Imagine if health care were like interacting with your favorite consumer brand. You could arrange a consultation on demand from an app on your phone, like a meal from DoorDash or a ride from Uber. A doctor might seamlessly monitor your progress from afar, or come to your home to treat you, much as someone from TaskRabbit comes to your home to help assemble your dining table. You could even have at-home equipment for testing and therapy, with professional guidance via livestream should you need it — think Peloton, but for medicine.
A world where healthcare caters to patients as consumers has been predicted for years. But so far, reality hasn’t lived up to the expectation. Now, a set of macrotrends is creating a burning platform for healthcare players to put patients at the center of their business. The impact of consumerism is leaving no healthcare sector exempt, reaching traditional healthcare stakeholders (e.g., providers, payers, medtech, life sciences) and piquing interest in non-traditional players (e.g., tech, retail).
This article is the first of a series about the implications of the new consumer healthcare reality. In this installment, we’ll start off with a look at the macrotrends driving healthcare toward consumerism. Then we’ll walk through some broad, but key, steps to getting consumer-centricity right.
A healthcare landscape in flux
The trend toward healthcare consumerism is influenced by several key landscape changes in the rapidly evolving healthcare landscape:
- Increasing healthcare costs and the shift toward value-based care
- Growing patient desire for convenience in healthcare
- Expanding competition within healthcare and the need to innovate to retain and gain consumers
Increasing healthcare costs and the shift toward value-based care
Escalating costs (see Figure 1) have healthcare providers sharpening their focus on prevention and overall wellness in a bid to reduce per-patient healthcare expenditures. A key motivator has been the shift to value-based care, in which reimbursements are tied to patient outcomes versus services delivered.
As overall health expenditures rise, the U.S. population is getting older — and more expensive to care for. The Centers for Medicare and Medicaid Services estimates that in 2019, 35% of U.S. healthcare spending went to those 65 and older, even though they accounted for only 17% of the population. By 2030, over-65s are expected to become 20% of the population (see Figure 2) and account for an even larger proportion of healthcare spending.
As a result of these rising costs, both payers and healthcare providers are shifting their focus toward prevention and overall wellness to decrease the total cost of care. In part, this means moving patient care outside of the hospital setting toward home health and telehealth, both important care settings for the consumerism trend.
Of course, patients haven’t been exempt from feeling these rising costs. A study by the Kaiser Family Foundation showed that deductibles have risen by 111% since 2010. In response, patients are more actively looking for greater value in their healthcare — better quality care at lower costs. They’re increasingly looking for more control over their healthcare and costs, aiding the rise of healthcare consumerism.
Growing patient desire for convenience in healthcare
For many patients, a key issue is time. In the past decade or so, a slew of technology and apps have arisen that allow us to have more things on demand.
According to the U.S. Bureau of Labor Statistics, most American households are dual-income households. That means not a lot of leeway to schedule and keep appointments, much less navigate all the other intricacies of the U.S. healthcare system.
Moreover, consumers are growing more accustomed to digital methods of interacting with service providers and businesses in every aspect of their lives. From their mobile devices, they can easily handle tasks like ordering food, hiring personal trainers, and booking vacations. Patients are coming to expect the same level of convenience from their healthcare providers. According to a 2021 survey performed by Experian Health, nearly 80% of patients want around-the-clock ability to schedule appointments from their mobile devices.
Patients looking to avoid face-to-face interactions during the COVID-19 pandemic accelerated the trend toward convenience through telemedicine. Virtual visits replaced office ones, and patients could “shop” for the most convenient options. Patients have welcomed these developments because their experiences as retail customers have conditioned them to expect access, convenience and personalized service.
73% of consumers surveyed by L.E.K. Consulting say they would use telehealth for their primary care
COVID-19 also led to a rise in at-home diagnostics. At-home coronavirus tests have become popular enough to throw official case counts into question. However, COVID-19 isn’t the only condition patients are testing for at home. They’re increasingly using home diagnostics for sexual health, cholesterol, hormone levels and more, while businesses are increasingly developing user-friendly tools to empower consumers.
Greater competition within healthcare
For their part, providers may have little choice but to continue rolling out alternative, convenient access to patient services amid a looming shortage of nurses and physicians. To keep their patients, hospitals and health systems are integrating more convenient non-acute care sites such as urgent care clinics.
Insurers are also adapting to the evolving ecosystem and expanding coverage for digital care. For example, Oscar, a digital health insurance company, is gaining traction on a platform of transparency and convenience to the consumer. The company nearly doubled membership between 2021and 2022 to 1.1 million, though they have faced challenges managing their medical loss ratio (MLR).
Traditional technology companies like Amazon and Apple have taken notice. The gaps in patient experience are a market opportunity for these consumer-centric players. They’re making investments and seeking disruptive ways to enter the healthcare value chain, from wearables to genetic testing and precision medicine.
Eight key success factors of consumer engagement
With this rise in healthcare consumerism, how can players most effectively adapt and evolve? Boosting consumer engagement is no small task, even for seasoned brands and retailers. For them, as well as for traditional healthcare players, a successful solution depends on myriad factors coming together.
Here are eight key considerations for engaging consumers across healthcare sectors.
Proper segmentation. You’ll need to identify your target consumer based on the challenges or outcomes (clinical and nonclinical) you’re trying to address. That includes defining attributes and ways you can effectively and efficiently reach each segment.
Market fit. Nail down the pain points you’re trying to solve for your target consumer (and other relevant stakeholders, e.g., providers may need to take payers into account) and how much they need a solution. Be clear on the value proposition you need to deliver. How does it compare to available alternatives? What are stakeholders willing to pay for the solution? Who else could benefit from the consumer access you’re opening?
Experience design. Get a detailed sense of what your target consumer’s experience is currently like, noting where it falls short of expectations. Don’t forget the logistical, financial or bureaucratic hurdles consumers might run into. This step will likely reveal a spectrum of use cases or missions you could serve, so be ready to prioritize or make trade-offs.
Strategic alignment. Your solution should align with your organization’s strategic objectives. To keep it on track, document the metrics (beyond margin) you’ll use to evaluate and demonstrate success to your stakeholders.
Consumer pull. Now that you have an idea of what your solution will be, how will you get it in front of consumers? Consider the marketing and operational capabilities necessary to scale and reach customers. If applicable, consider how you can leverage your current patient or customer base.
Data wrangling. Think about the data your solution will capture and who would find it valuable. On the flip side, find out whether other sources of data could make your solution more useful or yield important insights. In either case, you’ll need a strategy to collect the data and the capabilities to analyze it.
Ecosystem integration. To truly create efficiency in delivery and a better consumer experience, your solution should integrate with the consumer’s other healthcare providers. Make sure this doesn’t result in duplication of services. The goal is to provide continuity for the patient and help providers make better decisions about their care.
Monetization strategy. After designing your solution, you’ll need to figure out the best way to monetize it. Take into account how competing solutions are approaching monetization. Then assess how, and what, customers in each of your target segments are willing to pay for your solution.
Of course, there are other details to consider in the complex development of a consumer-centric solution. But these eight are the most important ones to get right.
Players to watch in the space
A number of players are leading the way in consumer-centric healthcare. Here are a few standouts to watch:
- One Medical is a membership-based primary care service with both in-person and convenient mobile app resources
- Teladoc has led the way on telehealth, providing a range of primary and specialty care virtually
- CenterWell Home Health (formerly known as Kindred) is the nation’s largest provider of home health services
- Bright Health is a startup providing tech-enabled consumer insurance plans for individuals across the country
- Devoted Health, another startup, focuses on providing more affordable Medicare Advantage plans on a more personalized basis
- Oscar Health is yet another startup providing more flexible, easy-to-navigate insurance plans with personalized data and 24/7 access to virtual care services
- Apple has its popular Apple Watch, which the company has been developing to include more health-monitoring features, like an FDA-cleared electrocardiogram
- AliveCor offers a portable, FDA-cleared EKG monitor
- Omron is a leader in the wearable blood pressure monitor space
Bringing healthcare into the consumer age
Conditions in the healthcare industry are aligning to form a new center of gravity around the healthcare consumer. In the next article, we’ll begin with discussing different models for delivering care — ones that don’t include the hospital or physician’s office. Stay tuned.
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