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Friday, September 18, 2020

COVID-19 shows we must rethink how we pay for healthcare

While many headlines have rightly focused on the tens of millions of people unemployed as a result of the coronavirus pandemic, many are overlooking how those unemployment numbers and fewer healthcare jobs will affect the healthcare system.

Due to a sharp drop in patient volumes, almost total cancellation of elective surgeries, and many patients out of work and unable to pay for care, 1.4 million healthcare workers were laid off or furloughed in April.

The majority of these workers are part of the administrative staff — those who handle the complex billing system and insurance processing that accompanies most hospitals and medical practices. Administrative staff spends, on average, 36 hours per week just on billing matters. The administrative costs associated with healthcare in the United States are the highest in the world because of how complicated and time-consuming they are.

These administrative costs, of course, are passed along directly to consumers through inflated prices for medical care and ever-increasing insurance premiums. Most patients spend more time on the phone, waiting on hold to figure out if a clinician takes their insurance, than they spend face-to-face with the actual doctor. U.S. payers and providers spent $496 billion on healthcare administrative costs last year. Those of us with private insurance take on 17% of these unnecessary costs.

Why is medical billing so complicated that it requires massive administrative staff and hours of wasted time for doctors and patients?

One reason is that the U.S. medical system lacks pricing transparency. If you have insurance, when you walk into a hospital with a broken arm or even plan an elective surgery, you are typically in the dark about the cost of the visit. There is no menu of prices, and there is no pre-warning. One of the most common tests in medicine is a metabolic blood panel. Despite how common this test is, hospitals and insurers negotiate the prices behind closed doors. It could either cost $11 or $1,000, and you — the true payer — won’t find out until you receive your bill in the mail. These examples of the lack of transparency — and there are countless others — not only affect patients but physicians as well. Right now, small physician practices are struggling to get paid, with the majority saying less than half of their visits are reimbursable by insurance companies due to the shift toward telehealth services and varying guidelines.

This system isn’t just inherently opaque — it’s also wasteful. Each bill requires the manpower of a robust administrative staff to act as the liaison between the institution, doctor, patient, and insurance company. Now that this staff is being furloughed or laid off, more and more doctors are having to take on those administrative roles, meaning they have even less time to see and provide the actual care patients need.

It’s never been more painfully clear: We need to consider other options to finance our medical care. We need to create a free-market healthcare ecosystem that allows people to pick and choose the type of care that is best for them without all the middle layers of inefficiency.

One example, which is a particularly good solution in this unprecedented moment, is direct primary care. DPC groups allow patients without insurance unlimited access to a physician for a subscription-based rate. By cutting out the middleman, direct primary care physicians can focus on treating patients without the heavy administrative burdens of our broken healthcare system.

A recent study by the Direct Primary Care Coalition suggests many medical professionals prefer this model, too. A whopping 99% of DPC physicians reported having better or much better “overall satisfaction” working in a DPC group, and 96% said there is “potential to provide better primary care under a DPC model.”

Other options exist as well, such as medical cost-sharing organizations. When executed correctly, this type of organization requires consumers to take control of their healthcare to become savvy health consumers, promotes transparency, and enables freedom and autonomy in health decisions. Members of medical cost-sharing organizations are also cash-pay, which can help decrease the administrative burden on physicians.

We need to think, now more than ever, about removing these unnecessary barriers to healthcare. How we pay for healthcare can be vastly simplified, and it’s happening. More often, doctors and patients are making the shift to “unconventional” payment methods, when in reality they’re just moving toward the common-sense approaches that happen to be used in almost every other sector of our economy — one that emphasizes the patient, affordability, and quality time and care.

Jamie Lagarde is the CEO of Sedera Health, a medical cost-sharing community focused on solving the healthcare cost problem in America.



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