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Healthcare Consumers Are Ready for Bundling (But Are You?)

April 11, 2013
by Mark Hagland
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A recent survey of healthcare consumers by Booz & Company finds that consumers are eager to receive their healthcare through bundled arrangements

On Jan. 30, the New York City-based Booz & Company announced the results of a survey of 1,000 U.S. consumers regarding their interest in receiving their healthcare via bundled care delivery offerings. That survey found that fully 78 percent of respondents told surveyors that the concept was appealing to them.

In releasing the results of the survey, Gary Ahlquist, senior partner in Booz & Company’s North American health practice, said in a statement, “Healthcare leaders know the time has come to figure out how to make high-quality, affordable care accessible to more people. This survey,” Ahlquist said, “shows there is an active appetite for change from traditional approaches to healthcare delivery, and suggests what a viable new model could look like.” The Booz survey was conducted online during the summer and fall of 2012.

Among the key results of the survey:

> Respondents indicated that they are increasingly willing to switch hospitals (50 percent) and medical specialists (45 percent) for bundles that are significantly lower-priced (meaning at least 10 percent less than existing coverage).

> Consumers showed a clear preference for bundled offerings from physicians, hospitals, and employers; 30 percent more consumers ranked those bundles as attractive choices compared to those offered by retail stores, online insurance aggregators, or brokers.

> Among the benefits available through bundles, patients saw the ability to provide input in their care processes, coordinated care, and warranties, as the most appealing. More than 50 percent of survey respondents ranked those as the top three benefits.

> A large majority of consumers (80 percent) expressed a preference for bundled coverage across all settings in the care continuum, from initial physician consultation to post-acute care and rehab.

Shortly after the release of the survey, HCI Editor-in-Chief Mark Hagland spoke with Minoo Javanmardian, a partner at Booz & Company who leads Booz’s payer-provider business in North America, and who was one of the four authors of the survey, regarding her perspectives on the survey’s results. Below are excerpts from that interview.

The results of this survey seem to indicate a growing awareness of pricing in healthcare. Would you agree?

Yes, I would, that is correct.

Minoo Javanmardian

And perhaps a growing sophistication about it, as well?

Yes. If you explain to consumers what a care bundle is—that if you have a condition and want to use the healthcare system and the bundle essentially delivers care end to end and ends fragmentation, and by the way, you know what it will cost—for consumers, it’s pretty appealing to them.

Were you at all surprised by the survey’s main findings?

I was not actually surprised by the fact that consumers are interested in the concept of bundles, particularly as you think about what the patients have to go through today as they access the system. Right now, they’re still having to put things together themselves for the most part. So in that sense, I was not surprised. What was interesting, though, was the issue of choice. And if the choice of physician and institution becomes limited in terms of the number who will or can do bundles, will the consumers have issues with limits on choice? What we found out was that that was not true; the only issue was around primary care, that they tend to be very sticky with their primary care physicians.

When it comes to bundles, if you say, here is the better value for you in a particular bundle, and here’s how you get it, and they are very interested—they’re more interested than we thought they would be. And the choice question becomes more important when it comes to their PCP, but much less so when it comes to the hospital.

Some of the specific survey results found that, on the one hand, healthcare consumers don’t want to travel far for care, but on the other hand, they see potentially having input into care processes, coordinated care, and warranties, as appealing, correct?

Yes, if they live in an urban area, they don’t want to travel beyond their urban area for care; but if they’re rural, they’re more willing to travel. Now, we didn’t ask one particular question—but if you’re a patient with cancer, we know a lot of patients go to places like MD Anderson, and such, and probably that would depend on the acuity of the condition. We didn’t test that, because we would have required a much larger sample. So yes, they prefer to get the care in a bundled fashion locally, but if rural, they would be willing to travel farther.

With regard to the questions on patient input into the care delivery process, what kinds of choices did you give them?

We gave them 10 choices. Here is the order in which those choices were appealing to them, with the most appealing choice first: the ability to provide input on care; a single, coordinated team providing care; the offer of a care warranty; one bill listing all costs; a fixed upfront, all-inclusive price; a team roster of the care team; a roadmap of the care course; third-party rating of providers; travel and lodging expenses covered; and concierge services.

So input into care processes, coordinated care, and warranties, were the three elements that were most appealing to those consumers surveyed. Was that at all surprising to you?

Not really, because the biggest pain point for patients is the fragmentation of care and care processes. So team-based care is very appealing. And, per warranty, they want to make sure that the outcome is good. And you only see that in a few instances, such as with Lasik surgery, for example. So they would like to see the broader application of that. And finally, the pricing is very interesting, because in healthcare right now, if you were to go get a procedure in a hospital, and you were to ask how much it would cost, including in terms of out-of-pocket, they couldn’t tell you. And for me, I like to use the car analogy, and it’s as though you were to go to a Toyota dealership, and say, I like this Camry, and they sell it to you, but you don’t know how much it costs. And you drive off the lot, and then six weeks later, you get a bill for it, and you can’t return the car.

Healthcare is in some ways a very sophisticated industry, but yet it hasn’t gone through a transition to become consumer-friendly and economically viable. And the issue is coming to a head right now in terms of the cost of care and accountable care, and so on.

Implications for healthcare IT leaders

There are a lot of implications in the survey results for our audience of healthcare IT leaders. When it comes to helping to create the systems of knowledge that will support the level of consumerism that the healthcare system is moving towards, healthcare IT leaders will need to help their colleagues to put together all the data on costs internally to prepare for bundled-payment contracting.

Yes, though the data and information requirements involved go far beyond costs. To me, the informatics of all this will be a backbone for success. And that will only be possible if all the stakeholders, especially the caregivers, have access to the key patient information throughout the process of care. And if you can’t access that information, it won’t work. Right now, you have payers and providers, and you work things out through contract negotiation, right? But if you go to bundled payments, you’re negotiating the care bundle pricing end to end. But you can imagine that the role of the payer in the future will be as an informatics powerhouse, right? Because the payers can make information available to the providers so that they can give the right kind of care. So it’s a very different construct for care delivery and payment. So that’s on the care side, and on the cost side, yes, you need to make everything visible. But to me, the cost is the less important part, because the pricing will get negotiated. But the core clinical information will be key.

And so it’s core clinical information that will run this engine, basically, right?

Absolutely. And why haven’t people done bundled-payment contracting before? The core reason is fragmented information, and the inability to understand all the elements in what becomes a bundle. So fragmented information is one of the key issues in designing effective bundles. And essentially, if you pull it together, the informatics will allow you to put all the information and data together to make this happen. And we think at the end of the day that bundles will be at the core of care delivery.

And if you think about the population health concept, and you say, I have healthy patients and patients who are sick. And you can imagine that a bundled model of care delivery will be front and center, because if you need procedures such as heart surgery or knee replacement or whatever, all those procedures can be parts of bundles. And you can even develop bundles of care for things like immunization and preventive care. So to us, the bundles will be the backbone of care delivery, if you can solve the challenge of informatics in this area.



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