Consumer-driven healthcare may be the "next big thing" after managed care. Indeed, it may change healthcare as profoundly as managed care did 20 years ago. Consumerism drivers include double-digit premium hikes, employers desperate to cover employees yet to lower costs to remain competitive, and 45 million uninsured. The latter, increasingly unable to pay, could undermine investments in our healthcare infrastructure, causing a cascade of personal bankruptcies, bad debts, failing hospitals, closing emergency rooms, falling income for insurers and suppliers, and widespread economic contraction. The healthcare industry is undergoing a shrinking paying customer base. This is occurring because the health inflation rate, now five times the rate of general inflation, is unsustainable for growing numbers of ordinary Americans, including many in the middle class.

Given these circumstances -- and American's desires for choice and access to medical technologies, and skepticism about government -- CDHP may be the only remaining workable alternative, outside of massive government intervention, for our health system.

I believe consumer driven care will fundamentally transform existing relationships between major healthcare participants by moving to a more consumer (a.k.a., patient) centered system. As we begin 2005, consumer-driven care seems to be driving down eight paths:

1. From government reticence to government activism

At the Republican convention, President Bush understatedly said, "More people will own their own health plans." He was referring to health savings accounts, or HSAs, the stealth component of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. It took effect January 1, 2004. Martin Feldstein, Harvard economics professor, predicted that HSAs "may well be the most important piece of legislation of 2003." Feldstein may be right. During the campaign, Bush made HSAs a main thrust of his health proposals. Republican leaders have generally embraced HSAs as a market-driven solution to lower healthcare costs and improve quality. The government has already offered HSAs to federal employees, including congressmen and senators, covered by the Federal Employees Benefit Program. With Republicans now in control, Democrats are leery. They realize HSAs, once widely in place, could make creation of a future government run system impossible.

2. From HMOs and PPOs to full replacement by consumer-driven health plans

HSAs and HRAs (Health Retirement Accounts) are just beginning to be marketed. Presently, such plans comprise about 2 percent of the health plan market. But consumer-driven plans could grow quickly and replace existing HMOs and PPOs. Jeff Hogan, a national insurance broker in Connecticut, says 90 percent of his business over the last year has involved consumer-driven plans. In his experience, most medium sized companies with 50 to 500 employees are completely replacing HMOs and PPOs with consumer-driven plans. A Mercer survey indicates 73 percent of firms will likely add HSAs to their benefit mix in 2006. Many large firms - Medtronic, Textron, Amazon.com, and Sara Lee - have switched to HSAs. National insurers - United Healthcare Group, Aetna, and Humana - have developed plans with HSAs or HRAs as mainstream products. United, for example, has 220,000 participants in 100 companies signed up on its consumer plan, has switched its employees to CDHP, and recently acquired Definity Health, a consumer plan startup. At this early stage, most small and large employers offer a choice of HMOs, PPOs, and CDHPs (Consumer Driven Health Plans), but that may change as employers and employees realize consumer-driven plans by definition offer a wide choice of providers. Even the venerable Kaiser Permanente, which has resisted HSAs because it prefers comprehensive coverage, is now offering HSA-based plans. Arthur Southam, senior vice president of product and market management of Kaiser, says Kaiser is forced by the market to offer HSAs because "our customers want to buy it."

3. Consumer acceptance

America's Health Insurance Plans released a post-election survey on health attitudes that found:

• 93 percent say the public has a right to know performance measures for hospitals, physicians, and nursing homes
• 54 percent favor choosing more basic coverage at a lower cost rather than increasing costs with government mandates
• 93 percent think seniors should have the same choices of health coverage plans in Medicare available to the rest of the population.

Consumers appear ready for reform. They're prepared to take a hard look at healthcare quality, to consider low cost basic coverage, and look at broad choices beyond traditional Medicare coverage. These attitudes play into the scenario envisioned by CDHC advocates - lower costs, more choice, higher quality.

4. Hospital-physician partnerships and joint ventures

Modern consumers, particularly the nation's 76 million baby boomers, could care less about ownership struggles between hospitals and specialists. They don't care if high tech specialists like cardiovascular specialists, orthopedists, and surgeons of other stripes create their own hospitals, thereby weakening community hospitals' bottom-lines. Instead, consumers want what they want - convenience, efficiency, comfort, and quality - when and where they want it, which is often in comfortable and safe suburban settings. As it happens, these settings are where the paying consumers are. The idea driving CDHC and HSAs is simple: if consumers are spending their own money (and worrying about depleting their HSAs), they will spend it wisely. They will expect the best in high tech-high-touch medicine, even if this requires investment beyond the separate means of hospitals and specialists. Meeting consumer expectations will require new facilities, expanded parking, closely-knit communication systems, multiple hospital physician partnerships, teams of physicians and other health professionals, and creation of Big MACCs (Multi-Specialty Ambulatory Centers). The latter blend traditional hospitals and doctor office settings.

5. Transparency

The buzzword among the CDHC proponents is "transparency." The transparency idea flows out of the Institute of Medicine's 2001 report "Crossing the Quality Chasm" and the work of the Institute of Healthcare Improvement. These organizations say doctor and hospital information ought to be transparent, standardized, objective, and evidence-based. Many CDHPs offer member Web sites where consumers can search for doctor and hospital data. This data may include comparative prices, interactive calculators of costs of brand vs. generic drug costs, quality ratings, outcomes, disease protocols, evidence-based guidelines, even malpractice records. The health plans are hoping consumers will use Web site data to make choices, shop online for the best deals and engage physicians in dialogue. This hope has yet to be tested widely, and many clinicians are skeptical on whether consumers are sophisticated enough to use these Web sites to "interview" their physician, either before or after an office visit.

6. So long, PCPs?

Primary care physicians consider themselves an endangered species. Residency matches for family medicine, pediatrics, and internal medicine have dropped for five consecutive years. In a New England Journal of Medicine piece "The Future of Primary Care Medicine," the authors say unless changes are made soon in family practice and internal medicine residences, "Primary care seems destined to become the province of nurses and other non-doctor healthcare professionals." This is already occurring in the disease management (DM) field. DM companies use teams of nurses rather than doctors to treat homebound patients. Doctors, who see patients episodically, are paid to see patients in their offices. They have largely been left out of the disease management equation, though many use DM services at their back office. What does this have to do with CDHPs? Simply this. Disease management is popular with consumers, who like personal contact with nurses between office visits. Most consumer health plans encourage disease management because of lower costs and greater consumer satisfaction.

7. Retail healthcare

Urgent care clinics and doctors' offices in strip malls and other commercial outlets aren't new. What's new is that medical visits are being made part of the shopping experience. According to Money magazine, consumers are beginning to shop aggressively for healthcare, and all kinds of businesses are springing up to cater to consumers who are short on time and money. Minneapolis-based Minute-Clinics have set up clinics in Cub Foods and Target stores treating relatively simple problems for $25 to $59 to "walk-in patients only." A wave of "Big Box" health retailing may be upon us. This service appeals to busy parents with sick kids. Other manifestations of this catering to patient convenience during shopping are thousands of imaging centers offering total body scans, cardiac or pulmonary evaluations, virtual colonoscopies, or laser vision corrections. Some of these specialized health convenience centers are using slogans such "buy one, get one free" or "half price for immediate relatives."

8. The age of EMRs

What do Newt Gingrich and Sen. Hillary Clinton agree on? Not much, except that they believe there are some answers to healthcare costs and quality in information technology. But is the EMR envisioned by the Bush administration in the personage of healthcare IT czar David Brailer, M.D., the Holy Grail for making our healthcare system more efficient? The underlying assumption is that consumers will make smart, value-conscious decisions about care when they have good information. American businesses invest 40 percent of their capital into information technologies. Why can't the healthcare industry do the same? In the case of hospitals and integrated delivery systems, with their organizational structure that often includes chief information officers, IT implementation is beginning to happen. These converging pressures may be too powerful to resist. But in the case of economically stressed doctors, progress is much slower. Doctors often must cough up $25,000 or more per doctor to install a system. They have more pressing financial imperatives, e.g. malpractice premiums. In addition, they fear EMRs will slow or disrupt patient and cash flow. Roughly 40 percent of groups of 20 and doctors of large enterprise academic organizations and integrated health systems have comprehensive EMRs. The percentage drops to 10 percent or less for doctor groups of 10 or less, which comprise 80 percent of American physicians. Nevertheless, surveys by Harris Interactive and others indicate that most consumers prefer doctors with whom they can communicate online and who have practice Web sites. Consumers, not the government, are likely to pressure doctors into adopting information technologies.

---

Richard L. Reece, M.D., is a pathologist, writer and editor. He is the author of a new book Hello Health Consumer: The Transformation of the Doctor-Patient Relationship. (www.practicesupport.com). He also serves as editor of Physician Practice Options and The Quality Indicator, two nationally distributed newsletters for physicians. He lives in Old Saybrook, Conn., with his wife, Loretta, and Paris, a French bulldog of impeccable heritage. He may be reached at 860-395-1501 or mailto:%20rreece1500@aol.com