Photo credit: McKinsey

The Consumerization of Healthcare

Healthcare poses a large financial problem to the United States. It accounts for almost 18% of total GDP and per capita healthcare spending greatly surpasses that of other developed nations while not producing better results. Given these high costs, several trends are emerging that promise to help the healthcare industry achieve the triple aim. These trends revolve around making patients more involved in their care decisions, providing informative and accessible information, and adapting to shifting consumer expectations.

Financial responsibility for healthcare expenditures is being shifted onto patients in hopes of incentivizing them to seek cheaper, more efficient care. Healthcare organizations are increasingly providing meaningful information to patients in order to help them make informed decisions. Additionally, these organizations are altering the ways in which they operate and engage with patients and their communities. As a result, patients are slowly shifting from passive participants in care to empowered information-seeking consumers of care. As all of this unfolds, patients find themselves in a great position to significantly shape how the industry operates.

Shift of Financial Risk

The last decade has brought a significant increase in HDHPs (Source: Kaiser Family Foundation)

In order to promote overall cost reduction, financial risk is being passed along to healthcare recipients in a variety of ways, such as increasing deductibles and co-insurances.

For example, High Deductible Health Plans (HDHPs) are health plans aimed at encouraging cost-efficient, high-value care choices by making patients feel some of the financial burden in their own wallets. These plans have seen enrollment rise to roughly 17 million in 2014, compared to only 1 million in 2005. The growing financial burden health insurance has posed to employers and the need to incentivize patients to seek cost-effective care have been key contributors to the increase of these plans. In addition to the influx of HDHPs, overall deductibles have seen an increase over the last couple of years in a similar effort to both pass along costs to the patient and encourage cheaper healthcare decisions. No longer can enrollees expect to simply pay a premium and co-pay, they must now be aware of the financial implications each healthcare decision will have on their out-of-pocket costs. While shifting financial risk does incentivize patients to seek cost-efficient care, it creates a need for informative, accurate, and accessible information about care choices to be provided.

Influx of Available Information

Online reviews play a critical role in the healthcare decision making process, especially in regards to physicians and hospitals (Source: Rock Health)

Patients are increasingly turning to the internet to search the plethora of available information regarding physician performance, hospital quality, care costs, etc. to make informed decisions. They are leveraging a vast variety of online resources ranging from Google searches to independent review websites to mobile apps.

In fact, this trend has created a large opportunity in the market for organizations to provide useful information regarding hospitals, providers, determinants of care, and more. ZocDoc, for example, allows patients to find highly rated doctors online. PatientsLikeMe allows patients to find others with similar conditions online to provide community support and advice. Additionally, The Center for Medicare and Medicaid Services (CMS) recently released a Star Rating system for hospitals to provide information that can be used when choosing which hospital to seek care in.

Providing useful information will play a critical role in transforming patients into savvy consumers. As patients become empowered by this information at their fingertips, they are starting to behave like they do when “shopping” in other industries, such as retail. This is forcing healthcare organizations to adapt and provide a competitive and modern consumer experience or risk becoming irrelevant in this changing landscape.

Consumer Expectations

Consumer expectations vary by age (Source: PwC)

Due to financial risk sharing and the influx of information, non-emergency healthcare consumption is slowly beginning to feel more like “shopping” in other industries. As a result, the consumer experience in other industries is driving the expectations for healthcare. Consumers are expecting timely and convenient services, demanding pricing accuracy, and willing to experiment with different care delivery methods.

These changing expectations have been met with a sharp increase in new care models. The increased use of telemedicine, the spread of retail clinics such as CVS Minute Clinic, and the emergence of digital health applications are just some examples. In fact, it’s expected that roughly $1.5 TRILLION of healthcare revenue will shift through 2025 due to new healthcare service delivery models emerging.

In addition to new care delivery models, there has also been a change in how organizations conduct patient engagement. Online scheduling, same day appointments, and patient-provider messaging platforms are just a few of the many emerging ways to better accommodate patients in the current healthcare landscape.

Healthcare organizations are finding that providing a more modern consumer experience is becoming a prerequisite to attracting, retaining, and empowering the new healthcare consumer.

As the healthcare industry places increasing significance in patients’ care decisions, patients are sensing the opportunity to become empowered healthcare consumers. They are using their shopping experiences from other industries to set their expectations for the current healthcare landscape. Although many positive changes have occurred, a great gap still exists to transform these typically overwhelmed and undereducated patients into empowered, savvy healthcare consumers. In order for healthcare organizations to attract new patients and retain current ones, it will be crucial for them to continue bridging this gap by engaging patients digitally, providing meaningful and accessible information about their performance, and expanding the accessibility and convenience of care provided. Continual progress is essential to achieving a state of healthcare in which patients can truly feel like empowered consumers that can confidently make well-informed care choices that collectively lead to lowered costs, improved quality, and satisfied patients.

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