They say you get what you pay but, while this may be true for many things, when it comes to healthcare, the link between price and quality isn’t always so clear. How much a specialist charges for a medical procedure can vary greatly, with all sorts of factors playing a part. “Cost can come down to a variety of things such as location, how many specialists are in the area and how large the local insured population is,” says Dr Doug Wright, medical director at Aviva UK Health. “There’s absolutely no evidence of a link between price and quality.”
To demonstrate just how unconnected the two characteristics are, fees can even be distorted by specialists’ retirement plans. For instance Dr Wright says that he’s spoken to specialists who have put their fees up as they approach retirement purely to reduce the amount of private work they do. But, as people perceive a link between price and quality, the price rise actually drives up the volume of customers.
But being able to determine whether a specialist warrants the price he or she charges is becoming increasingly important. While the choice of specialist has traditionally been left to the policyholder’s GP, as more and more medical insurers launch directed care products, they need to be able to demonstrate that a specialist has been selected for their quality and not just their price.
Both price and quality come into the selection criteria when insurers are deciding which specialists to include on their directed care products. At Axa PPP Healthcare, as well as ensuring that consultants have the right qualifications and experience, their fees also come under scrutiny. “We look at the overall episode cost,” says Axa PPP healthcare commercial director Fergus Craig. “The majority of specialists charge within a relatively narrow band but between 10 and 15 per cent are above this. Often this is as a result of defensive medicine, where extra scans, tests and other interventions are requested. As these aren’t always necessary it can be difficult not to be suspicious so we exclude these people from our lists.”
While this approach will weed out the specialists who do look to inflate the bills they send to the medical insurers, it will also remove some that simply charge higher fees as a result of their experience and expertise.
Jelf Group director Matthew Judge says there is anecdotal evidence that this is happening. “I’ve spoken to a number of consultants who say that while younger consultants who are building their private practice have seen an increase in referrals, the numbers have dropped for their older, more established colleagues. It does suggest that price has a significant part to play in the insurers’ selections.”
But while this may be the case, Simplyhealth head of employer marketing Howard Hughes says that it shouldn’t really be an issue. “People cancel their medical insurance because they can’t afford it. Given this I don’t really think there is a problem saying we’re creating networks to save our customers money. The industry shouldn’t be afraid to be honest about what it’s doing, especially as we don’t have the information to say one specialist is better than another,” he explains.
But this is changing. More data on specialists is becoming available both in the NHS and the private sector.
The NHS started a pilot publication of outcomes data for hospital consultants in June 2013 in a bid to provide greater transparency and drive up the quality of care patients receive. The data covers 10 specialist surgical societies, including heart, vascular and orthopaedic surgery, and is based on the operations and procedures carried out by around 3,500 consultants. It shows the number of times a consultant has carried out a procedure, mortality rates and whether their outcomes are within expected limits.
While the data can be used to check on NHS consultants working in the private sector, there are also moves to publish more information about private hospitals.
Already some comparative data is available on private and independent hospitals through the not-for-profit Private Healthcare Information Network. This pulls together information from administrative and billing systems, clinical reporting and submissions to the NHS and regulators to enable consumers to see how different hospitals perform. In total it covers around 200 hospitals.
But, while this is a good start there are calls for more data, especially at a consultant level. In its provisional findings on privately funded healthcare services, the Competition Commission recommended that better information was provided to patients on price and quality. At the launch of the findings back in August, Roger Witcomb, chairman of the Competition Commission and the Private Healthcare Inquiry Group said: “The lack of available and comparable information, often less than is available to NHS patients, also makes informed choices for these patients difficult.”
But while greater transparency is a good thing, not everyone believes it will help the public make more informed choices over their healthcare. “The data doesn’t always give the full picture,” says JLT Employee Benefits principal for healthcare and risk Nick Boyton. “A specialist carrying out more complex procedures or operating on patients with complications is likely to have a lower success rate. It won’t be easy to interpret the data.”
Further, a recent report in The Lancet (Public reporting of surgeon outcomes: low numbers of procedures lead to false complacency, Walker, Neuburger, Groene, Cromwell and van der Meulen) questioned the value of specialist data. It found that, for some specialties, the number of procedures that a surgeon does each year was so low that the probability of identifying one with increased mortality rates was also slim.
Given that the number of procedures carried out by specialists in the private sector is even smaller than for the NHS, producing meaningful data that will enable consumers to make decisions based on quality is likely to be extremely difficult. While he sees this as a potential problem, Craig is still in favour of publishing data. “It’s a bit like the league tables for schools. The fact that someone’s scrutinising what’s going on will lead to better standards,” he says.
Perhaps because it can be so difficult to interpret the data, most policyholders have been comfortable to leave the choice of specialist up to someone else. Furthermore, while the GP, with his or her medical background, has been seen as the obvious gatekeeper for specialists, medical insurers may also be well placed to make the decisions.
Certainly feedback from policyholders suggests most are happy to see the specialist their insurer recommends. Craig says that at Axa, while there are inevitably some people who are unhappy the specialist their GP recommended wasn’t available through their insurance, most people are very happy leaving the decision up to the insurer. “Feedback has been much more positive than we’ve seen before,” he adds. “They like the fact that we offer them choice over location and then book the appointment for them at a time that is convenient.”
Advisers support this feedback too. For instance Judge says that leaving the specialist decision to the GP or the insurer makes little difference to the majority of policyholders. “Unless you know someone the choice of specialist is largely irrelevant. As long as it’s someone who’s qualified and competent, there’s no real issue,” he says. “Some people like to know they can see any specialist they like but very few actually exercise this choice.”
As more data does become available, shifting the decision making into the insurer’s hands is likely to become even more acceptable too. This could lead to product innovation, with insurers developing top of the range products based around the specialists with the best outcomes. “It could reach a point where specialists want to be included on the insurers’ lists, almost like earning an endorsement of their services,” says Judge.
But while this may be some way off, the directed healthcare model has already shown it has a place. Boyton believes these types of products will gain a significant share of the corporate market, especially as consumers feel more confident about the quality of the specialists the insurers recommend.
“I don’t think it will completely replace the more traditional product,” says Boyton. “You only have to look at recent launches such as Allianz Worldwide Care’s top end international medical insurance policy which allows policyholders to be treated anywhere they like to see that choice remains an important factor for some clients.”