I remember some years ago while working for a health insurance company, asking one of the company’s senior executives whether we should promote our preventative and primary care rider options to customers who had opted out of purchasing them for a cheaper premium. If you are unfamiliar with insurance policy riders, these are add-on provisions to the standard policy that provide expanded benefits to the policy holder at an additional cost. Prior to the ACA requiring it, for example, maternity coverage could be purchased as an additional rider on an insurance plan if the policy did not specifically include it.
His immediate answer was, “NO!” He stated that the role of the insurance salesmen was to explain the policy options to each client. Once clients purchased a policy, they had a 10-day grace period to ask questions, add additional coverage, or cancel the contract before the premium rate kicked in. As a health customer service agent, my job was not to sell the policy but to service it and provide a verification of benefits when asked.
I must also add here, that in most cases the benefits of the policies were minimal, for example, there was the aero-medical evacuation plan that only provided coverage for transportation via a fixed-winged aircraft. I dealt with telling several unhappy customers who had been evacuated by a helicopter due to an accident that they would not be covered.
From the CEO’s perspective, the preventative and primary care riders were too expensive for the company to promote on individualized plans. It cost the company less when those services were provided through employer-based group plans because of the larger risk pool. Individual plans with higher deductibles were more profitable to the company. When clients opted for catastrophic coverage, which only provided inpatient care, it meant fewer upfront costs for maintenance.
Years later the perspective has changed because research has shown that the cost-benefits of investing in primary and preventative care can lead to improved consumer health and long-term savings.
Cost of Healthcare in the U.S.
The cost of healthcare in the United States is around $10,000 per person according to data released by the National Centers for Health Statistics. This means that if we were to divide America’s approximate population of 320 million into the $3.2 trillion dollars that is spent on healthcare annually, each person’s fair share would be around $10,000 dollars. And the Center expects the cost of care to continue to rise 5.6% annually through 2025.
Amount invested in healthcare annually divided by the approximate U.S. population
75% of healthcare costs are directly attributed to chronic diseases; as the cost of care continues to rise, so will the cost of premiums. By investing in cost-effective preventative and primary care, healthcare companies can shift the chronic care paradigm. Ideally an upfront investment in preventative and primary care would lead to:
- Increased expansion and accessibility
- Higher quality, more cost-effective care
- Earlier detection of diseases
- Improved utilization of intervention models
- Empowered, better educated consumers
- Improved quality of life
- Long-term systematic savings
- Reduced consumer costs
A systematic review of data published by the Robert Wood Johnson Foundation (RWJF) cited that a cost-savings approach to preventative care may result in decreased costs, but may not lead to a reversal in long term trends. Using a cost-effective analysis model requires spending more money up front and that a myriad of factors are taken into consideration such as the:
- Target population
- Use of technology
- Frequency of interventions
- Comparability analysis
- Distribution of resources
While the cost-effective approach requires spending more money, it does lead to increased long-term benefits such as improved quality of life. Using a cost-effective analysis allows evaluators to determine the overall impact of various interventions.
In a recent classroom discussion, I posed a question to my students as to whether preventative care could be included as part of a systematic healthcare continuous quality improvement (CQI) initiative.
CQI in healthcare has been deemed as a preventative, strategic workplace approach to reducing time spent on non-value-added activities. It builds upon the principles of quality management by placing the emphasis on the examination of objective data to improve outcomes. CQI requires an ongoing effort and can be done through incremental (Kaizen) type improvements or comprehensive breakthrough approaches.
The Institute of Medicine (IOM) defines quality as: “The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.” The 2001 release of, Crossing the Quality Chasm, cited the importance of redesigning the healthcare system to address the six core challenges originally outlined in, To Err is Human (1999):
- Safety: reduce and eliminate patient injuries
- Timeliness: improve wait times
- Effectiveness: reduce over and under-utilization of services
- Efficiency: avoid waste
- Equitability: improve consistency in quality and accessibility in care
- Patient centeredness: provide considerate, respectful care
There is a correlation between IOM’s systematic redesign process and implementing cost-effective preventative care strategies to include:
- Re-engineering processes
- Considerations for the effective use of technology
- Managing knowledge and skills
- Developing effective teams
- Coordinating across patient conditions, sites, and services
The best approaches to preventative care are those that can be benchmarked based on an examination of ROI. Embracing preventative care as a part of a larger scale systematic healthcare CQI initiative, could lead to reduce costs by eliminating non-value-added activities. Additionally, CQI allows for the customization of preventative care models based on the needs of the target population to improve healthcare outcomes.
Author, Dr. Kristy Taylor, is the founder of Heka Healthcare Consulting, LLC, and healthcare training and lean performance company. She has 15+ years of experience in healthcare and education. She is the author of the upcoming e-book, A Guide to Motivating Healthcare Teams Towards a Culture of Quality Improvement.