Another influencer impacts the market

An article in the Star Tribune titled “Can free advice on care lower health costs?” introduces us to another entity guiding patient choice – OptumHealth. According to the article, the company serves 40 million health plan members, helping guide members to the best choice when it comes to significant health care decisions. As an example, OptumHealth managed more than 5,000 transplants in 2007. Among its goals, the company tries to steer members to healthcare providers that offer the highest quality medical care. But when you hear that OptumHealth is owned by UnitedHealth Group, the nation’s biggest health insurer, it’s also not surprising to hear that the providers on the company’s list are providing care at costs that have been negotiated downward. The article states that OptumHealth negotiates “a discount of up to 46% in exchange for including a center in its network.”

Is that a bad thing? On the surface, no, if the company is driving patients to the best care, and at a lower price. But it does make you wonder how things might get warped along the way. Kind of reminds me of the “preferred vendors” used by insurance companies for auto coverage. For example, back in the day, when my car sustained damage from a collision in a typical Minnesota snowstorm, my insurer suggested I use a preferred vendor, which would expedite my repair, facilitate my deductible and more. By law, they couldn’t force me to use a preferred vendor, but they made it much easier for me to do so. When I asked those in the know about this policy, they cautioned me about receiving poor quality repair service. In essence, because the vendors were “preferred,” the insurer had negotiated lower costs for repairs. That meant more volume, but less profit, for the vendors, many of whom would take short cuts repair processes, use lower-grade materials, etc. on “preferred” customers to help make up the difference. My mechanic advised me, “If you really care about your car, how it looks, the quality of the repair, etc., pick a better place. If the car is older, or you don’t care so much, you’re OK with a preferred vendor.”

Could this happen in healthcare? Who knows. The strategy driving OptumHealth is solid, but incentives often warp actual behavior, so we’ll have to see how it plays out.

The other aspect of the article that wasn’t surprising was the universally negative response from providers themselves. “It needs a lot of scrutiny,” said one physician, and “We are all uncertain about how they make internal decisions,” said another. Sounds like the push back traditional providers had when mini-clinics first arrived on the scene. In many ways, this is just another form of managed care, so it’s not surprising that physicians wouldn’t be running to embrace the idea. But for providers, OptumHealth provides one more – very powerful – influence on how patients choose care.