Substance must come before style in consumer-driven plans

IN HIS BOOK, The Tipping Point, Malcolm Gladwell explains that momentous shifts in behavior are preceded by incremental changes, which build until they reach a critical mass. Well, hold on to your hats, because healthcare's about to tip. The driving force? Consumerism, and it's transforming the way Americans think about, pay for, and manage their healthcare.

More than just the high-deductible health plans grabbing all the headlines, consumerism is about moving healthcare toward a retail mindset, where individuals make rational and informed purchasing decisions. In the retail marketplace, there is a clear relationship between how much one pays and what one gets in return. Every car buyer understands the difference, in price and function, between a Ferrari and a Ford sedan. However, in managed care, nominal copays and monthly premiums have shielded consumers from the real costs of the services they received.

Times certainly have changed. On the pie chart of personal spending, healthcare now warrants its own category. Since 2000, the average annual premium for employer-sponsored family coverage has skyrocketed 60% to $9,950, with the employee currently shouldering one-third of that cost. As companies continue to reduce benefits, and as healthcare grows more expensive, consumers have an unprecedented stake in spending their dollars wisely. No surprise, they are starting to expect the same type of experience they have when buying other goods and services: transparent pricing; clear, understandable product descriptions; and the availability of 24/7 customer service and online transaction capabilities.

Online ordering. An extensive "selection wizard" guides members through enrollment and benefit selection based on medical conditions, budget, claims history, and ongoing medical and pharmacy expenses. Mass personalization is at the heart of consumerism.

Product descriptions. Consumers go online to research not just plan options, but also transparent provider pricing and quality information, such as types of procedures done, success rates, and patient satisfaction scores.

Consolidated account statements. This new breed of healthcare statement tracks the way consumers fund and pay for their healthcare. Similar to bank and brokerage statements, these easy-to-read documents itemize transactions across multiple funding sources, including the value the member receives from the health plan's negotiated provider discounts.

Real-time financial settlements. Today, patients wait weeks after an office visit to learn what amount their insurance has covered for their care. In the new retail market, the actual cost of a healthcare transaction will be determined-and paid for-at the point of service. Before the patient leaves the doctor's office, the provider will be able to access the health plan's system and calculate what balance the patient owes for a service. By using debit cards or other means to settle the patient's financial responsibility in real time, administrative costs can be reduced.

Once health consumers have access to informed choices, they'll expect more. Plans that understand this retail principle, and transform their businesses, are poised for success

This section is underwritten by an unrestricted editorial grant from NMHCC.

Jeff Margolis is chairman and chief executive officer of The TriZetto Group.