Private health care enters 2019 facing the competing forces of shifting demand, technology disruption, customer mobility, and regulatory reform.
An upcoming federal election, private health insurance reforms underway and a push for federal funding to change to value-based models are impacting funders, providers, and consumers. The private health care sector must find leverage in these intersecting influences to create opportunities and generate shared value.
Private health care providers are feeling the pressure of more and more Australians moving away from private health insurance. Out-of-pocket expenses and escalating insurance costs mean that there is a growing need for the entire ecosystem to assess its position and impact.
Individuals use private health insurance to assist them in paying for healthcare services. In 2015–16, more than half (57.0% or $8.5 billion) of the $14.9 billion spent by private health insurance funds was paid to hospitals — private hospitals accounted for the majority of this (86.6% or $7.4 billion)
Policy analyst at the Menzies Centre at the University of Sydney, Dr. Lesley Russell was asked to comment on the Commonwealth Fund finding that Australia’s private health care system was among the world’s best. Dr. Russell said the conclusion should be understood in context: “We know that out-of-pocket costs for Australians are continuing to increase, in large part because of the Medicare freeze that the Government has imposed over the last few years,” she said.
Individuals spent a total of $29.5 billion in out-of-pocket expenses in 2015–16 and that level of spending is giving consumers greater voice and influence in the sector than ever before. Consumers are choosing to wait for a public service rather than pay out-of-pocket or opting to go to public care because their insurance does not provide adequate private health care cover.
This has created a capacity issue for providers (being over and under-bedded for different services) and demonstrates insurance companies are not creating enough value for their customers.
Executives in private health care businesses have recognised that they require strategic thinking to adapt to these changes and leverage them to stay ahead in the market. Since our deep dive about the future of hospitals at the world hospital congress, our consultants have been further investigating problem areas with the broader private health sector.
While each organisation has different needs and variations of overarching strategic objectives, there are still many aligned or overlapping priorities.
Providers need to understand and articulate their place in the health ecosystem within its community/catchment area
Funding changes the impact of what and how health care is delivered, however there still needs to be someone dedicated to delivering care – whether online, in person or a mix of both. The role of the provider is changing but in the face of a considerable sectoral shift, it is critical to remind consumers of the value they create and where they fit into the lives of the community.
Everyone has their preferred ways of engaging with private health care. Some consumers are active and others are passive. Throughout their life journey, consumers seek information, support, service, and guidance from multiple providers.
The legacy ‘systems’ of referral to see GPs sends consumers to a preferred specialist based on personal relationships and qualitative data (experience of past patients). The specialist preferences hospitals that address personal professional needs (convenience, technology, support staff).
Private health care providers need to work within this system (influencing the perceptions of doctors) while also disrupting it, over time – for example, by educating patients and community members that the choice of hospital is their decision to make and could drive the choice of specialist.
Networks of health providers can still deliver care through a hub-and-spoke model. To deliver this, organisations must have the ability to securely share patient information, so they receive consistent care at any point through their journey. Canterbury (NZ) has done this with great success.
Providers must ensure patients are informed with validated information and understand the impact of digital platforms.
Patients spend more time researching health issues than ever before. Doctor Google is now a symptom and a cause of multiple health conditions by providing incorrect, invalidate information that has made a lasting impression. Often time is spent steering a patient away from a self-diagnosis, which is a poor experience for both patient and health care worker.
57% of consumers go online first and 47% went to websites that were previously recommended by their hospital. Australian search results are dominated by US providers (Mayo Clinic and WebMD holding the greatest results share) creating an opportunity for Australian providers to push validated, contextual information to the population.
While in-patient experience is very important, greater impact can be delivered through education platforms, focused out-patient programs (to ensure adherence or intervention as necessary), and the creation of digital tools that act like a health concierge.
Curating resources online, and providing it where and when consumers need it, improves health literacy and dialogue and creates value beyond the consulting suite.
Utilising population health data analysis and community consultation to assess whether the provider is meeting the needs of its catchment area.
Hospitals are not short of data. As highlighted at the World Hospital Congress, most data focuses on the internal metrics – patients served, efficiencies, costs etc. There is an extra element required that is often forgotten: changes happening at a population level.
Population changes across the country mean investigative work is needed to understand bedding and capacity issues, delivery of optimal service mix (expand, scale back, end, start).
While being able to understand over/under bedding leads to efficiency and minimal lost space, overlaying internal data with population data allows providers to identify if they need to deliver other services, expand offerings or target niche areas.
Consumer decision-making and patient experience insights are required to find interfaces for nudging or redirecting (internally) patients. 60% of consumers say they are willing to share personal health data with their health provider to improve their health. This creates the platform to consult directly with consumers about their evolving health care needs, as well as creating mechanisms to measure and iterate on care delivery.
Some areas of the country have changed and are changing dramatically. With proper data modelling, providers can deliver adequate services to their current citizens and plan for the future to ensure that they are meeting evolving needs while leveraging consumer insights to generate shared value.
Co-designing cost, services and payment structures between PHI and provider, to create shared value for both.
One of the biggest questions in health is ‘who pays?’
The relationship between insurers and providers has been evolving for decades. Changing cost schedules, complicated coverage levels and out-of-pocket expenses are creating ongoing changes without recognising those who are impacted the most: the customer.
Co-designing an ecosystem that integrates the insights and viewpoints of customers would enable all parties to have a fairer input into what their future models look like.
Consumers understand trade-offs. In a recent case study of a self-insured employer in the US, a group of researchers explored how an employer could engage employees in an open and constructive dialogue related to both the population level and coverage-level trade-offs that must be considered when designing an organisation’s health care benefit.
The results found that consumers were willing to make trade-offs for improved overall care. 83% were satisfied or very satisfied with their group-designed plan – only a small, 9% difference from the 92% satisfaction reported in individually-designed plans.
A co-designed ecosystem could lead to lower out of pocket expenses, which is a big driver of change, as patients look to public care when they are not adequately covered. As PHI increases have grown faster than wages and CPI, the result is that around 40% of the population and only 9% of people in their 20s have insurance.
Work needs to be done to redefine and restate the value of health insurance and the delivery of private care to address this huge gap in the market. This creates a major opportunity to be an Australian-first with a sustainable point of difference.
At a policy level, the change towards value-based care is coming.
As organisations like the Australian Healthcare and Hospitals Association (AHHA) gain traction in the push for value-based care and the current Minister of Health acknowledges it as a required move, the transition to value-based care will create one of the biggest changes in the sector. If providers are not working to define their metrics of impact and patient-reported outcome measures (PROMs) now, they will face intense scrutiny and possible closures when the change happens.
Ellis Jones recommends providers access the ICHOM standard sets and map out a strategy to achieving these. This requires both front end (patient experience/care delivery) and back end (systems and workflows) to be successful.
While this change is still occurring in Australia, internationally the idea of value-based health care is being challenged for lacking equity. Regardless of where the policy shift lands, people are talking about “patient experience” in isolation, the time for that has passed. Full-service design is required to create meaningful change.