The Case for Consumer-Driven Medical Care: 
Why Perpetuating the Third-Party Payment Model Is Not the Answer


Understanding Consumer Decision Making
Understanding Consumer Decision Making

In the January 21st issue, JAMA.2009; 301: 321-323, the premise and conclusions put forth by Drs. Berenson and Cassel, authors of Consumer-Driven Health Care May Not Be What Patients Need — (Caveat Emptor) betray a fundamental misunderstanding of the current financial quagmire of healthcare.  Their fears and admonitions against more direct consumer (patient) – doctor interaction does not hold up under scrutiny and are inconsistent with economic behavior and outcomes in a free market.  The positions they advocate would drive patients and physicians further apart, negate consumer pressure on prices, add to the already growing healthcare bureaucracy and exacerbate the disconnect that exists between costs and value.  They don’t understand that more, not less, consumer participation is part of the solution to our health care woes.

The assertion of their commentary is that a consumer-driven model requires, and I quote, “a fundamental reordering of the patient-physician relationship, placing increasing reliance on commercial ethics while eroding professional ethics as a guiding force for patient-physician interactions.”   The authors assume that free-market forces will lead to inevitable conflict between commercial and professional “ethics” causing them to become mutually exclusive. 

On the contrary, in a patient driven model, professional ethics will likely be a more important factor in day-to-day patient care because patients (the consumers in this example) will expect it!  The patient’s assumption of ethical behavior by a professional is a huge part of the price we agree to pay and implicit when a professional service is rendered.  Implied in the authors commentary is their unstated belief that the pressures of free market competition would render many physicians incapable of being “professionally ethical. “  They state in their conclusion section, “Payers and policy makers should take heed of professional ethics as a critical mediating force that provides social and economic value in the health care system“… they go on to say “ The current environment already presents serious obstacles to fulfilling these ideals; consumer-directed health care would further exacerbate the tension.“  Translation:  Without oversight, we are incapable as patients to make our own decisions about quality or outcomes and incapable of managing our own health related spending; and without regulations, we as providers are incapable of executing our ethical and fiduciary responsibility to our patients.

This premise is flawed at its core and shows a blatant bias toward anointing centralized/bureaucratic control as ethically superior to individual-driven choice where patients interact directly with providers without a financial intermediary.  There would, indeed, be a “reordering” of the doctor-patient relationship in a consumer-driven model; it would be more as it was intended to be.  Once again the physician would be working FOR the patient rather than a care delivery vehicle for the third-party payers!  It betrays a dangerous elitist outlook to assume that the patient-physician relationship under our present system dominated by third-party payers is closer to the ideal, and that more consumer control (less third-party control) would further damage the therapeutic relationship.  The present system being one that favors central control and bureaucratic oversight as opposed to individual choice and reliance on the professional integrity of the individuals involved.

So, what is authors’ answer to the anticipated erosion of “ethics” in a consumer-driven market?  They insist that payers and policy makers should set the agenda, tell us the priorities and make the rules.  Those same “policy makers” would determine “the social and economic value” of the care you and I seek, further distorting and disconnecting it from its true market value.  Their implication suggests that more over-sight (we‘re not sure by whom), while diminishing free-market forces, will somehow ensure value and ethical “patient first” behavior by providers! 

That notion is sheer nonsense!  One cannot legislate or mandate professional ethics; a physician either possesses it or not.  Physicians (providers) will NOT be more likely to put patient welfare first in a third – party payer, heavily regulated system as compared to a system where the patient also acts as the consumer, not just a passive recipient of care.  In fact, the opposite is true.  Our present system encourages providers to only do the minimum to satisfy audit requirements of payers.  A consumer-driven system where the provider works FOR the patient, not as a bill collector for the insurance company, would be MORE responsive to patient needs and wishes; working with the patient to establish an agreed upon level of care based on an informed patient who is exercising choices allowed because they are both the consumer AND the patient!

Contrary to the assertions of Drs. Berenson and Cassel, we have no reason to believe consumer-driven care will result in unethical price wars between providers with no reliable way to measure real quality or outcomes.  Let’s leave the assessment of quality to the ones that have the most at stake in the outcome: The patients!  Measurements used to assess quality in health care will be different from that of other businesses, but patient/consumer satisfaction will still be the main driver, as it should be. Consumers don’t shop for sensitivity, professionalism, advice and privacy at Wal-Mart, they shop for price and selection.  Likewise, they will tune their shopping sensors to the issues they care about when selecting a health care professional.  Consumers are savvy and know how to distinguish value depending on the nature of what they are purchasing.

So, what is consumer-driven health care?  It is simply going back to an idea that maintains that patients are better patients when they are also consumers.   This is accomplished in part by gaining control of routine health care decisions by allowing patients to vote with their own money.  Direct consumer pressure is an economic force that is largely absent in today’s health care arena, while a driving factor in almost every other area of our economy.  Why do healthcare cost rise at such a high rate compared other heavily consumed services or goods such as cellular phones, computers, internet access, software, etc…?   It is because consumers purchase these non-medical goods and services directly with no contracts controlled by third parties, no co-pays to insulate them from the true costs and no discounted fees negotiated by third parties that vary from network to network.  Consumer-driven care means abandoning the failed era of expensive first-dollar prepaid health care “benefits” that masquerades as health insurance.  The same “benefit” that is administered by a third-party adds nothing to quality and actually drives up the cost of the commodity for which they claim to be holding down costs.

One of the economic tenets of effective insurance utilization advises to never insure what you can afford to pay for yourself.  Not only are we insuring too many up front expenses that most working people can afford, but we paying more for insurance premiums than the services are actually worth!  Talk about double jeopardy!  We (or our employer or some combination of both) are paying hundreds or even in the thousands of dollars each month, sometimes going months or more without filing a claim!  What a waste!  Consumer-driven care simply removes the middleman from the equation and allows direct purchase of certain services when needed by the individual who then becomes an engaged consumer of their care, not just a passive recipient of care.  If services are not needed, then the patient (if they are the consumer) gets to keep their own money.  What a concept!  If done correctly and across the board, the consumer driven model opens access by forcing providers to react to a large pool of unrestricted, unassigned patients by providing high quality services in a timely fashion.  It also begins the slow process of assigning true market value to professional services and ancillary outpatient tests.  Let’s stop going down this dead-end path of spiraling increasing costs of first-dollar benefit, prepaid “insurance” where we define health care costs by the cost of insurance premiums; instead of the true costs of routine primary care.

The first essential step to move toward a consumer-based market that actually works is to get rid of artificial financial intermediaries from the transaction.  This means keeping the insurance contract exclusively between the insured and the insurance company! Moving away from physician-insurer contracts allows direct interaction between the patient who is seeking professional service and the provider who is rendering it.  There can be no true “professional ethics” without a direct “contract” between the provider and patient; this promotes accountability and fidelity of the relationship.  Doing away with physician-insurer contracts also eliminates the constraints associated with insurance networks and enlarges the pool of unrestricted “free-agent” patients requiring physicians to compete for their patronage.

Consumer beware?  Yes!  Beware of third-party payers, policy makers, bureaucrats and politicians that claim they know what is best for you or promise you more service for less money.  Trust yourself to make the best decisions with your own money and if your health professional betrays your trust, fire them and hire someone else.  That simple paradigm has served society well for many decades.

Robert W. Nelson, MD


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