The Healthcare Entrepreneur Blog

Where is the economic (and ethical) exposure in healthcare? The patient’s pocketbook.

by Tannus Quatre PT, MBA | September 4th, 2008 | No responses

Healthcare has long been referred to as resistant to economic fluctuations that readily affect sectors such as retail, manufacturing, and entertainment.  In fact, we have blogged about this very point on The Healthcare Entrepreneur a number of times (see posts here, here and here).

Exposure exists though, and usually trickles down to healthcare through the bond markets (read about how bond markets affect healthcare here), and insurance companies who are affected by the capital and job markets.  A somewhat new, and significant exposure is gaining attention though, and holds the potential to affect both small private practices as well as large hospital organizations: The patient’s pocketbook. 

Co-pays have risen over the years as have the use of high deductible insurance plans which require more out of pocket payment by the users of the healthcare system.  Well, with more responsibility placed on the patient to pay for their own care, patients have used more discretion in their decisions about the services they receive. 

This makes perfect sense, as this type of discretionary use of services is the essence of the free market – people will buy goods and services at a price that they feel is reasonable (that is, they are both willing and able to pay for desired or needed goods and services).  If a price is out of reach and/or the goods and services do not possess a perceived value that exceeds the amount required to purchase them, the goods and services will go unpurchased, and pressure will exist to offer them at a lower price (read more about supply and demand in healthcare here).

So, imagine the decision making process that occured for Jack Atwell, a 58 year old mortgage broker who was referred by his physician in South Florida to have a cardiac catheterization test because of stress testing that indicated he had an increased risk for a heart attack.  Sounds like a simple decision…have the test, right?

Well, when Broward General Medical Center informed Atwell just two days before the procedure that he needed to pay his responsible portion upfront, to the tune of $2,500, he simply couldn’t afford it.  Fortunately for Atwell, he was able to get the procedure done at Holy Cross, also in South Florida, without an upfront fee.

So, as you can see, this is what’s happening both in our hospitals and in our private practices in America.  I’m not personally here to judge what is right or wrong, only to illustrate that there is a chapter unfolding in American healthcare that tells the story of an ethical dilemma imposed upon our healthcare businesses because of the pressure to survive financially, as well as an economic soft spot in the industry that is a direct result of patients’ inability and/or unwillingness to pay for certain services.

Click here to read the full article in the Sun Sentinel about Jack Atwell and the growing trend toward increasing patient responsibility in the healthcare transaction.

The Internal Revenue Service looked into the issue for the first time in 2006 through a voluntary survey and found 14 percent of 481 nonprofit hospitals nationwide required patients pay or work out a payment plan before being admitted.

Patient advocates said asking for payment before care is delivered, and with short-term notice, places stress on vulnerable individuals who might face life-threatening illnesses. “Somebody facing a catastrophic illness and having to be burdened with the extra stress of paying a co-pay or premium is just unconscionable,” said Laura Goodhue, executive director of Florida CHAIN, a consumer-health advocacy organization based in Palm Beach Gardens.

Hospitals argue that rising health care costs and hard economic times have caused an explosion in care for which they are not paid.

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Click here or call (888) 827-5613 for information on a free program dedicated to helping private practices throughout the U.S. strategically adjust to the slowing economy.  Free program runs through March 31st, 2009 and is open to practice owners and administrators of any healthcare discipline.

Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm located on the west coast.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

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