by James DiGiorgio

Part 1 of 3

There is innovation, then there is ‘INNOVATION’. Much of the innovation happening today is ‘coloring between the lines with different colored crayons’. Incremental change. Trying to improve an existing system that may not be salvageable. Healthcare remains a typically siloed enterprise even within a single system. Human nature hates change and healthcare exhibits this trait well. Do we have time to tweak the system and try to evolve it? Will it bankrupt us before we can make any meaningful change?

Even the ACA was not significant change regarding what healthcare in the U.S. is and how it works. ACA primarily changed ‘insurance’ — we still have a ‘sick care’ system rather than a health care system. Yes there are a few leading institutions that have embraced value based care, ACOs, and population health, but the majority of healthcare organizations are still just thinking about these changes — with great anxiety. In 2016, MedScape published the results of a Health Affairs study reporting that 95% of provider visits still used fee for service payments. Long way to go to change that statistic.

Will the consumerization trend in healthcare drive more change? Individuals are shouldering more of the cost of care through high deductible health plans and ever increasing premiums for health insurance. According to Mercer study results reported in Crain’s Chicago Business,


‘High-deductible plans covered just 3 percent of workers in 2006; fast-forward to 2016, and that figure is 29 percent.’


More than once I have asked myself if it is worth having insurance that costs almost $20,000 per year in premiums, plus responsibility for a $6,000+ deductible (each!). Really! The results have been that hospitals and health systems are seeing significant increases in consumer bad debt with little expertise in how to handle this trend.

Some statistics about consumer healthcare debt as reported by Becker’s Hospital CFO

1. From 2011 to 2014, the number of consumer payments to healthcare providers increased 193 percent, according to a study from InstaMed

2. Workers’ wages increased 1.9 percent between April 2014 and April 2015, whereas American’s out-of-pocket medical expenses jumped 9 percent from 2014–2015.

3. For insured patients, management consulting firm McKinsey & Company estimated the rate of bad debt is increasing at well over 30 percent each year in some hospitals.

Patients are not able to be good ‘consumers’ of healthcare because information about price, quality, and performance are not easily available. You can argue that quality and performance data are available — perhaps so much so that it is confusing — but understandable price data is still well hidden in the dark recesses of the chargemaster. And the most helpful information, out of pocket cost estimates for a particular procedure or service, are scarce and are very difficult to provide.

According to the HFMA (Healthcare Financial Management Association)…


‘As patients face increased exposure to healthcare costs, they have an urgent need for meaningful and transparent price information. Patients are being asked to act as consumers in a marketplace in which price — a fundamental driver of consumer behavior — is often unknown until after the service they purchase has been performed.’


Would you buy anything else that way?

Healthcare still generally treats all patients the same with one size fits all messaging and wonders why patients don’t do what they should do regarding compliance with medications, care plans and follow up care. Sorry physicians, recent research on healthcare consumers identifies about 13% of consumers who obediently will follow ‘what the doctor says to do’ — so you are only miscommunicating with 87% of your patients!!

Recent articles are promoting the use of all variety of care coaches, care navigators, even family caregivers. Great idea, it works, but what is the cost of inserting care coaches at multiple levels throughout the care continuum? Who will pay for this? Hospitals that are now laying off workers to make ends meet?

So how do we get to the ‘new healthcare’? In my next post, I will share some ideas on how we may be able to get there and accelerate the pace of change.

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