The Oliver Wyman Health Innovation Center (OWHIC) is dedicated to developing and promoting market-driven solutions that address the crisis of high cost and poor quality in our healthcare system. To that end, OWHIC recently convened a group of market leaders to explore the disconnect between today’s de facto consumer marketplace and consumer-centric innovations. The group emerged with a vision for a new Empowered Marketplace. Here, Partners Sam Glick and Josh Michelson with Senior Consultant Kate Kiernan explain the Empowered Marketplace and what it will take to get there:
Where are we today?
With more than 50 percent Americans now in a high-deductible health plan (HDHP), the United States has entered a de facto consumer marketplace. But the industry has yet to pivot its practices accordingly, and so we find ourselves with a consumer marketplace that is neither consumer-driven nor consumer-centric. And that creates an inefficient and potentially dangerous paradox.
For example, to combat the burden of high deductibles, many consumers are limiting their utilization and avoiding even high-value services such as preventative care. In fact, research shows consumers reduce spending by 12 percent to 14 percent after switching to a HDHP. While this may lower consumers’ short-term out-of-pocket costs, it can contribute to increased system costs, as more people use more services and higher-level care for conditions that could have been prevented or managed more efficiently.
Ideally, consumers in HDHPs would be informed and empowered enough to shop for the best care for their healthcare dollars. But most consumers don’t understand how to shop on cost and quality, and current shopping tools are difficult to understand and incomplete. As a result, consumers are left shopping based on experience and access; and that is leading many to look toward alternate sites of care (such as retail health clinics), where there is clear cost structure, accessible locations and hours, and a streamlined experience.
Furthermore, with the incredible range of provider cost and quality, there is a distinct lack of marketplace standards and scant guidance to help consumers as they increasingly shoulder the burden of health decisions.
Finally, our system today incentivizes doctors to treat more not better, and for patients to reduce short term costs not long term health. In effect, the health system structure is orthogonal to its own goals.
Consumers are looking to drive their own health decisions, yet our health system today doesn’t given them the information or education needed to effectively do so; and so they feel stuck.
What is an Empowered Marketplace? Why should we go there?
The Empowered Marketplace is the future of healthcare. What we mean by the Empowered Marketplace is informed consumers actively participating in the system. We mean a market that looks to physicians to deliver better, more cost-effective treatment, and then rewards those who do so. And we mean systemic incentives aligning with long-term individual and population-wide health goals.
The Empowered Marketplace is a balancing act between these three pillars – informed decision-making, marketplace standards, and systemic incentives – and is predicated on choice and responsibility. While the optimal balance of these may be unique to populations, health statuses, locations, or types of care, the new wave of healthcare needs to optimize itself for the consumer.
How do we get there?
To date, the market has seen pockets of innovation and steps toward the Empowered Marketplace. (See: UnitedHealth Tries Boutique-Style Health Plan.) However, much of the industry remains entrenched in traditional, silo-ed business models and a fee-for-service mindset. To achieve the Empowered Marketplace, collaboration, cooperation, and unprecedented partnerships between payers, providers, and innovators will be required.
The Empowered Marketplace requires long-term perspective and commitment from incumbents and new entrants alike. It will take upfront investment by the system to hire and train a new generation of health professionals (e.g. health coaches, population health managers); targeted, user-friendly, salient, and sustained consumer education; and ongoing support and dedication from all players.
To that end, a crucial undercurrent to the success of the Empowered Marketplace is the targeted implementation of technology. With sleek interfaces that streamline the consumer’s experience to aggregated back-end datasets, and predictive analytics on consumer health and purchasing decisions, technology needs to be the glue between the pillars.
Together, the industry can pivot and embrace the new generation of an Empowered Marketplace, and together we can move the consumer into the driver’s seat of his or her own health.