Issue link: https://beckershealthcare.uberflip.com/i/976338
17 Executive Briefing Sponsored by: C hange and uncertainty in healthcare are hardly new phenomena, but the industry today appears to be experiencing a period of especially significant transition. Beyond the impact of ongoing policy debates and legislative and regulatory shifts, trends like changing demographics (including an aging patient population, and the emerging cohorts of millennials and Generation Z), increased spending, new models of care delivery, healthcare consumerism and social sharing and rapidly advancing technology are all having a profound effect on healthcare in the U.S. One trend in particular is already having a pointed impact on care providers of all sizes, from small, independent practices to the largest health networks. Rising out-of-pockets costs are shifting responsibility for payment from traditional payers like insurance companies to individual healthcare consumers. This "payment shift" is affecting the way patients make healthcare purchase decisions, but it also has serious implications for providers, influencing financial policies, patient communications and approaches to billing, collections and revenue cycle management. Fortunately, providers who recognize this transition and take steps to adapt can navigate it successfully and continue to thrive. Rising cost Healthcare spending overall in the U.S. has been on a growth trajectory that shows no sign of slowing. CMS projections released in February anticipate 5.5 percent annual growth through 2026, reaching $5.7 trillion by that point. 1 This increase is expected to outpace that of gross domestic product, driving healthcare spending to nearly a fifth of GDP (19.7 percent) in 2026. More tellingly, the share of costs that individuals are paying continues to rise. In addition to premiums, copays and coinsurance for health insurance coverage, deductibles are a major source of out-of-pocket costs for many healthcare consumers. Data released in February by the CDC show that enrollment in high-deductible health plans increased substantially in the first nine months of 2017, from 39.4 percent in 2016 to 43.2 percent in September 2017 (among individuals aged 18 to 64 with private health insurance). 2 According to an annual survey by the Kaiser Family Foundation, premiums for individual employer sponsored coverage rose 4 percent, on average, in 2017, more than both wages (2.3 percent) and inflation (2.2 percent). 3 The average employee contribution for this coverage was $1,213, and the average deductible (for individuals with a deductible) was $1,505, with the majority of covered employees (51 percent) having a deductible of $1,000 or more. This represents an increase of 37 percent in just five years (up from $1,097 in 2012), and 148 percent over the past decade (up from $606 in 2007). Pressure on patients — and providers Rising costs may be inherently concerning and suggest issues to be addressed in the current healthcare system, but they also have a pointed impact on many patients and providers. In some cases, cost can be a significant barrier to receiving care, leading individuals to delay or decline treatment due to concerns about cost. According to the Federal Reserve, 44 percent of Americans could not cover an unexpected expense of $400 without borrowing or selling something, and the average cost of an unexpected major medical incident is $1,000. 4 In an ambulatory surgery scenario, procedures can often be planned well in advance, allowing patients time to prepare financially for the expense. However, this can mean delaying treatment, which can affect health, quality of life, and potentially impact an individual's earning power (e.g., if deferred surgery affects strength or mobility). For providers, the impact of high out-of-pocket costs goes beyond seeing patients hesitate to move forward with recommended treatment in a complete and timely way, which can affect care quality and outcomes. Delayed or declined treatment also has a financial impact, representing lost or The payment shift: patients as payers By Dave Fasoli, Synchrony EVP and CareCredit CEO 1 National Health Expenditure Projections 2017-2026, Centers for Medicare & Medicaid Services, February 14, 2018 2 Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January–September 2017, Centers for Disease Control and Prevention, National Center for Health Statistics, February 2018 3 2017 Employer Health Benefits Survey, Kaiser Family Foundation, September 19, 20174 4 Federal Reserve Board, Report on the Economic Well-Being of U.S. Households in 2016, May 19, 2017