According to a July 2011 report from CMS’ Office of the Actuary, patient out-of-pocket spending and private health insurance spending are both projected to grow this year. Out-of-pocket spending is projected to grow 3.9 percent in 2013, up from 1.8 percent in 2010. Private health insurance spending is projected to grow 4.8 percent in 2013, up from 2.6 percent in 2010. Employer-sponsored insurance enrollment is expected to increase with gains in employment.
As household incomes grow, this is expected to lead to more healthcare spending. At the same time employers are expected to increase cost-sharing requirements for employer-sponsored insurance plans.
While both patient-consumers and employers are looking to keep the costs of care down, they are also seeking surgical providers with a reputation and track record for quality care and positive outcomes to help reduce the need for future care and additional costs.
But the search for providers that can deliver low-cost, high-quality care is no longer limited to a setting located within a reasonable drive. Patient-consumers and employers are surgery shopping outside of their state and region to identify the best providers available and at the best prices — prices that do not necessarily just look at the cost of procedures but may factor in expenses associated with travel to and from a setting as well. Payors, looking to keep costs down, are also investing in resources to help their members find quality, affordable care.
With these new developments, hospitals are no longer in competition for patient-consumers with other local hospitals and ambulatory surgery centers. They are now in competition with surgical providers throughout the country — and even the world. Due to this increased competition and tightening reimbursement, hospitals must turn themselves into destination settings — built around a focus on quality, transparent costs and, perhaps most importantly, superior customer service — if they wish to keep their case volume from local patients high and bring in patients from outside of their market.
Here are five steps hospitals should take to turn their facility into a destination setting for surgical care.
1. Provide price transparency. Even just a few years ago, cost wasn’t a significant determining factor — if it was a factor at all — of where a patient underwent a procedure. For many patient-consumers, price is now a significant factor. You may provide outstanding care, but your facility may be looked over as an option for patient-consumers if they cannot determine what that care will cost.
As such, it is imperative to find ways to provide transparency into the prices you charge for procedures, explain why you charge the amount you charge and identify what the charges cover and what they do not. By sharing this information, you are not only providing an important detail that is likely on a patient-consumer’s evaluation criteria checklist but you are developing a level of trust with the patient-consumer built around honesty as well as open and accurate communication that does not hide or disguise information.
It is also important to make this information easy to find or at least have it available if a patient-consumer asks for it or patient-consumers may believe you do not provide pricing transparency. A recent study published in JAMA Internal Medicine revealed researchers were able to obtain a complete price estimate (including physician fees) for routine hip replacement surgery from just close to half the hospitals contacted, but to obtain that figure often required contacting the hospital and doctor individually. Fifteen percent of hospitals were not in a position to provide any price estimate for the procedure.
2. Keep costs low. If a patient-consumer identifies two facilities believed to provide an equal level of quality care, the lower cost option is likely to win out. While it may go against your hospital’s model for financial success, continue to explore different ways to lower the cost of the care you provide but now pass some — or more — of these savings along to patients in the form of lower prices.
Employers are not only encouraging but providing their employees with financial incentives to go to lower-cost facilities. As the Los Angeles Times reports, companies like Wal-Mart and Kroger Co. are waiving deductibles, giving substantial bonuses and covering travel and even procedure costs for patients that go to cheaper providers.
So if your efforts to lower the cost incurred by patients brings you more cases, the decline in what you earn per case should be offset; your hospital will be rewarded with more cases at a slightly lower rate, which may be better than fewer cases at a slightly higher rate.
3. Provide quality transparency. It’s not just enough to know and be able say your hospital provides high-quality care — patient-consumers need to see the proof to back it up. Your accreditation and any quality awards your hospital has earned should be prominently displayed on your website, with an explanation of what accreditation and the awards mean and what they say about the quality of the care you provide. Patient satisfaction ratings and testimonials, outcomes data and your performance on quality measures should also appear on your website and in marketing materials.
Transparency in quality and cost isn’t just important to patient-consumers and employers. Payors are placing a greater emphasis on it as well, and are contracting for services to help their members make educated health decisions based around these components. For example, in late January, insurer Harvard Pilgrim Health Care contracted with Castlight Health to provide 600,000 Harvard Pilgrim plan participants access to insight into cost and quality information for providers and common procedures. Castlight Health is a company built around providing information about healthcare price and quality.
4. Develop and promote a travel program. When a patient-consumer from outside your area comes to you for care, they’re not just coming to your facility — they’re coming to your city, its airport or train station, a nearby hotel and local restaurants. Planning some of these experiences may add stress while others may make traveling for surgery more appealing. If your hospital develops a travel program, it can help with both.
Travel programs are designed to assist patients in making the necessary plans to get to your area, ensure they have the means to get to and from your facility for their care and make the time they spend before and after their procedure as stress-free and enjoyable as possible. Travel programs may provide recommendations and discounts on hotels, car rental agencies and restaurants, as well as information on tourist attractions and events taking place during a patient’s visit. The members of your facility assigned to the travel program should help address any questions from a patient about their visit and help to make the necessary arrangements and reservations. Facilities may cover some of the costs of a patient’s visit to further entice them to select them as their setting for care.
If your hospital develops a travel program, you should provide this information on your website and in marketing materials. Just the appearance of your travel program may provide a patient-consumer with greater confidence in your facility’s ability to help take care of them, not only in the OR but during their entire visit to your area.
5. Partner with surgery benefit management programs. There are a number of companies designed to help patient-consumers, employers and payors with shopping for providers. These companies, sometimes referred to surgery benefit management programs, assemble a network of preferred facilities, usually based upon a detailed set of criteria.
One such company — Bridge Health Medical — has criteria that includes accreditation by a national agency and demonstration of outcomes and satisfaction scores in the top 25 percent of facilities in the country. If your hospital meets the criteria of a surgery benefit management program and becomes a part of its network, this may further enhance the likelihood of your becoming a destination setting for new patients.
Jessica Nantz (jessica@outpatienthcs.com) is president and founder of Outpatient Healthcare Strategies, a consulting management services firm focusing on operational improvement and efficiencies for ambulatory surgery centers, hospital perioperative services and hospital outpatient departments. The company is based in Houston.
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