The ITIJ team have been reporting live from ITIC UK 2023 in Bath this week (20 April 2023) sharing the discussions that took place at the conference. Read all reports
James Walker, Head of International Network at Charles Taylor Assistance
Walker began by noting that traditionally underappreciated economic metrics such as the consumer price index (CPI) have become ‘relevant’ to providers as a means of setting prices that are beneficial to them, whereas in the past it has been too low to be useful. Despite this, he suggested that insurers should look to build the CPI into contracts as a clause, ‘because when it goes back the other way, you can hold the line on it’.
Walker added that another thing that has become ‘very important’ is cashflow: “We found that if you can pay in five to seven days, providers will give you much bigger discounts – it’s actually a very useful tool that’s increased some of our savings.”
He added that ‘exaggeration of treatment’, while it has ‘always been a problem … has become a much bigger issue, to the extent that ‘we are actually seeing customers question why they are having certain tests at certain facilities’.
Walker cited the cost of medication and consumables as another source of potentially high costs –particularly for ‘bundled charges’, but also in terms of mark-ups for even basic medication such as paracetamol.
“Intermediaries continue to be a problem, but it’s even more of a problem now,” he said. “We’re seeing intermediaries ‘sit’ on top of the hospital system and marking bills up by up to … 90 per cent. They’re also harassing patients, using legal counsel to contact patients rather than regular staff.”
He also highlighted that there is growing collusion between small outpatient clinics, typically in resorts, and local hospitals with the aim of collaborating to profit off patients. “That’s quite concerning for us,” said Walker, “because it’s very hard to control.”
Worryingly, Walker said that the connection between price and quality is becoming ‘less and less relevant’, as more healthcare facilities are increasing costs without reinvesting any of the funds raised into their facilities.
To maintain a strong control over costs in the face of these challenges, Walker said that it was important for insurers to ‘understand the provider’ – considering what they were prioritising, and tailoring their approach to them. He also recommended having multiple providers available in each country covered, rather than relying on just one. Finally, he affirmed that insurers should dispute anything that they consider unacceptable in their dealings with providers.
Mary-Jo McDonald, Managing Director for Europe, Global Excel Management
McDonald focused primarily on the ‘European aspect’ of cost containment, beginning by highlighting the ‘scary view’ that healthcare inflation statistics painted – with global healthcare inflation for 2023 currently projected at around 10 per cent, up from 8.8 per cent in 2022, and 8.4 per cent in 2021.
In Europe, this is reflected in a projected inflation rate for 2023 of 8.6 per cent, up from 8 per cent in the previous year. These figures were based on WTW’s 2023 Global Medical Trends Survey.
McDonald noted that many healthcare systems across Europe are struggling with issues of capacity currently, so despite many European nations having ‘very strong public healthcare systems where quality is excellent where it is available – you have to expect that you will have to look after patients in private healthcare’. She recommended that travellers should obtain a European Health Insurance Card (EHIC) or Global Health Insurance Card (GHIC) where possible to manage costs.
One driver of these shortages, and consequently healthcare inflation, is a shortage of trained medical staff. She noted that, in France, ‘more people are retiring than are joining the medical industry [with] fewer doctors now than in 2012’, while ‘40 per cent of doctors in Europe are aged over 55 – they’re retiring’.
In light of this situation, McDonald advocated for a preventative, rather than reactive, approach to managing costs: “It’s most important to try and avoid costs at the outset.” Reiterating what Walker said, she also highlighted the importance and benefits of fast payment, offering potential discounts.
She also said that ‘local understanding is really important’ when attempting to navigate the complexities of foreign healthcare systems, noting that in some European countries, healthcare pricing may be done on a regional, rather than national level.
Jason Davis, Chief Revenue Officer, The Phia Group
Davis focused on the challenges of cost containment in the US. He noted that the US has fewer acute beds per capita, at 2.5 per 1,000, than many other comparably wealthy countries – behind Germany, Japan, Austria, Belgium, Switzerland, France and the Netherlands; the comparable country average is 4.2 per 1,000 people.
“You would expect the most expensive, most expansive hospital system in the world to have tonnes of hospitals – they don’t,” he stated.
Davis also highlighted that the US has one of the highest proportions of specialist physicians (88 per cent) versus generalist physicians (12 per cent) in the developed world, alongside having an above-average number of licensed nurses per capita.
This tendency, he suggested, was due to American health systems being run ‘as a business’ – with staffing costs being a key contributor to operational costs. “And when you think about it as a business, the highest staffing cost would be from physicians. So you have fewer physicians, unless they’re specialists, and more specialty nurses,” he explained.
“Everything Mary-Jo McDonald said about doctors and nurses leaving the system and not getting equivalent replacement is happening in the US,” continued Davis, adding that the stresses of the coronavirus pandemic had only accentuated these problems.
Additionally, Davis said that while many hospitals are ‘sitting on impressive cash holdings’, many are not-for-profit and may have to sell investments at a loss to keep cash flow going. Consequently, ‘cost-shifting is something on their minds, and they are looking to the international market with money lust’.
However, he recognised that the US government has worked in recent years to address many issues that formerly plagued the US health market. This included the impact of the Affordable Care Act (Obamacare) and the No Surprises Act in reducing the risk of incurring ‘out-of-network’ costs and improving price transparency.
He highlighted the fact that prior to the No Surprises Act, it was the responsibility of individuals to ensure that they didn’t overpay when out-of-network. Since the Act’s introduction, it has now become a legal responsibility for American companies to pay a ‘commercially reasonable amount’ on emergency claims, while providers cannot claim more than a commercially reasonable rate on emergencies, even if the consumer doesn’t have insurance.