Can Tech Tools, Incentives and Advice Inspire Health Care Shopping?

Health care consumerism has mostly failed, but that’s not the end of the story

By Greg Goth October 2, 2018
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How people find and select cost-competitive health care providers is about to change.

In a recent study, Harvard University professor Michael Chernew and his colleagues found a shockingly low number of people—fewer than 1 percent—used online tools to find lower-cost providers. But benefits technology companies are betting that health care navigation is just starting to take off, and personalized "health concierges" that help employees to select doctors and facilities are marketing their services as an up-and-coming employee benefit.

Chernew's study used data from a large, unnamed private insurer that covers millions of U.S. residents and focused on nonemergency, lower-limb MRI scans that were potentially "shoppable." The researchers found that, if patients had selected the lowest-cost provider in the area, they could have reduced their out-of-pocket costs by an average of $83.93 (27.47 percent), while their insurer's spending would have fallen by an average of $220.52 (40.5 percent).

Health care consumerism, which encourages employees to shop for cost-effective services, has merit, but "you should be a little cautious about how far you think that's going to go," Chernew said.

Nevertheless, the evidence showed that if employers encourage their workers to be cost-conscious consumers before they establish a relationship with a provider, they will be more price-sensitive when selecting a doctor, hospital or out-patient clinic.

Encouraging Consumerism

As high-deductible plans make people more price conscious, insurance companies and independent vendors are providing transparency through online cost-estimator tools. 

Harry Sit, a financial blogger, posted: "Shopping doesn't work when you are unconscious in an ambulance, but it can work when you are not in a hurry. Even if 'almost no one does it' you can still do it and tell others how you did it. Then more people will do it."


Experts say consumers' reliance on referrals from one provider to another, with referring physicians rarely taking cost into consideration, is another problem. One answer may be for insurers to give primary care physicians the tools to make cost-effective referrals and reward physicians with financial incentives to use them.

Shifting the responsibility for price-shopping from patient to physician will not be an easy sell, however, said John Whyte, chief medical officer for online health-information site WebMD.

"The average time a physician spends with a patient is 10 to 12 minutes," Whyte said. "So I am trying to tell you how to manage your blood pressure and your high cholesterol, how to reduce your risk of dementia, answering any questions you may have—then how many minutes will I need to spend telling you where to shop for the best price?"

[SHRM members-only toolkit: Managing Health Care Costs]

Enter the Navigator

"I like to think about health care as a team sport, and it's not [just] that the physician has to do it, or the patient has to do it," said Ivor Horn, chief medical officer of the navigation concierge service Accolade. "There is a whole team of people in the health care ecosystem who need to be participating in this process."

Rather than rely on patient-operated tools—or expect physicians to assume the role of shopper—a new phase of comparison shopping centers on data-enabled concierge services offered as part of employers' benefits packages.

Horn said Accolade's navigators establish an ongoing relationship with employees from the time of open enrollment, and the firm's clinical care team includes experts on specialist care.

Another sign of the trend toward providing direct advice on selecting providers is the recent announcement that benefits platform vendor Alight Solutions is buying health care navigation firm Compass and making Compass' services available through Alight's platform.

"Only about 30 percent of health plan members [among Compass' 2,000 clients] have seen a primary care physician in the prior two years," said Compass' co-founder and chief medical officer, Eric Bricker. "The way people utilize health care is episodic and tends to be specialist driven. So rather than trying to make people 'good consumers,' we say to them, 'Let's take that off your hands and let somebody who does it every day do it for you."

Andy Sexton, a partner at HR consultancy Mercer, said that 82 percent of the firm's surveyed clients offer a transparency tool but see only "single-digit" usage, similar to the findings in Chernew's survey. However, offering a concierge service is paying off for the firm's clients and is worth considering as part of an overall benefits-design package.

"We average $70 savings per health concierge engagement with a consumer," Sexton said. "Those interactions could be scheduling, helping with a claim or dealing with medical bills."

Harvard's Chernew, who serves as chairman of the benefits committee for the university's nonunion employees, said Harvard is making the Vitals SmartShopper concierge service available to employees beginning Jan. 1. The benefits committee is "gently steering employees to more cost-effective providers without overstepping," Chernew said. The Vitals service appealed to the committee, he explained, because the service does not charge a big upfront fee and rewards users who choose a lower-cost provider with cash incentives.

"We're a very generous plan, and we don't want to interfere with people's clinical choices," Chernew noted. "That said, there can be a 40 percent price differential" when shopping for health care. "The people who go to lower-priced providers should gain something for that choice," since it represents a big savings for the employer's self-funded health plan as well.

"We're trying to protect people from large out-of-pocket bills and give them a general choice of their preferred provider, but also allow and reward the people who go for lower prices," he said.

Considering a Concierge Health Shopping Service?

Before hiring a concierge service, ask vendors about these points:

  • What is their business model? Compass, for example, offers a stand-alone, per-member, per-month agreement billed quarterly, and a percentage of these fees is placed at risk with performance guarantees related to cost savings, engagement, customer satisfaction and other factors. The Vitals model, which is partially based on the number of users who choose a lower-cost provider, appealed to the Harvard University benefits committee. "We don't pay a big upfront fee, and it limits our risk," Chernew said. Vitals also reimburses enrollees who choose a lower-cost provider.
  • What is their rate of turnover? If a concierge service touts the permanence of the relationship between your employees and their navigators, are they retaining their own employees long enough to back up that claim? Do they have a strategy for keeping a relationship strong if a navigator leaves?


Greg Goth is a freelance health and technology writer based in Oakville, Conn.


Related SHRM Articles:

Millennials Bring Online Consumer Behaviors to Health Care, SHRM Online, July 2018

Employees Still Can't Find Out How Much Health Providers Charge, SHRM Online, April 2017

Transparency, Decision Support Are Next Wave in Benefits Self-Service, SHRM Online, August 2016

Health Care Shopping Tools Often Go Unused, SHRM Online, May 2016


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