Creating a healthcare consumer is more likely than ever before thanks to innovations in information technology, but the benefits are not yet fully realized.
In healthcare, consumerism is not a product or program. Instead, it is an orientation to new care delivery models that encourage and enable greater patient responsibility through the intelligent use of information technology. Despite the promise of consumerism, current approaches have not fully realized the potential benefits of improved outcomes and lower cost. We recommend 4 guiding principles to ensure that next-generation innovation yields the returns that providers, patients, and other stakeholders expect: (1) keep the consumer at the center of innovation, (2) keep it simple, (3) link products and services to a broader "ecosystem" of care, and (4) encourage health in addition to treating illness. Now may be a particularly compelling time to invest in a consumerist approach.
(Am J Manag Care. 2010;16(12 Spec No.):SP37-SP43)
On a Saturday night at 10:15, John, a 45-year-old man with type 2 diabetes, arrives at the emergency department (ED) of his local hospital. John checks in with the admitting nurse and explains his visit. He has exhausted his insulin supply, has forgotten to ask his general physician for a prescription, and is now light-headed. After registering, John sits and waits to be seen.
At 12:45 am, the triage nurse leads John into an examination room to administer a series of tests. Upon discovering that his blood glucose levels are high, the nurse assigns John a bed so that a physician can evaluate his hyperglycemia and determine the appropriate treatment.
By 1:15 am, John ultimately resolves the reason for his visit to the ED, but at a cost that many would consider excessive. John’s health plan likely paid $500 for an emergency intervention that could have cost many times less. One reason for the high cost is that, without access to John’s medical history, the triage nurse needed to administer tests to check for kidney failure, blood pressure, and glycosylated hemoglobin levels. An ED physician dedicated 30 minutes to a nonemergent need rather than focusing on more critical patients. The time John spent in a hospital bed resulted in longer waits for other patients, and the hospital suffered from slower throughput. Also, John spent almost 3 hours of his time resolving an issue that should have required a few minutes of clinical attention. Despite the clear inefficiencies, this scenario is quite common; in fact, approximately 83% of all ED visits could have been resolved in nonemergency settings and at far lower cost.1
One reason this scenario is so common is that many patients do not pay adequate attention to the management of their own care. As a result, payers and providers are increasingly investing in new care delivery models and incentives that encourage greater patient engagement. These players hope to discourage historical patient behaviors that include waiting to react to instructions or largely ignoring the cost of care. Instead, the goal is to create healthcare consumers that, like retail consumers, invest the time in making the right decisions and seek value in the products they purchase. By encouraging this new pattern of patient behaviors—what we term consumerism in healthcare—payers and providers are able to save on costs, improve quality of care, and remain competitive. If John were more engaged in the management of his diabetes, his circumstances would have likely looked different. In fact, it is unlikely that he would have needed to visit the ED. Instead, as an example, John might have relied on a handheld monitoring device to remind him to refill his insulin prescription. Such a device, perhaps offered for free by his employer to reduce emergency care costs that result from inattention, would have alerted John if his glucose levels reached unacceptably low levels. Alternatively, he might have relied on a text message from his pharmacist, triggered automatically due to how much time had passed between prescription refills. Or, if by ignoring his alerts and reminders John still needed care on a Saturday evening, he might have logged into his patient portal to find a pharmacy that was open and able to access his medical profile, or used his iTriage mobile app to identify the closest clinic with the shortest current wait time.
Even if John had ended up in the ED, consumerism tools would have supported a different outcome after his visit. The visit would have been logged in his electronic medical record (EMR). By Monday, the nurse assigned to John’s customized diabetes management program would have noticed the visit after a routine check of his recent activity. The nurse might
then initiate a video chat with John from his home to remind him how to use his handheld monitoring device. This nurse might even encourage him to check in with his company nutritionist and to exercise this month in order to qualify for the discounted premiums offered by his insurance plan.
UNDERSTANDING CONSUMERISM IN HEALTHCARE
As illustrated in this alternative scenario, healthcare consumerism can yield important benefits for both patients and providers. Such benefits can be distinguished in 3 key areas: wellness and prevention, disease management, and care utilization (). The benefits of consumerism will likely become more relevant due to current industry, consumer, and technology trends.
On the industry side, pressures among payers to reduce costs will require hospitals to provide alternatives to traditional, expensive care delivery models. Some payers, for example, are debating whether to increase copayments for ED visits, which will deter people like John from defaulting to emergency care. Payers also are moving to outcome-based reimbursement, which means that providers will need to manage risk in care delivery. If providers are “on the hook” for specific outcomes, then there is more incentive to involve patients, because they are a major determinant of the delivery outcomes associated with interventions.
There also are industry pressures on the demand/patient side. As a result of recent health reforms, there will be an influx of newly covered Americans who will seek care startingin 2014 when legislative initiatives take effect. Servicing this new demand at a system level through traditional, hospitalbased channels will be increasingly difficult.
On the consumer side, one relevant trend is the rise in costsharing. As a result of escalating healthcare costs, employers are increasingly pushing costs onto consumers in the form of higher deductibles and copayments, and the use of health savings accounts. Recent legislation will likely accelerate this trend as individuals enroll in bronze and silver plans on state health exchanges that entail high cost-sharing with the beneficiary.
Another driver of consumerism is the growth of behaviorally induced chronic diseases. The incidence of diabetes, for example, has nearly doubled over the past 10 years.2 The complex, systemic nature of chronic disease is a key driver of spiraling costs. Part of the solution is greater consumer responsibility, facilitated by new advances in technology.
From a technology perspective, the recent focus on and investment in healthcare information technology (HIT) has resulted in a proliferation of new products and opportunities to engage consumers more effectively. A large driver of this focus on HIT is the American Recovery and Reinvestment Act (ARRA). Passed by Congress in 2009, ARRA encourages meaningful use of technology—through substantial incentives and penalties—among healthcare providers in the United States. The vision of meaningful use is one in which patients are fully engaged in their healthcare, providers have real-time access to all medical information and tools to help ensure the quality and safety of the care provided, and patients are afforded improved access without healthcare disparities.
Not all ARRA requirements have been completely defined. (Only stage 1 ARRA requirements are in place. Stage 2 and stage 3 requirements currently are only recommendations by the HIT policy committee.) However, the requirements do indicate the need to provide patients with an electronic copy of both their health information and discharge instructions at the time of discharge. In addition, providers are required to “use certified EHR [electronic health record] technology to identify patient-specific education resources and provide those resources to the patient if appropriate,” as worded in legislation of ARRA. Other likely requirements (in either stage 2 or 3) will include secure patient-provider messaging, integrated data from home monitoring devices, and access for all patients to personal health records populated in real time with data from EHRs.
Given the emphasis in the legislation on HIT investment and specific applications to improve patient engagement, we believe that ARRA will accelerate the adoption and scope of consumerism in the next few years.
ROLE OF HEALTH INFORMATION TECHNOLOGY
Although the benefits of consumerism extend across care settings and build upon various trends, one theme is constant: the need for robust HIT. The role of HIT is critical because consumerism depends on the ability to interact with information that changes frequently and can be accessed across different settings. Effective chronic disease management, for instance, depends on the availability of up-to-date progress reports that can be accessed by physicians, nurses, and the patient.
Successful examples of consumerism reinforce the need for technology. The Veterans Affairs healthcare system and Kaiser Permanente have leveraged significant investments in HIT, including the early adoption of EHRs, to execute effective care management programs. Regional systems in Alberta, Canada, and Valencia, Spain, have won accolades for their use of technology to encourage greater patient choice, provider competition, and ultimately, greater efficiency.
We believe that 4 technologies in particular enable new, real-time interactions with patients: telemedicine and remote care management, clinical decision support, EHRs, and health intelligence. Coupled with well-designed behavior change programs, these technologies can improve patient engagement ().
Electronic health records are a particularly important prerequisite for consumerism. In order for consumers to move across care settings (eg, hospitals, clinics, even their own homes), EHRs must be in place so that caregivers have access to medical histories and are able to track patient activity. Without this information backbone, visits to a clinic or ED may remain invisible to a primary care physician. Many of the first health systems to introduce urgent care clinics are ones with an EHR system already in place, such as Geisinger in Pennsylvania. Visits to these clinics are recorded in patient EMRs and made available to all providers of care for this patient in the system.
Virtual care platforms such as telemedicine enable a variety of new care models such as eVisits, video chat consultations, and other home-based care approaches. To function effectively, these models depend on the right infrastructure, such as a secure broadband connection and capabilities to track, report, and provide oversight of the patient and care provided. Such functionality will ensure that physicians are properly reimbursed and regulators are able to review virtual care practices.
Care management interventions such as tailored case management depend on powerful health intelligence tools (eg, data aggregation, analytics) to be effective. Best practice programs will segment a diabetes population according to relevant characteristics such as condition type, age, comorbidities, and behavioral insights. Based on available data, these programs will target interventions based on what works best for each of these segments. Effective segmentation ensures that programs avoid one-size-fits-all strategies, which is important because type 2 diabetes care for a 64-year-old man is far different from that for a 14-year-old girl.
BEFORE YOU SIGN ON THE DOTTED LINE…
Although the role of HIT is important, the track record to date of HIT-enabled consumerism is mixed. Significant investments by high-profile investors and globally respected companies in patient portals, home health devices, and information exchanges have yet to fully realize the benefits in broad and sustained patient engagement. In addition, it is not yet clear who should pay for these expensive investments. Consumers are the residual claimants of cost savings but are unlikely sponsors, whereas providers will need incentives to invest in infrastructure that in many cases will reduce utilization. Although the challenges in realizing value are varied, the 4 challenges described below may be most important.
Information Technology for Information Technology’s Sake
The value to the consumer often is lost in the desire to have sophisticated and innovative technology. Personal genomic mapping services have harnessed groundbreaking innovation, but have not yielded clear benefits to date for the average consumer. Early adopters of these mapping services are left wondering, for example, what to do with the knowl- edge that they have a 27% higher likelihood of suffering from Alzheimer’s disease in 20 to 40 years. Similarly, many personal health record (PHR) portals have built impressive user interfaces with convenient mechanisms to upload information. Nevertheless, many consumers are not yet clear on what to do with a PHR, and in turn what a PHR will do for them. “Does a complete record mean I will spend less on healthcare? If so, how much?”
Build It and They Won’t (Necessarily) Come
Best-in-class capabilities are enablers, but not solutions, for effective consumerism. Too often, providers invest in a groundbreaking device and assume consumers will use it appropriately. Marketing, education, and incentives often are overlooked or insufficiently addressed. The latest home health devices, for example, are user-friendly, consumer-oriented in design, and easy to use via Wi-Fi and/or cellular networks. Yet these devices have not yet achieved broad adoption, despite being on the market in a variety of forms for more than 20 years. Patients often use these devices inconsistently, and providers are challenged to link to the data generated from them in a meaningful way. As one hospital administrator noted, “Who is responsible for tracking and analyzing the data? The PCP [primary care physician] complains it’s not his job, the RN [resident nurse] may track some data but doesn’t share or analyze it, and my [administrator] colleagues don’t want to push anyone to do it since we’re not getting reimbursed more for reading these devices.”
Innovation in Isolation
Consumers have a spectrum of health needs. They may be managing a chronic illness, deciding where to go for an acute procedure, determining how to pay for assisted living for elderly parents, and debating which vitamins to give their children. Yet many innovations targeted to consumers focus on particular parts of this spectrum in isolation. Disease management programs target diabetes, asthma, or congestive heart failure, regardless of whether the patient has comorbidities. Many patient portals set up by health systems are focused predominantly on appointment reminders. Home health devices tend to focus on disease monitoring rather than wellness. Electronic health records tend to share information effectively among providers but often are isolated from patients. On the other hand, PHRs collect input from patients, but often are isolated from providers. Of course, any single advancement need not attempt to address the entire spectrum of consumer health needs. However, providers should ensure that any single investment in innovation allows for connectivity and information alignment with other offerings. This integration of information is critical to ensure that innovators and implementers think about healthcare the way consumers do.
Being Closed (System)—Minded
Closed systems, such as Kaiser Permanente and the VA, stand to gain the most from HIT investments in consumerism because cost savings stay within the system. Admittedly, for stand-alone providers in a fee-for-service environment, financial returns are difficult to realize. But partnership with payers on consumerism initiatives can improve returns through gains sharing. Recent healthcare legislation incentivizes such collaboration by encouraging creation of accountable care organizations and narrow networks. The closer providers can move toward a “virtual” closed system, the clearer the investment case becomes.
ACHIEVING SUCCESS IN CONSUMER-DIRECTED HEALTH
Although consumerism has not yet realized its full potential, we are optimistic that it will soon become a meaningful lever to reduce costs and improve quality of care across the healthcare industry. However, in order to benefit from consumerism, providers and other stakeholders such as developers need to focus on the following 4 principles.
Keep the Consumer at the Center of Innovation
Building a world-class portal, investing in a software service, and distributing mobile devices are important elements of successful consumer engagement. But handing someone a wrench does not make him a plumber. Consumers need to understand how to use these innovations to change behaviors and why doing so is worthwhile. Increased engagement in healthcare is relatively new in our system, which means the value may not be obvious to beneficiaries. Innovation in this space is fighting decades, if not centuries, of inertia generated by models where patients are passive recipients of care. However, the right incentives are not easy to create. In fact, many efforts focus on attracting consumer traffic through appealing designs and clever interfaces. Although attracting consumer traffic is important, we believe that is only the first step in realizing value ().
Effective incentives can lead people up the “ladder,” as illustrated in the Figure, and sustain positive behavior changes over time. To change behavior effectively, providers and HIT companies can apply sales and marketing best practices—even if unrelated to healthcare—as well as lessons from the field of behavioral economics. Castlight Health, an HIT company based in San Francisco, appreciated the need to keep consumers front and center when building its platform to compare cost and quality across providers. To ensure that consumers use their platform to shop for care, Castlight has distilled the out-of-pocket cost to consumers (net of insurance) and the quality metrics that matter, such as patient satisfaction ratings.
Keep It Simple
The greatest success stories in consumerism are not necessarily the most complex. Voxiva, a nonprofit organization based in Washington, DC, is reducing pregnancy complications through its Text4Baby program. This program, funded in part by the White House and launched in February 2010, has already sent 3.7 million SMS messages to expectant mothers with tips for a healthy pregnancy such as reminders for upcoming checkups and ultrasounds. Hospitals also have begun using SMS to deliver information to consumers, such as real-time information on ED waits. One Florida hospital with this SMS program managed to draw urgent care traffic from competitors because patients liked knowing how long they would wait, even if the ED waits were not necessarily shorter. SMS solutions are relatively cost-effective opportunities to increase touch points with consumers, communicate valuable information, and ultimately create customer loyalty.
Invest in a Bridge, Not an Island
No single endeavor can address all consumer needs. The most successful products and services, however, will link to a broader “ecosystem” of care. For example, Apple has been successful in creating an ecosystem around the consumer. The iPhone is a platform for millions of different mobile applications that serve a variety of consumer needs. Although each application is from a different source, they come together under 1 standardized interface. As a result, the consumer can address a spectrum of needs with just 1 device.
Healthcare consumers would benefit from a similar consolidation of disparate services. Imagine a PHR that automatically updates information from both hospital and out-of-hospital (OOH) settings, generates financial rewards when an annual exam is completed, and alerts nurses when prescription adherence is interrupted. Providers should aspire to be the hub for these exchanges of information, potentially leveraging or expanding existing HIT platforms (eg, EHR platforms) across care settings. Providers that are first to integrate the various information sources— from pharmacists, ambulatory centers, clinics, and so forth—will find themselves central to a consumer’s health and will be rewarded with increased loyalty and more effective interactions with patients.
Encourage Health in Addition to Treating Illness
Consumers prefer not to think about illness. As one health system leader remarked, “Consumers don’t want a nagging parent who reminds them to take their pills. They want a guide like Jiminy Cricket, someone who ‘sits’ on their shoulder and orients them just when they need it.” The light-hearted lesson is that we must expand our focus from sick-based care to include wellness if consumerism is to be successful, not least because consumers are easier to engage on health than on illness. The new Fitbit device, marketed heavily as a means to monitor daily activity and achieve health goals, has been so popular that orders are on backlog. RedBrick Health, a young company in Minnesota, is enrolling employees of large companies in fitness classes, nutrition workshops, and smoking cessation programs by offering employer-funded fin nancial incentives. Providers should consider these and other approaches to entering the wellness space. Of course, preventing high-cost exacerbations of chronic illness will drive the biggest payoffs in the near term. But if we wait until a patient is sick, we have limited the opportunity to serve that patient’s overall health needs.
The benefits of consumerism will most clearly emerge in the areas of wellness and prevention, disease management, and care utilization (). However, value capture across stakeholders will vary considerably and may take time to show positive returns. Waiting to act, however, may not be viable because consumerism will eventually shift from an innovative approach to a minimum set of requirements for healthcare delivery. Simply put, solving the issue of patient engagement is not something the healthcare industry can ignore. The HIT incentives from ARRA, the increased cost sensitivity among patients, and rising demand (particularly for chronic needs) mean that consumerism is gaining momentum, even without considerable input from stakeholders.
The healthcare leaders that will benefit most from consumerism recognize that, despite the challenges, the opportunity to partner with patients to deliver better, more cost-effective care deserves greater prioritization. These leaders understand the importance of health behavior as a cost driver, particularly as supply-side approaches to cost control prove incomplete. They appreciate that intelligent use of technology and clear, consumer-oriented incentives are critical enablers of new approaches. Finally, these leaders know that acting early means a chance to help shape the direction of consumerism, and in so doing, create a meaningful competitive advantage.
Author Affiliations: From McKinsey & Company (SBC), San Francisco, CA; McKinsey & Company (KG), Palo Alto, CA; and McKinsey & Company (WP, FL), Chicago, IL.
Funding Source: The authors report no external funding for this work.
Author Disclosures: The authors (SBC, KDG, WEP, FL) report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.
Authorship Information: Concept and design (SBC, KDG, WEP, FL); acquisition of data (SBC); analysis and interpretation of data (SBC); drafting of the manuscript (SBC, KDG, WEP, FL); critical revision of the manuscript for important intellectual content (SBC, KDG, WEP, FL); administrative, technical, or logistic support (SBC, KDG); and supervision (SBC, KDG, WEP, FL).
Address correspondence to: Seth B. Cohen, MBA, MPA, McKinsey & Company, 555 California St, San Francisco, CA 94123. E-mail: firstname.lastname@example.org.
1. Niska R, Bhuiya F, Xu J. National Hospital Ambulatory Medical Care Survey: 2007 emergency department summary. Natl Health Stat Report. 2010;(26):1-31.
2. Centers for Disease Control and Prevention. 2008 Morbidity and Mortality Report. Accessible at http://www.cdc.gov/mmwr/preview/ mmwrhtml/mm5728a1.htm. Accessed December 6, 2010.