healthcare costs 45% higher than Switzerland, the country with the second highest spend per capita. June’s annual CMS report projects our costs to grow at 5.8% per year to 2025, consuming 20% of GDP! Any guess of who is to fund the projected $548 billion increase in the Federal Government’s healthcare spending over the next decade?
The Dallas/Ft Worth Business Group on Health (DFWBGH) is a non-profit entity representing over 70 employers with 750,000 local individuals and over $4 billion of healthcare spend in north Texas. Their Board is ready to act with urgency to impact healthcare. This summer, they launched the Innovative Quality Healthcare Collaborative (IQHC). The IQHC leverages the collective scale of area employers in working with local healthcare suppliers (physicians and health systems) to impact the quality of healthcare and the patient safety in our community.
As the ultimate purchasers of healthcare, DFWBGH’s goal is to work more closely with interested suppliers to re-design the current fragmented process of care and to bring a “Six Sigma” approach rooted in evidence-based treatment guidelines. IQHC wants to recognize those physicians and health systems delivering higher quality care, so they are rewarded for their process improvements and results. Through this new initiative, the purchasers will have knowledge of the healthcare suppliers’ performance (think of it as a supply chain management approach), so individuals (patients) are better educated to access quality driven providers, rather than selecting the most convenient doctor.
A focus on low back pain
IQHC is starting with musculoskeletal conditions as this is a top spend for most employers. The initial focus is on uncomplicated low back pain. As the healthcare suppliers embrace evidence-based medicine, the non-value added waste is removed, which lowers costs for the purchasers and the patients. Through free market competition, the purchasers can channel their employees to suppliers delivering value-based healthcare.
As this initiative was introduced to major physician groups and health systems, the interaction was fascinating. The providers began to address the challenges they face with patient interactions, and the employers outlined how they can alleviate some of the barriers. Each segment was working to address problems independently without realizing the opportunity to collaborate in ensuring the patient’s health was optimized. The employers were thrilled that 80% of the providers in attendance expressed interest in working with them to improve quality and patient safety.
The employers are currently working with five providers to develop clinical care processes, so both sides can collaborate to better address the purchasers’ needs. These suppliers are now developing Six Sigma “swim lanes”, and these process maps are incorporating the various touch points for a patient along their care journey.
It is rewarding to see the level of engagement between the employer and the provider in collaborating to remove the waste. The goal is for patients to be guided to high value, cost-effective MRI centers, physical therapists, or other providers, so patients like my family can avoid wasteful charges. When employers and providers collaborate, it’s a win for patients.