Role of Consumers U.S. Health Care System

Perfect competition assumes consumers and producers have perfect information. What’s so good about perfect competition anyway?

LOWHIGH LOW Effectiveness of Care Efficiency Better Quality Can Cost Less Provider Universe Today Provider Universe Tomorrow You can’t have competition without an adequate supply of high performing providers…and that won’t happen if we don’t realign incentives. No standardization in measures No business case for quality

The Consumer The word consumer has only recently come into use in discussing health care. The word consumer has only recently come into use in discussing health care. Why is the term patient more commonly used and what does it tell us about the health care system? Why is the term patient more commonly used and what does it tell us about the health care system?

Patients Dual Roles of Consumer and Patient Dual Roles of Consumer and Patient Focus on the Patient Focus on the Patient Assuming Illness Assuming Illness Possibly Distress or Discomfort Possibly Distress or Discomfort Uncertainty Uncertainty

The Patient Characteristics of the Sick Person Characteristics of the Sick Person Impaired Functioning --Role Limitation Impaired Functioning --Role Limitation Needs help--dependent--passivity Needs help--dependent--passivity Fearful Fearful May not exercise usual judgment May not exercise usual judgment Lacks information to make “good” choices Lacks information to make “good” choices

Consumers and the Economic Perspective Health Insurance and Many Health Care Services are Bought and Sold in Markets. Health Insurance and Many Health Care Services are Bought and Sold in Markets. Thus the term consumer is relevant with many of its commercial connotations. Thus the term consumer is relevant with many of its commercial connotations. Economics’ two basic questions: (marginal analysis) Economics’ two basic questions: (marginal analysis) What is it worth to me? What is it worth to me? What do I have to give up to get it? What do I have to give up to get it?

The Economic Perspective A very smart, quick thinking calculator will A very smart, quick thinking calculator will Choose whatever is worth more than it costs Choose whatever is worth more than it costs Reject what is not Reject what is not Consider the overall budget Consider the overall budget Implication: When the cost of a service rises one will buy less. Supporting evidence: RAND Health Insurance Experiment (RHIE). Implication: When the cost of a service rises one will buy less. Supporting evidence: RAND Health Insurance Experiment (RHIE).

Economic Perspective Continued This requires knowing a lot about what a product can do for you and understanding what it will cost you. This requires knowing a lot about what a product can do for you and understanding what it will cost you. We are pretty well positioned to make these judgments about many goods and services We are pretty well positioned to make these judgments about many goods and services Fruit Fruit Hair styling Hair styling Computers Computers But health care services? But health care services?

Questions to Consider If you are sick, how clearly are you thinking, are you likely to shop around, how do you perceive professionals and family? If you are sick, how clearly are you thinking, are you likely to shop around, how do you perceive professionals and family? If you are healthy and are choosing a health plan or a doctor If you are healthy and are choosing a health plan or a doctor What do you look for? What do you look for? How do you find out about plans and physicians? How do you find out about plans and physicians? What about price? What about price?

Consumer-Patient Decision Making Key Choices Key Choices What Health Plan What Health Plan Whether to use services Whether to use services Provider Choice Provider Choice Components of Consumer Decision Making Components of Consumer Decision Making What does a consumer want? What does a consumer want? What does a consumer know? What does a consumer know? What does a consumer want to know? And need to know? What does a consumer want to know? And need to know?

Health Plan Choices What are key factors in choosing among plans? What are key factors in choosing among plans? Technical Quality of Care Technical Quality of Care Covered Benefits Covered Benefits Satisfaction of Enrollees Satisfaction of Enrollees Price Price Convenience (short waits, few hassles) Convenience (short waits, few hassles) MD/ Hospital Choice MD/ Hospital Choice

What Do Consumers Know About Health Plans? National Survey in 1995 (Health Affairs, Winter,1996) National Survey in 1995 (Health Affairs, Winter,1996) 36% of respondents say they have a good understanding of plan differences overall. 36% of respondents say they have a good understanding of plan differences overall. 63% claim not to have a good understanding. 63% claim not to have a good understanding. HMO enrollees respond that they have a good understanding more often, 40% of the time. HMO enrollees respond that they have a good understanding more often, 40% of the time. Most people (65% to 77%) know which types of plans tend to be more restrictive. Most people (65% to 77%) know which types of plans tend to be more restrictive.

What Sources of Information are Most Important Most Trusted Sources of Information: Doctors, Friends and Family, Employee Benefits Staff Most Trusted Sources of Information: Doctors, Friends and Family, Employee Benefits Staff Least Trusted Sources: Insurance Companies/MCOs, Media Least Trusted Sources: Insurance Companies/MCOs, Media 52% of respondents said they would choose a plan suggested by friends/family over one rated higher by experts 52% of respondents said they would choose a plan suggested by friends/family over one rated higher by experts

Provider Choice Consumers Typically Want Consumers Typically Want A provider with a good reputation A provider with a good reputation A provider who is accessible and available A provider who is accessible and available A provider who treats them with respect and dignity A provider who treats them with respect and dignity A provider that has the appearance of a well run practice A provider that has the appearance of a well run practice A provider who is technically excellent A provider who is technically excellent

Sources of Information on Providers Most people have not seen any information on the quality of providers Most people have not seen any information on the quality of providers 76% would choose a surgeon they are familiar with over one more highly rated 76% would choose a surgeon they are familiar with over one more highly rated 72% would choose a familiar hospital over a more highly rated hospital 72% would choose a familiar hospital over a more highly rated hospital

Policy Questions What are the prospects of relying on consumer choice to promote/maintain quality? What are the prospects of relying on consumer choice to promote/maintain quality? What measures might be adopted to expand use of reliable information on quality? What measures might be adopted to expand use of reliable information on quality? What institutions in other areas offer a model? What institutions in other areas offer a model?

Engaging Consumers With Information  Gives the consumer a high-level roll-up of the physician’s overall performance, appropriate levels of drill-down, and gives the consumer the ability to compare objective and subjective measures.