I read another article today about cash-pay doctors, and I have my own personal experience with a cash-pay primary care physician. I struggle with the challenge of creating a fair system that pays properly for medical care instead of feeding bloated insurance bureaucracies. When I look at self-insured business entities, I got a brief glimpse of a way to fundamentally change the way care service is delivered, measured, coordinated, and therefore, purchased.
Looking at the rising costs of healthcare from the point-of-view of the self-insured model (used by large corporations and in government-funded care), it is easy to see why the costs of care continue to grow out of control. Self-insured companies and government programs have traditionally hired insurance companies to manage a network of providers and the care-to-reimbursement part of the model. This includes prescription benefits management, pre-certification, and medical necessity review. In the end, the entire care experience is managed by the insurance company (or "payer"), but the actual cost of the care paid to the providers (and therefore the risk) is borne by the self-insured company or government health program (DoD Tricare, VA Community Care, and even Medicare and Medicaid). In a purely economic view, the organization paying has no direct control over the cost of care except by choosing what benefits are paid based upon the plan selected from the payer. Further, the payer has no risk since they are simply paid a fee to manage the plan. We need to do this differently and intervene in the already disjoined patient-payer-provider relationship.
To get a core understanding of the challenge and potential solutions, we need to get a few things on the table that are not commonly understood:
- Doctors are prevented from "colluding" to establish a price for their services to the insurance companies. (From NIH)
- Insurance companies can collaborate to set prices that they are willing to pay for a service within a region. (NPR Article)
- Doctors spend 50-70% of their work time justifying the expense of care (Forbes Article)
To drive upheaval in this putrified process, we could implement a process similar to the applied in the taxi industry (Uber and Lyft) and hotel industry (Airbnb). This would connect those who want to pay for care (like self-insured and government programs) directly to the practitioners who provide the care to the benefit of the patient. Furthermore, once the model is in place, the insurance model flips to protect companies that were previously not self-insured to manage the risk of the downside of the shift.
The system does need to account for the fact that some care is not offered with choice - for example emergency care - and would float on a different market than those where a patient can chose a practitioner and a level service to meet their needs. Once a practitioner is known for their capabilities and demand for their particular services go up, the price paid by the self-insured party would go up to provided the improved efficacy. This also allows newer practitioners to enter the market more cost-effectively thereby allowing them to build up outcome measures and patient loyalty.
As we know most of the parties in this chain only act differently if they see an easy-achieved benefit, I put forward this basic subset of benefits by the stakeholder:
- Immediate cash payment
- Reduced fees because no overhead justifying service to payers, the information is already there to justify the need.
- See market demand by skills, geography, and quality.
- Exposes part of their schedule for cash-pay and part for traditional insurance. Streamline the shift.
- Improved sharing of data to prevent retests and rework; further, it exposes all of the justification that the practitioner used in their care decision...no need to document, just find.
- "Surge" payments for high-demand skills and time windows...customer chooses and pays.
- Self-Insured Companies and Government
- Reduced total liability by direct access to providers as well as balance of supply and demand.
- Set caps on reimbursement for services within a geography, remainder is cash-pay by patient - limits upside risk.
- Immediate feedback of care and costs - reducing fraud and cost optimization on better sharing of health data.
- No longer regulated at the state level as insurance, simple purchase of care on behalf of individual.
- More face-to-face time with practitioners.
- More flexibility in time and availability of services.
- Cash-pay allows patients to go to high-demand doctors or high-demand hours and pay supplement over cap set by self-insured party.
- Patients are able to see and tailor their selection of practitioners with clarity, access to outcomes, other patient reviews.
While this sounds like a complete re-write of the entire medical system as we know it today, it is not. This disruptive force can be introduced slowly through each of the self-insured companies and in concert with outsourced care at both DoD and VA. Practitioners can move parts of their practice from insurance-pay to cash-pay as the market transitions. Would love to find somebody who would like to invest and collaborate to make this happen.