New Marketplace

New Marketplace Survey: Patients Lack Information to Reduce the Cost of Care

Insights Report · March 7, 2019

Analysis of the NEJM Catalyst Insights Council Survey on New Marketplace: The Patient Role in Lowering the Costs of Care. Qualified executives, clinical leaders, and clinicians may join the Insights Council and share their perspectives on health care delivery transformation.

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Advisor Analysis

By Leemore Dafny and Chris DeRienzo

Efforts to mitigate rising health care costs have left most industry participants — patients, providers, and payers alike — frustrated at the lack of progress. While there is plenty of blame to go around, a significant open question remains: how responsible are patients for reducing costs?

A survey of NEJM Catalyst Insights Council members indicates that responsibility for lowering the cost of care is shared relatively equally among multiple stakeholders. Although hospitals/health systems (chosen by 95% of respondents) and clinicians (94%) top the list for responsibility, government (88%) and patients (83%) are fairly close behind. This suggests that health care is a collaborative enterprise, with no single participant or entity substantially more responsible for lowering costs than the other.

Many Stakeholders Share Responsibility for Lowering the Cost of Care

From the New Marketplace Insights Report: Patients Lack Information to Reduce the Cost of Care. Click To Enlarge.

Leemore Dafny, PhD, Bruce V. Rauner Professor of Business Administration at Harvard Business School, member of the faculty of the Kennedy School of Government, and NEJM Catalyst’s New Marketplace Theme Leader, views this survey result as a positive finding.

“I’m surprised at how high these figures are. I think that’s a positive development because it means that nearly all stakeholders view themselves as responsible for the extraordinarily high spending in this country.”

“On the other hand, I’m not surprised that patients were deemed to have the lowest degree of responsibility for reducing costs,” says Dafny. “They should have the lowest responsibility because they have the least information when it comes to making spending decisions, and a lot of these decisions are happening when patients are extremely ill or incapacitated.”

Chris DeRienzo, MD, MPP, a practicing neonatologist and Chief Quality Officer for Mission Health in Asheville, North Carolina, agrees that some of the obvious candidates for responsibility are provider organizations and clinicians, but he also adds a few more participants to the list of cost influencers.

“It doesn’t surprise me that hospitals/health systems and clinicians are at the top of the list, as they’re the entities closest to the sharp end of the delivery stick. However, just like anything else in health care, if we move one lever on the provider side, it moves 14 other levers that can also impact costs, including those controlled by health plans, medical equipment producers and suppliers, drug companies, and even employers.”

While patients play a prominent role in most cost-reduction strategies, they are not always best positioned to make decisions about costs due to the industry’s absence of cost transparency and Byzantine reimbursement structures and policies.

In fact, nearly two-thirds of survey respondents (61%) say that patients do not have enough information to affect the cost of their own health care–related decisions, and more than three-quarters (78%) say that assessing the total cost of care is extremely challenging for patients. No respondents to the survey believe that assessing total cost of care is not challenging.

Patients Lack Information to Affect the Cost of Their Care Decisions

From the New Marketplace Insights Report: Patients Lack Information to Reduce the Cost of Care. Click To Enlarge.

“America’s model of paying for health care doesn’t easily lend itself to reaching total cost transparency for patients and consumers,” says DeRienzo. “A system with premiums, copays, coinsurance, and then out-of-pocket maximums can make the true total cost of care nearly opaque to consumers. Given the nature of such a system, care that is actually more expensive from a total cost perspective can even at times cost less to a patient’s out-of-pocket spend.

Furthermore, none of this takes into consideration the impact of quality on cost. I think it’s exceptionally hard for patients to both access and fully understand this information right now, even at as general a level as CMS seeks to provide through Hospital Compare,” he says.

The top change indicated in the survey to support patients/consumers in lowering total health care costs without compromising quality is to provide more transparency about the true cost and quality of services (chosen by 71% of respondents). But Dafny emphasizes that the jury is still out on the effectiveness of this approach.

“I’m a little surprised that respondents are so optimistic that more information about cost and quality will help lower the cost of care because there is very little empirical evidence to suggest that’s true. I agree with the support for designing models to shift utilization to lower-cost settings.” That was the number-two choice (36%) for a change to support patients in lowering the cost of care.

She notes that “there is a lot of research that shows that even when price transparency tools are good, and the prices are well reported, accurate, and personalized to reflect deductibles and health plans, the patients don’t use the information. Either they don’t access it, or if they access it, they act on it too infrequently for it to have any meaningful impact.

“My view on this is that cost of care information is likely to have more impact if delivered to the provider, who can help to steer patients to efficient care. Of course, you need to provide incentives for the providers to engage with the information and to use it to get patients to the right place.”

DeRienzo notes that health plan design plays a critical role in consumer spending. But he cautions about unintended consequences. “I think plan design can significantly impact both net good behaviors and net bad behaviors from a long-term outcomes and total cost of care perspective. Specifically, I worry about exposing consumers to economic trade-offs on the kinds of preventative care that in the long run is going to improve their health and decrease total cost. By doing so we may pinch pennies but waste dollars. This is why it’s so important when we talk about cost that we discuss high-quality outcomes in the same breath.”

VERBATIM COMMENTS FROM SURVEY RESPONDENTS

How would the provision of health care in the United States change if patients had reliable information about the cost of care (including out-of-pocket and total costs)?

“1. You’d see pressure on hospitals to lower costs; right now, it’s a black box. A number of hospitals would probably close. 2. Substantially more care would shift to the out-patient setting. 3. More discussion on whether a test or study is truly needed.”
— Clinician at a large nonprofit hospital in the West

“As long as insurance companies are the intermediary, there can be no change.”
— Department chair at a large nonprofit medical school program in the South

“As with other areas of the economy, consumer knowledge would lead to market driven changes. It’s the 80/20 rule, 80% of patients would drive the biggest savings while 20% would have reactive care at the place closest to their home regardless of the published outcomes.”
— Director of a large for-profit community hospital in the Midwest

“Fewer emergency room visits and fewer unnecessary hospital admissions would occur. I also think that more preventive care would be sought and personal health would improve. The issue is that those who use the medical system incorrectly are also those who bear the least responsibility and are least likely to pay the costs.”
— Clinician at a small nonprofit medical school program in the South

“Decreased health care spending. But patients should also have information about the QUALITY of care.”
— Executive at a large nonprofit community hospital in the Northeast

Download the full report for additional verbatim comments from Insights Council members.

Charts and Commentary

by NEJM Catalyst

We surveyed members of the NEJM Catalyst Insights Council — who comprise health care executives, clinical leaders, and clinicians — about the patient role in lowering the cost of care. The survey explores the stakeholder’s responsibility in lowering the cost of care, challenges patients face in assessing the cost of care, the availability of cost information to inform health care–related decisions, patients’ most reliable sources of care cost information and the sufficiency of those sources, the changes needed to support patients in lowering the cost of care, and the priority of informing patients about end-of-life care costs. Completed surveys from 840 respondents are included in the analysis.

Assessing Cost of Care Is Difficult for Patients

From the New Marketplace Insights Report: Patients Lack Information to Reduce the Cost of Care. Click To Enlarge.

Insights Council members indicate that responsibility for lowering the cost of care is shared fairly equally among providers, patients, and the government. While hospitals/health systems and clinicians top the list for net responsibility, government and patients are not far behind.

An executive at a physician organization in the South describes the situation this way in a written comment: “Health care is like no other industry in the United States. There is no free market pressure driving down cost because the costs of essentially all aspects are hidden. Transparency of cost (and effectiveness, i.e., grading of hospitals and even providers) would go a long way to driving down costs.” A clinician from the Midwest offers a similar view, saying, “Health care is the only industry where we purchase services with no idea about what things actually cost. Hospitals, clinics, etc. have charges, but those are not actual costs.”

Download the full report to see the complete set of charts and commentary, data segmentation, the respondent profile, and survey methodology.

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