Consumer-directed Care
An Option To Managed Care

by DAN PROCTOR

Nashville is known as the health-care capital of the U.S. for our ability to evolve business models and tools to deliver health care as efficiently and effectively as possible.

When fundamental changes occur in health-care delivery models or in technology, you can count on a Nashville company to leap into the forefront of driving change.

The last major change in our reimbursement system was in the 1980s, when managed care was pursued with a vengeance. While managed care started off with a noble idea, it quickly turned into managed "cost," as payers used their authority to restrict treatment. Much ink has been used discussing consumer backlash to controlling growth in health-care spending through bureaucratic mandates. Currently, another major change is rippling through health care, which goes under the broad title of consumer-directed health care (CDHC), which basically gives consumers the control they've been wanting, along with a larger portion of the funds to either save or spend as they see fit.

CDHC comes in several flavors, acronyms and combinations. At Passport Health Communications, we introduced a plan with a $5,000 deductible combined with a tax-free HSA (health savings account) and found wide acceptance. In 2006, approximately 25 percent of our employees signed up, and at our most recent enrollment, their positive experience resulted in an increase to 51 percent. Not only is this movement more popular than managed care, many businesses also credit it with significant savings. Safeway, a company that had seen health-care costs rise to more than 120 percent of its net income in 2005, credits the introduction of HSAs for a drop in 2006 costs of 15 percent.

Under managed care, providers dealt with a handful of bureaucracies that made reimbursement decisions. Companies, many based in Nashville, developed sophisticated tools and business processes to optimize reimbursements. CDHC will require new and even more sophisticated tools as patients will demand to know the cost before service is rendered and reimbursement will initially come from the patient.

While several pundits have predicted that the introduction of universal health care would do away with all of these complexities and return us to a simpler era of health care, I would point out that the American public has shown little tolerance for bureaucracies in their health-care decisions. We also have a different standard of acceptable outcomes from countries that already operate under universal health care. For example, in the United Kingdom, being ambulatory when one is discharged is considered a good outcome. In contrast, in the U.S., we want to both look good and feel good as we dance out of the hospital. Even countries that have universal health care have seen the private health-care industry become the fastest-growing segment of their economy.

The health-care industry is constantly reshaping itself as technology innovation provides new services and delivery models. One thing that hasn't changed is Nashville's ability to be at the forefront of that evolution.

As an industry leader, Passport actively participates in open dialogue regarding timely and important health care trends. Dan Proctor is the founder of the company and serves as its chief technology officer.

For more information, visit www.passporthealth.com.