Consumer-centricity has historically not been the healthcare industry’s forte. In other industries, from retail to banking, greater strides have been made. Nonetheless, consumerism has come to healthcare, and digital is accelerating its importance at a remarkable pace.
In this blog, we will we explore:
The forces of consumerism reshaping healthcare, including external threats.
Some promising examples of responses to those threats.
The notable investments incumbents need to make to address the tide.
Consumer Trends That Are Applying Pressure on Healthcare
Consumers have had their expectations redefined over the last 20 years by advancements in technology and the success of consumer brands: from retail (Amazon) to banking (Mint) to media (Netflix) and transportation (Uber). Those expectations are putting pressure on healthcare in a few critical ways:
Affordability: Consumers expect services to cost less as innovations are made and potential savings are passed on to the individual. Very often in healthcare, breakthroughs in treatment are expensive, and the longer one lives, the higher the cost of care.
Transparency: Consumers are often unaware of the total cost of care, and the true cost of care, until they have already incurred it. Historically, the total cost of healthcare has not been borne by consumers alone, creating further confusion.
Convenience: Healthcare service providers have been slow in addressing accessibility and availability of care. Be it hours of access or channels of access, convenience in healthcare is often limited, partly due to the constraints on what can be reimbursed by service providers.
Choice: This is probably the most important consumerism trend as it usually creates competition, which in turn drops cost and raises quality. While there is choice in where consumers can get their care, coverage, networks, and lack of comparison information limits consumer choice and decision-making.
Disruptive Innovation From The Outside
While the above innovations are welcomed, it is the external threat that has motivated healthcare incumbents of late. Amazon recently purchased the online pharmacy PillPack for nearly $1 billion. Industry experts speculate that Amazon intends to create a “Prime Health” service using PillPack’s pharmaceutical expertise, leveraging the distribution licenses PillPack already has in 49 out of 50 US states.
Amazon and PillPack demonstrate disruption at incredible scale, and they are not the only example. Most prominent are technology giants Apple and Google, each approaching the healthcare industry in their own unique way. Add to that retail giants like Walmart, relative upstarts like Uber and Lyft, and even trusted agnostic brands like AARP. Countless organizations are eyeing the healthcare economic pie.
Areas not traditionally part of the healthcare experience are now ripe for disruption because of healthcare’s emerging consumer focus. From a business perspective, healthcare has nothing to do with transportation. But from a consumer perspective, getting to and from the doctor’s office is part of the process. That’s always been true. But with consumer-centric innovation in transportation (e.g., ride sharing), the need for healthcare to keep pace with life has become critical.
As Adrienne Boissy, the Chief Experience Officer at Cleveland Clinic, puts it: the industry is “evolving from health care to life care.”
Some Healthcare Organizations Are Making the Shift
Healthcare incumbents are not sitting still. The beauty of digital transformation is that it is part of a larger ecosystem process.
CareMore: a Medicare and Medicaid delivery system, partners with Lyft on a ride-sharing program for its patients who are largely at-risk seniors. CareMore has developed an app that allows providers, patients and caregivers to request and track rides. The clinic noticed that Lyft rides are more likely to arrive on time and save the clinic 39% from non-Lyft non-emergency medical transportation. CareMore’s incorporation of this trendy, consumer-friendly service also aligns with two central healthcare trends: the broader political push to use Medicare and Medicaid funds more economically, and the drive to create digital healthcare programs that provide what consumers want.
CVS: recently merged with Aetna. CVS owns nearly 10,000 retail stores nationally and plans to offer non-emergency health services in some of its stores. Turning them into de facto clinics, while also providing health coverage to customers through its new Aetna connection. The clinics serve as simple one-stop-healthcare-shops. The merger created a combined customer database of 65 million patients and a digital prescription program that receives half of its refill requests through mobile devices. According to a recent Bank of America/Merrill Lynch survey, 68% of consumers expect this merger to permanently change the healthcare landscape.
Oscar Health: a relative newcomer to the health insurance space. Oscar has nonetheless made waves with their approach to differentiating, serving consumers and challenging the status quo. Oscar is renowned for their mastery of data science across their organization, enabling them to design optimal provider networks, personalize experiences for every member, and conduct continuous testing with real users all the time. Oscar Health has used these capabilities to spur rapid growth, raise funds and expand their vision and reach.
Key Investments for Success in a Consumerized Future
Healthcare companies are generally late adopters of consumer-centric capabilities that are integral to catching up. As a result, their digital transformation journey will be particularly challenging and painful, as it will challenge the norms of how many have evolved over the last few decades.
Here are key areas of digital transformation that require investment:
Customer Experience: fundamental to meeting consumer expectations is a well thought out experience across multiple channels, that begins with Service Design and extends through Behavioral and Interaction Design. A simple yet personalized customer experience is a must-have.
Human Capital Retooling: consumerism is about people and not just the customers. Inside the organization requires rethinking current human capital experiences, expertise and evolution.
Value-Based Monetization: whether we are talking about risk-bearing agreements or alternative revenue sources, consumerism invites models like freemium, subscriptions and pay-for-performance in equal measure. It is all about monetizing for value.
Digital Asset Refactoring: all organizations have some set of assets that can be retooled, revitalized and repurposed to great effect. It is never a good idea to assume that a rip-and-replace approach is best.
Data as a Strategic Asset: last but not least, the future of consumer economics lies in the power of data: how many insights can be harvested and at what velocity. Every single industry has been transformed by the strategic use of data.
Surviving and succeeding the healthcare consumerism shift is a strategic imperative. Investing in capabilities like those noted above is not just a savvy tactical list of responses, but the very definition of “business going forward.” The demarcations between payer, provider, pharma and other companies are blurring. One guiding “north star” is the consumer and their preferred healthcare journey.
In our next installment, we will unpack why getting to scaled consumerism in healthcare, and reaping the benefits, requires more partnership, less disruption.