Drowning in Medical Debt: Transparent Pricing + Blockchain Can Save American Healthcare

This post was originally published on https://www.healthfurther.com/the-future-of-health/2018/07/25/drowning-in-medical-debt-transparent-pricing-blockchain-can-save-american-healthcare/. If you like it, please go to the original post and leave a comment to ensure that SeeThru can appear at Health:Further this August. Thanks!

The U.S. health system is opaque and unaffordable. Americans are plagued by high costs and surprise bills. Over the last 20 years the price of healthcare has risen more than 230%, more than all other consumer goods and services in the country. This financial deterioration of an otherwise advanced health system has led to medical debt becoming the top reason Americans file for personal bankruptcy. This mismanagement and waste of resources cannot continue.

According to the Centers for Medicare and Medicaid Services (CMS), the US spent $3.3 trillion on healthcare in 2016, over $10,000 per capita. This number, representing 17.9% of GDP, is expected to reach 20% of GDP by 2020. This expenditure dwarfs every other advanced economy and is 2.5 times the OECD average. Despite this massive investment, Americans have significantly worse outcomes and shorter life expectancies than many of these other countries.

The problem is multi-faceted and can be attributed to a number of causes including culture, geography, disparities in healthcare accessibility, and antiquated principles governing the healthcare market. The latter in particular introduces global inefficiencies and raises costs for all involved parties. The healthcare sector, more than any other in the economy, resembles the 20th century model. It is needlessly complicated and nearly impossible to fully understand even for well-educated patients.

Navigating the healthcare space represents a harsh departure from the Amazon experience to which patients have become accustomed. Whereas consumers are capable of searching and filtering for nearly any retail product based on myriad criteria, from price to shipping speed, it is impossible to achieve anything resembling this in healthcare. For example, there is no efficient way to proactively filter physicians based on quality, location relative to patient, and cost. In other words, value shopping is impossible in healthcare. There is no practical reason for the absence in capability. The technology is proven, yet it has never been successfully applied to the healthcare sector.

Were it only for the aforementioned variables of quality, location, and cost, it would be relatively easy to solve. Yet, because of the complex interplay between patients, providers, and payors — the stakeholders that dominate the healthcare landscape — a more nuanced solution is necessary.

Consider the inherent conflicts and competing interests that often characterize these relationships:

• Patients want good care, at an affordable price, conveyed to them in a humanistic, delightful environment.
• Providers want to provide high quality care for their patients and be compensated fairly for their work.
• Payors want good outcomes for their customers but at a cost structure that allows for predictable profit streams.

Now, consumers must take into account a multitude of variables such as in-network versus out-of-network coverage, pricing, and appointment availability — sometimes without regard for or understanding of provider quality.

The problem for patient-consumers has become more acute in recent years as cost of care (i.e., financial burden) falls increasingly on them. As part of the mandate for required health insurance governed by the Affordable Care Act (ACA), many Americans chose to enroll in high deductible healthcare plans (HDHPs). These plans may require low monthly payments to the insurance companies, but, by definition, nearly always require out of pocket payment as a result of the service. For many, such as those who are young and healthy, these plans represent an attractive option and serve primarily as “catastrophic” protection. HDHPs encompass a sizable portion of all out-of-pocket spending (OOPS), with total OOPS reaching nearly $500 billion in 2016 and is expected to grow 6.1% annually through 2021.

The transition by consumers toward HDHPs has also created unique challenges for providers. As an increasing number of payments are made by the patient, and fewer by traditional payors such as insurance companies, revenue cycle management (RCM), already a major source of lost income, has become even more complicated and ineffective. Per a 2013 McKinsey report, a full 15% of all healthcare revenue, now totalling over $400 billion goes to “claims processing, payments, billing, revenue cycle management (RCM), and bad debt — in part, because half of all payor-provider transactions involve outdated manual methods, such as phone calls, fax, and mailings.”

In particular, providers have trouble efficiently collecting directly from patients. According to the MGMA: 30% of patients walk out of a practice without paying anything. In such cases, an average of 3.3 billing statements are sent before a patient’s outstanding balance is paid in full. Finally, if a patient’s bad debt is turned over to collections, practices recover just $0.15 on every dollar originally billed.

The message is clear: healthcare RCM, already an expensive and inefficient endeavor, is made more difficult as the reliance on out of pocket patient payment increases. HDHPs, a structure built on patients paying at their time of treatment, have not helped shorten RCM. The longer it takes to collect, the less likely anything is to be collected at all.

The good news is that new technology can help. Direct billing with EMRs is useful, many RCM efficiency tools have popped up over the last few years, booking is made easy with ZocDoc and Solv, and there are many price estimators available online such as Amino and through your insurance company. However, the actual PRICE still remains a barrier to care.

At SeeThru we are building a comprehensive consumer-patient-centric solution. We use free market economics, current e-commerce principles, and blockchain technology to guide our design. The SeeThru platform reduces patient costs and grows provider pay by improving access to transparent, guaranteed pricing, bringing patients and providers together, and making instant payments at point of service. We have developed a true marketplace for healthcare that empowers patients, providers, and payors.

The technology and design exist. With the buy-in to change the archaic system from all stakeholders, transparent affordable care is not just a pipedream anymore.