Beginning with high-deductible health plans and cost sharing models, which started springing up around a decade ago, and continuing to the creation of health insurance exchanges — written into the Patient Protection and Affordable Care Act — consumerism has been on a steady rise in the healthcare industry.
More and more hospitals and physicians are taking note and tweaking the way they provide care to appease these better informed patients. Websites and mobile apps are making it easier for patients to get more healthcare information, as HHS, private companies and some payors are helping distribute cost and quality of care data.
There are a number of trends stemming from a shift toward consumer-driven healthcare. Hospitals that ride the waves of these changes may be in a better position to stay financially sustainable in an era when competitive pricing and patient satisfaction can make or break a hospital's chances of succeeding.
Here are several trends causing a rise in consumer-driven healthcare.
1. Legislation is providing health consumers with more options and transparency. The rise of consumerism in healthcare "will increase dramatically with the creation of healthcare exchanges," says Doug Fenstermaker, managing director and vice president of healthcare consulting firm Warbird Consulting Partners. State-regulated health insurance exchanges, which kick in beginning 2014 if the Supreme Court upholds the healthcare law, "are essentially virtual healthcare menus," Mr. Fenstermaker says. The insurance exchange will set side-by-side various insurance premiums, out of pocket co-pays and direct payments to providers in a way that is more transparent for the healthcare consumer.
Further, should employers choose to provide defined contribution instead of defined benefit healthcare plans, consumers will likely shop around for better-valued health plans. "More employers will not be able to continue to pay the shift of cost to them from uncompensated care borne by hospitals and doctors," he says. And if the Supreme Court strikes down the individual mandate provision of the PPACA, Mr. Fenstermaker predicts an increase in the number of consumers who price shop.
Another element of a more consumer-driven healthcare era is a push toward greater transparency in costs. A bipartisan Texas tag team of congressmen, Reps. Michael Burgess, MD, (R) and Gene Green (D), recently introduced legislation that would require hospitals to disclose the cost of inpatient and outpatient services.
The Health Care Price Transparency Promotion Act of 2012 would mandate that states establish laws requiring hospitals to disclose charges for both inpatient and outpatient services. Additionally, health insurers would need to provide enrollees in a health plan an estimated out-of-pocket cost for healthcare items and services.
The legislation also asks the Agency for Healthcare Research and Quality to study the type of healthcare cost information consumers find most useful, part of an effort to provide consumers with simple and timely healthcare cost information.
2. Private companies and payors are also promoting cost of care transparency. While HHS already publishes information about insurance plans and allows consumers to compare providers based on quality, safety and patient satisfaction indicators at Healthcare.gov and other websites such as Hospitalcompare.hhs.gov, private companies such as San Francisco-based Castlight Health are getting into the game of publishing provider information, including paid claims data. Castlight says it uses algorithms and proprietary technology along with data analytics to drill down and publish cost of care information it then sells to companies that, in turn, provide employees with that data.
Consumers are looking for more transparency in part because they are paying more out-of-pocket for procedures, but also out of frustration with how hospital bills are calculated. As noted in a recent New York Times article, the cost of care can vary widely for the same procedure from hospital to hospital, or even, in some cases, at the same hospital. The example used in the report is a routine appendectomy, which costs anywhere from $1,500 in California to, in one case, more than $182,000.
Moreover, many consumers are unaware of how much medical treatment is supposed to cost.
"The problem individuals are facing," says Peter Isaacson, chief marketing officer of Castlight, is that "they are taking on expenses without the tools to help them really make informed decisions and understand the tradeoff that might exist between cost and quality."
Some health insurers are also publishing cost of care data in an effort to help patients make more informed healthcare decisions. For example, United Healthcare and Blue Cross have widgets that predict out-of-pocket costs based on a customer's policy design and whether they've met their deductible.
3. It's still unclear how many consumers are using online and mobile cost of care tools. While websites such as those run by the government and private organizations, such as HealthGrades.com, publish benchmarking data on hospitals and physicians meant to inform patients about quality of care, the question is whether patients actually use the online tools available to them.
"While HealthGrades has been around for many years, consumers' use of tools is still a pioneering activity," says Jane Sarasohn-Kahn, MA, MHSA, a health economist and blogger. "Healthcare report cards have also been available, but most consumers still spend more time researching buying a new car or washing machine than they do comparing health plans. Therefore, we don't know yet whether the tools pay off."
A regional example in Utah shows that some consumers are using cost of care and quality data to make healthcare decisions. Regence Blue Cross Blue Shield in Utah recently surveyed 13,000 users and found that 28 percent changed providers based on cost information and quality data made available online, according to a recent article in The Salt Lake Tribune.
In an era when consumers pay more for their health and healthcare organizations are forming accountable care models with built-in payment incentives for driving down costs, it's becoming increasingly important for both providers and patients to have an understanding of the type of care needed and how much that care costs.
"We need to have patients prove their health literacy in a more dramatic way," says West Shell II, chairman and CEO of Healthline, a San Francisco-based company that provides health information to consumers. "They need to be empowered to make the right decisions."
For consumer-driven healthcare to work, employers and individuals purchasing care need to have a firmer grasp of healthcare literacy, Gail R. Wilensky, the former director of CMS and a senior fellow at Project HOPE, writes in an Atlantic editorial.
"Consumers and patients need to become more involved in their own health — they need to know their plan options and what they cost, have a reason to care, and be rewarded to adopt healthier lifestyles," Ms. Wilensky writes. "That would be a very different world from the one we've been living in."
Here are some of the effects of the rise in consumerism and ways hospitals and physicians might further adapt in a consumer-driven healthcare era.
4. As healthcare costs shift to consumers, hospitals can help provide more consumer-driven care. The rise in the early 2000s of health savings accounts and consumer-driven health plans — or high-deductible plans — was a way for consumers to "get more skin in the game," says Ms. Sarasohn-Kahn. But she says high-deductible plans haven't necessarily helped consumers become more savvy healthcare decision-makers.
"What we have seen in the first few years with consumer directed health plans is that people aren't using them wisely. People will make what they think are smart fiscal decisions which lead to bad long-term physical consequences," she says.
However, an influx of online tools and mobile apps means patients have less of an excuse to be in the dark about their healthcare costs.
"Utilizing price comparison tools, patients now can understand the financial implications of their care decisions, more credibly request discounts from high-cost providers, and direct themselves towards more affordable providers," says Adam C. Powell, PhD and President of Payer+Provider Syndicate, a healthcare consulting company.
In order to survive in a consumer-driven era, hospitals will need to provide transparency on price, quality and services as well as deliver a high level of customer service, thinking more along the lines of a retail store like Nordstrom's than a health provider, Ms. Sarasohn-Kahn says.
Hospitals can help the growing number of patients paying more out-of-pocket for care by embracing consumer-driven healthcare and actively promoting it. In turn, hospitals will be helping themselves.
"Hospitals are much-trusted players in consumers' local health markets," Ms. Sarasohn-Kahn says. "They have the opportunity to leverage that trust in the consumer era by becoming more retail-oriented. The trend of many hospitals providing more wellness and fitness services, along with partnering with after-hours care providers, such as retail and work-site clinics, are signposts on the road toward more retail health," she says.
Proactive hospitals that respond to the call of the consumer may be in the best position to survive, no matter the next turn healthcare reform takes.
5. Hospitals are already striving to promote themselves to more consumer-minded patients. "Today's hospitals are just as aggressive about advertising and promoting their services to potential customers as any other vendor," says Mario Almonte of Herman & Almonte PR, a New York-based agency specializing in healthcare communications. "Beyond getting the customer to their beds, they are also finding ways to 'keep the customer for life' through ongoing campaigns to sell additional services to them."
The fact that hospitals are seeking to make more intimate connections with patients and treating them as consumers is not a new phenomenon. But now, in an era when mobile access and social media brings a sense of hyper-connectivity to life, the trend may seem more pronounced than ever before.
Rhoda Weiss, PhD, a national healthcare consultant, speaker, author and editor of Marketing Health Services Magazine, emphasizes the importance of hospitals creating a recognizable brand for their patient audience. She suggests hospitals create professional and engaging videos to post on You Tube and other social media sites that tell a patient's story. Dr. Weiss says it's about creating memorable experiences at hospitals: striving for strong first impressions, shorts waits, attention to detail when communicating with patients and making patients laugh when appropriate.
“You don’t need a big budget to do marketing — you can have a smaller budget and still reach your brand positioning and marketing goals,” Dr. Weiss said at the Becker's Hospital review conference in May. “Because marketing is about relationships.”
Building that relationship is a proactive step toward increasing patient satisfaction and keeping a hospital's credibility high. Also, improving patient satisfaction can help a hospital build a strong word-of-mouth reputation, which may be an underestimated part of a hospital's success in a consumer-driven healthcare era.
6. Hospitals and physicians with a focus on prevention to curb patient healthcare costs may promote that to consumers. Moving forward, hospitals might leverage strong population health management skills to advertise to the consumer-driven patient. By identifying target health concerns in a population, health systems and hospitals are potentially less at risk of dropping the ball on patient care, at least on a macro-level.
"With a solid population health management program, hospitals can make a positive and significant impact on the health of the entire community while creating a stronger and more financially sound healthcare organization," says Pearson Talbert, president and CEO of Nashville, Tenn.-based hospital consulting firm Aegis Health Group.
Physicians have skin in the game too. Accountable care organizations and other integrated care models are providing physician groups financial incentives to improve patient outcomes. In the not so distant future, as many as half of a physicians' earnings may be based on quality outcomes, according to CEO of Objective Health Russ Richmond, MD. With incentives to improve long-term health of patients, primary care physicians are spending more time on preventative care.
But for patients to participate fully in preventative measures they need to be engaging and incentive-based, says Ms. Sarasohn-Kahn.
"You have to create in connected health systems incentives for patients to connect back," she says. "You want to enable patient engagement, which requires interactive tools, carrots, and when appropriate, sticks."
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More and more hospitals and physicians are taking note and tweaking the way they provide care to appease these better informed patients. Websites and mobile apps are making it easier for patients to get more healthcare information, as HHS, private companies and some payors are helping distribute cost and quality of care data.
There are a number of trends stemming from a shift toward consumer-driven healthcare. Hospitals that ride the waves of these changes may be in a better position to stay financially sustainable in an era when competitive pricing and patient satisfaction can make or break a hospital's chances of succeeding.
Here are several trends causing a rise in consumer-driven healthcare.
1. Legislation is providing health consumers with more options and transparency. The rise of consumerism in healthcare "will increase dramatically with the creation of healthcare exchanges," says Doug Fenstermaker, managing director and vice president of healthcare consulting firm Warbird Consulting Partners. State-regulated health insurance exchanges, which kick in beginning 2014 if the Supreme Court upholds the healthcare law, "are essentially virtual healthcare menus," Mr. Fenstermaker says. The insurance exchange will set side-by-side various insurance premiums, out of pocket co-pays and direct payments to providers in a way that is more transparent for the healthcare consumer.
Further, should employers choose to provide defined contribution instead of defined benefit healthcare plans, consumers will likely shop around for better-valued health plans. "More employers will not be able to continue to pay the shift of cost to them from uncompensated care borne by hospitals and doctors," he says. And if the Supreme Court strikes down the individual mandate provision of the PPACA, Mr. Fenstermaker predicts an increase in the number of consumers who price shop.
Another element of a more consumer-driven healthcare era is a push toward greater transparency in costs. A bipartisan Texas tag team of congressmen, Reps. Michael Burgess, MD, (R) and Gene Green (D), recently introduced legislation that would require hospitals to disclose the cost of inpatient and outpatient services.
The Health Care Price Transparency Promotion Act of 2012 would mandate that states establish laws requiring hospitals to disclose charges for both inpatient and outpatient services. Additionally, health insurers would need to provide enrollees in a health plan an estimated out-of-pocket cost for healthcare items and services.
The legislation also asks the Agency for Healthcare Research and Quality to study the type of healthcare cost information consumers find most useful, part of an effort to provide consumers with simple and timely healthcare cost information.
2. Private companies and payors are also promoting cost of care transparency. While HHS already publishes information about insurance plans and allows consumers to compare providers based on quality, safety and patient satisfaction indicators at Healthcare.gov and other websites such as Hospitalcompare.hhs.gov, private companies such as San Francisco-based Castlight Health are getting into the game of publishing provider information, including paid claims data. Castlight says it uses algorithms and proprietary technology along with data analytics to drill down and publish cost of care information it then sells to companies that, in turn, provide employees with that data.
Consumers are looking for more transparency in part because they are paying more out-of-pocket for procedures, but also out of frustration with how hospital bills are calculated. As noted in a recent New York Times article, the cost of care can vary widely for the same procedure from hospital to hospital, or even, in some cases, at the same hospital. The example used in the report is a routine appendectomy, which costs anywhere from $1,500 in California to, in one case, more than $182,000.
Moreover, many consumers are unaware of how much medical treatment is supposed to cost.
"The problem individuals are facing," says Peter Isaacson, chief marketing officer of Castlight, is that "they are taking on expenses without the tools to help them really make informed decisions and understand the tradeoff that might exist between cost and quality."
Some health insurers are also publishing cost of care data in an effort to help patients make more informed healthcare decisions. For example, United Healthcare and Blue Cross have widgets that predict out-of-pocket costs based on a customer's policy design and whether they've met their deductible.
3. It's still unclear how many consumers are using online and mobile cost of care tools. While websites such as those run by the government and private organizations, such as HealthGrades.com, publish benchmarking data on hospitals and physicians meant to inform patients about quality of care, the question is whether patients actually use the online tools available to them.
"While HealthGrades has been around for many years, consumers' use of tools is still a pioneering activity," says Jane Sarasohn-Kahn, MA, MHSA, a health economist and blogger. "Healthcare report cards have also been available, but most consumers still spend more time researching buying a new car or washing machine than they do comparing health plans. Therefore, we don't know yet whether the tools pay off."
A regional example in Utah shows that some consumers are using cost of care and quality data to make healthcare decisions. Regence Blue Cross Blue Shield in Utah recently surveyed 13,000 users and found that 28 percent changed providers based on cost information and quality data made available online, according to a recent article in The Salt Lake Tribune.
In an era when consumers pay more for their health and healthcare organizations are forming accountable care models with built-in payment incentives for driving down costs, it's becoming increasingly important for both providers and patients to have an understanding of the type of care needed and how much that care costs.
"We need to have patients prove their health literacy in a more dramatic way," says West Shell II, chairman and CEO of Healthline, a San Francisco-based company that provides health information to consumers. "They need to be empowered to make the right decisions."
For consumer-driven healthcare to work, employers and individuals purchasing care need to have a firmer grasp of healthcare literacy, Gail R. Wilensky, the former director of CMS and a senior fellow at Project HOPE, writes in an Atlantic editorial.
"Consumers and patients need to become more involved in their own health — they need to know their plan options and what they cost, have a reason to care, and be rewarded to adopt healthier lifestyles," Ms. Wilensky writes. "That would be a very different world from the one we've been living in."
Here are some of the effects of the rise in consumerism and ways hospitals and physicians might further adapt in a consumer-driven healthcare era.
4. As healthcare costs shift to consumers, hospitals can help provide more consumer-driven care. The rise in the early 2000s of health savings accounts and consumer-driven health plans — or high-deductible plans — was a way for consumers to "get more skin in the game," says Ms. Sarasohn-Kahn. But she says high-deductible plans haven't necessarily helped consumers become more savvy healthcare decision-makers.
"What we have seen in the first few years with consumer directed health plans is that people aren't using them wisely. People will make what they think are smart fiscal decisions which lead to bad long-term physical consequences," she says.
However, an influx of online tools and mobile apps means patients have less of an excuse to be in the dark about their healthcare costs.
"Utilizing price comparison tools, patients now can understand the financial implications of their care decisions, more credibly request discounts from high-cost providers, and direct themselves towards more affordable providers," says Adam C. Powell, PhD and President of Payer+Provider Syndicate, a healthcare consulting company.
In order to survive in a consumer-driven era, hospitals will need to provide transparency on price, quality and services as well as deliver a high level of customer service, thinking more along the lines of a retail store like Nordstrom's than a health provider, Ms. Sarasohn-Kahn says.
Hospitals can help the growing number of patients paying more out-of-pocket for care by embracing consumer-driven healthcare and actively promoting it. In turn, hospitals will be helping themselves.
"Hospitals are much-trusted players in consumers' local health markets," Ms. Sarasohn-Kahn says. "They have the opportunity to leverage that trust in the consumer era by becoming more retail-oriented. The trend of many hospitals providing more wellness and fitness services, along with partnering with after-hours care providers, such as retail and work-site clinics, are signposts on the road toward more retail health," she says.
Proactive hospitals that respond to the call of the consumer may be in the best position to survive, no matter the next turn healthcare reform takes.
5. Hospitals are already striving to promote themselves to more consumer-minded patients. "Today's hospitals are just as aggressive about advertising and promoting their services to potential customers as any other vendor," says Mario Almonte of Herman & Almonte PR, a New York-based agency specializing in healthcare communications. "Beyond getting the customer to their beds, they are also finding ways to 'keep the customer for life' through ongoing campaigns to sell additional services to them."
The fact that hospitals are seeking to make more intimate connections with patients and treating them as consumers is not a new phenomenon. But now, in an era when mobile access and social media brings a sense of hyper-connectivity to life, the trend may seem more pronounced than ever before.
Rhoda Weiss, PhD, a national healthcare consultant, speaker, author and editor of Marketing Health Services Magazine, emphasizes the importance of hospitals creating a recognizable brand for their patient audience. She suggests hospitals create professional and engaging videos to post on You Tube and other social media sites that tell a patient's story. Dr. Weiss says it's about creating memorable experiences at hospitals: striving for strong first impressions, shorts waits, attention to detail when communicating with patients and making patients laugh when appropriate.
“You don’t need a big budget to do marketing — you can have a smaller budget and still reach your brand positioning and marketing goals,” Dr. Weiss said at the Becker's Hospital review conference in May. “Because marketing is about relationships.”
Building that relationship is a proactive step toward increasing patient satisfaction and keeping a hospital's credibility high. Also, improving patient satisfaction can help a hospital build a strong word-of-mouth reputation, which may be an underestimated part of a hospital's success in a consumer-driven healthcare era.
6. Hospitals and physicians with a focus on prevention to curb patient healthcare costs may promote that to consumers. Moving forward, hospitals might leverage strong population health management skills to advertise to the consumer-driven patient. By identifying target health concerns in a population, health systems and hospitals are potentially less at risk of dropping the ball on patient care, at least on a macro-level.
"With a solid population health management program, hospitals can make a positive and significant impact on the health of the entire community while creating a stronger and more financially sound healthcare organization," says Pearson Talbert, president and CEO of Nashville, Tenn.-based hospital consulting firm Aegis Health Group.
Physicians have skin in the game too. Accountable care organizations and other integrated care models are providing physician groups financial incentives to improve patient outcomes. In the not so distant future, as many as half of a physicians' earnings may be based on quality outcomes, according to CEO of Objective Health Russ Richmond, MD. With incentives to improve long-term health of patients, primary care physicians are spending more time on preventative care.
But for patients to participate fully in preventative measures they need to be engaging and incentive-based, says Ms. Sarasohn-Kahn.
"You have to create in connected health systems incentives for patients to connect back," she says. "You want to enable patient engagement, which requires interactive tools, carrots, and when appropriate, sticks."
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