Health Care Conference Focused on Consumers

Published April 22, 2003

The first annual Consumer Directed Health Care Conference (CDHCC) was held in Las Vegas April 7 – 9 and was a huge success with some 700 attendees and 45 exhibitors. There is little doubt anymore that “consumerism” is the next wave in health care financing and delivery.

This CDHCC delved deeply into case studies and how this is working out in real life. Yet, success brings it own challenges. All kinds of old ideas and products are trying to ride the wave of consumerism – without making any real change.

Here are some examples that came up in discussions during this meeting:

Tiered Payment Systems

This idea started with prescription drug benefits, where health plans would direct patients to lower cost medications by charging a nominal co-payment for generics, higher for name-brands and still higher for off-formulary drugs. Now some health plans are trying to apply the same principle to hospitals and physicians.

These programs may help some employers lower their costs at the margin, but they are in no sense consumer directed. They involve some committee deciding who is worthy of getting the lower co-payment and who is not, and they continue to divorce the consumer from the true cost of care. A more consumer-empowering approach would be coinsurance that requires the patient to pay a percentage of the actual fee, or better yet, a cash account allowing consumers to apply their own shopping skills.

Evidence Based Medicine

Of course medicine should be based on the best available evidence. That is the purpose of medical schools, medical journals, Grand Rounds in hospitals, continuing education programs, peer review, and all the rest. The problem comes in how the information is applied.

There is a movement afoot that would develop and enforce practice protocols. Enforcement would include both carrots and sticks. The carrots include paying more to compliant physicians and exempting them from malpractice disputes. The sticks include dropping non-compliant physicians from networks, paying them less, and in some cases even taking away their license to practice.

The premise of this movement – which we actually know the best thing to do in all circumstances – is flawed. We do not. And what we think we know today, will often turn out to be wrong tomorrow. It seems every week new research comes along debunking the conventional wisdom of yesterday. But how quickly will the bureaucracy be able to amend its protocols once they are laid out in black and white?

And, how will the bureaucracy be able to overcome the resistance to change from interests invested in the current protocol? This system will soon become a political boondoggle subject to intense lobbying by some groups wanting the protocol changed and others satisfied with the status quo.

Meanwhile, physicians will not be allowed to use their best judgment to treat their own patients. The worst thing about this idea is that it has yet to be debated in any serious way. It represents the worst aspects of the hubris and group-think characterizing much of health policy in the United States.

Employer Paternalism in Health Care

One consultant at the meeting described the contortions he went through when a client wanted to cut its health care costs by 15%. The employer wanted the cuts but it also wanted to cover all the services it used to cover and impose economizing behaviors on the employees without inconveniencing anyone. It was like pushing down on a balloon.

A push over here would result in the balloon popping up over there. As the old Maine joke goes, “You can’t get there from here.” No one seems to have the nerve to tell employers cutting their costs is the easiest thing around – through defined contribution. Decide how much you want to spend next year, make it available, and let employees decide what they want. It is not the job of the employer to make these decisions.

Major strides made

Don’t get me wrong. The conference itself was great, and a major advance in the growth of consumerism in health care. These observations simply highlight how far we have to go.

Almost all of the major vendors were there to highlight their products and marketing strategies, including case studies with major accounts. Plenty of time was spent on information technologies and patient support. There were sessions on how to explain the changes to employees, the application of these principles to drug, vision, dental, and alternative medicine benefits.

In some cases competitors were throwing shots across the bows of their rivals, explaining how their product was superior to others. At the same time there was a lot of networking and commerce going on out in the hallways as potential partners sized each other up.

Refreshingly, there was very little politicking going on. Members of Congress were hardly ever mentioned, legislation was of little concern, few speakers were based in Washington. Not a single politician was on the program.

The closest the conference came to hearing from official Washington were the live videoconferences from Newt Gingrich and Mark McClellan. Consumer driven health care is based solidly in the market, and that in itself is encouraging.

The conference was organized by Skip Brickley and his staff at The Emergent Group who deserve accolades for putting together a landmark event. For copies of almost all the presentations delivered at the conference, biographies of the speakers, and links to most of the exhibitors go to: and click on “program.”

Greg Scandlen is director of the Galen Institute’s Center for Consumer Driven Health Care and assistant editor of Health Care News. Please send all comments/questions directly to Scandlen at [email protected]

For further information, contact Heartland Public Affairs Director Greg Lackner at 312/377-4000, 773/489-6447, email [email protected]