In a complex system, the potential for impact is found at points of leverage where there is either shared pain or a shared sense of possibility. Through mapping the system, we identified a set of 10 leverage points.  Through leverage points, we see the cash market in the broader context of the challenges in healthcare.  The 10 leverage points are as follows.

1. Transparency across multiple pricing and reimbursement strategies: Currently, patients cannot be certain at the time of service the ultimate cost of a service, and providers rarely know what they will be reimbursed for providing the service. Pricing in an insurance-driven market is determined by the negotiated rate card, and cost-shifting in the system means that the price has no reliable relationship to the costs of the procedure borne by the provider.  On the other hand, focusing on the cash market as distinct from the insurance market creates new possibilities for building systems that are more transparent. 

2. Optimizing intermediation between patients and providers: Traditionally, public and private insurance administrators have been the primary and often only intermediation between consumers and providers. Increasingly, consumers are bearing direct costs for healthcare and ostensibly are more engaged in healthcare decisions.  While not all optimal, new intermediaries are stepping in to provide financial services, collective purchasing, and information brokering and to empower patients with the ability to access healthcare themselves. These new intermediaries and others that may emerge as the cash market becomes visible reflect an opportunity to realign relationships between patients and healthcare providers. 

3. Realignment of collections practices and risk in the system: Providers have worked for decades to either outsource or professionalize revenue cycle management in a constant quest to turn receivables into cash. New financial services offerings are shifting the risk of nonpayment from the providers to consumers and third parties. Payment at the entrance to a hospital or a doctor’s office is becoming the norm. Providers, fearing nonpayment, are limiting their exposure to the cash market by offering credit instruments and cash incentives.

4. Smoothing the vicissitudes of financial impact on individuals:  One theory equates the cash market for healthcare to a similarly priced cash market: “If you can buy a car you can pay for healthcare.”  Unfortunately, this theory/analogy is flawed, because with a car you know the costs ahead of time, can reasonably predict when you will need to buy another car, can finance the new car easily, etc.  Furthermore, you buy a car you can afford and it will still get you around town, but a heart attack is going to be expensive for both the rich and the poor.  In the current system, it is difficult to plan and save for healthcare as one does for a car.  Tools exist for managing costs in other parts of people’s lives; imagine if the same existed for healthcare. 

5. Anticipation of Out Of Pocket Revenue and Expenses for Providers and Consumers: The healthcare industry has been slow to provide accessible information on the cost of services; this has been true for insured and uninsured patients alike.  As health care costs continue to escalate, even insured patients are feeling the burden of out of pocket costs associated with healthcare services.  However, healthcare providers have not developed effective systems or processes to capture true costs and provide patients with information on the out of pocket expenses they will incur for services.  This has put both providers and patients at peril.  For individual consumers, the fact that medical events are usually unexpected makes it difficult to plan for them.

6. Visible gaps between what insurance covers and the costs of healthcare: In America’s past, healthcare financing was offered through employers or government programs.  Today, employers are opting out of plans or offering plans in which employees are asked to bear significant amounts of the costs. In the same vein, government programs (Medicare and Medicaid) are increasing their co-payments or reducing eligibility.  The amount of uncovered costs of healthcare is growing, increasing the size of the cash market in healthcare, increasing the need for standard and clarifying practices. This gap is not addressed by most universal health coverage policy proposals.

7. Integrity and accountability in the calculation of risk: As a society, we are responding to the subprime mortgage mess and the subsequent crises in the capital markets with increased attention to the assumptions behind credit ratings. The idea to rationalize the cash market for healthcare begs several ratings-related questions. Do we have an adequate understanding of the risks currently covered by insurance? How do we rate health-related debt? How do we price the capital behind it? These questions drive the analysis of financial services in healthcare, and the standards and rating systems that drive how they are factored are still emerging.

8. Potential of alliances to create risk pooling and collective purchasing or action:  As employers’ role in healthcare diminishes, the door is opening for new alliances to play a significant role. Both traditional alliances (such as trade associations, churches, etc.) and new alliances (such as online communities) may offer opportunities. The cash market presents an entry point for new alliances. These alliances can provide opportunities to pool risk and to negotiate services and prices, offering new ways to access healthcare and lower costs through bulk purchasing, shared risk, etc.

9. Risk sharing at the micro level balanced against risk management at the macro level:  Risk is increasingly moving away from national pools into smaller pools and onto individuals. Placing some risk on an individual may encourage healthier and more cost-effective decisions. Placing too much of the risk on an individual leads to bankruptcy and nonpayment for the provider. Within the cash market, risk is largely managed within the myriad of local, community-based innovations where informal and formal networks come together to ensure access to healthcare in their communities. 

10. Definitions of healthcare as a public good and part of a social contract: Americans have strong and deeply conflicted beliefs about healthcare.  Is it a right? A responsibility? Should there be a single payer or a consumer-driven solution? Our ideological views shape our definitions of justice and how we’ve navigated the cash market in healthcare. Americans don’t see the cash market as part of that contract. We can’t apply standards of effectiveness to something we haven’t yet defined.

Our exploration and prioritization of these leverage points, which began with an inquiry into the uncovered costs of healthcare, ultimately uncovered a cash market in healthcare. These leverage points connect the need and the opportunity to rationalize the cash market to the broader healthcare system. An intervention targeting the cash market for healthcare may address a small portion of the overall system, but it can have a broader impact. We hope the analysis that follows makes the case for attention to the cash market as a necessary lever within broader healthcare reform.