Direct Contracting and Healthcare Interoperability

by | Sep 27, 2019

Who will disrupt healthcare? Those who can make the system simple, convenient and affordable, says Jay Beck, who spoke at a recent HIMSS DFW Luncheon. Beck is the Vice President of Strategic Growth for Texas Health Resources.

Beck’s presentation focused on private healthcare — specifically direct contracting, where employers sidestep health insurers and contract directly with providers. He mentioned several notable examples, including:

According to a recent survey, only 6% of employers contract directly with providers now, but that number is expected to rise. Why?

PwC’s Health Research Institute (HRI) explains it like this:

“Despite employers’ efforts to control utilization through high deductibles and other cost sharing, medical cost trend still outpaces general inflation. Prices continue to creep up. So, more employers are taking matters into their own hands, becoming what HRI terms ‘employer activists.’”

Beck highlighted several pain points that are driving employers, employees, and providers to consider direct contracting, including:

  • Pricing transparency. It’s hard to know the true costs of healthcare services when different hospitals charge different amounts for the same procedure. There’s also variation in patient outcomes.
  • PCP engagement. High PCP-employee engagement can help with the early detection of disease, which can make a big difference with long-term costs.
  • Overuse of ER. People often go to the ER for non-emergencies, which is the most expensive place to receive care.
  • Catastrophic claims and specialty prescriptions. Catastrophic claims for conditions such as cancer or premature birth, as well as extremely high costs of certain drugs, put a huge burden on employers.
  • Navigating the healthcare system/access. Direct contracting can potentially improve barriers such as long wait times for specialists, as well as help patients navigate toward lower-cost providers or care settings that have positive patient outcomes.
  • Cost shifting. Direct contracting also helps curb cost-shifting, which is when a hospital or other healthcare provider charges an insured patient more than it does an uninsured patient for the same procedure or service.
  • Provider quality. Employers can direct contract with providers who have quality patient outcomes.

This is where healthcare technology plays in, Beck said. There is room for health IT vendors to develop tools that connect employees, employers, and providers.

“Putting that technology at the consumer’s fingertips, there’s a lot of runway there,” Beck said.

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