Want to manage your total cloud costs better? Emphasize the ‘Ops’ in DevOps, says Futurum analyst Daniel Newman

The next BriefingsDirect Voice of the Analyst interview explores new ways that businesses can gain the most control and economic payback from various cloud computing models.

We’ll now hear from an IT industry analyst on how developers and IT operators can find newfound common ground to make hybrid cloud the best long-term economic value for their organizations.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy.

Here to help explore ways a managed and orchestrated cloud lifecycle culture should be sought across enterprise IT organizations is Daniel Newman, Principal Analyst and Founding Partner at Futurum Research. The interview is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Daniel, many tools have been delivered over the years for improving software development in the cloud. Recently, containerization and management of containers has been a big part of that.

Now, we’re also seeing IT operators tasked with making the most of cloud, hybrid cloud, and multi-cloud around DevOps – and they need better tools, too.

Has there been a divide or lag between what developers have been able to do in the public cloud environment and what operators must be able to do? If so, is that gap growing or shrinking now that new types of tools for automation, orchestration, and composability of infrastructure and cloud services are arriving?

Out of the shadow, into the cloud 

Newman: Your question lends itself to the concept of shadow IT. The users of this shadow IT find a way to get what they need to get things done. They have had a period of uncanny freedom.

Newman

But this has led to a couple of things. First of all, generally nobody knows what anybody else is doing within the organization. The developers have been able to creatively find tools.

On the other hand, IT has been cast inside of a box. And they say, “Here is the toolset you get. Here are your limitations. Here is how we want you to go about things. These are the policies.”

And in the data center world, that’s how everything gets built. This is the confined set of restrictions that makes a data center a data center.

But in a developer’s world, it’s always been about minimum viable product. It’s been about how to develop using tools that do what they need them to do and getting the code out as quickly as possible. And when it’s all in the cloud, the end-user of the application doesn’t know which cloud it’s running on, they just know they’re getting access to the app.

Basically we now have two worlds colliding. You have a world of strict, confined policies -- and that’s the “ops” side of DevOps. You also have the developers who have been given free rein to do what they need to do; to get what they need to get done, done.

Get Dev and Ops to collaborate 

Gardner: So, we need to keep that creativity and innovation going for the developers so they can satisfy their requirements. At the same time, we need to put in guard rails, to make it all sustainable.

Otherwise we see not a minimal viable cloud – but out-of-control expenses, out-of-control governance and security, and difficulty taking advantage of both private cloud and public cloud, or a hybrid affair, when you want to make that choice.

How do we begin to make this a case of worlds collaborating instead of worlds colliding?

Newman: It’s a great question. We have tended to point DevOps toward “dev.” It’s really been about the development, and the “ops” side is secondary. It’s like capital D, lowercase o.

The thing is, we’re now having a massive shift that requires more orchestration and coordination between these groups.

How to Make
Hybrid IT
Simple

You mentioned out-of-control expenses. I spoke earlier about DevOps and developers having the free rein – to do what they need to do, put it where they need to put it, containers, clouds, tools, whatever they need, and just get it out because that’s what impacts their customers.

If you have an application where people buy things on the web and you need to get that app out, it may be a little more expensive to deploy it without the support of Ops, but you feel the pressure to get it done quickly.

Now, Ops can come in and say, “Well, you know … what about a flex consumption-based model, what about multi-cloud, what about using containers to create more portability?”

“What if we can keep it within the constraints of a budget and work together with you? And, by the way, we can help you understand which applications are running on which cloud and provide you the optimal [aggregate cloud use] plan.”

Let’s be very honest, a developer doesn’t care about all of that. ... They are typically not paid or compensated in any way that leads to optimizing on cost. That’s what the Ops people do.

Such orchestration -- just like almost all larger digital transformation efforts -- starts when you have shared goals. The problem is, they call it a DevOps group -- but Dev has one set of goals and Ops has different ones.

What you’re seeing is the need for new composable tools for cloud services, which we saw at such events as the recent Hewlett Packard Enterprise (HPE) Discover conference. They are launching these tools, giving the Ops people more control over things, and -- by the way -- giving developers more visibility than has existed in the past.

There is a big opportunity [for better cloud use economics] through better orchestration and collaboration, but it comes down to the age-old challenges of having the Dev and Ops people share the same goals.

There is a big opportunity [for better cloud use economics] through better orchestration and collaboration, but it comes down to the age-old challenges inside of any IT organization -- and that is having the Dev and the Ops people share the same goals. These new tools may give them more of a reason to start working in that way.

Gardner: The more composability the operations people have, the easier it is for them to define a path that the developers can stay inside of without encumbering the developers.

We may be at the point in the maturity of the industry where both sides can get what they want. It’s simply a matter of putting that together -- the chocolate and peanut-butter, if you will. It becomes more of a complete DevOps.

But there is another part of this people often don’t talk about, and that’s the data placement component. When we examine the lifecycle of a modern application, we’re not just developing it and staging it where it stays static. It has to be built upon and improved, we are doing iterations, we are doing Agile methods.

We also have to think about the data the application is consuming and creating in the same way. That dynamic data use pattern needs to fit into a larger data management philosophy and architecture that includes multi-cloud support.

I think it’s becoming DevDataOps -- not just DevOps these days. The operations people need to be able to put in requirements about how that data is managed within the confines of that application’s deployment, yet kept secure, and in compliance with regulations and localization requirements.

DevDataOps emerges

Newman: We’ve launched the DevDataOps category right now! That’s actually a really great point, because if you think about where does all that live -- meaning IT orchestration of the infrastructure choices and whether that’s in the cloud or on-premises – there has to be enough of the right kind of storage.

Developers are usually worried about data from the sense of what can they do with that data to improve and enhance the applications. When you add in elements like machine learning (ML) and artificial intelligence (AI), that’s going to just up the compute and storage requirements. You have the edge and Internet of Things (IoT) to consider now too for data. Most applications are collecting more data in real-time. With all of these complexities, you have to ask, “Who really owns this data?”

Well, the IT part of DevOps, the “Ops,” typically worries about capacity and resources performance for data. But are they really worried about the data in these new models? It brings in that needed third category because the Dev person doesn’t necessarily deal with the data lifecycle. The need to best use that data is a business unit imperative, a marketing-level issue, a sales-level data requirement. It can include all the data that’s created inside of a cloud instance of SAP or Salesforce.

How to Solve Cost
and Utilization Challenges
of Hybrid Cloud

Just think about how many people need to be involved in orchestration to maximize that? Culturally speaking, it goes back to shared tools, shared visibility, and shared goals. It’s also now about more orchestration required across more external groups. So your DevOps group just got bigger, because the data deluge is going to be the most valuable resource any company has. It will be, if it isn’t already today, the most influential variable in what your company becomes.

You can’t just leave that to developers and operators of IT. It becomes core to business unit leadership, and they need to have an impact. The business leadership should be asking, “We have all this data. What are we doing with it? How are we managing it? Where does it live? How do we pour it between different clouds? What stays on-premises and what goes off? How do we govern it? How can we have governance over privacy and compliance?”

I would say most companies really struggle to keep up with compliance because there are so many rules about what kind of data you have, where it can live, how it should be managed, and how long it should be stored.

I think you bring up a great point, Dana. I could probably rattle on about this for a long, long time. You’ve just added a whole new element to DevOps, right here on this podcast. I don’t know that it has to do with specifically Dev or Ops, but I think it’s Dev+Ops+Data -- a new leadership element for meaningful digital transformation.

Gardner: We talked about trying to bridge the gap between development and Ops, but I think there are other gaps, too. One is between data lifecycle management – for backup and recovery and making it the lowest cost storage environment, for example. Then there is the other group of data scientists who are warehousing that data, caching it, and grabbing more data from outside, third-party sources to do more analytics for the entire company. But these data strategies are too often still divorced.

These data science people and what the developers and operators are doing aren’t necessarily in sync. So, we might have another category, which would be Dev+Data+DataScience+Ops.

Add Data Analytics to the Composition 

Newman: Now we’re going four groups. You are firstly talking about the data from the running applications. That’s managed through pure orchestration in DevOps, and that works fine through composability tools. Those tools provide IT the capability to add guard rails to the developers, so they are not doing things in the shadows, but instead do things in coordination.

The other data category is that bigger analytical data. It includes open data, third-party data, and historical data that’s been collected and stored inside of instances of Enterprise resource planning (ERP) apps and Customer-relationship management (CRM) apps for 20 or 30 years. It’s a gold mine of information. Now we have to figure out an extract process and incorporate that data into almost every enterprise-level application that developers are building. Right now Dev and Ops don’t really have a clue what is out there and available across that category because that’s being managed somewhere else, through an analytics group of the company.

Gardner: Or, developers will have to create an entirely different class of applications for analytics alone, as well as integrating the analytics services into all of the existing apps.

Newman: One of the HPE partners I’ve worked with the in the past, SAS, and companies such as SAS and SAP, are going to become much closer aligned with infrastructure. Your DevOps is going to become your analytics Ops, too.

How to Achieve
Composability
Across Your Data Center

Hardware companies have built software apps to run their hardware, but they haven’t been historically building software apps to run the data that sits on the hardware. That’s been managed by the businesses running business intelligence software, such as the ones I mentioned.

There is an opportunity for a new level of coordination to take place at the vendor level, because when you see these alliances, and you see these partnerships, this isn’t new. But, seeing it done in a way that’s about getting the maximum amount of usable data from one system into every application -- that’s futuristic, and it needs to be worked on today.

Gardner: The bottom line is that there are many moving parts of IT that remain disjointed. But we are at the point now with composability and automation of getting an uber-view over services and processes to start making these new connections – technically, culturally, and organizationally.

What I have seen from HPE around the HPE Composable Cloud vision moves a big step in that direction. It might be geared toward operators, but, ultimately it’s geared toward the entire enterprise, and gives the business an ability to coordinate, manage, and gain insights into all these different facets of a digital business.

Companies right now still struggle with the resources to run multi-cloud. They tend to have maybe one public cloud and their on-premises operations. They don't know which is the best cloud approach because they are not getting the total information.

Newman: We’ve been talking about where things can go, and it’s exciting. But let’s take a step back.

Multi-cloud is a really great concept. Hyper-converged infrastructure, it’s all really nice, and there has been massive movement in this area in the last couple of years. Companies right now still struggle with the resources to run multi-cloud. They tend to have maybe one public cloud and their on-premise operations. They have their own expertise, and they have endless contracts and partnerships.

They don’t know which the best-cloud approach is because they are not necessarily getting that total information. It depends on all of the relationships, the disparate resources they have across Dev and Ops, and the data can change on a week-to-week basis. One cloud may have been perfect a month ago, yet all of a sudden you change the way an application is running and consuming data, and it’s now in a different cloud.

What HPE is doing with HPE Composable Cloud takes the cloud plus composable infrastructure and, working through HPE OneSphere and HPE OneView, brings them all into a single view. We’re in a software and user experience world.

The tools that deliver the most usable and valuable dashboard-type of cloud use data in one spot are going to win the battle. You need that view in front of you for quick deployment, with quick builds, portability, and container management. HPE is setting itself in a good position for how we do this in one place.

How to Remove
Complexity From
Multi-Cloud and Hybrid IT

Give me one view, give me my one screen to look at, and I think your Dev and Ops -- and everybody in between – and all your new data and data science friends will all appreciate that view. HPE is on a good track, and I look forward to seeing what they do in the future.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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Price transparency in healthcare to regain patient trust requires accuracy via better use of technology

The next BriefingsDirect healthcare finance insights discussion explores the impacts from increased cost transparency for medical services.

The recent required publishing of hospital charges for medical procedures is but one example of rapid regulatory and market changes. The emergence of more data about costs across the health provider marketplace could be a major step toward educated choices – and ultimately more efficiency and lower total expenditures.

But early-stage cost transparency also runs the risk of out-of-context information that offers little actionable insight into actual consumer costs and obligations. And unfiltered information requirements also place new burdens on physicians, caregivers, and providers – in areas that have more to do with economics than healthcare.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy.

To learn more about the pluses and minuses of increased costs transparency in the healthcare sector, we are joined by our expert panel:

• Heather Kawamoto, Chief Product Officer at Recondo Technology in Denver
• Joann Barnes-Lague, Revenue Cycle Director at Shields Health Care Group in Quincy, Mass.
• Julie Gerdeman, President at HealthPay24 in Mechanicsburg, Penn.
• Beth Jones Sanborn, Managing Editor at Healthcare Finance News/HIMSS Media in Portland, Maine
• Alena Harrison, Senior Director of PBM Innovation at CVS Health in Woonsocket, RI.

The panel is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: For better or worse, we are well into an era of new transparency about medical costs. Heather, why is transparency such a top concern right now?

Kawamoto

Kawamoto: It’s largely due to a cost shift. Insurance companies are having patients owe more of a payment’s portion. With that there has been a significant rise in the high-deductible health plans -- not only in the amount of the deductible, but also in the number of patients on high-deductible plans.

And when patients get, sadly, more surprise bills, we start to hear about it in the media. We also have the onset this month of the IPPS/LTCH PPS final rule from the Centers for Medicare and Medicaid Services (CMS) [part of the U.S. Department of Health and Human Services].

The New York Times did a recent story about this, and that’s created buzz. And then people start saying, “Hey, I know I have a medical service coming up, I probably need to call in and actually find out how much my service is going to be.”

Gardner: It seems like the consumer, the patient, needs to be far more proactive in thinking about their care, not just in terms of, “Oh, how do I get better? Or how do I stay as healthy as I can?” But in asking, “How do I pay for this in the best possible way?”

That economic component wasn't the case that long ago. You would get care and you didn't give much thought to price or how it was billed.

Joann, as somebody who provides care, what’s changed that makes it necessary for patients to be proactive about their health economics?

Know before you owe

Barnes-Lague

Barnes-Lague: It’s the consumer-driven health plans, where patients are now responsible for more. They have to make a decision – “Do I buy my groceries, or do I have an MRI.”

The shift in healthcare makes us go after the patient before insurance is paid 100 percent. Patients now have a lot of skin in the game. And they have to start thinking, “Do I really need this procedure, or can it wait?”

Gardner: And we get this information-rush from other parts of our lives. We have so much more information available to us when we buy groceries. If we do it online, we can compare and contrast, we can comparison shop, we can even get analysis brought to the table. It can be a good thing.

Julie, you are trying to help people make better paying decisions. If we have to live with more cost transparency, how can technology be a constructive part of it?

Gerdeman

Gerdeman: It's actually a tremendous opportunity for technology to help patients and providers. We live in an experience economy, and in that economy everyone is used to having full transparency. We’re willing to pay for faster service, faster delivery.

We have highly personalized experiences. And all of that should be the same in our healthcare experiences. This is what people have come to expect. And that's why, for us, it’s so important to provide personalized, consumer-friendly digital payment options.

Sanborn: As someone who has been watching these high-deductible health plans unfold, data has come out saying the average American household can't afford a $500 medical bill, that an unexpected $500 medical bill would drastically impact that household’s finances for months. So people are looking to understand upfront what they are going to owe.

At the same time, patients are growing tired of the back-and-forth between the provider and the payer, with everyone kicking the can back and forth between then saying, “Well, I don’t know that. Your provider should know that.” And the provider says, “Well, your health plan is the one that arbitrates the price of your care. Why don't you go ask them?” Patients are getting really, really tired of that.

Learn How to Meet Patient Demands
for Convenient Payment Options
for Healthcare Services

Now the patients have the bullhorn, and they are saying, “I don't care whose responsibility it is to inform me. Someone needs to inform me, and I want it now.” And in a consumer-driven healthcare space, which is what’s evolving now, consumers are going to go where they get that retail-like experience.

That’s why we are seeing the rise in urgent care centers, walk-in clinics, and places where they don’t have to wait. They can instead book an appointment on their phone and go to the appointment 20 minutes later. Patients have the opportunity to pick where they get their care and they know it. At the same time, they know they can demand transparency because it's time.

Gardner: So transparency can be a force for good. It can help people make better decisions, be more efficient, and as a result drive their cost down. But transparency can put too much information in front of people, perhaps at a time when they are not really in a mindset to absorb it.

What are you doing at CVS, Alena, to help people make better decisions, but not overload them?

Clear information increases options

Harrison

Harrison: The key to good transparency tools is that they have to be a 100 percent accurate. Secondly, the information has to be clear, actionable, and relevant to the patient.

If we gave patients 10 data points about the price of a drug -- and sometimes there are 10 prices depending on how you look at it -- it would overwhelm folks. It would confuse them, and we could lose that engagement. Providing simple, clear data that is accurate and actionable shows them the options specific to their benefit plan. That is what we can do to help consumers navigate through this very complex web in our healthcare system.

Gardner: Recondo helps people create and deliver estimates throughout this process. How does that help in providing the right information, at the right time, in the right context?

Kawamoto: It's critical to provide [estimate information] when a patient schedules their service, because that gives them the opportunity -- if there is a financial question or concern -- to say, “Okay, I don’t know that I can pay for that. Is there another location where the price might be different? What are my financial options in terms of the payment plan or some sort of assistance?”

Enabling providers to proactively communicate that information to patients as they schedule a service or in advance gives patients an opportunity to shop. They know they are going to be meeting with an orthopedic surgeon because they need knee arthroscopy.

In advance of that, they should be able to get some idea of what they are going to owe, relative to their specific benefit information. It puts them in that position to engage with the orthopedic surgeon to say, “I looked at the facility and it's actually going to be $3,000. What are my options?” Now, that provider can be a part of the cost discussion. I think that is critical.

Barnes-Lague: As providers we have to be okay with patients making that decision, of saying, “Maybe I won’t have that service now.” That’s consumer-driven. And sometimes that hurts our volume.

We may have had a hard time understanding that in the beginning, when we shared estimates and feared that the patients wouldn't come. Well, would you rather trick them and then have bad debt?

As providers we have to be okay with patients making that decision, of saying, "Maybe I won't have that service right now." That's consumer-driven. ... It's about being comfortable with the patient making educated decisions.

It’s about being comfortable with the patient making educated decisions. Perhaps they will come back for your MRI in December when their deductibles are met, and they can better afford it.

Gardner: Part of this solution requires the physician or practitioner to be educated enough to help the patient sort out the finances, as well as the care and medical treatments. As someone who has a lot of clinicians, technicians, and physicians, are they not the primary point for more transparency to the patient?

Barnes-Lague: That would be the ideal solution, to have the physicians who are referring these very expensive services to begin having those conversations. Often patients are kind of robotic with what their doctors tell them.

We have to tell them, “You have a choice. You have a choice to make some phone calls. You have a choice to do your own price shopping.” We would love it if the referring physicians began having those price-transparency conversations early, right in their offices.

Gardner: So the new dual-major: Economics and pre-med?

Julie, your background is in technology. You and I both know there are lots of occupations where people have complex decisions to make. And they have to be provided trust and accommodation to make well-informed decisions.

Whether you are a purchasing agent, chief executive, or chief marketing officer, there are tools and data to help you. There have been great strides made in solving some of these problems. Is that what we are going to see applied to these medical decisions across the spectrum of payer, provider, and patient?

Easy-to-access, secure data builds trust

Gerdeman: This field is ripe for disruption. And technology, particularly emerging technology, can make a big difference in providing transparency.

A lot of my colleagues here have talked about trust. To me, the reason everybody is requiring transparency is to build trust. It goes back to that trusted relationship between the provider and the patient.

The data should be available to everyone. It’s now time to present the data in a very clear, simple, and actionable way for them to make decisions. The consumer can make an informed decision, and the provider can know what the consumer is facing.

Gardner: Yet to work, that data needs to be protected. It needs to adhere to multiple regulations in multiple jurisdictions, and compliance is a moving target because the regulations change so often.

Beth, what do we do to solve the data availability problem? Everybody knows data is how to solve it. It’s about more data. But nobody wants to own and control that data.

Sanborn: Yes, it’s the $64,000 question. How do you own all that data and protect it at the same time? We know that healthcare is one of the most attacked industries when it comes to cyber criminals, ransomware, and phishing.

Sanborn

I hear all the time from experts that as much as the human element drives healthcare, as far as data and its protection [the human element] is also the greatest vulnerability. Most of the attacks you hear about happen because someone clicked on a link in an email or left their laptop somewhere. These are basic human errors that can have catastrophic consequences depending on who is on the receiving end of that error.

Technology is, of course, a huge part of the future, but you can't let technology develop faster than the protections that have to go with it. And so any developer, any innovator who is trying to help move this space forward has to make cybersecurity a grassroots foundational part of anything that they innovate.

It’s not enough to say, “My tool can help you do this, this, and this.” You have to be able to say, “Well, my tool will help you do this, this, and this, and this is how we are going to protect you along the way.” That has to be part of, not just the conversation, but every single solution.

Gardner: Alena, at CVS, do you see that data solution as a major hurdle to overcome? Meaning the controlling, managing, and protection of the data -- but also making it available to every nook and cranny that it needs to get to?

Harrison: That’s always a key focus for us, and it’s frankly ingrained in every single thing we do. To give a sense of what we are putting out there, the price transparency tools that we have developed are all directly connected to our claims system. It’s the only way we can make sure that the patient out-of-pocket costs we provide are 100 percent accurate. They must reflect what that patient would pay as they go to their local pharmacy.

See the New Best Practice
of  Driving Patient Loyalty
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But making sure that our vendor partners have a robust and very rigorous process around security is paramount. It takes time to do that, and that’s one of the challenges we all face.

Gardner: So we have a lot going on with new transparency regulations, and more information coming out. We know that we have to make it secure, and we are going to have to overcome that. So it’s early still.

It seems to me, though, there are examples of the tools already developed and how they can be impactful; they can work.

Joann at Shields, do you have any examples of what benefits can happen when you bring in the right tools for transparency and for making good decisions?

Transparency upfront benefits bottom line

Barnes-Lague: Yes, we bring in more revenue and we bring it in timely. We used to be at about 60 percent collected from the patient’s side overall. Since we implemented tools, we are at 85 percent collected, a 400 percent increase in our overall revenue.

We have saved $4.5 million in [advance procedure] denials, just based on eligibility, authorization, and things like that. We are bringing in more money and we don’t require as much labor because of the automation. We are staffed around the automation now.

Gardner: Julie, how does it work? How do better tools and more information in advance help collect more money for a medical transaction?

Gerdeman: It works in a couple of ways. First, from a patient-facing perspective, they have the access to pay whenever and wherever they are. Having that access and availability is critical.

We have saved $4.5 million in [advance procedure] denials -- just based on eligibility, authorization, and things like that. We are bringing in more money and we don't require as much labor because of the automation.

Also they need to be connected. An estimate – like Heather talked about, to be able to make a decision from that -- has to be available from the very beginning.

And then finally, it's about options. All of these things help drive adoption if you give a patient options and clarity upfront. They have a choice of how to pay and they have the knowledge about costs. That adoption drives success.

So if you implement the tools appropriately you will see immediate impact. The patients adopt it, the staff adopts it, and then it drives up the collections that Joann is talking about.

Gardner: Heather, we have seen in other industries that tracking decision processes and behaviors leads to understanding use patterns. From them, incentivization can come into play. Have you seen that? How can incentives and transparency improve the overall economic benefits?

Incentivization improves savings

Kawamoto: Being able to communicate to patients what their anticipated out-of-pocket costs will be is powerful. A lot of organizations have created the means where they say to the patient, “If you pay this amount in advance of your service, you will actually get a discount.” That puts the patient in a position to say, “I could save $200 if I decide to pay this today.” That's a key component of it. They know they are going to get a better cost if they pay sooner, and then many of them are incented to do that.

Gardner: Any other thoughts about incentives, Alena?

Harrison: Yes. An indirect incentive, but still quite relevant, is that our price transparency tools are available to all of our CVS Caremark members. We are seeing about 230,000 searches a month on our website.

When members search for the drugs they are taking, if there are lower-cost alternative options, we see members in their next refill order one of those lower cost drugs 20 percent of the time. That results in an average savings of $120 per prescription fill for those patients. As you can imagine, over the course of several months, that savings really starts to add up.

Gardner: We have come back to the idea of the out-of-pocket costs. The higher the deductible, the lower the premiums. People are incentivized therefore to go to lower premiums. But then, heaven forbid, they have an illness, and then they have to start thinking about, “Oh my gosh, how do I best manage that out-of-pocket deductible?”

Nowadays, with technologies like machine learning (ML), artificial intelligence (AI), and big data analytics, we are seeing prescriptive or even recommendation types of technologies. How far do we need to go before we can start to bring some of those technologies about making good recommendations based on data -- rather than intuition or even a lack of informed decision making — to medical finance decisions? How do we get to that point where we can be proscriptive in automated recommendations, rather than people slogging through this by themselves?

Automated advice advances

Gerdeman: At HealthPay24 we are looking at predictive analytics and what role the predictive capability can play in helping make recommendations for patients. That’s not necessarily on the clinical or pharmaceutical side, but we know when a patient makes an appointment and gets an estimate what their propensity to pay will be.

Proactively we can offer them options based on what we know ahead of time. They don't even have to worry about it. They can just say, “Okay, here are my choices. I have only saved up $500; therefore, I am going to take advantage of a loan or a payment plan.” And I do believe that technology will help.

On the AI side, it’s already starting. As you talk to providers, they are using it for repetitive processes. But I think there is even more opportunity on the cognitive side of AI to play [a role] in hospitals. So there is a big opportunity.

Gardner: We already see this in financial markets. People get more information, they get recommendations, and there is arbitrage. It’s not either/or. It’s what are the circumstances? What’s the credit we can offer? How do we make the most efficient transaction for all parties?

So, as in other transactions, we have to gain more comfort with the combination economics and medical procedures. Is that part of the culture shift? You have to be a crass consumer and you have to be looking out for your health.

Any thoughts about the need to be both a savvy consumer as well as a patient?

Kawamoto: It's critical. To Julie’s point, we are now looking through our data and finding legitimate savings opportunities for patients, and we’re proactively outreaching to those patients. Of course, at the end of the day, the decision is always in the provider’s hands -- and it should be, because not all of us are clinicians. I certainly am not. But to allow patients to prompt that fuller conversation helps drive the process, so the burden isn't just on the provider. This is critical.

Gardner: Before we close out, any recommendations? How should the industry best prepare for more transparency around procedures and payments in medical environments? Joann, what do you think people should be thinking about to better prepare themselves as providers for this new era of transparency?

Lead with clear communication

Barnes-Lague: Culture is very important within the organization. You need to continue to talk. It’s shifting. Let’s talk about the burden to the provider, now that the patients are responsible for more. There is no other product that you can purchase without paying upfront. But you can walk away from healthcare without paying for it.

The more technology you implement, the more transparency you can provide, the more conversations you can have with those patients – these not only help the patients. You as providers are in business for revenue. This helps bring in the revenue that you have lost with the shift to consumer-driven health plans.

Gardner: Heather, as someone who provides tools to providers, what should they be thinking about when it comes to a new era of transparency?

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Kawamoto: While there have been tools available to providers, now we have to make those tools available to patients. Providers are, in many cases, the first line of communication to patients. But before that patient even schedules, if they are in a position to know they need a service, they can go out and self-shop.

That’s what providers need to be thinking about. How do I get even further out into the decision-making process? How do we engage with that patient at that early point, which is going to build trust, as well as ensure that revenue is coming to your particular facility?

Gardner: Beth, what advice do you have for consumers, the patients? What should they be thinking about to take advantage of transparency?

Take care of physicians and finances

Sanborn: First, I want to advocate for the physicians. We hear all the time about change fatigue, burnout; burnout is as hot a topic as transparency. If providers are going to be put in the position of having to have financial conversations with patients, I think health system leaders need to be aware of that and make sure that providers are properly educated. What do they need to know so that they can accurately communicate with patients? And they need to understand how that's going to affect the workload -- that is already onerous and at times damaging -- to physicians. So along Joann’s comments about culture, there needs to be a culture around ushering in physicians into that role.

From a consumer standpoint, when we look at the law that just went into effect, patients need to understand what are they looking at. The price list that the hospital is publishing is a chargemaster. It’s a naked price from a hospital. It's not what they are going to pay, and so we need to eradicate the sticker shock that I am sure is happening at first glance.

Gardner: The patient needs to self-educate about what’s net-net and what’s gross when it comes to these prices?

Patients need to be educated on what they are looking at, and then understand the options available to them as far as what they are actually going to pay. Payers need to make sure they are reaching out and make sure their consumers understand how the benefits work.

Sanborn: Right. You can put these prices in plain terms. The chargemaster is what a hospital charges. But remember you have insurance. There are discounts for self-pay. There could be other incentives or subsidies that you are eligible for.

So please don't have a heart attack, literally, when you look at this price and go, “Oh, my gosh, is that what I am responsible for?” Patients need to be educated on what they are looking at, and then understand the options available to them as far as what you are actually going to pay.

And the other thing is benefits literacy. Payers need to make sure they are reaching out to their consumers and making sure their consumers understand how the benefits work so that they can advocate for themselves.

Gardner: Alena at CVS, as a provider of pharmaceutical services and goods, what advice do you have about making the best of transparency?

Harrison: Beth hit the nail on the head with a lot of her points. We see similar brute-force regulation happening in the prescription drug space. So pharmaceutical manufacturers now need to publish their “sticker” prices.

Little do most people know, the sticker price is something no one pays. Payers don't pay it. Patients certainly don't pay it. The pharmacy doesn’t pay it. And so it is so critical as this information becomes available to make sure that your customers, consumers, and members understand what they are looking at. You as an organization should be prepared to support them through the process of navigating this additional information.

Gardner: Julie, what should people be thinking about on the vendor side, the people providing these tools, now that transparency is a necessary part of the process? What should the tool providers be thinking about to help people navigate this?

Gerdeman: It comes back to the user experience -- providing a simple, clear, and consumer friendly experience through the tools. That is what’s going to drive usage, adoption, and loyalty.

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Technology is a great way for providers to drive patient loyalty, and that is where it’s going to make a difference. That’s where you are going to engage them. You are going to win hearts and minds. They are going to want to come back because they had a great clinical experience. They feel better, they are healthier now, and you want the rest of their experience financially to match that great clinical experience.

Anything we can do in the tools themselves to be predictive, clear, beautiful, and simple will make all the difference.
 

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: HealthPay24.

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