Service Guarantees in Healthcare: Not So Easy

From time to time, the bad behavior of airlines will prompt the awarding of frequent-flyer mile credits or partial refunds to aggrieved customers.  Given that that industry has been used to portray everything that's wrong with U.S. healthcare, why hasn't this virtuous example of customer service been used by hospitals and other medical providers?

According to this news article, it will be.  As the PHB understands it, once patients have completed their treatment, they will be able to access an app to register their displeasure and access a "money-back guarantee" in the form of a partial refund.

PHB readers know that there is always more to stories like this. Despite its familiarity with the population health service industry's many years of money-back guarantees, the PHB decided to help its readers stay ahead of the competition with a quick look at the topic of provider guarantees.

It's not a slam dunk.

For starters, "service guarantees" can be divided into two categories: specific and unconditional.  The former is tied to one or more measurable elements of the service, such as the on-time delivery of a pizza or the HCG + implantation of a fertilized embryo. The unconditional category is typically tied to a global assessment of the consumer, who can access the guarantee for any reason, such as the disappointing frothiness of a cappuccino or the unfriendly persona of a nightshift nurse. 

The service guarantee described above appears to be unconditional.  

Service guarantees have long-known upsides and downsides.  In the healthcare industry, the upsides include motivating patient-centric behaviors, minimizing the use of the dreaded complaint line and undermining the competition. The downsides are that they can be used by many more patients than anticipated, once unleashed it's hard to pull it back and refunds could be driven less by satisfaction than by economic self-interest.  The PHB also worries that it's one more step toward the commoditization of healthcare and that a refund for an otherwise unavoidably bad outcome could be misinterpreted as agreement that the physician is at fault.

Service guarantees are not unheard-of in healthcare settings.  A quick Google search will reveal that they're common in in-vitro fertilization (IVF) and LASIK clinics. That's because these services are typically not covered by insurance and the fees are paid directly by the consumer.

Which raises the role of health insurance.  The PHB is no expert in this field, but it suspects that the historical absence of guarantees for services covered by insurance has to do with two broad principles:

1) if the insurer is ultimately bearing the cost of the service, the insurer should benefit from a refund.  The consumer arguably paid a premium to transfer the cost of the service to the insurer. Like it or not, the insurer, and not the patient, "owns" the cost, which is why we have insurance in the first place.

2) since the consumer is often responsible for out-of-pocket expenses "before" the insurance "kicks in," it could be argued that the aggrieved patient owns some of that service risk/cost and that the patient should also benefit from a service guarantee.  Good point, but there are decades of thorny anti-kickback laws that are designed to prevent service providers from using rebates of any kind to secure referrals or market share. Partially "waiving" or "refunding" co-pays or co-insurance as been a big regulatory no-no, and unconditional service guarantees are perilously close to crossing the line.

Bottom line:

Whether this latest foray into healthcare service guarantees remains a sideshow, or is the start of a trend remains to be seen. Much will depend on how any refunds are legally "immunized" against the insurance issues. 

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You Get What You Pay For in Cancer Care and Insurers Get What They Save With the Medical Home

The latest issue of Health Affairs is out and the Population Health Blog couldn't stay away. 

Three interesting articles:

The United States healthcare system has been criticized for spending too much of its treasure for too little in the way of outcomes.  Well, it's not that simple.  Stevens and colleagues in this just published Health Affairs study examined global cancer spending and found that increased spending on treatment correlated with drops in cancer mortality. From 1995 to 2007, the U.S. experienced a growth of $18,000 per cancer patient and dropped mortality among amenable cancers from 55 to 45 per 100,000.  Other than Japan and Finland (which benefit from already low levels of cancer plus sociodemographic factors like this and this), no other country has achieved that level of success.

In other words, you get what you pay for.  And when it comes to cancer, residents of the U.S. are not only paying, but getting a lot.

And speaking of payment, the same issue of Health Affairs has an article on multipayer medical home initiatives. The Population Health Blog didn't know this, but 17 of these initiatives have been launched since 2008.  Most were launched by states, not only because they controlled Medicaid's participation, but because they could blunt antitrust concerns. Challenges included agreeing on the criteria for provider participation, standardizing the payment models, and establishing criteria for success. What's more, the political landscape (health reform) and science (risk stratification, for example) has changed over the years. .

In other words, there is still no single approach to the medical home. When you've seen one statewide medical home initiative, you've seen one medical home initiative.

And speaking of initiatives, Geisinger's medical home program was also featured in Health Affairs. This observational study found that its care management nurses were independently associated with lower health care costs for as many as seven years.  That's good news.

But, the PHB knows that the Geisinger Health System is comprised of provider entities (such as its hospitals and the clinic) as well as a managed care insurance plan called Geisinger Health Plan (GHP). According to the article, "GHP hires, trains and manages the embedded case managers, partly because practices often lack resources to support such capabilities."

In other words, since.....

1) reducing health care costs will only benefit the holder of risk (the insurer) and

2) typical primary care settings lack the resources to change their approach to care,

....the real lesson of Geisinger's ProvenCare is that ownership of the medical home by commercial health insurers is an important option in assuring its success.