Vanessa Furmans, in today’s WSJ, reports that UnitedHealth has decided to fine physicians sending labs to Quest instead of LabCorp.
While one can understand UHG’s desire to maximize savings from its deal with LabCorp, one can only imagine the chaos the edict can cause at the doctor-patient level, especially where use of labs to actively manage treatment is disrupted by a change in lab values brought on by a switch in lab used to process the samples.
This is yet another example where creating incentives that put the insurance company, doctor, and patient on the same page could work wonders. Instead, wielding the stick is likely to create a public relations mess.
John Goodman makes a very interesting argument pointing to 3rd party payment as a primary cause of the lack of innovation in health services. He highlights a lack of incentive for more efficient care, as it is combined more often with financial penalty instead of reward.
“There is no systematic reward for excellence and no penalty for mediocrity. As a result, excellence tends to be the result of the energy and enthusiasm of a few individuals, who usually receive no financial reward for their efforts.”
However, Goodman takes two aspects: price and quality too far. In citing the retail clinic, he claims that transparent pricing and quality of service allows success outside of 3rd party payment.
However, in discussions with Linda Hall Whitman, former CEO of MinuteClinic, this example falls somewhat short. 3rd party payment was a key to the financial viability of the MinuteClinic, including significant funds from BCBS MN. MinuteClinic’s success was based instead on SUPERIOR service combined with SUPERIOR quality at half the price.
There appears to be three approaches that consumer-focused innovation can improve upon to drive real adoption: 1) Out-of-pocket price, 2) Expected quality of care, 3) Expected level of service.
