Consumersim and beyond . . . Consumer-Centric Healthcare

Sun will soon be come the premier technology partner with the Medical Banking Project. Why?

Background:

The financing part of the medical system has traditionally been shielded from the consumers. The providers filed the claims and the payers paid the doctor directly leaving the consumer out of the picture.  With the recent push towards consumerism (i.e. increased decision making rights to the individual consumers), the financing part of the providing healthcare has taken a center stage. Combine this drive with the inevitable mandate towards universal coverage, new entrants see market opportunities in the Healthcare, namely Retail banks and investment banks.

Banks: More than 70% of employers are offering consumer directed healthcare (CDH) with up to 80% of HSA employers contributing money into these accounts.  In order to manage these new ‘defined contribution’ funds and utilize new products, consumers will need tools to understand and compare quality and costs for healthcare services and  plan what they need to save, spend and invest on healthcare, now and into retirement.  There are currently insufficient tools to aid consumers in this effort but new tools are releasing quickly to greatly aid in this effort. Banks are ideal to provide these tools and services given their existing loyalty and confidence among their customers.

According to Forrester, low premium plans could cover up to 34% of the commercially insured by 2012.  Add the 20-40 million Americans entering the healthcare system from the uninsured ranks and the number of low premium plans (and their financial accounts – HSAs) could climb.  Banks and investment managers need systems/processes/partners different from their core business to accommodate this new opportunity.

Current 2012 estimates for healthcare spending are $4T, according to the National Coalition on Healthcare.  Traditional payment networks owned by various banks and other financial institutions also want to get into this new business.

Investment Banks: Some estimate that more than $200 billion will sit in new consumer health deposits by 2012 – for current and retirement health needs.  Retirement planners’ estimate that we’ll need “30% of our required retirement savings to >$200k” in retirement to address health needs.  While investment managers are adept at handling funds until a retirement date, HSA funds may need to be accessed regularly or early in the event of medical need.  Therefore, investment banks will need transactional capabilities beyond traditional investment platforms and will pursue system build, partnerships or acquisitions to secure this.

In the next few years, banks can expect to play the following new roles:

1. Serving as custodians for HSA accounts
2. Offering varied services to providers (hospitals, group practices and individual doctors) around electronic fund transfers and other payment processes. Real time adjudication and real-time patient liability services are being offered by some commercial payers already.
3. Serve as the custodian of Personal/Individual health Records (PHR/IHR).

Sun in the forthcoming weeks will work closely with Medical banking project to develop new business models and the medical banking paltform.

The biggest surprise for me this week was learning that Microsoft and Google in their PHR efforts, are not "Covered entities" in terms of adhering to HIPAA privacy rules. See in their own words .

What? Sun just turned down an RFP from a PHR vendor for hosting their PHR service to general public in the US market. Our concerns were being a covered entity and be able to justify the cost of ensuring confidentiality. So, how did Google and Micro$oft escape this?

The answer in their own words: "We store data on behalf of health care providers. Instead, our primary relationship is with the user."

Hmm. It reminds me of the situation in California where one motorist was pulled over for using his cell phone while driving. He wanted to escape citation by claiming that he was just texting and not talking on the phone which is against the law!.

So, what is in it for Google and M$? The answer is simple. In the near future, whoever ends up owning your medical record is going to sit on a mountain of new business opportunity. The business opportunities range from targeted advertisement to redirecting web traffic to their other offerings.

So far the entities interested in owning your PHR are:

• employers
• insurance companies
• healthcare providers
• independent entities
• Banks

Yes, banks! Nations' leading banks are actively getting on this consumerism bandwagon and trying to monetize down the road. Banks are, well, banking on the trust their consumers have with them managing their finances and expect that trust to extend to managing their health records as well. Employers motive also would be selfish to manage their employees health by themselves. But what happens when the employees leave the company? Can they take their records with them? Payers want to own their members records since they will see this as a leverage to hold on to their current members. If the hassle of transporting PHR across payers is cumbersome, members might be incented to stay put with their current payer. If providers want to own the medical records, the question is which provider? There is nothing really in it for them to own and manage their patients longitudinal records. Their own EMR? yes, PHR? No.

So who should own it? That leaves only the consumers them selves or the government. Government should be the last entity to own our medical records given the recent track record. So, that leaves only the individual consumers to own our medical records over time. Ignoring for now the physical location of the records, the individual consumers probably have the right incentive, motive and trust to own their records.

The last time I visited India, I accompanied my aging father on a visit to a specialist lugging a big bag filled with his medical records, images and reports! That is his longitudinal, historical PHR albeit, in paper!

The HHS (Health and Human services) finally made the proposal to adopt the new ICD-10 code sets along with the new X12 transaction standards. The recommendation is to make it effective October 1, 2011.

This is obviously huge, more drastic than moving to the IPv4 or even Y2K. This will impact pretty much every one in the healthcare value chain: The providers (their practice management systems and EMR and billing systems need to adopt the new codes), the payers (the core claims processing systems need to change and the government regulatory bodies. As if the burden on payers and providers to adopt new IT systems is not enough this mandate will financially impact everyone alike.

The original standard from WHO

But wait! Even though the original standard was developed more than a decade ago, the industry is already debating whether this is about time or whether this is totally unworkable! Read the article debating this point.

Any change is difficult. Not only this proposed new standard will address many of the short comings with the current ICD-9 codes but also will allow for newer business models like pay-for-performance (P4P). From technology point of view, new systems will be in demand that will help payers and providers to go thru a transition phase (cross linking of code) while it will take a lot of systems changes to completely adopt the new standards. Sun will be offering enhanced identity and Integration suite products that will facilitate this adoption.

Kumar Swaminathan, the owner of this Blog, has recently (re)joined Sun as the Healthcare Industry Manager focussing its efforts in the Payer Industry. Sun and its partners have a lot to offer to address the trend of the entire industry embracing consumerism. Please visit this blog again to learn, participate, critique Sun's efforts in this area.