“Why Consumers – Not Companies – Should Make Health Care Decisions”
By Knowledge@Wharton of the University of Pennsylvania
Part I: Article Summary – CEO of Humana Inc., Mike McAllister, while speaking at the 2009 Wharton Health Care business conference explains why there is not an existing health care system in the United States even with all of the current political discussions of health care reform. Instead, there are several players in a health care sector that need reform. McAllister goes on to explain the health care management issues that need reform (Knowledge@Wharton, 2009):
The first issue is that the power of the consumer is not harnessed: The consumer is the most powerful player in all marketplaces except for healthcare because they do not have price and quality information readily available to them. When a consumer sees the doctor, most of the time they do not have a clue what the care they are getting costs or why it is important for them to receive. Most of the information that consumers get about their benefits from their health care companies is hard to understand and does not help the consumer make better choices about their health care. McAllister quotes “we’re going to have to make things simple, clear, easy to understand. The power has to be in the hands of the individual consumer (Knowledge@Wharton, 2009).”
Next McCallister explains that the wrong forms of competition exist; universal coverage would be a great benefit for the United States but this would be impossible to achieve without cost and quality improvement. For example, there is not a process in place to judge the effectiveness of new technologies and doctors would greatly improve treatment if they developed standards of care for all patients by causing fewer complications, shorter stays, and smaller bills.
Incorrect geographic markets are also a problem as across the country, there is no standard for health care. Differences in where a patient lives can make a big difference in the kind and quality of care they receive. One example given by McCallister is the fact that in Wyoming more people have back surgery than in Illinois on an annual basis, but there is no reasoning behind this statistic (Knowledge@Wharton, 2009).
Our current health care system has poor strategies and structures. Without consumers having the power to “choose, finance, and use” they cannot make smart decisions when it comes to their healthcare (Knowledge@Wharton, 2009). McAllister points out that although 84 percent of American’s rank health care as their most important benefit they have no idea what that benefit truly costs them. Companies do not offer much information about their healthcare benefits and likewise employees spend little time exploring their options. They simply sign up and pay for it from their paychecks although they really don’t know what they are getting for their money. When McAllister asked managers to hold seminars to explain benefits to their employees, most said they didn’t have the time to have their employees away from work for such reasons (Knowledge@Wharton, 2009).
Consumers need to be able to observe the options and costs of their healthcare coverage and be educated on what treatments are actually necessary for their care. This would save doctors, patients, and insurance company’s time and money. McAllister quotes the estimate is that 15-50% of our health care is of no use and that “If we’re ever going to be able to understand what we’re doing in health care, we have to be able to understand quality (Knowledge@Wharton, 2009).”
Perhaps the biggest issue is that doctors do not share information. Only 17% of doctors use electronic records. Paper records cost more and they do not allow doctors to review a patient’s records from another doctor, leading to unnecessary repeated treatments and wasted time re-researching treatments. Insurance companies keep incredible electronic records, if this information was able to be shared with doctors and vice versa, quality and quantity of treatment would improve incredibly (Knowledge@Wharton, 2009).
The wrong incentives exist for patients, providers and payers. There are excessive uses of services such as CAT scans and MRI’s because doctors and hospitals make a lot of profit by using these services. Patients are also to blame because they feel this is the norm for their treatment today and hospital and doctor visits are up twenty percent in the past five years. This will only get worse as the baby boomers become elderly and demand more of the Medicare system. Lastly, the U.S. population as a whole is becoming more obese which increases rates of heart disease, diabetes, and orthopedic injuries (Knowledge@Wharton, 2009).
Humana uses the internet as a tool to help consumers choose the best health care plan to fit their family and their budget. Patients take surveys online that help them to decide when it is necessary to see a doctor. If there are any red flags, a nurse will call the patient to speak about seeing a doctor for treatment. There are even debit cards issues linked to health care savings accounts that patients can use to pay their portion of the bill and also areas on the website where patients can view the actual costs of the treatment they receive (Knowledge@Wharton, 2009).
Part II: Organizational and Managerial Issues Raised
The organizational and managerial issues raised in this case are many. The largest organizational issues are that most health service organizations are not using electronic records. Paper records are expensive and mistakes can be made in keeping them. Not to mention the extra personnel required to manage these records. Organizations and their management are also concerned about the amount of time each patient spends in the doctor’s office. Keeping electronic records would allow less time with each patient because the doctor would not have to repeat the same processes as previous doctors. They could simply view the electronic records on their computer during their visit and not spend time reading previous visit notes or asking the patient about their medical history. Bottom line is the time with a patient is money, the more patients in and out, the more money is made. Therefore records are a large concern for management and organizations alike.
Another managerial issue raised is that because consumers do not understand what they really need or what it costs them and the organization needs to make money, extra services are offered to patients that they may not necessarily need for treatment. This requires extra personnel, maintenance, and even more paperwork for managers to deal with. This also costs the insurance companies even more money in the long run and causes excess medical billing to consumers and insurance companies; again resulting in more managerial issues in dealing with patient care and the training and hiring of personnel required to handle the billing and coding.
Perhaps the most obvious problem shown by the title of the article “why consumers, not companies… should make health care decisions (Knowledge@Wharton, 2009)” is that insurance companies are running health service organizations and making the decisions about proper healthcare instead of the doctors, health managers and most importantly the patients that need the proper care. Patients get what their insurance pays for; the medical system has almost become an automatic system of treatment dependent on one’s insurance coverage. Many organizations cannot afford to treat patients without insurance because of the high costs of treatment and the high rate of non-payment and collections for patients who cannot afford the treatment they need. This is an organizational issue because they must retain constantly updated records on their patients and they must pay collections agencies to recover unpaid bills. For this reason many of the patients with no insurance report to the emergency room, where they cannot be turned away if they cannot pay. Emergency room managers are constantly dealing with prioritizing actual emergencies from the common cold and extremely long waiting periods for patients who may need immediate care in their facility; bogged down by the extreme numbers of non-insured reporting for regular care.
The last three issues discussed raise the legal and ethical concerns by doctors, patients and managers. “HSO’s and HS’s use charters and bylaws of autonomous bodies as formal sources of law. Courts look to these documents to determine the rights and obligations of those who are affected (Longest & Darr, 2008, p. 170).” For example, because patient count determines money made instead of money paid for services needed, medical mistakes can be made by doctors rushing to meet their necessary numbers for the day. Patients can sue if they were given something that caused them harm or they were not told that a certain treatment would not be covered by their insurance. This causes health services management to have to be experts on managing services and insurance coverage over patient care as well as to teach their organizations charters or bylaws stringently to all employees and health care providers.
Another legal and ethical concern is that in order for organizations to make enough money to operate, doctors are often offered incentives by drug companies to write prescriptions for certain expensive medications not covered by insurance and buy machines or treatments that they may later find caused harm to their patients. Patients and insurance companies have the upper hand when harmed by health service organizations offering these treatments because they might not have necessarily required the treatment in the first place, bringing on more lawsuits against doctors and drug companies alike.
Insurance companies also must make ethical considerations when making decisions for patient care coverage. Patients can file suit against insurance for not covering needed medications and services. This causes an increase in premium rates because of the legal staff required to determine whether medical care is needed or to be on hand for judicial proceedings. All of this trickles down to the doctors and their patients, fighting to get the proper medication for a patient or simply trying to get the latest medications approved by insurance.
There are obviously many stakeholders whose rights are affected by our current healthcare system. First is the patient, who has no idea what treatment is best for them or if they can count on their insurance company or doctor to make the right decision because of all of the legal implications involved. Not to mention the patient who does not know the actual cost of their treatment or whether to trust the opinion of just one doctor. Patient rights are also affected by the use of paper medical records. If emergency care is needed and a previous condition is unknown; treatment could lead to sickness or even death.
Second the healthcare managers who must manage an organization run by health care companies and drug and medical corporations instead of by the doctors and patients who should be offered the right to make informed decisions about care. Managers are also convoluted with the incredible number of personnel required to run an organization based on our current heath care system. How can a manager possibly make the right decisions when they must make enough money to pay doctors and personnel through practices that rush them through the patient care process and require them to work with large drug companies and big insurance?
The healthcare practitioners such as doctors and nurses are also stakeholders because they must be constantly concerned with keeping patient visit times low while maintaining quality treatment and also have the worry of possibly losing their license or registration over the slightest mistake in patient care.
One might think that the big insurance company is the least of the stakeholders because they have the upper hand in deciding on treatment coverage and premium costs. However, they hold the responsibility of working with management, physicians, and patients to improve care while keeping costs low in a system where services and prescriptions given to patients may not be necessary and only an organization attempting to increase revenue.
It seems no one is the winner here. Not the patients, the physicians, the health service organizations and their management and workers or even the insurance companies. It is one large tug-of-war when it could be much simpler. Mr. McCallister definitely brings up some positive ways to improve our healthcare system in this article by putting more power in the hands of the consumer (Knowledge@Wharton, 2009).
Part III: Alternative Courses of Action
This article is headed in the right direction with great ideas to improve healthcare. However, there are a few alternatives to the options showcased in the article that might also be improved courses of action.
For example, one change to our current healthcare plan that the article suggests is to ensure that doctors are using electronic records instead of paper records so that information could be shared among the healthcare community and unnecessary treatments are not repeated (Knowledge@Wharton, 2009). An alternative to this option would be to allow patients access to an online health database where their current records, prescriptions and physicians are kept. This would allow patients to further research their current conditions and make choices about their treatments prior to their next visit. Almost like talking with their doctor without him have to be there to discuss options.
Another option the article suggests is to have prices of treatments more openly posted so patients know what their healthcare is costing them. An alternative to this option would be to have a menu with prices for all treatments offered and present it to the patients and allow them to decide. Of course this menu would need to describe what each treatment would really offer them and what the follow-up costs would be.
Another major issue discussed in the article was that many patients are unaware of what is included in their healthcare benefits and get frustrated when certain medications are declined that they may need for proper care (Knowledge@Wharton, 2009). A possible alternative to this would be for each beneficiary to receive a certain amount of money per year they are allowed to use for treatment and they can decide what treatments to use and what medications to choose from based on prices, instead of the insurance company choosing for them.
From a managerial and business profitability point of view, I believe that the shared online electronic records are the best alternative presented. There are several reasons for this: First, it saves time during patient care appointments because the patient already knows which route they would like to take for treatment and whether their insurance company covers it. This allows doctors to see more patients and increased patient satisfaction because each person has a part in their care; therefore, it is good for business and for the customer. Second, the doctors and nurses would have less paperwork to write up when checking in a patient and recording the visit. They would simply use a shared electronic system where the patient could scan their insurance card to check themselves in through kiosks, eliminating the need for front desk staff. The link to the record could be sent to a small electronic tablet for the nurses and doctors to share outlining why the patient is there and what their vision is for their treatment plan. The doctor would be able to see what medications the patient is currently on and whether any of them need refilling. They would also be able to see what the patient would prefer for treatment and then spend the appointment time discussing the options with the patient instead wasting time going over medications and reviewing previous medical treatments.
This is great from the business perspective because the organization would require less health service personnel, and less appointment time, allowing the organization to profit with less payroll expense and more profit from an increased number of patients seen per day. Managers would also see less patient upsets caused by long waiting periods and improper courses of action in regards to their treatment.
The pharmacy could also take part in the system to look up what medications the patient is currently on and allow the doctor to electronically sign for new medications. The pharmacy could then fill the prescription automatically without the patient having to drop off the paper form and wait for the prescription to be filled. Once again, a satisfied patient and money saved by the pharmacy in paperwork filing costs and phone and transmission costs.
Finally, perhaps the most important participant to make this alternative successful is the health insurance companies. These companies already keep impeccable electronic records on their patients so it would not require much of an adjustment to move to the new electronic program. They would simply need to ensure each patient’s account is updated with benefits available to them and if necessary providers on the network for customers to choose from. Many insurance companies already offer websites which keep electronic records and prescriptions as well as additional health care information for customers to review and use. An effort would need to be made to combine these systems into one key system that works for everyone.
The bottom line from a management and business profitability point of view is that an electronic system such as this would save money, cut down on patient appointment times and unnecessary treatments and allow for more profitability by all participants simply by allowing them to service more customers and cut their costs for managing paperwork and transmission systems. The only thing left to do is to contact President Obama and get this program started!
Knowledge@Wharton. (2009, March 18). Why Consumers — Not Companies — Should make Health Care Decisions. Knowledge@Wharton , pp. 1-3.
Longest, B. B., & Darr, K. (2008). Managing Health Services Organizations and Systems. Baltimore: Health Professions Press.