The healthcare industry is no stranger to change. Healthcare consumerism is a transformation in the way that people choose providers, health plans, and more. It emphasizes informed decision making, the care experience, and forging two-way relationships with patients. And it’s changing people’s expectations of hospitals and health systems, forcing a shift towards a retail-based healthcare market where consumer value far outweighs provider convenience.

Through our partnership with The Advisory Board Company, SPM has studied and analyzed the rise of consumerism, examining the key drivers and strategic hospital/health system responses.

The Rise of Healthcare Consumerism

Before deciding on an adequate response to change, you must understand what is causing the disruption in the first place. There are many driving forces propelling the rise of consumerism, but for the purpose of this discussion, we have highlighted three:

  1. Price Sensitivity and Value Consciousness: According to a study by SPH Analytics, consumers with health plans that have at least a $1,000 deductible reached 41% in 2014, up from 10% in 2006. Without a doubt, the popularity of high deductible health plans (HDHPs) has increased the financial burden on individuals for their care. As consumers shoulder more of the cost of their healthcare, they become more price and value sensitive shoppers. But HDHPs aren’t the only factors changing the way people view healthcare from a financial perspective. Growth in the number of people selecting Medicare Advantage Plans and Medicaid expansion putting the responsibility of picking a health plan on the individual have created more value conscious healthcare shoppers as well.
  1. Hyper-Informed Decisions: As consumers bear more financial responsibility, they search for healthcare tools similar to those that they have become accustomed to using in other areas of their life, such as Yelp, Trip Advisor, and Angie’s List. While many are imperfect, more information and new tools are emerging every day to help consumers shop and compare healthcare services and insurance plans.Arguably, the biggest need is price transparency. A recent Public Agenda study found that 56% of Americans have actively looked for price information before getting care, including 21% who have compared prices across multiple providers. Even further, people with higher deductibles (who must saddle more financial responsibility) are more likely to have sought price information.But context is also key. Premium price does not necessarily mean high quality in healthcare; nor does lowest price ensure volume/sales. Quality and safety ratings provide context to price and the totality of these factors give a better indication of the care you will receive, more than price alone. Consumers, generally, are pretty good value shoppers.
  1. Proliferation of Options: Driven by the perceived weaknesses of the traditional, institutional provider landscape, an explosion of new ways to receive or engage with healthcare have hit the market. Convenience, accessibility, value for price—these are all expectations of the active, engaged healthcare consumer. And new entrants are appeasing these needs unmet by providers. An example of this larger trend is on-demand care access for minor needs:
    1. About 2/3 of participants in a McKinsey & Company study said they were willing to use healthcare services offered by a pharmacy or retail store.
    2. Urgent care popularity is on the rise, with 7,100 centers nationwide growing at a rate of 300-600 centers per year, getting patients out of the ER and into a lower cost care site.
    3. Regardless of cost, 49% of respondents in the McKinsey study were willing to speak with a physician practitioner by phone, internet, or email and 36% were willing to speak with them by video.

Responding to new threats like these requires an analysis and understanding of what the consumer feels they truly need. What do they want to buy and how are they shopping? Hospitals and health systems that do not understand these motivations are at risk of losing patients and market share.

Conclusion

Healthcare consumerism has been a hot-button subject for some time now. In fact, it’s something that our partners at The Advisory Board Company have been talking about a lot lately!

SPM has a special partnership with The Advisory Board, a global research, technology, and consulting firm partnering with more than 230,000 leaders in more than 5,000 organizations. Over the next 5 months, The Advisory Board will be hosting CEO special sessions on this exact topic, dubbed “The New Consumer Imperative,” to examine questions such as:

  • Which factors actually change consumer behavior, and what are the stakes?
  • What are the new fundamentals, and which systems are generating consumer loyalty today?
  • How can healthcare leaders take the reins of consumerism?

In the same vein, SPM is involved in a number of client projects designed to stay ahead of consumerism’s drivers. In part 2 of this series, we’ll talk more about the implications for healthcare marketing.

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Dan Miers

Dan Miers

Chief Strategy Officer at SPM Marketing & Communications
Dan anticipates “what’s next” in our complex industry and keeps SPM on the leading edge of healthcare policy and strategy. A valuable resource to all SPM clients, his strategic insights focus how we understand and apply industry trends to client issues. With 20 years of experience, Dan has two master’s degrees in healthcare administration and finance, worked in business development at an academic medical center, and launched a healthcare technology company. He is also a frequent speaker at industry events and an active member of the Society for Healthcare Strategy and Market Development (SHSMD).
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