Tag Archives: Consumerization

Are Patients Ready to Take Control?

In 1980, the actor Steve McQueen traveled to Mexico to receive unorthodox (and ultimately futile) cancer treatment. The widespread coverage that McQueen’s trip received in the mainstream press can, of course, be attributed to his celebrity. But it was also because the actor had taken the reins of his healthcare from the medical establishment, something that was seen as brazen.

Back in those days, we wouldn’t have used the term “consumerization of healthcare” to describe what McQueen did. However, his approach has become an accelerating trend over the past decade, when Americans have taken more control over their health, and the healthcare experience. Consumers are more informed about choice, more demanding about the services being offered and more focused on how they pay for it.

The list of changes is long and growing, focusing on:

  • Wellness
  • Easily accessible online repositories of medical information and advice
  • Medical tourism
  • Physician ratings
  • Walk-in clinics at stores like Walmart and CVS
  • Health spending accounts
  • A proliferation of insurance options

As technology advanced, consumerization was enabled, and, as healthcare costs increase, it’s grown in importance. But the question remains: Do consumers have what it takes to control their health and healthcare as they both consume it and pay for it?

See also: Healthcare Buyers Need Clearer Choices  

What’s driving the consumerization of healthcare?

Thanks to the wealth of information available on the internet (product and service details, pricing info, ratings and reviews), consumers have more control over what they spend their money on, and where and how they spend it. Consumerization began with product shopping but quickly moved into the service sector (financial services, travel services, healthcare).

Whether consumers are covered by group plans in their workplace or by individual plans, they are paying more for their coverage and experiencing higher out-of-pocket costs. A recent Kaiser Foundation study showed that, from 2015 to 2016, deductibles increased by 12% for those covered by employer-sponsored plans. While deductibles have grown more rapidly than premiums – this is, after all, the tradeoff – premiums have still been rising more rapidly than wages. More now than ever, people are more conscious of what they’re spending.

Consumers have become more active

Today, consumers are increasingly relying on technology to manage their health. This trend cuts across generations. Baby boomers were perhaps the first truly “health conscious” cohort. Running, as a popular activity, took off on their watch, as did an interest in (and willingness to spend on) healthier foods. At the same time, boomers are focusing on the health and the healthcare experience of their elderly parents. Boomers are taking advantage of monitoring technology that enables them to keep a remote eye on their parents while helping them remain independent. Then, of course, there’s tremendous interest coming from millennials — digital natives who are used to ubiquitous technology and to shopping around and finding the best deals in all aspects of their lives. Millennials are more likely than boomers and Generation X-ers to own a fitness tracker, search for a physician online and base physician choice on reviews. Millennials are also more likely than other generations to go online and research a medical problem before consulting a physician. Technology, in fact, is bringing about a merger between health and healthcare. When employers are buying Fitbits and sponsoring wellness programs for their workforce, they’re hoping to achieve the dual benefits of healthier employees and more cost-effective healthcare.

There is a growing body of evidence that consumers want more active involvement in their healthcare, and the adoption of digital health tools and applications is a good proxy. For the past several years, Rock Health has surveyed consumers on their use of digital health. In a 2016 report, Rock Health found that 46% of those surveyed have adopted three or more forms of digital health tools. They’re using a fitness tracker, engaging in some form of telemedicine or contacting their physician via email or text message. The survey also found that the majority of Americans would like an electronic version of their healthcare record, and that, in the six months prior to the survey, 20% had requested or downloaded a copy.

Do consumers have the tools and knowledge to manage cost?

Consumers are showing an increasing willingness to take control on the payment end of things. But they may not yet be in a position to do so. Policy Genius, which offers online tools for buying all types of insurance, surveyed consumers on their understanding of some of the basic concepts underlying health insurance. Only 53% picked the right definition of “co-pay.” The term “coinsurance” was understood by just 22%. Roughly half couldn’t define “deductible.” So, while consumers may express a greater desire to take control of their healthcare, they may lack awareness and understanding of how to best utilize their insurance to pay for it.

See also: Consumer-Friendly Healthcare Model  

There’s an app for that

The good news is that technology applications are making consumer control possible. We’ve already seen plenty of apps that help manage so many aspects of health and the healthcare experience: apps for checking symptoms, chatting with a physician, monitoring medications, tracking vitals and even accessing healthcare records. Applications that focus on the cost and payment side of the equation have been slightly slower in arriving to market, but they are coming.
There is an emerging array of insurance-related (insurtech) apps that are making it possible for consumers to gain control of their insurance buying experience, apps that enable them to figure out whether their physicians are part of their network, whether their prescriptions are covered and just what that coinsurance-copay-deductible means to their pocketbook. These insurtech platforms include businesses like GetInsured, which helps individuals purchase the right health insurance plan; apps like Stroll Health, which brings transparency and efficiency to the imaging referral process by delivering personal recommendations based on what is covered by the patient’s insurance plan; and GlucosePath, an app that looks at the 6 million combinations of drugs available to treat Type 2 diabetes to find the regimen that is affordable (based on the patient’s insurance), effective and has the fewest side effects.

Given that Steve McQueen was famous and wealthy, he probably wasn’t worried about the cost or payment side of his treatment. But taking control of his own healthcare the way he did may have helped spark a major consumer trend. Today, consumers continue to push for active control in their health and in how they consume and pay for their healthcare. And, through technology, the healthcare industry is inexorably delivering solutions to fill any gaps that keep consumers from exercising even more control.

Why Insurers Need to Transform

Would insurers rather be enticed and pulled into the future by the motivation and promise of transformational technologies or pushed into transformation by circumstances that lie outside of their control? This is a question every CEO and CIO should face and answer as they evaluate the next steps in modernization that will lead to their secure futures.

In the past, the forces that had a bearing on insurers and their businesses were primarily competitive, lying within the insurance industry itself. Today, however, pressures coming from outside the industry, such as a digital way of life and widespread consumerization, are weighing upon the capabilities of entrenched systems and processes. The entire insurance industry, as a whole, is grappling with prototypes that will keep it relevant. A close look at the business with an eye on the future will yield a greater understanding of the reasons insurers need to transform.

In general terms, transformation is a matter of business priorities. Insurers need to transform to improve the business and meet business imperatives. This idea isn’t new. But insurance competitiveness is now at the forefront of industry concerns. Remaining competitive and growing the business is the main reason that transformation must occur.

Why Do Insurers Pursue Transformation?

Transformation Meets These Common Business Needs and Goals

  • The world is competitive. The company needs to compete and win.
  • Transformation enables the organization to grow.
  • Transformation can create optimal customer experiences.
  • An insurer needs good data, better data organization and segmentation and transformed views of data to understand its business.
  • Accelerating product development will make the company more agile.
  • Modern technology costs less to maintain.
  • Reducing technology debt will create efficiency in technology spend and reduce technical risks.
  • Creating business process efficiencies and reducing manual business processes will allow business resources to spend time on growing the business rather than administering it.
  • Eliminating the risk of business interruption by pursuing a guided, framework approach to modernization will maintain legacy system integrity during the process.

Transforming to compete is a necessity. The modern insurance model isn’t going to allow for old paradigms to remain unchallenged. The competition is becoming more agile, efficient and faster at every point of their operations, including customer service. They are learning faster than ever, as well, using increased access to higher-quality data to improve their data insights. All of this is being fueled by rapidly improving technologies for data gathering, data handling and analytics.

Improving the customer experience is a goal for transformation efforts because it answers a number of business improvement strategies (including competitiveness and growth). Nearly every process and technology within the organization is tied to the customer, if not directly, then indirectly. Most insurers agree that creating one brand experience across devices and channels leads to greater customer satisfaction. Transforming this area is also likely to contribute to the quality of data an insurer receives from its policyholders.

Transforming the gathering and use of data will accomplish a number of strategic business goals. It will lead to better service, greater distribution effectiveness, improved pricing assumptions, better claims experiences, less fraud (harmful to the company) and a lower risk of security breaches (harmful to the customer AND the organization’s reputation).

Transforming product development and creating efficiencies will enable growth. Transformation within core systems will unify data and environments, bring agility to areas such as product development and result in a simplification that saves time, effort and resources (as well as reducing fears and anxieties over legacy breakdowns). These internal modernizations will serve business by both simplifying architectures and by opening up more areas to access by business users. Growing levels of configurability and new methods of handling regulatory compliance can revolutionize an organization’s ability to compete. The efficiencies found in reducing manual processes and simplifying environments will also allow the organization to shift some resources away from administrative tasks and into growth pursuits.

Reducing/removing technology debt is a benefit that is strong enough to justify transformation all on its own. We have seen numerous examples of insurers that understood that the choice to modernize ended up saving long-term maintenance costs as well as potential loss costs if the organization was pressured to change in a hurry later.

Keeping the reasons for transformation in sight.
Transformation isn’t an end unto itself. It is a journey that needs continual monitoring and alignment. If an organization stays focused on its business imperatives and doesn’t allow transformation to diverge from those imperatives, it stands a logically greater chance of improving the business with each transformation effort.