Consumers or Patients: The Role of Individuals vs. Employers in Health Care Spending Choices

In a roundtable co-hosted by EBRI and the Midwest Business Group on Health in Chicago last year, Boeing’s Jason Parrott and Walgreens Boots Alliances’ Tom Sondergeld debated how well various aspects of consumer-driven health care — such as deductibles and copays — were helping to control both costs and the value of health care services. The answer was clearly “not as well as we’d like.” And then the entire group challenged whether health care recipients are truly even consumers in the traditional sense at all. Are they not in fact patients? And isn’t there a fundamental difference between a patient and a consumer? This point was intriguing. When people are in need of health care, it’s because they are sick. And anyone who has ever been sick knows that the highest priority tends to be getting well, not shopping around for value-based services.

balance-billingIt’s a point Paul Fronstin and his co-authors underscore in their recent Issue Brief, “Cost Differences for Oncology Medicines Based on Site of Treatment.” Evidence from the data[1] shows that payments for infused cancer medicines in the commercial and employment-based markets are nearly two times higher, on average, when services are provided in hospital outpatient departments vs. physician offices. However, it is arguable whether patients are really getting two times the value. On the surface it seems there would be a difference. After all, someone referred to a hospital outpatient department to receive chemo might assume that this would be a better option than a physician office. What if they had a negative reaction to the chemo and needed emergency care? Wouldn’t it be better to be in a hospital outpatient office where an emergency room would be just around the corner vs. a physician office where it would not?

This thinking, however, is not necessarily on point. It is not correct to assume that hospital outpatient departments are actually located in hospitals. Generally, in fact, they aren’t, often having previously been physicians’ offices that were bought by a hospital. But even when hospital outpatient departments are located on a hospital campus, they can be as far as 250 yards away from the main building and still be considered hospital based. So in many cases, even if a patient receiving chemo in a hospital outpatient department needed emergency services, they would have similar transportation issues — i.e., needing to be transported to an emergency room — to a patient in a physician office.

Differences in pricing that do not necessarily align with quality of care, of course, extend beyond chemo costs, as I recently learned from personal experience. Both my husband and I required the same medical procedure recently, but since we have different primary care physicians, we were offered two very different recommendations for care. I was sent to a physician office; he was sent to a hospital outpatient department. Both procedures went well, with the only noticeable difference from the “consumer’s” perspective — mine and his — being that his procedure took longer and he was required to leave in a wheelchair. The other noticeable difference came when we saw our insurance claims. His was more than three times higher than mine.

Note that because both procedures were covered by our health care insurance, neither of us were particularly motivated to second-guess our doctors’ recommendations based on price. But what about based on quality of service? Perhaps it is lack of transparency that caused me not to question whether I was better off in a hospital outpatient department or a physician office for my procedure. Perhaps I just trust my doctor’s recommendation. But this is definitely not how I behave when I make other consumption choices. For example, I’m in the market for a new health club. So far, I’ve scoured website reviews, measured the distance from my house to health clubs, compared prices, and planned walk-throughs. The other day, in fact, I spotted someone wearing workout clothes near a health club and asked her how she liked the club.

It may be argued that consumerism when it comes to health care choices is evolving. In an EBRIefing on Consumer Engagement in Health Care Among Millennials, Baby Boomers, and Generation X, Paul Fronstin showed how Millennials are more likely than other generations to seek out cost information about health care, check the quality rating of a doctor or hospital before receiving care, talk to doctors about treatment options and costs, and try to find the cost of health care services before getting care. Further, in the recent EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, members of high-deductible health plans were more likely than members of traditional health plans to demonstrate consumer research patterns such as those described above.

In the meantime, what can employers do to help? In the site of care Issue Brief, Fronstin et al. concluded that employer intervention should be a consideration and that employers could cut their drug costs nearly in half simply by shifting patients to physician office settings or negotiating site-neutral pricing for medicines. This suggests that seeking to turn employees into consumers of health benefits is not the only answer when it comes to controlling costs while maintaining quality.


[1] The analysis was based on 18,195 users of the top 37 infused oncology drugs prescribed to employment-based and commercially insured patients in 2016.

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President and CEO, EBRI

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