Your Primer to Healthcare Mergers and Acquisitions

5 Reasons Why Consumer Direction Is The #1 Factor In The New I/DD Marketplace

Apr 10, 2018

by Tom Schramski

by Tom Schramski, PhD, CM&AA and Joshua Boynton, CM&AA

Volume 5 Issue 8, April 10, 2018 

In its purest form, consumer direction means that people have significant decision-making control over the services and products they receive. Most people believe this is a right that we can exercise in whatever marketplace we enter – buying a car, choosing where we attend college, shopping for groceries and so on. We also understand that while there may be obstacles, especially financial limits and resource availability, we are free to challenge them as we choose.

Consumer direction has increasingly become a dynamic movement in the largely Medicaid-funded long-term supports services (LTSS) marketplace, where over $150 billion is spent each year to support the basic needs of eligible older Americans and people with disabilities. People with intellectual/developmental disabilities (I/DD) are the largest of the LTSS subpopulations and also where the most dramatic evolution of services is occurring.

People with disabilities are demanding to have shared decision-making for the use of dollars they are assigned, to have direct choice of the people who are available to support them in their daily lives, to have a voice in the location and time when services are provided, and to have flexibility to adjust to their own changing needs. This is an increasing challenge to traditional service providers and we believe it is the #1 factor shaping the emerging I/DD marketplace. Why?

Consumers love self-direction – They appreciate the opportunity for choice in many aspects of their lives and it expands the menu traditionally offered by providers to unlimited a la carte possibilities. Additionally, once someone experiences this level of choice, they have little desire to return to a service model without it.

The outcomes are good – The research on well-designed consumer-directed models indicates that they lead to improved overall health and cost outcomes for participants. Results like these are now helping to drive the “whole health” movement which likely be a core concept for evidence-based practices that are becoming embraced by managed care organizations (MCOs).

Available options are expanded – Traditional provider models are often shaped by what funding agencies seek from providers with modest direct input from customers. Consumer-directed models are not necessarily bound by this structure and allow for services to be negotiated directly with the customer. This flexibility can create financial benefit to customers and payers.

Best use of a tight labor market – Consumer-directed services often use fewer support workers, especially in independent contractor relationships like host home and in-home care, compared to traditional employee models that may be more attuned to a shift model with legal restrictions. Add to the mix the ability of an individual to choose friends and family (often 45-50% of support in self-directed relationships) in an increasingly tight labor market makes consumer directed services a powerful option.

Consumer-directed services are cost effective – As we noted earlier, well-designed consumer-directed services are generally cost effective. This typically occurs because they are lean in management, they require modest bureaucracy, and consumers are more likely to seek only what they need, not what others believe is necessary. States are discovering this evidence, which has led to the rapid expansion of fiscal intermediaries and host homes that are squarely focused on the individual.

We can reasonably argue that we have fully entered the next stage of the liberty of people with I/DD. Large facility institutionalization has given way to a community-based system across the country the past 50 years, while greatly improving the quality of life for hundreds of thousands of individuals and their families. Traditional service providers have been a significant part of this success. The next stage is one where our system is becoming more customer-centric, more cost conscious and it is impacting the entire I/DD marketplace in a profound fashion.

Tom Schramski

Tom Schramski PhD, CM&AA


Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.

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