Breaking Down the Basics of Healthcare Consumerism

WHAT IS HEALTHCARE CONSUMERISM?

The term “healthcare consumerism” became noteworthy with the industry’s shift toward value-based care, but it’s not the first time the US has referred to this trend. According to a 2015 literature review conducted by Nancy S. Lee, PhD, from the University of California San Diego, language linking patients as consumers dates back all the way to the 1930s.

“Findings from Consumer Reports show that the consumer movement of the 1930s–40s staunchly advocated for universal health insurance,” Lee wrote in her article abstract. “Whereas consumer rights language nowadays tends towards individual choice and personal responsibility, consumerism in health care during that era articulated ideas about consumer citizenship, framing choice and responsibility in collectivist terms and health care as a social good.”

Today, medical professionals use “healthcare consumerism” to mean the personal choice and responsibility in paying for and managing one’s own health. The term, which gained notoriety both as value-based care took hold and high-deductible health plans (HDHPs) became commonplace, demonstrates that the patient has become one of the primary payers of healthcare and primary drivers of wellness.

In terms of HDHPs and patients as payers, patients have increasingly been on the hook for a considerable bulk of their medical costs. Because of higher deductibles, patient financial responsibility has gone up. According to an October 2023 analysis from KFF, the average employee deductible has increased by about $500, and that figure is only expected to grow in coming years.

Consumers have to balance that with medical bills, too. A 2023 report from the Federal Reserve showed that 23 percent of patients had an unexpected medical bill in the previous year, with the average amount totaling to between $1,000 and $1,999. More than a quarter (28 percent) of adult patients went without care because of the high price tag.

This has led to another aspect of healthcare consumerism: the patient experience. Because patients are paying higher out-of-pocket healthcare costs, they are looking for a healthcare experience that mirrors those they have in other service sectors. Healthcare consumers are demanding healthcare experiences that are as frictionless as those in the hospitality, airline, or e-commerce industries.

And as organizations have realized this, they have had to adjust their practice.

WHAT DOES HEALTHCARE CONSUMERISM MEAN FOR PROVIDERS?

The healthcare industry has zeroed in on this concept of healthcare consumerism. Recognizing that patients are increasingly in charge of their healthcare payments, organizations know they must create a good consumer experience.

There is a serious business case for this, most organizations agree. As healthcare organizations face tighter margins, it will be important for them to deliver on a good consumer experience and cultivate a sense of patient loyalty.

In 2019, Definitive Healthcare found that healthcare consumerism was a top industry trend and slated to shape the way organizations deliver medicine. Later that year, healthcare consulting firm Sage Growth Partners also reported healthcare consumerism as a top priority among C-suite executives.

Similarly, 70 percent of health IT developers and medical technology companies told Accenture and AdvaMed in a survey that the “patient as consumer” mindset is very relevant and a concept that will shape their business planning going forward.

Industry stakeholders, ranging from provider organizations to payers, are generally reacting to consumerism in healthcare by borrowing from other service sectors. Given the understanding that patients have grown accustomed to the customized self-service of marketplaces like Amazon or the travel and banking industries, healthcare organizations are working to follow suit.

This means creating a digital front door that helps healthcare consumers better navigate the healthcare industry. Tools included in the digital front door may include, but are not limited to:

• Online appointment scheduling
• Online check-in
• Patient portal
• Remote patient monitoring tools
• Virtual care and telehealth
• Chatbots
• Digital bill pay
• Patient education tools

But creating a consumer-centric healthcare experience requires more than just a broader health IT ecosystem. For one thing, organizations need to make sure these multiple solutions work together, not independently, helping to create a cohesive experience for the patient consumer.

Payers and providers should be aware of the low-tech aspects of the consumer experience, too. For example, cost and location serve as two of the main factors swaying a consumer’s healthcare access decision. Organizations need to consider how they can set up facilities, virtual care options, and other creative ways to reach their consumers, while keeping prices transparent and low.

The patient experience, too, influences the healthcare consumer. Data shows that patients still want a good relationship with their providers, seeking particularly good patient-provider communication that helps patients understand and engage in their healthcare. Organizations must continue to cultivate the interpersonal skills required to create these good relationships.

Personalized care on the horizon

Healthcare providers and payers have been zeroed in on consumerism for several years now, if not more, but they are still far off their targets, some reports show. In September 2021, Kaufman Hall issued a report showing that fewer than a tenth of healthcare organizations excel in healthcare consumerism.

Of the 110 organizations surveyed, only 7 percent fell into the top tier for consumerism in healthcare, largely because of limitations in personalized care.

Personalization is the next frontier in healthcare consumerism, experts have asserted, giving patients a tailored healthcare experience that will be truly actionable for their needs and goals. This approach, too, mirrors the approaches other service sectors have taken to consumer-centricity.

Take, for example, the curated Amazon homepage shoppers can explore. No one’s Amazon home page looks the same; rather, computer algorithms create targeted listings based on a consumer’s identity and previous shopping habits. Amazon may even estimate when a shopper will need to refill a certain product.

This level of personalized needs to be forthcoming in healthcare. After all, nobody’s health is the same, so the tools used to manage it can’t be, either.

What’s more, consumers are demanding personalized. In Kaufman Hall’s 2022 State of the Healthcare Consumer report, patients demonstrated strong activation but still needed more personalization from their providers. Narrow networks and limitations for clinicians to integrate health data from disparate providers and wearables are getting in the way, the report showed.

Organizations may also be stymied by limited access to patient-centered metrics. In a 2023 Kaufman Hall survey of 59 healthcare organizations, researchers gathered that very few organizations have implemented the patient-centered care model that healthcare consumerism demands. Rather, hospitals and health systems are mostly operating under an older, provider-centric model.

This gap in consumer-centricity is mostly driven by poor insights into consumer needs and limited uptake of consumer-focused performance measures.

Consumer-focused measures may include the cost of care to patients or how much a patient spends at one hospital compared to all of their healthcare spending. But currently, only about half of the Kaufman Hall survey’s respondents said their institution tracks even just one consumer-focused measure. Instead, hospitals and health systems are still looking at metrics like the volume of patient visits, unique patient counts, and inpatient market share.

A better understanding of the consumer experience will help organizations assess their standing with patient consumers and develop strategies for moving forward.

Trends in healthcare consumerism are likely not going away. As patients continue to serve as a primary healthcare payer, organizations need to meet their demands, which typically reflect consumer experiences with other service sectors.