We'd always applaud any innovation that improves patient care, however, there are some weaknesses in trying to contain overall costs of care by using 'open referrals', which one large insurer has suggested building into all its corporate private medical insurance (PMI) schemes from January 2012.

'Open referrals' are not a new concept and have been available as an option within some corporate PMI schemes for quite some time, usually offered in return for a discounted premium, to reflect the reduction in choice to patients.  However, the concept presents some considerations for businesses which may not be immediately apparent, particularly for employees at the point they may need to make a claim.

Essentially, open referrals pass responsibility for choosing a secondary care provider (a consultant, surgeon, diagnostic centre etc) from a GP to either the insurer or to the patient.  The insurer, although the focus in any communications will be placed on quality, has a vested financial interest in selecting which specialist they'd like you to see - if they can lower the costs of a claim, especially while maintaining or even raising premiums, that improves their loss-ratio and they make more profit.

As today's Economist points out¹, in an article about healthcare in America, there are indeed perverse incentives apparent in some healthcare sectors.  However, Blossoms believes there are broader steps to successfully managing healthcare strategies, other than relying on micromanaging claims costs (which is the main driver of open referrals).

Lowering the costs of care absolutely is a noble goal, however, it's recognised that saving money on an initial consultation may not reduce the overall cost of treatment (a poor decision at the outset of a treatment plan could even result in poorer health outcomes, as well as higher overall costs).  Likewise, it's also recognosed that seeing the most expensive specialist possible is not necessarily a guarantee of quality.

Assessing overall quality and value in healthcare can be incredibly complex and sometimes highly subjective, so getting independent advice is hugely important.  That's the role of your GP, whether you're in NHS or private care.

Imagine you need to make a claim under your own health insurance policy and during the pre-authorisation phone call, you're presented with a list of five consultants to choose from - how do you know which one is the most skilled in that particular area?  How do you know that the insurer is presenting you with a full choice of specialists in the area?  How do you really know what steps the insurer has taken to approve or accredit the specialists? Your doctor is there to help you make those decisions.

Some insurers may suggest that GP's don't really know which consultants are best in a given area, which hospital has the best facilities, or even that decisions about your care are often made on loose, informal data. Blossoms believes that view trivialises the role of your doctor, particularly as the inference is that the insurer knows better than your own doctor.

Your doctor will always tell you what information they're basing their guidance upon, why the route they may recommend is best for your presenting circumstances and what outcome they expect. They have the benefit of first hand experience, usually built up over many years, as well as the insight which comes from working within clinical networks where good and bad care are quickly recognised.

The acid test about whether an insurer is offering you the best choice for your circumstances lies in the information they use to make their suggestions. The fact that the data is not published openly is a huge concern and draws the whole process into question. The challenge to insurers is this: if you are bold enough to suggest that you're better placed to manage a referral than a doctor, then publish the data on which you are making your judgements about quality of care.

Managed referrals have cropped up this week in the NHS too, which, in purely co-incidental timing, has just launched a full review of the practice in London², recognising that there's a potential conflict of interest between those commissioning care and those providing care. Exactly the same principles apply if an insurer is directly influencing the commissioning process too.

Every professional advisor knows it's important to show value from an employee benefit and it's clear that the constant rise in health insurance premiums is unsustainable in the long term.  However, the best way to be sure that your employees are getting the best quality treatment, as well as the best value treatment overall, is always to obtain independent, specialist advice (from someone who's separated from the provision of that service too) at the most appropriate time.

Although your health intermediary is best placed to provide a view about the merits of each different health insurer, Blossoms believes that the best way to contain overall treatment costs is to look beyond solely the cost of each claim and towards understanding the full risk profile of a population, then structuring the care support provided according to the presenting risks, across the most complex therapeutic areas, to actively manage the risk.

To improve care and reduce overall costs, it's better to look at individual care pathways and anomalous areas, which always exist, within individual businesses.  Like any good surgeon, that means taking a scalpel to get to the root of the problem, not a sledgehammer.

¹ Source: http://www.economist.com/node/21534814
² Source: http://www.pulsetoday.co.uk/newsarticle-content/-/article_display_list/12941966/referral-management-centres-across-London-under-review