Healthcare must – MUST – learn how to operate with a patient-as-consumer mindset. The industry has historically operated with payers and providers negotiating rates and services. Patients are left out of the discussion but incentivized to consume as many services as possible without regard to cost because they rarely bear the financial burden. It’s an unsustainable model.

High-deductible health plans (HDHP) and consumer-directed health plans (CDHP, defined by the CDC as an HDHP combined with a health savings account, or HSA) are starting to provide an alternative and shift some of the cost for coverage away from employers and to individuals. Between 2010 and the first half of 2016, the proportion of privately-insured individuals under 65 with HDHPs rose from 25.3% to 38.8%. Breaking those numbers down further, CDHPs almost doubled between 2010 and June of 2016. The proportion of HDHPs without an associated HSA grew by just over a third from 2010 and 2014 and then leveled off. Total assets held in HSAs grew by 22% from 2015 to 2016, although enrollment in HSAs appears to be going in the opposite direction. (This apparent contradiction with the CDC numbers cited above is likely due to differences in what’s being measured. Specifically, the absolute number of HSAs versus the number of HSAs being actively funded.)

Chart adapted from CDC data

Simultaneously, patients’ share of healthcare expenses increased from 8% to just over 12% between 2012 and early 2017. While this may be good for employers trying to reduce costs, it’s not good for providers (who are under scrutiny for disproportionately rising prices). Not surprisingly, the increased financial responsibility is a burden for patients. Uncompensated care and bad debt have risen in parallel with patient balances as people with HDHPs are more likely to have trouble paying medical bills (CDC). They tend to avoid or delay care, so the increased financial responsibility has potential ramifications for long-term health, as well.

To state the obvious: no patient wants to be sicker and burdened with medical debt, and no hospital wants bad debt on their balance sheet. Without change the problem will continue as more and more people enroll in HDHPs.

With these challenges, the current situation is probably at the early stages of “it has to get worse before it gets better.” HDHPs represent perhaps the best stimulus to drive a more efficient, cost-effective and consumer-minded healthcare system.

Value-based care is often considered the framework for accomplishing this; however, VBC comes with its own set of problems (this, for example). To date only about 4% of healthcare transactions are fully value-based. In contrast, on paper HDHPs create a situation that looks much more like a typical consumer transaction where an individual pays directly for a product or service. In other words, it’s a model that people already understand and so the challenges noted above could be easier to overcome than the long-term project of rebuilding the payer-provider relationship required to fully implement VBC.

Taking full advantage of increased patient responsibility and getting away from the problems like bad debt will require education and setting appropriate expectations. One might expect that patients who are responsible for a greater share of their healthcare spending would act like they do when making other purchases: making decisions based on their best-case combination of quality, price and convenience. A new study in the journal Medical Care found that this is not the case. The researchers discovered that patients find consumer strategies like comparing prices, discussing cost with a provider, and negotiating prices “difficult.” More importantly, patients didn’t think these strategies would be useful. As a result, only a minority of patients expressed an inclination to act like a consumer.

Pause there for a moment: by definition people act like consumers for almost every purchase, whether a car or a new trash can. They check prices, compare features, look at seller reputation and consider product availability. Then they get to healthcare decisions and disregard those same behaviors, avoiding them because they don’t think it’ll make a difference.

This is an advantage for providers who charge more than their competitors. It’s certainly a disadvantage for providers making strides to reduce cost and for patients. In the long run, it’s going to be problematic for everyone. Patients will unintentionally take on more medical debt than necessary by going to higher-priced providers, and providers will see bad debt continue to grow. New transparency rules are necessary but not sufficient to combat this trend. In a recent editorial for STAT News, Recondo Tech CEO Jay Deady points out that the “true point of health transparency [should be] helping patients actually pay for their health care.”

Providers should pursue tools that help patients shop for healthcare services the way they do other products. This includes implementing procedures in the front office where patients are given as much information as possible when they arrive. Furthermore, according to the authors of the Medical Care study, “it may be important to educate consumers about how exactly they might benefit from engaging in such strategies and in which situations the strategies may be useful.” It feels counterintuitive to offer resources that could result in a patient going elsewhere for services, but a willingness to do so can engender patient loyalty. As patients learn to use their increasing share of healthcare dollars as consumers, that loyalty and customer satisfaction will be key to business success for providers.

Can patient financial education help both patients and providers? What are the best tools for accomplishing this? Let us know in the comments.

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