For years there has been a clear distinction between the organizations that care for patients (Providers) and the companies that provide insurance coverage for the cost of care (Payers). The primary goal for Providers was to deliver safe, high-quality care so that patients have the best outcome possible. The main objective for Payers was to effectively manage the funds and pooled risk of its policyholders so that they could pay claims made for healthcare costs. It is a symbiotic relationship that has remained intact for over 70 years.
Over the past several years a myriad of market forces have blurred the lines between Providers and Payers. These formerly symbiotic partners are now evolving into each other and quickly becoming competitors.
As healthcare costs have skyrocketed, governments, employers and patients have put tremendous pressure on Providers to “bend the cost curve”. Currently, there is an initiative underway to transform healthcare from a fee-for-service reimbursement model (where Providers are paid based on the service delivered to a patient) to a value-based one (where Providers are paid based on the outcome of the service delivered). This tectonic shift in reimbursements is causing Providers to re-think their approach to delivering care. Instead of focusing just on delivering quality episodic care, Providers now have an expanded goal – to keep their patient populations healthy. Providers are now offering a slew of wellness services at their facilities including classes/coaching/support for mindfulness, nutrition, yoga and smoking cessation.
Keeping patient populations healthy has also become the goal of Payers. Rising healthcare costs have battered insurance companies throughout the US and in their search for solutions, Payers have arrived at the same conclusion. One of the best ways to reduce their claims is to keep their members healthy (and out of the healthcare system). To encourage healthy behavior, Payers themselves are now offering wellness services similar to those of Providers – smoking cessation, nutrition and even chronic disease management. In order to provide these services Payers are hiring clinicians directly.
There is another market force that is helping to blur the lines between Payers and Providers – the popularity of high-deductible health plans (HDHPs). When the US government made regulatory changes to help provide healthcare insurance to an underserved population, HDHPs became the popular choice for these new insurance buyers. Part of the draw was the significantly lower premiums for the insured member. The lower premiums not only attracted new insurance customers, but many already insured Americans switched to HDHPs as well.
HDHPs have had the unintended consequence of turning Providers into financial institutions. Under HDHPs patients are often on the hook to pay the first $10K (or even more) of incurred healthcare costs. Very few individuals have this level of financial liquidity on-hand. As a result, Providers are being forced to offer payment plans and financial vehicles in order to collect payments from patients. Savvy Providers have adopted credit scoring and other actuarial models in order to better manage the financial risk of their debt portfolios. Guess who uses these same techniques? Hint: the word starts with “Pay” and ends in “er.”
At HIMSS17, Healthcare Finance Managing Editor Beth Jones Sanborn spoke with me and my fellow HIMSS Social Media Ambassador Mandi Bishop about this Payer-Provider phenomenon. It was a lively discussion that explored the growing overlap between Payers and Providers. While Mandi and I both agreed that the lines were becoming blurred, we ultimately disagreed as to who was better positioned to succeed.
From Mandi’s perspective, Payers were more strongly positioned as they have years of experience with the complexities of risk and financial management. They also have the administrative infrastructure already in place to offer, manage and service healthcare policies – a massively expensive undertaking. A key point that Mandi raised was the fact that Payers already were used to dealing with a wide network of providers and had strong relationships that they could tap to offer health and wellness services to insured members.
I had the opposite view. Many Provider organizations have their own captive insurance companies and thus have access to financial and actuarial talent in-house. As well, Providers are closer to the patient and more attuned to each patient’s unique healthcare situation. This intimacy means that Providers could offer patients a more customized insurance package – one that more suited their lifestyle and budget. There is finally the matter of trust. Most people have a low opinion of their insurance company. Providers by comparison enjoy a much higher level of trust. It is my belief this trust is one of the factors that tip the scales in favor of Providers.
Ultimately it doesn’t really matter whether Payers or Providers win this battle. Both are striving towards the same goal: helping people live healthier and longer. Who do YOU think will win? Join the discussion on LinkedIn!