Rising Insurance Premiums Push Consolidation in Healthcare to the Limit

01 December 2019 - Collaborative Imaging
Annual insurance premiums for families have now soared past $20K, inclusive of employer-paid benefits. Learn why and how it will impact radiologists now.
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The state of the health industry continues to undergo digital transformation, comparable to other industries across the globe. Unfortunately, major problems within the health industry, including the consumerization of the health profession, are creating new challenges and risks. The high cost of annual insurance premiums represents one such risk, and as insurance premiums soar to record levels, far outpacing inflation and wage growth, notes Modern Healthcare, practice owners and Radiologists will need to re-evaluate their business models. Before making any rash decision, it is imperative that practitioners understand what is happening, why it is happening, how it will shape the future of private practice, and a few tips for overcoming high insurance costs.

What Is Happening With Annual Insurance Premiums?

Annual insurance premiums have reached a new level. Combined, companies, and workers spend more than $20,000 on average for family health benefits. While employees pay respectively 25% of this cost, it still amounts to more than $15,000 paid by the company on behalf of employee. Applied across 10 employees, that is an added expense of $150,000. Now, this sharp rise only reflects a 4.9% growth from 2018, but these prohibitive costs have risen at even faster rates in recent years.

Part of the problem with the current track of health premiums revolves around growth, or lack thereof, in wages and inflation. Current inflation rates and wage earnings are expected to only grow 2% and 3.4%, so at this rate, health insurance premiums effectively wiped out any potential for earning more money.

What Contributes to Increased Annual Insurance Premiums?

The uptick in annual insurance premium rates is a complex problem. On the surface, it reflects growing unrest in the market and uncertainty as more individuals and families choose state-or federal-backed insurance plans, which are part of the Affordable Care Act (ACA). Until this year, insurance premiums through the ACA marketplace rose at record-breaking levels as well, up to 50% in some areas, reports The Washington Post, namely Texas and states that did not choose to expand Medicaid. With that in mind, it is also imperative for practitioners to realize that paying higher premiums is not necessarily the only solution.

Unfortunately, any company with more than a set number of employees, per the ACA guidelines, must offer insurance to its workers. However, the ACA does not make any specific rules regarding how much employees and employers are responsible for paying for such premiums. Still, that is not the only thing impacting increased annual insurance premiums.

Increased Regulations Continue To Rile Up TheIndustry

As the health industry shifts with the passage of the ACA, increased regulations continue to rile up the industry. Surging patient costs and high pharmaceutical prices, including the outrage surrounding the 600% price hike of Epi-Pens a few years back, have led to the sheer demand for more transparency. In fact, hospitals were recently required to begin listing prices online for patients, explains the Centers for Medicare and Medicaid Services (CMS). This new requirement forces practitioners to evaluate all billing models and allocate extra resources for managing online pricing information.

At the same time, healthcare has moved further from a business-to-business model.

For example, traditional health visits were the result of patients seeing a primary care physician (PCP) and obtaining referrals for any necessary care. Now, patients take a more active role in choosing who they see, the provider’s location, tests that will be performed, and more. Giving patients the power of choice may seem ideal, but it opens the door to risk. Tests may be run unnecessarily, and the threat of insurance-denial looms over each interaction.

The Technology Giants Look For Ways To Embed Digital Capabilities In Everyday Life

The shift in the market to a business-to-consumer model also attracts the attention of Apple, Amazon, Microsoft, and even Google. As the technology giants look for ways to embed digital capabilities in everyday life, such as through health trackers and smart devices, healthcare is becoming more direct, reports Medium.com. This effectively lessens the fees and charges associated with traditional care, such as diagnostics and labor costs for spending time with patients. In a sense, as healthcare grows more involved with technology and remote capabilities, the opportunities to grow business revenue decline. Concurrently, private practices face increased competition and lose the advantages that allow them to stay in business.

While proof does not necessarily exist for this inference, declining healthcare worker earnings growth could be a result of increased consumerization of healthcare, resulting in fewer funds for paying employer-paid health benefits. This makes working with a conglomerate or joining a radiology investment group more attractive, but it is not all the gold and glamour it appears.

What Can Private Practices Do?

The simplest option is to leave private practice. Unfortunately, Radiologists lose their identity and voice in making decisions. Consolidated radiology groups can require Radiologists to work extensive hours, fail to pay certain premiums over a given threshold, and make autonomy in practicing a logistics’ nightmare. So, health practitioners should consider a few other options:

  • Embrace the consumerization by using telemedicine to lower in-office expenses.
  • Ask employees to pay a higher percentage of their premiums.
  • Encourage employees to review available ACA marketplace plans during open enrollment.
  • Take advantage of technology, such as artificial intelligence, to reduce the time needed to read individual images and make decisions.

What’s Next for the Health Industry?

No one really knows. The uncertainty in the market alludes to the risk of a recession, which will coincide with higher illness rates. As costs grow, employees will face decisions with whether to keep their own coverage, and Radiologists will see renewed pressure from investment groups to “join the team.” Instead of abandoning ship, Radiologists should fight against consolidation, work to find new ways to stretch the budget, find time to enjoy recreational activities and build consumer-rapport through digital interactions. Since there are ample ways to connect with consumers and avoid losing patients to the bigger players in the industry, part two of this series will delve deeper into what needs to happen to avoid the steep costs of inflated insurance premiums and overcome the threat of consolidation.