Insights on Today's Healthcare Consumer

The New Healthcare Consumer Is a Disruptive Force of Change

Posted by Brent Walker on Fri, Oct 09, 2015

The New Healthcare Consumer

More than a decade ago, the Harvard Business Review published an article entitled, “Let’s Put Consumers in Charge of Healthcare.” Bemoaning the sorry state of the U.S. healthcare system in 2002, Regina E. Herzlinger, the Nancy R. McPherson Professor of Business Administration at Harvard Business School, wrote, “When consumers apply pressure on an industry, whether it’s retailing or banking, cars or computers, it invariably produces a surge of innovation that increases productivity, reduces prices, improves quality, and expands choices.” Herzlinger is intimately acquainted with the U.S. healthcare system’s woes, having also served as a director or board member for numerous healthcare-related organizations including Cardinal Health, HealthAllies.com, Noven Pharmaceuticals and Wellcare, among others. Now, thanks to a rise in healthcare consumerism, Herzlinger—along with myriad organizations in the healthcare industry—are witnessing just how a new breed of healthcare consumer is becoming a force for disruptive innovation in healthcare.

Disruptive Innovations Already Having a Huge Impact on Healthcare

All year, H&HN Magazine has been exploring the impact that the rise of healthcare consumerism—among other industry disruptors—is having on healthcare. One of these disruptors has been, in fact, a catalyst for consumerism—namely, the launch of the healthcare insurance marketplace. Climbing health insurance deductibles were already making individuals with healthcare coverage more sensitive to costs, but the opening of federal and state health insurance marketplaces did several things.

  1. It allowed millions of consumers who were previously uninsured or under-insured to shop for health insurance. Suddenly, consumers who were accustomed to doing without healthcare coverage had options. However, these are consumers who often had financial reasons for not buying insurance in the first place, so they are still very focused on price. And it must be said that many plans on the exchanges are also saddled with high deductibles, and just because one has access to health insurance coverage does not mean he or she has access to health care.
  2. It activated the comparison-shopping “gene” that is an innate part of the consumer experience in every other industry – whether they’re looking for a new car, a bigger house, a more service-oriented bank or an Internet-enabled high-definition television. And it’s not just healthcare providers and hospitals that are subject to scrutiny. Insurers are quickly discovering that consumers have very few qualms about dumping one insurance plan for another if it offers better coverage or lower costs.

This allowed other disruptive innovators—like organizations that provide pricing tools or publish quality reviews—to join the fray.

Another significant disruptor in healthcare is the growth, both in number and in market share, of non-traditional providers that offer convenient, low-cost care services. Hospitals and primary care practices alike may not have taken the CVS MinuteClinic® seriously when it launched under the name of QuickMedx in 2000, but as H&HN points out, “2014 was the year physicians and health system executives stopped scoffing at the cute little clinics at the drug store.” Walk-in clinics may have had a slow start, but consumers appreciate the convenience of clinics open in the evening at the very location where they need to pick up a prescription or some groceries. They also like the price transparency offered by these clinics, a feature that is still sorely lacking among more traditional healthcare providers. Since 2000, the number of walk-in clinics across the country has grown from just a few dozen to nearly 3,000, according to a Washington Post article.

Consumer-driven Healthcare Demands Greater Awareness

When asked for his take on this new consumer-driven healthcare market and the disruption taking place, Humana president and CEO Bruce Broussard said that healthcare organizations need to take stock. He acknowledged, “We all say we’re customer-centric, but it takes time to compete with an Apple or a P&G or a Nordstrom. We have to change the perspective from ‘What’s best for the health care system?’ to ‘What’s best for the consumer?’” And answering that question will require deeper insights into healthcare consumers.

No longer can hospitals or other healthcare-related organizations rely on defining patients in general terms. They will need to look beyond the diagnosis and beyond the usual demographic breakdowns to gain a better understanding of individual attitudes, motivations and behaviors—psychographic segmentation—to effectively influence patients and drive engagement. It’s something retailers have understood for years; you need to serve up the right message, on the right channel, at the right time to make meaningful connections with your prospects and customers.

Innovative companies like PatientBond are integrating psychographic segmentation into outbound patient communications with messaging based on a healthcare consumer’s motivations and vehicles based on that consumer’s preferences (email, text/SMS, voicemail, portal, etc.). EdLogics, is a disruptive company using gamification to drive patient activation, engaging healthcare consumers with a motivating approach.  EdLogics is also exploring ways of incorporating psychographic segmentation to further boost its effectiveness.

Healthcare reform is a work in progress, but it’s clear that Herzlinger accurately assessed the impact that consumerism would have on driving disruptive innovation in healthcare. Now, it is up to organizations across the healthcare industry spectrum to get to know their consumers and make the changes needed to win their business.

Patient Activation and Engagement Whitepaper

 

Brent Walker

Written by: Brent Walker

As Chief Marketing Officer, Brent's primary responsibilities include leading marketing strategy and execution for c2b solutions, development of c2b solutions' proprietary consumer segmentation model and insights products, research on healthcare consumers’ motivations and behaviors, and providing marketing guidance to c2b solutions clients.

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