Consumerism Is Transforming Business Models and Delivery Channels
As the cost of care has risen, landing more financial responsibility in the lap of patients, purchasing healthcare has come to more closely resemble retail shopping. That is, patients—now often referred to as consumers—regularly conduct their own research to make treatment choices based on price, convenience and perceived quality.
“There’s a general sense that consumers are shopping for healthcare the same way they do for other items,” says Ben Umansky, practice manager for research and insights at The Advisory Board Company. “They’re looking at online reviews from other patients and the price of a procedure before choosing a facility. That is retail behavior.”
The shift from volume-based to value-based reimbursement that is spurring tremendous growth in accountable care organizations and bundled payment models is also driving healthcare consumerism, says Doug Ghertner, president of Change Healthcare. And when consumers are behaving in a retail-oriented fashion, providers and facilities must respond. As a result, business models and delivery channels are transforming.
The Changing Healthcare Landscape
As costs rise and consumers change the way they make healthcare decisions, providers and facilities are tweaking the treatment options they offer. “Rising healthcare costs are causing physician practices, stand-alone hospitals and clinics to reconsider their position in the marketplace, spurring seemingly countless mergers and acquisitions,” Ghertner says. “Increasing costs are also forcing providers to reassess how and where they deliver services. The best example of this can be seen in the growing popularity of retail health clinics.”
Health plan providers are also changing the way they do business, as growing numbers of consumers are purchasing insurance on public and private exchanges. Rather than the traditional, group-based approach to acquiring and retaining policyholders, insurers must now shift their attention to individual members, a process that is becoming known as the retailization of healthcare.
Many plan sponsors are turning to high-deductible health plans, including consumer-directed health plans (CDHPs), as a way to help manage costs, Ghertner says. According to research by the National Business Group on Health, more than half (57 percent) of large employers will implement or expand CDHPs in 2015 and one-third will offer a CDHP as their only benefit plan.
It’s important for providers and facilities to be aware of these health plan changes, because high-deductible plans shift more of the cost of care to consumers and they’re often unprepared to manage it, Ghertner says. According to a January 2015 Harris Poll, nearly one in five insured Americans, or 44 million people, have skipped out on visiting a physician for a general health concern in the past 12 months because of fears about how much such a visit could cost.
Providers Need to Have a Presence
Healthcare facilities are responding to the consumerization of healthcare in a variety of ways. Many are establishing a presence in true retail environments, such as offering clinics at local drugstores.
“Smart facilities need to have a response,” Umansky says. “If they don’t have a presence in those purely retail settings, they may be opening a freestanding urgent care center or offering virtual interaction with providers, such as through secure messaging and virtual chats. All of these options increase convenience for consumers.”
Facilities may be competing against freestanding clinics that offer the same services—such as scheduled procedures and imaging—at a much lower price. In those cases, “facilities are trying their best to differentiate on quality and experience,” Umansky says.
In addition to promoting their clinical expertise, facilities must also compete on cost, which could mean operating at lower margins.
“All those cost-cutting measures facilities have been celebrating the past few years are not just about reducing internal costs to improve the bottom line,” Umansky says. “They’re also about giving facilities the strategic flexibility to be able to compete better.”
Some facilities are providing more detailed patient data to clinicians to help them offer better service. For instance, Change Healthcare already offers comprehensive cost and quality data to its health plan members, but increasingly, employers that sponsor the plan are showing interest in making that same information available to physicians and other healthcare providers. Access to this data can help physicians make informed referrals, reduce costs and add value for patients. In other words, physicians can see how patients’ money is being spent and how it is paying off for them quality-wise.
“Physicians, hospitals, pharmacies, plan sponsors, and other health and wellness partners must work together to create an informed, connected and engaged consumer to meet the demands of healthcare consumerism and, in turn, drive improved clinical outcomes and cost savings all around,” Ghertner says.
Moving Forward
Although cost and quality transparency tools are a step in the right direction, there is more to be done, Ghertner says. “To impact consumer behavior in a meaningful, sustained way requires deep data—data to anticipate care needs and deliver a highly personalized consumer experience; data to enable ongoing, proactive engagement to support long-term behavior change; and data to integrate with resources across the care continuum to ensure a seamless and holistic consumer experience.”
In addition, healthcare facilities and providers must find a way to motivate consumers to view the data. “Putting cost and quality information out there isn’t enough,” Ghertner continues. “Consumers have to be engaged to use it.”
For instance, a recent Catalyst for Reform survey found that 98 percent of health plans have a transparency tool, but only 2 percent of their members use it. “When consumers are positioned to experience healthcare in an informed, connected and engaged way, we’ll see consumers who ask more and better questions, and who make value-based decisions, weighing quality and cost,” Ghertner says. “This is how we’re going to change the healthcare industry for the better.”
The evolution of the “Internet of Things” (IoT) may offer some solutions for compiling better data and engaging consumers. This next generation of Internet usage includes interconnected items such as the Apple Watch and the Fitbit. Ultimately, the IoT will go beyond individual use and leverage billions of always-on, connected sensors, through which organizations will create smart factories, homes, automobiles, hospitals and cities.
“One of the biggest advantages of the Internet of Things is that it offers real-time data from various sensors and can be analyzed afterward,” says Daniel Obodovski, co-author of The Silent Intelligence: The Internet of Things. “Specifically, in the wellness space, it gives patients an opportunity to monitor their own health and change behaviors that could lead to a healthier lifestyle.”
The IoT aids healthcare facilities in collecting consumer data in real time. Traditionally, when they needed to do a patient study, they had to find a group of subjects and pay them, and the study was limited in time.
In contrast, the Apple Watch can provide data from multiple health sensors, Obodovski notes. “Considering that Apple will probably sell between 10 and 30 million watches this year alone, imagine how large the data sample is going to be,” he says. “With time, sensors are going to become more sophisticated and provide more accurate data on EKG, stress levels, blood pressure and so on.”
Apple and other companies marketing IoT devices are working with healthcare researchers to share the data. Individual hospitals can also take advantage of opportunities to integrate with data feeds from wearable devices and monitor the well-being of patients when they are being treated at home, Obodovski says.
The evolution of patients into cost-conscious healthcare consumers is already having significant implications for all players in the supply chain. Successful facilities will be those finding innovative products and services that yield increased transparency and give consumers greater control over their care.
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