Healthcare finance is often regarded as a controversial and confusing sector by healthcare organizations and entities. This dynamic realm is plagued with challenges and problems that affect physicians, employers and patients. Also, how insurers are redefining prior authorization protocols, and consumers struggle with the complexity of hospital price comparisons. In this blog, we’ll analyze the mastery of risk-assuming providers and assess the disruptive influence of digital health startups. Simultaneously, we’ll inspect the genuine motivations behind insurers’ prior authorization adjustments and evaluate the feasibility of consumers actively participating in price transparency initiatives. Let’s navigate the evolving nuances, challenges, and prospects that define the future landscape of healthcare finance, shaping the industry’s vision and redefining stakeholder roles.
Physicians’ Incentives and Risks
In healthcare finance, physicians are reimbursed categorically. That means, from a financial lens, there are primary care physicians and procedure-based specialists. Both are reimbursed under the fee-for-service model. However, there’s a disparity. Primary care physicians are often inadequately reimbursed, while specialists are reimbursed enough; but not enough to take risks. That’s why shifting to a risk-based reimbursement model is much needed to increase focus on preventive care. Moreover, this reimbursement model will enable physicians to take risks to leverage preventive care.
Besides this risk-based reimbursement model, understanding the accountability of financial risks is crucial. Primary care physicians are often held accountable for patients’ overall health. However, the term “accountability” is perceived in a wrong sense. It’s due to the lack of financial education that physicians get. Moreover, primary care physicians are at risk of financial loss more than specialists. For example, if a primary care physician treats Medicare patient, it’s loss for the physician. Also, the physician is at risk as this is against the law.
Limited Employer Engagement
One significant hurdle in the journey towards effective employer-driven healthcare solutions is the lack of genuine concern among the majority of employers. Despite verbal expressions of care for employee benefits, action speaks louder. The statistics reveal that the common US CEO spends a mere 30 minutes a year thinking about their employee’s health plan. This lack of attention poses a substantial barrier to meaningful progress.
One light of hope in the quest for employee well-being lies in the concept of onsite clinics. These clinics aim to direct primary care physicians and act as health managers for employees. The success of companies like SeraGraft known for manufacturing dashboards for automotive giants Ford and GM, illustrates the potential of onsite clinics. SeraGraft’s 12-year streak of flat healthcare costs has been achieved through directed health plans and onsite clinics. This showcases the tangible benefits of this approach.
Successful Approach by Walmart
Amidst the challenges, there are examples of employer commitment to employee healthcare, with Walmart leading the way. The retail giant, despite being a low-margin business, prioritizes its employee health plan. Sam Walton’s commitment in 1992 to tackle rising healthcare costs is evidence to their proactive approach. Walmart, unlike many, does not outsource its healthcare management. It has in-house actuaries, staff, and expertise, considering it a core competency. Their success lies in hands-on ownership, accountability, and a commitment to providing understandable benefits which is illustrated by their zero coinsurance policy.
Walmart with its approximately 2 million employees, stands out as a guide of creativity and intelligence in healthcare purchasing. The company is known for being tough negotiators. They seek not only cost containment but also drive better health outcomes. Walmart’s rare approach demonstrates that, when approached strategically, healthcare can be both cost-effective and employee-centric.
Importance of purchasing healthcare
The journey towards effective healthcare purchasing begins with a crucial player: the CEO. The significance of an engaged CEO is a driving force behind transformative healthcare solutions. Smart CEOs are not just cost-conscious but also envision healthcare as a tool to drive better health outcomes. HR teams empowered by visionary leadership in revolutionary innovative healthcare purchasing strategies. The common fears of HR professionals are fear of failure and subsequent termination. When CEOs actively empower HR to be creative, take risks, and experiment, groundbreaking solutions will emerge.
The Rarity of Innovative Buyers
There is a scarcity of companies that are actively engaged in managing healthcare costs. The challenge faced by HR professionals who are constrained by fear of termination are often hesitant to experiment. However, a call to action is required for organizations to foster a culture that encourages risk-taking and creativity in pursuing efficient and effective healthcare purchasing.
Successful innovation by Nebraska Furniture Mart
A shining example of a company breaking free from traditional molds is Nebraska Furniture Mart, a Berkshire Hathaway company. With a history rooted in moderation, the company’s leadership recognized the need to optimize healthcare spending while ensuring employee well-being. Nebraska Furniture Mart empowered its HR team to take chances, make mistakes, and continually experiment. The result is a remarkable success story with outstanding health performance. This affirms the notion that innovation and experimentation are the keys to effective healthcare purchasing.
The bottom line is that the healthcare finance sector has a myriad of complexities and physician providers are at the forefront of facing losses. It’s high time that healthcare stakeholders change their viewpoint to address the challenges and focus on educating caregivers about their reimbursements and insurance payment processes. Also, employers need to change their approach to elevate employee well-being. In essence, experimentation, taking risks and adopting strategic approaches can help you navigate the evolving nuances and opportunities of the future of healthcare finance. Explore more interesting topics and listen to insightful podcasts related to healthcare only on CareTalk.
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David Williams linkedin
David, co-host of CareTalk Podcast, articulates his passion for digital health, technology-enabled services, and AI. His podcasts cover a plethora of intriguing healthcare subjects to guide stakeholders to a better future of healthcare.
Dr. Eric Bricker linkedin
Eric, Medical Director of SimplePay Health, is a healthcare finance expert. Dr. Eric’s experience in healthcare and knowledge of finance helped several resident physicians. His YouTube channel “AHealthcareZ” offers an insider view of $4 trillion sector of the healthcare industry.