Tag Archives: consumerism

Consumerism on Health Is Not Practical

I read a lot of articles about consumerism and how employees need to be better consumers. As one who implements technology, I am very familiar with most of the decision support tools in the market and all the online symptom checkers. So let me make a bold statement: It is all garbage.

I have always thought that individuals will never have enough knowledge to make educated healthcare decisions. Healthcare is too complex and always changing, so how am I ever going to have the time to keep my knowledge current? I don’t want to, trust me. And the last time I needed healthcare, I was driving very quickly to the emergency room. Not a lot of time to think there.

I recently listened to a presentation that Aetna CEO Mark Bertolini gave a few years ago at Stanford. (You can find it here.) The final question asked of him was: “How do you create a more educated consumer in a marketplace where they are directing their own healthcare decisions?” The answer surprised me:

“Trying to educate everybody on how the healthcare system works and the level of detail isn’t going to work. Sorry to say. And the reason is that, unless the amount of information I can gather is immediately available and that when I act on it has an immediate response, I am not going to pay attention to it.”

See also: Consumerism: Good, Bad, Future  

With all the articles out there about consumerism and directing one’s own healthcare, I thought I was the only one that had such a view.

Every time I have my car fixed, I am wondering whether I am getting ripped off. I don’t know enough about cars to shop the market for service. I remember watching 60 Minutes or one such TV show where auto mechanics are shown taking advantage of everyday consumers by doing things people don’t need. That’s me. I wish I had a trusted auto consultant who would tell me whether I really need the services some mechanic is saying I need. You get my point. If I don’t know whether my car is getting the proper treatment, how the heck am I expected to figure out whether my doctor is doing the right thing?

Just last night, my wife and I had a debate about the value of multivitamins, and we couldn’t agree on whether they worked or were a waste of money. So I Googled the topic, read a bunch of articles — and I still don’t know whether multivitamins work.

Let’s not confuse choosing healthcare versus choosing health insurance. When choosing health insurance, is one supposed to be predicting what their needs are going to be in the next 12 months to essentially “game the deductible”? Insurance is supposed to protect one from an unanticipated event that may cause financial duress if one were not insured. Anything that doesn’t fit into this category is simply a reimbursement plan. Dental insurance is almost not insurance. It is a prepaid reimbursement plan for most. There should be two types of insurance plans — one that runs like dental and is simply discounted reimbursements, and another that is real insurance. It is for this reason that health savings accounts should rule the day.

So what is the solution? I don’t like it when people run around talking about the problems without giving viable solutions, so I won’t do that myself. I always say stating the problem is easy; it is the solutions that are tough. Let me start with who I would want as a consumer. I would want someone who would give me sound advice as to what proper treatment is. I want someone who has an incentive to do the right thing for me. I want someone who would spend my money as if it were their own.

See also: Consumer-Friendly Healthcare Model  

I think the solution requires properly placing incentives. I want to live a healthy, happy, long and financially viable life, just as I want my car to last long, be healthy and be financially viable. (I am not sure what a happy car would look like.) I want someone advising me who understands my goals, which I will safely say are more than likely shared by many. I am all about incentives. It is funny how, when you have the right incentives, you get better outcomes. That requires having someone who wants me to be healthy and not just fix me when I am broke.

There are emerging models out there that will provide this type of service. And making consumer-based decisions around the small stuff may become common. But, as a means of controlling healthcare costs, no way. We all know the majority of healthcare costs come from a few people with chronic conditions. If I need to have my oil changed, maybe I can shop the market. But if I need a new engine, I would hope to have a very educated mechanic at my side to help me make the best possible decisions.

Consumerism: Good, Bad, Future

The model of employer-sponsored healthcare has historically been very paternalistic. Companies would differentiate themselves and take care of their workforce with health plan offerings (and dental, if you were lucky!), employees would enroll in and use the plans they were offered, and it was very difficult for people to get the care they needed without an employer plan.

Things have changed in the past 50 years, however. Insurance is no longer the differentiator it used to be. People have options in terms of where they get their coverage and the plan options they choose. Healthcare costs have risen exponentially, meaning cost considerations are more important than ever, both for employers and the employees they cover. Cost sharing is becoming more common through so-called consumer-driven health plans or high-deductible plans.

Because employers can no longer afford to cover everything for their employees, they shift costs to them and expect people to be smart about their healthcare spending.

But what happens when employees have to pay elevated premiums just to get the minimum of what they expect from their plans? Employees avoid care altogether.

Why? Because the tools to be smart, thrifty healthcare consumers just don’t exist.

Why Patients Are Bad Consumers

Consumers of just about everything else compare prices and quality to determine the best solution. Healthcare consumers can’t do either of these things. Prices vary based on region, provider, potential complications and a variety of other factors, meaning that simply discovering the price of a particular treatment is difficult. Data on care quality is even harder to quantify, and the consumers who do seek comparative outcomes find themselves among groups of doctors and providers still trying to get the same information. They don’t know what things cost or what they do, but we expect them to make educated decisions anyway.

Buying healthcare isn’t like buying anything else. Someone looking at healthcare options is likely ill, distracted and even scared. Not only is his health in jeopardy, but thanks to the prominence of high-deductible plans, healthcare can cripple his financial life, as well.

See also: Consumer-Friendly Healthcare Model  

Most healthcare consumers don’t even need all the options in front of them. The popular “80-20” rule of healthcare, an approximation that 20 percent of patients incur 80 percent of costs, exists because rarer and more complex ailments take more resources to cure. These consumers often don’t have the luxury of shopping around, so providers don’t have to cut them any breaks when the bills come due.

If healthcare consumers don’t know what they’re buying or how much it costs (and don’t feel like they have any say in the matter), are they actually consumers at all?

Subscriptions Are Popular for a Reason

Subscription services are picking up steam across the globe. People are outsourcing things like transportation to Uber, music to Spotify, shopping to Blue Apron — the list goes on, but healthcare has not yet taken advantage of the subscription model.

We need the same subscription-based outsourcing of responsibility in the healthcare space to push more of the complexity of the consumer process under the surface and provide patients with easily comparable options. Right now, people have to choose how they die (cancer insurance, accidental death and dismemberment insurance) and which parts of their bodies are covered (vision, dental, health). Not only does going broke seem to be a requirement for good treatment, but healthcare providers also aren’t doing enough to show patients what they’re paying for and what their options are.

Initiating the Change

The healthcare structure needs to move from consumer-driven to consumer-centric.

Navigating healthcare today is like producing a movie. Patients have to find the actors, directors and sets and then figure out the financing for everything separately without knowing what anything costs until the night of the premiere. Current healthcare transparency tools really only add another layer of confusion to the process because these tools communicate ineffectively.

Unfortunately, the “Uber of healthcare” doesn’t exist and likely won’t for the foreseeable future. Too many parties have too much at stake, and major companies like Apple and Tesla won’t enter this space because the barriers are too daunting. So, with the stakes so high and the options limited, what is the healthcare industry to do?

In short, be more helpful. We need to help people become healthier and protect their lives and their livelihoods, taking on the burden of information that has so far been placed at the feet of the unprepared consumer. Patients don’t care whether payment behind the scenes is coming from dental insurance or standard health insurance — they just want the bill paid and the service performed. Uber and Netflix have created a generation of people accustomed to having half the decision made before the information ever reaches them, and that’s what healthcare must become for the sake of its consumers.

See also: Healthcare: Time for Independence  

The industry must take these steps to simplify the healthcare consumer experience:

  1. Drive relevance. People won’t watch videos about how healthcare works because they don’t trust the processes behind the industry as a whole. They’re more likely to watch videos — or download PDFs, listen to podcasts and otherwise consume content — about the benefits they’re receiving. That’s what affects them. We also need to put those benefits in context, comparing them with other plans both in the U.S. and abroad, and make that information engaging and digestible.
  2. Package for impact. People want to make their own benefits decisions, but the process is complicated and confusing. Netflix offers choice without overwhelming its users, by incorporating data to automate the early part of the search (the hardest part) and allow consumers to select from a range of prescreened options. As an industry, we must simplify the user experience by leveraging intuitive technology to create holistic benefits packages that are easy to understand.
  3. Prioritize everyday value. Right now, many healthcare options only step in when patients get hurt or seriously ill. We need to incorporate technology to make maintenance easier. Telemedicine and concierge services can eliminate many of the unnecessary barriers between consumers and care without breaking the bank.
  4. Create intuitive interfaces. People expect real-time feedback, iterative updates and responsive mobile experiences, yet the industry today largely lacks these things. Providers and insurers should shed the paper-based status quo and bring the simplicity of the 21st century into healthcare with customizable apps.
  5. Offer easy payments. Part of the appeal of subscriptions like Uber and Netflix is not having to pull out the credit card with every use. Healthcare needs to combine payroll deductions, copays, deductibles and co-insurance in a simple, single-payment system so people know when and where their money goes.
  6. Open the data. The data to help families become more educated and live healthier lives is out there — but it’s siloed. Data exchanges can incorporate products that address multiple facets of health and wellness, streamlining existing data to create not only savvier healthcare consumers, but also healthier, wealthier families.

It’s time for the healthcare industry to make life easier on the patients it serves. By taking on more of the information burden and improving communications, healthcare insurers and providers can give patients clearer options and easier access to the care they need.

Hey, Pharma! It’s Time for a Change

As Bruce Buffer, voice of the UFC, would say, “IIIIIIIIIIIIIIIIIIIIIIIT’S TIME!”

In this case, it’s time for big pharma to stop just defending its prices and to start to tap into the consumerism that is transforming healthcare.

Check out these stats (mostly from Google and Decisions Resources Group):

  • One in 20 online searches is for health-related questions.
  • According to comScore, health topics are the No. 1 search category on mobile.
  • 72% of people with pre-existing conditions searched for medical info online.
  • Half of all patients and caregivers already turn to digital channels to look up formulary or dosing information.
  • After a diagnosis, 84% of patients searched for options.
  • In a report by Decision Resources Group of 1,000 physicians, more than 50% reported their patients are more actively involved in treatment decisions — and these doctors called on pharma to support affordable options, provide relevant information and make online information more understandable.

The latest survey from Medical, Marketing & Media (MMM) shows 76% of pharma respondents use digital marketing, but the channel segregation below shows respondents devoted the greatest percentage of their marketing budgets to professional meetings/conferences and sales reps/materials. Digital channels — including websites, digital advertising and social media — lagged behind.

More surprising is that only half of both large and small pharmaceutical companies see the growth of consumerism in healthcare as an opportunity. But that’s EXACTLY where the opportunity for growth lies. To thrive in the new era of value-based care, pharma companies will need to change their marketing strategy toward partnering and will certainly need to focus far more on the individual consumer.

See also: Checklist for Improving Consumer Experience  

Trying to scare politicians away from lower-price reforms with the “It will kill our R&D” excuse is becoming the “BOO!” that no longer scares the grown-ups. Both 2016 presidential candidates, Hillary Clinton and Donald Trump, plan to stimulate price competition through imports — and there is bipartisan pressure to lift the ban on Medicare’s negotiating drug prices. Apart from trade groups and shareholders, high-priced pharma doesn’t have many friends.

Payer pressure is bad enough, but if you don’t get into the value-based care game, you are going to be on the wrong side of a very emotional equation.

Patients have greater financial burdens because of higher deductibles and greater cost-sharing requirements, with varying medication tiers. Providers are ever-burdened with less time, and, now, a greater level of risk is being put on them to deliver higher-quality care, better outcomes and greater patient satisfaction — all at a lower price.

Patients are not just seeking advice from providers. They are increasingly online, and at all hours. Plus, we’re going to start to see greater levels of patient-generated healthcare data with wearables and digital technology. And, as we have seen, half of consumers spend their online time on social media. (HINT: Tap into consumers’ behaviors and beliefs, show that you genuinely care and engage them in ways that let them feel as though you are part of their health team.)

The writing is on the wall. Consumers are practically screaming out what they want and need from you. Partner with wearable and EHR companies. Start developing ways to capture and interact with your customers — specific to individuals, at the best times to engage. Find ways you can partner with hospitals, physicians and affordable care organizations (ACOs) to get into their care pathway in ways that help them lower costs to patients and payers.

See also: Stop Overpaying for Pharmaceuticals  

Say “yes” to predictive modeling, big data, analytics, lots of testing and customer segmentation. “Yes” to retaining some of the traditional marketing. Most of all, become human in your approach. Put yourself out there and let people know that you are no longer on an island, separate from everyone else. Let them know your port and beaches are open to more boats and more people than ever before.

Group Insurance: On the Path to Maturity

The group insurance market shows real promise, but most carriers are still trying to determine the best path forward. Moving from being in a quiet sector to the front lines of new ways of doing business has shaken the industry and confronted it with challenges – and opportunities – that many could not have foreseen even a decade ago.

For starters, let’s take a look at where the market is right now. Three recent trends, in particular, are having a profound impact:

  • The Affordable Care Act, which has led health carriers to increase their focus on non-major medical aspects of the parts of their business that the legislation has not affected. In turn, this has led to intensifying competition.
  • Consumerism, which has resulted largely from workers’ increasing responsibility for choosing their own benefits. This has created disruption as employees/consumers have become increasingly dissatisfied with the gap between group insurance service, information and advice and what they have come to expect from other industries.
  • The aging distribution force, which means that experienced brokers/agents are leaving the work force and are being replaced by inexperienced producers at decreasing rates or are not being replaced at all.

Group players – which historically have been conservative in their market strategies – focus on aggressively driving profitable growth. To do this, they are concentrating on four key areas: 1) growing their voluntary business, 2) streamlining their operating models, 3) re-shaping their distribution strategies and 4) making significant investments in technology.

See Also: Long-Term Care Insurance: Group Plans vs. Individual

Group insurance is no longer a quiet sector of the industry but instead is in the front lines of developments in customer-centricity and technological innovation.

Growing the voluntary business – The voluntary market has been of interest to traditional group insurance carriers for more than two decades, but the success of the core employer paid group insurance business has resulted in a lack of robust voluntary capabilities. However, with employers shifting more costs to employees, voluntary products have become a key way to manage group benefit costs while expanding the portfolio of employee products.

Some carriers are expanding their voluntary businesses by offering a modified employer paid group product in which the employee “checks the box” to pay an incremental premium and receive additional group coverage (e.g., long term disability (LTD), life and dental). Other carriers are exploring models where employees can sign up for an individual policy at a special premium rate. The former example is a traditional voluntary product, while the latter example is a traditional worksite product. For most carriers, adding the traditional voluntary product is fairly straightforward because it is still a product that the group underwrites. However, more carriers are looking into the worksite product (which AFLAC and Colonial Life & Accident have executed particularly well) because, with the passage of the Affordable Care Act, some see a potential opportunity to reach small businesses that previously may not have been interested in group benefits.

Streamlining operating models – Group carriers also are trying to develop streamlined, cost-effective, customer-centric operating models. The traditional group insurance operating model has been built around product groups such as group LTD, short-term LTD, dental, etc. However, the product-based model is inefficient because it increases service costs, slows speed to market and fails to support the holistic views of the customer that enables carriers to serve customers in the ways they prefer.

Group insurers are now investing both time and capital to understand how to remove inefficient product-focused layers of their operations and streamline their processes to profitably grow. Many have focused on enrollment, which cuts across products and is a frequent source of frustration for everyone. Carriers are frustrated because they can spend days and weeks trying to ensure that everyone is properly enrolled in the right plan. Moreover, what should be a fairly straightforward, automated process often can require considerable manual intervention to ensure that employees are properly enrolled. In the meantime, employees are frustrated with recurring requests for information and the slowness of the enrollment process. Employers are frustrated by the additional time and effort that they have to expend and the poor enrollee experience. Producers become frustrated because the employer often holds them accountable for the recommended carriers’ performance.

Reshaping distribution strategies – In terms of distribution, private exchanges initially promised to connect group carriers with the right customers using extremely efficient exchange platforms. As a result, many group carriers joined multiple exchanges expecting that this model would put them on the cusp of the next wave of growth. However, success has proven more elusive than they expected, largely because they’ve spread themselves too thin across too many, often unproven exchanges. And, while private exchanges still offer great potential, many carriers have now begun to rethink their private exchange strategies with the realization that the channel is not yet a fully mature group insurance platform.

Investing in technology – Whether group carriers are focusing most on entering the voluntary market, streamlining operations or refining their private exchange strategies, successful in all these areas depends on technology. Group technology investments have lagged behind the rest of the industry. The reasons for this range from a lack of proven technology solutions that truly focus on the group market to downright stinginess and the resulting reliance on “heroic acts” and dedication of committed employees to drive growth, profits and customer satisfaction. However, viable technological solutions now exist – and they are probably the most critical element in the march toward effective data integration, efficient customer service and ultimately profitable growth. Every facet of the business –underwriting, marketing, claims, billing, policy administration, enrollment, renewal and more – is critically dependent upon technological solutions that have been designed to meet the unique needs of the group business and its customers. Prescient group carriers understand this and have been investing in developing their own solutions and partnering with on-shore and offshore solutions providers to fill gaps in non-core areas.

Whatever their primary focus – growth, operations or distribution – a necessary element for success is up-to-date and effective technology.

A market in flux

In conclusion, group insurance is in a time of transition. Major mergers and acquisitions have already started to reshape the market landscape, and existing players are likely to use acquisitions and divestitures as a way to refine their market focus. Moreover, new entrants are looking to exploit openings in the group space by providing the kind of focus, cutting-edge product offerings and service capabilities that many incumbents have not. These developments show group’s promise. The winners will be the companies that wisely refine their business models and effectively employ technology to meet the unique needs of new, consumer-driven markets.


  • We will continue to see group carriers focus on the voluntary market, especially traditional group-underwritten products. They will look to not only round out their product bundle by providing solutions that meet consumer needs, but also integrate their offerings with other employee solutions like wealth and retirement products.
  • Group insurers will continue to aggressively streamline processes to promote productive and profitable customer interactions.
  • Private exchange participation strategy needs to align with target markets goals, including matching products with appropriate exchanges. Focusing on participation means that group carriers avoid spreading themselves too thin trying to support the various exchanges (often with manual back-end processes).
  • Group carriers can no longer compete with antiquated and inadequate technology. Fortunately, there are now group-specific solutions that can make modernization a reality, not just an aspiration.

Why Healthcare Costs Soar (Part 6)

In most healthcare discussions today, “the exchange” is usually described as a solution to address employers’ health and cost challenges. The exchange model is now being offered by carriers, by consulting firms and by independent companies. Accenture says the enrollment in private exchanges exceeded 6 million in 2015, and it’s projected to be 40 million by 2018.

Since the age of consumerism began back in the early ‘90s, the theory has been that, if we can transform employees into consumers of healthcare services, the free market will drive out the price variation among the providers as patients question the cost of services. But, despite increasing deductibles and pushing more of the cost burden to employees, many employers are still waiting for those employees to become healthcare consumers.

The reality is that healthcare is complex, so individuals have trouble deciphering medical terminology and obtaining the actual price for a specific service, especially because most people access the healthcare system infrequently.

Is the exchange the answer for consumerism to take hold?

At a recent exchange conference, national experts discussed the impact of the exchanges, providing various messages and statistics. It became clearer that the value of the private exchange is basically as an administrative platform to give individuals plan and program choices, so they can make decisions based on their needs.

Now, the concept of giving employees’ choices and allowing them to make a personalized decision is not new–cafeteria plans have been around for 25-plus years. Cafeteria plans in the ’90s had some big problems. The main one was serious adverse selection. When you have big bills planned, you switch to the “richest” plan, and then switch to a low-cost option later. When this happens, the “sponsor” gets shorted on payroll deductions as well the spread of the costs among those not using services.

It will be interesting to see if the exchanges have a better design these days.

When questions were posed to the exchange experts on whether the data was showing an impact to the healthcare decisions and to the health of the population, the consistent response was—we’re not sure.

It’s important not to get caught up in the marketing claim that an administrative platform is going to solve the healthcare challenges confronting employers today. As we discussed in Part 5 of this series, the marketing around value-based contracts/ACOs has also positioned that concept as a solution, when, in reality, performance contracts with provider have also been around for 25-plus years.

Employers continue to be faced with this problem: About 8% of their population consumes 80% of the total healthcare spending, and that 8% changes every 12-18 months.

Is it time to get back to the basics? Should the focus be on finding the right physicians committed to delivering evidence-based healthcare, and then ensuring that patients are accessing care from these providers?

When providers see that employers are truly committed to supply chain management, we can expect the process of care to change significantly, and there will be a commitment to removing the waste from the system. As with many other industries, the ultimate purchaser has the ultimate power, by working with the interested suppliers to improve the process and to increase quality and lower costs.