The year is 1976. The unseemly side of a long-standing network is exposed to its customers. The network is sinking in popularity and suicide may be imminent. Thirty-nine years ago, I would have been describing the film “Network.” Today, many believe that is an apt description of the state of provider networks now.
One of the recurring themes among guests I have interviewed on my podcast is whether traditional provider networks have a future in the rapidly transforming health care delivery infrastructure. The question began with an in-depth discussion of the long-standing, hyper-inflated charge master system used by hospitals (think $300 Tylenol). One guest opined that the prices on the charge masters were stratospheric solely so that networks could then promote heavily discounted “allowed” amounts as a way to attract business. He likened the arrangement to something that would make organized crime blush.
In previous columns we have remarked that one of the unintended consequences of PPACA was to create a new cohort of consumers; albeit consumers who are for the time being shopping in a very narrow, walled and controlled environment. Since World War II, the de facto consumer for most Americans has been their employer. Until fairly recently, the employer did the “shopping” and the employees took whatever was offered.
PPACA has provided a double whammy: Those nascent health care consumers are shopping in an environment that is analogous in many ways to the Web-based shopping they use for other goods and services. Couple this with ever-increasing personal responsibility burdens and you have a catalyst for consumerism.
As those of us who were active during the beginnings of consumer-driven plans know, when people are shopping with their own money, they tend to demand transparency, quality and choice. It is completely predictable, then, that, faced with a huge out-of-pocket amount, these consumers will shop for lower costs and higher quality.
The consumer pushback may have begun with so-called “skinny” networks, but shoppers are just beginning to waken from their decades-long slumber. The Free Market Medical Association and physicians such as Oklahoma Surgery Center’s Dr. Keith Smith are promoting a national movement where providers openly post both price and quality data. Services such as Ralph Weber’s Medibid allow patients in need of non-emergent care to send out RFPs on which those free market providers can bid.
An opportunity for real choice in consumer’s local markets has been limited as well. The slow death of community hospitals, coupled with the shrinking number of individual practice physicians has been exacerbated by an increased number of covered persons in the market. New hospitals rarely come on line. Certificates of need for new facilities are approved so infrequently that many who might have attempted to create competition have decided to stay on the sidelines.
Moreover, despite evidence of improved quality of care, specialty hospitals have become verboten in this country. This is largely thanks to a strong hospital lobby worried that their most profitable cases will be skimmed off. Again, the consumer is left with less choice.
Will all of this hasten growth in consumers shopping in a free and open market for non-emergent care? With smartphones and services such as HealthTap providing instantaneous access to physicians anywhere in the world, will consumers be content with the constraints of traditional network structures?
See also: Power to the patients!
In large measure, it is too early to tell. All of these drivers are in their early stages and the change swirling in and outside of the broader industry could change the course of consumer thought yet again.
What is absolutely clear is that an ever-growing number of today’s health care consumers would feel completely comfortable repeating the words of Howard Beale, the UBS anchor in “Network” when he yelled, “I’m mad as hell and I’m not going to take this anymore.”