TARGET HEALTH excels in Regulatory Affairs and Public Policy issues. Each week we highlight new information in these challenging areas.

Goings On In Wisconsin

Major current events often provide valuable lessons for those willing to probe beneath the surface and detect emerging trends. Watching the turmoil over retirement and health care benefits for public employees in the American Midwest offers valuable insights about evolving trends in health care & health spending to those engaged in discovering, developing and marketing health care products and services (e.g. Target Health Clients). These insights are valuable strategically and therefore warrant consideration irrespective of anyone’s view about which side has the more compelling arguments in the controversy.

Examining the healthcare-related proposals reveals policy initiatives reciprocating widely adopted (and not especially novel) approaches to health coverage in the private sector. Specifically, the design of private sector benefit programs has evolved to increasingly shift costs to individuals. This is accomplished through multiple mechanisms, among these increased premiums, deductibles and “co-pays”, tiered pharmaceutical benefits, and restricted provider networks with high out of pocket payments for services from non-network providers. The common theme is to “off load” costs (and thus some of the financial risk) to individual patients. Wisconsin appears to be moving tentatively in a similar direction.

In addition to the obvious cost savings for employers, a stated goal of newer plans is to increase the cost sensitivity of patients, making the market for medical care reminiscent of more conventional consumer markets. Accomplishing this responsibly requires providing patients with accurate and actionable information about the products and services among which they will be obligated to choose from. The hypotheses are that 1. consumer choice will result in a more efficient market for medical services, and 2. With the engagement of decision-making by individual patients, cost-containment will be achieved.

For developers and marketers of medicines and devices, this means that the value of these products and services will increasingly need to be transparent to multiple users: physicians, payers and patients. An additional competitive advantage will accrue to firms able to rapidly communicate enhanced value effectively and accurately to this array of constituencies.

Bluntly, if patients are asked to pay an increasingly larger percentage of health costs out of pocket, they will seek value – and bargains – just as they do when making other major purchases. Patients will not, however, be willing to be sold a “bill of goods” and assume the brunt of out-of control healthcare costs. Whether this can be achieved at an acceptable “cost” and with no negative impact on patient care is uncertain, but there is no question that the competitive landscape is shifting in favor of products and services with compelling and effectively communicated data. By Mark L. Horn, MD, CMO, Target Health Inc.

For more information about our expertise in Medical Affairs, contact Dr. Mark L. Horn. For Regulatory Affairs, please contact Dr. Jules T. Mitchel or Dr. Glen Park.

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