Biggest Healthcare Payer is Consumer

Educated Consumers Shop Around Before Spending Their Healthcare Dollars

Leah Binder
Leah Binder, President, Leapfrog Group. Leah Binder

Leah Binder, President and CEO of The Leapfrog Group, conducted a great session at the World Health Care Congress entitled "What National Health Care Costs Really Tells Us About Quality."

Leapfrog can sometimes be a thorn in the side of hospitals.

Leapfrog works with employer members to encourage transparency and easy access to health care information as well as rewards for hospitals that have a proven record of high quality care.

She opened by talking about a Health Affairs article that recently reported that health care costs have plateaued. The reason - high deductible health plans. Follow the logic. A person like myself has a high deductible plan. I think we have to spend $3,600 before anything is paid for by the plan. Do I have an incentive to stay healthy and out of the hospital, the physician's office, the SNF rehabilitation center? You betcha.

Here is the crazy part. The largest payers are people. Not Medicaid. Not Medicare. Not private insurance. The amount people are paying out of pocket accounts for the highest percentage of payment among all sources.

So guess what long-term care providers - the consumer is becoming educated about health care spending. Because hospital and physician care is becoming more about self pay. And that is how the long-term care industry is paid for by and large. So will price sensitivity become even more acute.

Yes. People will shop on price in long term care more so than they are doing now.

That begs another question. Is the value you offer worth the price? If you charge more than the competitor down the street can you justify it? That will call into play other metrics around quality and satisfaction that start to better define value.

Binder then explored cost and safety. We already know that costs in health care are arbitrary. What Medicaid, Medicare and private insurance pay for the same procedure differs widely.

But also consider that there is a hidden cost to quality and safety. And it gets built into your healthcare costs. In hospitals there is something called a "never event". These are events that should never happen like operating on the wrong body part. Here is the thing. When this happens many times you will pay for the fix. Even if Medicare and Medicaid spells it out that they will not reimburse for these "events" consumers do end up paying.

Are there "never events" in long term care? Answer that to yourself. Then consider how the costs of those are passed down. And then consider that as more agencies hold long term care accountable, transparency will grow. And that will inform consumer choice. And always remember that the press will be in the hunt for disaster stories too!

Media Circus

Unless you foster controls, bad experiences (and good) will find their way to social media, impacting your Net Promoter Score.

A Net Promoter Score (NPS) is based on the perspective that every company's customers can be divided into three categories: Promoters, Passives, and Detractors. By asking one simple question — How likely is it that you would recommend [Company X] to a friend or colleague? — you can track these groups and get a clear measure of your company's performance through its customers' eyes.

And in the pace of today's marketing environment, fueled by social media, this is an important metric to track.

Customers respond on a 0-to-10 point rating scale and are categorized as follows:

  • Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

You calculate your company's Net Promoter Score (NPS), by taking the percentage of customers who are Promoters and subtract the percentage who are Detractors. Obviously you want more promoters in your corner and increasingly those promoters can be caregivers, who are increasingly using social media to communicate with each other.

Transparency, high quality, open communication, responsiveness - these all have an implication on your organization's brand and someone's willingness to recommend. Ultimately it impacts your revenue and profitability.

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