In September, in collaboration with New York City Health Business Leaders, Oliver Wyman hosted a panel discussion titled “Consumers Demand More: Competing in the New Healthcare Economy.” With Oliver Wyman Partner Helen Leis serving as moderator, panelists Jeanne Pinder (CEO, Clear Health Costs), Sally Poblete (CEO, Wellthie), Kyle Raffaniello (Chief Revenue Officer, Vitals), and Dr. David Tsay (Director of the Innovation Center at New York Presbyterian) explored topics ranging from who will own the healthcare consumer relationship to challenges in healthcare literacy. Here, Helen and Chris Schrader, principal with Oliver Wyman, share learnings from the event.
Consumer choice in healthcare is on the rise. Why? For the first time, the average American is having to shoulder the entire burden of his or her healthcare costs. That’s due to the rise of high-deductible plans and increasing out-of-pocket costs. In this environment, healthcare consumers are becoming increasingly cost-conscious, and their choices reflect that.
For example, we are seeing consumers delay prescription refills, and ask for second, third, and even fourth referrals in order to find a provider in their (often narrow) network – and preferably one with an available appointment this week. Winning with consumers is no longer just about being the ‘best of the worst’; today, healthcare companies must compete on real and perceived value – economics, convenience, access, and more.
At the recent Oliver Wyman-New York City Health Business Leaders event, much of the discussion centered on the need to connect the patient and the physician with tools and information at the point of care – this in order to increase awareness of cost, quality, and value, and help consumers connect to the right care at the right place and right time.
But providing information and tools at the point of care is only a partial solution and it doesn’t begin to tackle the broader consumer engagement challenge. In truth, the greatest opportunities to engage the consumer in healthy behavior exist outside of the doctor’s office. While it is important to provide great information and guidance, and to inform choices at the point of care, that only addresses a small set of consumer health needs.
Winning with consumers is no longer just about being the ‘best of the worst’; today, healthcare companies must compete on real and perceived value – economics, convenience, access, and more.
To truly tackle the issue of consumer engagement – and, specifically, low adoption of consumer-engagement solutions such as telemedicine and transparency tools – it is helpful to view the issue through the lens of supply-side challenges, demand-side challenges, and challenges connecting supply with demand.
Supply-Side Issues: Not the Right Products
Many products and tools we see in the market still do not meet consumer needs. Rather, they are created to solve B2B issues experienced by the “middle” of the supply chain. For example, employers make up the middle of the supply chain, and self-insured employers have a need to reduce medical cost. Consequently, there are numerous solutions aimed at reducing employers’ medical costs.
Even solutions that put the consumer at the center tend to be one-size-fits-all with limited personalization to individuals or situational context. Further, most solutions are point solutions and do not connect to the rest of a consumer’s healthcare journey. We need to flip the script and design from the consumer out: What are their needs – spoken and unspoken? What are their biggest hassles? What job can you do for the consumer to eliminate those hassles? We need to hit on functional, emotional, and financial needs to develop products that are magnetic to consumers. We are seeing some bright stars in this year, but as an industry we’re not there yet.
Demand-Side Issues: Limited Understanding and Interest
We know consumers are reluctant to pay for healthcare tools themselves. Even the things they have been willing to pay for in the past (e.g. weight-loss solutions) have become commoditized as free solutions become more readily available. Further, long-term engagement remains elusive, with high abandonment rates on items such as fitness trackers and diets. Consumers may be willing to try a number of new technologies, but they are very selective about what they stick with over time.
Part of the demand-side challenge is related to disposable income – consumers have a hard time investing in their health when they are relatively healthy. This is especially true when other things in their life seem more urgent (the car repair shop bill, Mom’s hospital bill). Remember, 50 percent of Americans can’t find the money to pay an unexpected $2,000 medical expense in 30 days.
Consumers also don’t fully understand what value these tools provide to them, or what they may help them accomplish, or how one product is different from the next. Even with better tools, there may be demand-side issues given consumers would not know when or how to use the tools.
Connecting Supply and Demand: Right Place, Right Time
Today’s tools often fail to meet consumers where they are and when they need support. As an ecosystem, we need better ways to engage consumers at a point of relevance to establish a connection that drives awareness, use, and satisfaction.
Too often today, it’s the employers who are buying healthcare tools for consumers; but the existence of these tools isn’t always communicated to employees in a situationally relevant way. Consumer tools may be included in a description at the point of enrollment in a health plan, but forgotten about when someone has an actual need. Solutions often fail to gain traction because they aren’t marketed to consumers at the right time, or in the right way, or sometimes at all.
Further, solutions are not universally accessible to consumers. We are limited today in that many tools are either regionally focused solutions, only useful to the tech literate, or small-scale solutions that the population at large cannot yet access.
The gauntlet to the industry is clear: Consumers are demanding to be the central design focus of any solution. Consumers will make decisions based on clear and transparent pricing and understanding the financial ramifications of their decisions. Getting this right will drive their engagement, and we know that consumers’ engagement in managing their health and wellbeing (e.g. adherence to care plans) is paramount to cost management.
The answer to drive deeper consumer engagement, and therefore cost savings? We think it lies in personalized convenience, simplicity, and integration of solutions that address consumers’ functional, emotional, and economic needs.