Empowered patients buy more efficient care

Business & Health, June, 1996 by Lisa Schiff, Richard Service

A roundtable of experts from business, government and academia reveals that the health care needs of employers and employees are more closely aligned than many people think.

Many observers of the health care scene think the delivery system is poised for its next leap forward. The first stage of reform aimed at the supply side, but managing cost by restricting access is a short-term solution that newer research suggests could be damaging. A more sophisticated strategy promises a healthier population and more cost-effective delivery by aiming at the demand side. Changing behavior, however, takes more than turning employers into smart shoppers and shrewd negotiators. Consumers must become full partners in the process. Indeed, "the future of health care reform depends on enhancing the power and ability of consumers to make choices based on quality," argues health care sage Paul Ellwood, MD, of the Jackson Hole Group.

How will this come about? Business & Health and the National Patient Empowerment Council convened a roundtable of business, government and academic experts to explore obstacles and opportunities in empowering patients. The panelists outlined some surprising alignments in the interests of employers and employees.

"We've learned over the past 25 years that if consumers are put in a position where they have to make cost-conscious choices, they will do so for relatively small differences in premiums," says Ellwood. But Robert Moffit of the Heritage Foundation thinks health reform still has a long way to go. "It is absurd to say we are witnessing the triumph of a free market in health care when the consumer of this commodity cannot, for all practical purposes, buy it or have any property rights to the commodity once it is purchased, or when the seller does not compete with other sellers for the consumer's dollars."

"The real customer in managed care is not the patient," explains Dan Perry of the Alliance for Aging Research. "The real customer is the employer, the purchaser. That's who gets the provider's courtesy and attention"--and the financial reward for being a smart shopper as well. "I don't think there are many instances where corporate benefits managers give workers the cash equivalent of the difference between the cost of last year's indemnity plan and next year's managed care plan," says Moffit, "so let's frame at least one fundamental law: You cannot empower patients unless patients have economic power."

Ellwood thinks they need knowledge as well: "You can't make a market work, particularly a critical one like this, unless people are able to ascertain whether the thing is valuable." But the educational gap is huge. "Paul Ellwood may have invented it 25 years ago and California may have a mature managed care industry," laments Dan Perry, "but for the vast majority of us it's like trying to buy a new kind of automobile without even knowing how to kick the tires."

Shoshanna Sofaer of George Washington University sees a more fundamental problem: "We've got a delivery system that emphasizes high-tech tertiary care, that spends a huge amount of money once people get very sick but does very little to keep people well. And we've got a traditional patient who responds very well to that system, which we're now trying to totally transform.

"Patients still think that if an HMO saves money it must be cutting corners somewhere, hiring doctors who couldn't get patients any other way and denying services people need," Sofaer continues. "Now this is not consumer experience talking. This is their assumption that more is better."

"We've got to do better education," counsels attorney Barry Scheur of The Scheur Management Group, beginning when a consumer signs on with a plan: "If you belong to a managed care organization, you don't understand how the system works from reading the brochure. You use that to light your fireplace."

John Burke of the National Patient Empowerment Council (NPEC) agrees: "Employers spend enormous amounts of money on educational material, but there are great numbers of people out there who just can't get through it. We scanned materials for 25 plans and found readability at the 12th to 16th grade levels. Any newspaper editor will tell you that's over the heads of most Americans."

It doesn't help, says Sofaer, "that managed care is a moving target. What's a POS? An EPO? Consumers get annoyed because nobody bothers to tell them--in language they can understand--what in the name of heaven this organization is about." But the problem goes deeper than obscure acronyms. "There are a lot of myths out there that really get in the way of consumer decision-making," says Sofaer. "The worst one is that all managed care organizations are alike." Scheur elaborates: "There is no 'managed care industry' or one managed care philosophy. Kaiser, Aetna, United Health Care, CIGNA and QuailCare are not all part of one fabric. You have for-profit and non-profit. You have those that care about access and those that don't."

Burke uncovered some consequences of confusion in NPEC focus groups: "We were surprised at the amount of times people told us they were willing to relinquish the relationship they had with physicians for many years to save a few dollars. They were able to focus on the cost of Plan A versus Plan B. But when we asked, 'How do your plans save money?' they didn't know. Clearly, people don't understand what they're relinquishing when they choose a less expensive plan. It's not clear in the material and it's not clear until they bump up against a restriction."