Mother and child have telehealth appointmentMother and child have telehealth appointment

The site of service can contain healthcare costs, but patients don’t know where to start

April 26, 2023
Katie Cobb

The kind of care a patient receives - and the setting in which they receive it - has a ripple effect across the healthcare system, but patients often are not equipped to identify which type of care setting is most appropriate for their needs.

Historically, patients have received care primarily at physician offices and hospitals, but over the past decade, healthcare has evolved both in how it is accessed and administered. Initially, treatment began moving from high-cost physical locations to low-cost ones, followed by a second phase in which physical locations in general moved to virtual sites of service. COVID-19 has accelerated both of these shifts. 

As a means of curbing increasing healthcare costs, stakeholders across the industry have explored new ways to achieve lower cost, higher quality care specifically by focusing on where care is provided: the site of service. Today healthcare sites of service include myriad venues and modes, from freestanding clinics and ambulatory surgery centers to telehealth.

Providing care at the optimal site of service has demonstrable benefits for payers, providers, and patients.  By offering more venues for patients to receive care, industry leaders have an opportunity to modernize the healthcare system to improve access, affordability, patient outcomes and experiences. 

Appropriate care settings reduce costs system wide

According to UnitedHealth’s 2020 Sustainability Report, “Medical care provided at sites of care that meet quality and cost-efficiency criteria predictably leads to better health outcomes at a lower cost for the consumer.” The stakeholders and entities involved in the payment for health care are driving the most significant changes in the healthcare ecosystem, particularly as they explore alternative, innovative means of distributing care. There are several examples of how providing patient services at the most appropriate site of care can be a boon for budgets across the healthcare system.

  • Urgent care vs. emergency departments. According to estimates, the healthcare industry could realize more than $18 billion in savings by steering non-urgent cases from emergency departments to preventive care. In fact, according to Dr. Ben Aiken “An ER visit often costs up to 10X the rate of an urgent care center or primary care provider (PCP) and often includes a long wait time.” 
  • Freestanding laboratories vs. in-hospital laboratories.The Employee Benefit Research Institute found the prices of lab services can vary astronomically, ranging from 65-531% more expensive depending on the location. The report also states that employers can save $3B each year if lab services are routed away from hospital outpatient departments.
  • Freestanding imaging centers vs. in-hospital imaging departments. In 2019, the average price for a routine diagnostic imaging test performed in a hospital outpatient department was $1,855 — 165% more than the price of the test performed in stand-alone imaging centers or physician offices. Shifting care from outpatient hospital departments to freestanding imaging centers would reduce spending by 62% and save members an average of $312 per test, according to a UnitedHealth study.

Low healthcare system literacy drives up rates of unnecessary, inappropriate care 

The kind of care a patient receives - and the setting in which they receive it - has a ripple effect across the healthcare system, but patients often are not equipped to identify which type of care setting is most appropriate for their needs. The root cause? Low healthcare system literacy.  

For example, due to the extreme complexity of the healthcare system, non-emergent care sought in the emergency department is largely due to individuals who either cannot navigate the system of in-network and out-of-network doctors or simply opt for the convenience of an always-open emergency department that never requires an appointment. Whatever the reason for overuse, the practice amounts to $47 billion in “avoidable medical spend for US healthcare each year,” according to a recent Accenture report.

Patient decision-making support is critical to realizing cost-containment goals

If patients aren’t equipped to make the right decision, the value of expanding sites of services is wasted. Patient preferences typically come down to the path of least resistance. In a system riddled with puzzling terminology, confusing rules and regulations and opaque processes, people are defaulting to the ER for its accessibility. It’s easier than trying to navigate a complex system that refuses to meet them halfway. 

Instead of trying to mold people’s behaviors to an inflexible and labyrinthine system, it is time to center the system on people with rigor and empathy. Changes that payers, benefits administrators, and other enterprise healthcare companies make to influence people’s behaviors should reflect human-centered design principles. This means combining human and digital guidance to design experiences, products and workflows from an “outside-in,” “walk in others’ shoes” perspective. 

Complexity is an entrenched problem in healthcare that impacts payers, providers and people. If health organizations use simplicity and humanized healthcare as their touchstones for making change that improves care, they can finally start cutting through complexity—and cutting costs.

Amino Health recently added new search topic mapping to guide plan members away from high cost care settings toward in-network urgent care and retail clinics or curated specialist providers, when appropriate.  Learn more.

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