A Guide to Healthcare Consumerism

Consumerism: a Definition

Consumerism can and has been defined in a variety of ways. However you define it, the notion of human beings as consumers first took shape before World War I but became commonplace in America in the 1920s. The period from the 1940s to the 1970s was labeled the Consumer Era, when production boomed, and consumerism shaped the American marketplace.

More recently, the proliferation of consumer use of technology has spurred changes in multiple industries, led primarily by media, banking and retail. Growing interest in capabilities such as digital shopping, payment, scheduling and others has been driven by an expectation of convenience, flexibility and personalization.

Consumers are used to having access to information at their fingertips. Many want an array of choices and expect to be able to decide based on their specific needs which option(s) best suit them. Whereas consumers previously had only a couple choices in several product categories, they now have the ability to conduct research and select from a variety of products or services.

Going beyond simply meeting the needs of consumers enables service providers in most any industry to offer a superior level of service that can exceed customer expectations and drive loyalty. It also aids those providers in retaining current customers, which is especially important because it costs five times as much to attract a new customer than to keep an existing one.

KPMG’s think tank, the Customer Experience Excellence Center, identified the characteristics of an exceptional customer experience in six pillars:

Personalization: Focusing on the individual to create an emotional connection with the customer.
Integrity: The ability to create a trusting relationship through credibility.
Expectations: Being aware of customer expectations and knowing how to exceed them.
Resolution: Assuming responsibility for a problem and knowing how to manage it effectively.
Time and effort: The ability to simplify the customer experience as much as possible, minimizing the effort required by the customer.
Empathy: Creating a significant relationship with customers based on the analysis of circumstances.

Incorporating these types of characteristics would certainly be advantageous for the healthcare industry, as each patient has different needs. Those with multiple chronic conditions typically require more frequent care and monitoring, whereas a patient who only visits his or her primary care physician once or twice a year probably doesn’t need the same level of targeted care.

These same traits can be applied to a patient population’s likelihood of using technology in their healthcare journey. A study by Accenture identified four key consumer personas based on traits such as comfort level with technology, willingness to share personal data and preferences for interacting with businesses:

Pragmatists: Trusting and channel-agnostic
Traditionalists: Value human touch and avoid technology
Pioneers: Tech-savvy risk takers
Skeptics: Tech-wary, generally unsatisfied

As the study noted, growing interest in digital services like payments is an opportunity to increase touchpoints and stay relevant in consumers’ daily lives. By understanding their consumer base and developing a strategy to respond to such market changes, businesses – including those in the healthcare industry – have the ability to best apply the use of digital technology where it drives growth and promotes loyalty.

Consumerism in Healthcare

Although not one of the first industries to adopt and promote the idea of consumerism, healthcare has quickly adapted to the trend, even more so due to the COVID-19 pandemic. Because banking and retail were first on the consumerism scene, the healthcare industry has the benefit of being able to look to these businesses to gauge their consumerism strategies and apply best practices while avoiding previously identified obstacles, such as security concerns.

Healthcare consumerism regularly tops the list of C-suite priorities and is generally understood to describe people proactively using trustworthy, relevant information and appropriate technology to make better-informed decisions about their healthcare options in the broadest sense, both within and outside the clinical setting.

According to a literature review conducted by a doctor at the University of California San Diego, language linking patients as consumers dates back all the way to the 1930s. However, the current consumerism trend has been precipitated by increasing demands for data, convenience and transparency along with shifting expectations and cost structures and healthcare reform. It’s driven almost solely by patients who historically have faced marked barriers in attempting to consider quality and price when making healthcare purchasing decisions.

A consumer insights survey from McKinsey & Company identified six healthcare consumer segments with differing needs:

Engaged traditionalists: Actively engage in healthcare, reliant on primary care provider (PCP) and use multiple care settings
Busy convenience users: Seek care for self only when necessary, often use most convenient options
Constrained chronic care consumer: Poor health and unmotivated, not enough time or resource to take care of health
Disadvantaged disconnected user: Few relationships with providers, likely to go to emergency room for care
Loyal informed consumer: Proactive about managing health, care most about quality of care
Healthy convenience seeker: Health-conscious and proactive, self-reliant

No matter under which segment a healthcare provider’s patients fall, being aware of these behaviors and implementing strategies to address them is essential in this changing industry environment, even as consumerism appears to have more impact on outpatient services than inpatient care. It’s simple: consumers want to be more educated and knowledgeable about their healthcare options.

COVID-19’s Effect on Healthcare Consumerism

The COVID-19 pandemic upended many businesses, especially smaller ones, but nowhere did it have more of an impact than the healthcare industry. Physicians, nurses and many other healthcare professionals have been tasked with providing high-quality care while reducing the risk of infection, resulting in increased burnout and even a clinician labor shortage across many parts of the U.S.

Many patients delayed or canceled care, including preventive screenings, during the pandemic. Physician practices reported a 55 percent decrease in revenue and a 60 percent reduction in patient volume on average. Some patients reported delayed care for serious problems during the ongoing pandemic for reasons such as being unable to get an appointment, find a physician who would see them or access the care location. Among those reporting delayed care, roughly 55 percent reported experiencing negative health consequences as a result.

For patients who wanted to receive healthcare during the COVID-19 outbreak without seeing their physician in his or her office, telehealth became a popular option. From a technological perspective, the pandemic not only accelerated telehealth adoption – thanks to easing restrictions for faster implementation and expanded reimbursements – it also ignited rapid innovation and software iterations that were tested and upgraded during a real-time crisis.

Consumers already had indicated interest in using telehealth and other virtual health services, but the COVID-19 pandemic catapulted these technologies into mainstream use. The contactless care enabled by virtual health services lets providers offer routine and follow-up care, prescribe medications and make behavioral health and other referrals with little to no physical contact, protecting patients and staff. But beyond safety, contactless care tools like digital check-in have proven to be convenient.

About 16.5 million Americans reported that they or a family member utilized telehealth for the first time during the pandemic, and 88 percent said they’d use it again. The preference for virtual care options appears especially prevalent among younger Americans. Note the following statistics from Accenture’s Digital Health Consumer Survey:

More than half of consumers are much more willing to receive virtual services from traditional providers.
Confidence levels of security and privacy of consumers who have received virtual care is significantly higher than those who did not.
If given the option, many healthcare consumers would choose virtual for basic care services and even for specialty care.
Approximately 42 percent of respondents are open to receiving diagnoses virtually for illnesses, diseases and disorders, and 44 percent are open to using virtual care for appointments with medical specialists for diagnosis or acute care.
Among Generation Z (those born 1997-2012), 41 percent would prefer a virtual or digital experience with a doctor or other medical professional, along with 33 percent of millennials.
Younger generations received virtual healthcare more than twice as frequently than elder generations, even before the pandemic.

Leveraging virtual care tools, primary care providers are empowered to act as a team leader, coordinating services provided by other caregivers to meet their patients’ multidimensional healthcare needs from a single location. Combined with digital communications tools, such as texting, these tools drive patient engagement, which leads to a patient not just being more in-tune with their care plan but ultimately improving outcomes.

Rising Patient Healthcare Costs

Costs continue to rise across the U.S. for numerous products and services. Consumer prices rose recently at the fastest annual pace in nearly 40 years. Some of the largest cost spikes have been for necessities such as food, energy, housing, cars and clothing.

Nearly one-third of Americans say they’ve skipped medical care for a health problem due to concerns about the cost, and more than 30 percent admit to not having a primary care physician because it’s too expensive. Younger populations especially are more likely to say they delayed care because of cost.

The COVID-19 pandemic has only made healthcare affordability worse for many U.S. residents. Approximately half of Americans are more concerned about the cost of healthcare now than they were before the pandemic.

Rising out-of-pocket healthcare costs continue to plague consumers, markedly increasing the financial responsibility of patients. The average annual patient financial responsibility is $1,650, while the net total is about $491 billion. A study by the Kaiser Family Foundation found that patient deductibles have risen by 111 percent since 2010, and family premiums have increased 55 percent.

Along with spiraling healthcare premiums and deductibles, steadily increasing prescription drug prices affect some consumers’ ability to get the specific medical treatment they need. Prescription drug prices in the U.S. are significantly higher than in other nations, with prices averaging 2.56 times those seen in 32 other nations.

Some of the increased ownership of healthcare costs is due to the prevalence of high-deductible health plans, which typically have lower premiums than an equivalent health insurance plan with a lower deductible. HDHPs sometimes result in high annual out-of-pocket expenses, causing some patients to avoid or delay medical care.

Through HDHPs, consumers can contribute to a health savings account (HSA). Although HSAs are a clear benefit for patients, not every consumer regularly sets aside money for their health savings account, making it hard to budget when an unexpected illness or other medical situation arises. Also, pressure to save the money in an HSA might lead patients to avoid medical care, even when they need it.

Similar to HSAs, flexible spending accounts (FSAs) that allow employees and sometimes their employers to contribute a portion of their regular earnings can be utilized to pay for eligible medical, dental and vision care expenses that are not covered by a consumer’s health care plan or elsewhere. However, patients must use the funds in their FSA by the end of the calendar year, and the IRS limits individual flexible spending account contributions, and compared to HSAs, employers are less likely to contribute to an FSA.

Some employers offer wellness programs, often with incentives for participation in healthy behaviors. The goal of these programs is to reduce absenteeism while improving employee health and, consequently, productivity. Without putting consumerism into wellness programs, though, patients lack access to pricing and transparency tools that indicate their cost of care.

Health plan–based wellness programs, most of which offer members premium discounts, cash rewards, gym memberships and other incentives to participate, can be beneficial for healthcare consumers, even with some privacy concerns. But, enthusiasm about the financial and health gains that these wellness programs might yield coexists with concerns about health costs shouldered by employees.

It’s these burgeoning out-of-pocket costs and the push from employers and payers to reduce them that are prompting consumers across the country to search for a healthcare experience similar to those they have in other service sectors. Many patients also have reacted to more expensive healthcare products and services by requesting and even demanding a greater degree of price transparency.

Price Transparency

It’s not unusual for patients to procure healthcare services without knowing the price. Many assume they don’t have a choice in where and from whom they receive medical treatment. However, rising patient financial responsibility is turning the tide.

Research shows that more than 75 percent of consumers want more price transparency in healthcare, the goal of which is to reduce healthcare costs and spur competition among providers by enabling patients to shop for healthcare services. Approximately 90 percent of Americans believe the government should require hospitals and insurers to disclose prices.

For healthcare providers, price transparency often results in increased patient knowledge of payment responsibility and more profitable revenue collection from lack of surprise medical bills. It also initiates increased claims payments for laboratory tests, advanced imaging and clinician office visits.

Data shows that consumers spend less annually and choose more effective and efficient healthcare treatments when given clear, upfront pricing that’s easy to understand. They also benefit from price transparency through real-time online access to estimated out-of-pocket costs, easier comparison of hospital products and services, better pre-procedure knowledge of prices and fees and the ability to make more educated healthcare purchasing decisions.

Without price transparency, patients often receive similar healthcare services but end up paying drastically different prices. About three-fourths of patients would rather pay $50 out of pocket than be unaware of the cost of a primary care visit, and almost half say having a clear estimate of their financial responsibility will affect whether they see a certain healthcare provider.

Rules implemented under the Affordable Care Act (ACA) require hospitals to publish in a machine-readable or computer-friendly format the standard dollar amount for the services they provide, but much of the data is still too complex for many patients to understand. Also, most of the listed prices don’t take into consideration insurer-negotiated rates.

There are price transparency tools available to inform patients about how much their healthcare will cost before receiving it, but many consumers aren’t aware of such resources. For example, some digital solutions allow patients to review their co-pays and outstanding balances during check-in, thereby increasing transparency while helping providers improve cash flow and decrease collection fees.

Federal Regulations for Price Transparency

A regulation from the Centers for Medicare & Medicaid Services (CMS) requires hospitals to list standard prices for 300 “shoppable services” along with the lowest prices they will accept from patients paying out-of-pocket. Under the CMS Final Rule on Price Transparency, which went into effect on January 1, 2021, healthcare providers not in compliance with one or more of the rule’s requirements face a monetary penalty of up to $300 per day.

Another piece of legislation designed to stimulate price transparency and mitigate surprise billing in healthcare is the No Surprises Act. Scheduled to take effect in 2022, it prohibits out-of-network providers from billing patients more than in-network cost-sharing amounts for:

All out-of-network emergency facility and professional services
Post-stabilization care at out-of-network facilities until such time that a patient can be safely transferred to a different facility
Air ambulance transports, whether emergency or non-emergency in nature
Out-of-network services delivered at or ordered from an in-network facility unless the provider follows the notice and consent process

An estimate by the Congressional Budget Office has the legislation reducing commercial insurance premiums by between 0.5-1 percent. The law also is projected to save consumers about twice that much between reduced premiums and cost-sharing.

Aligning Consumerism with Provider Goals

Some research on consumer experience shows that the healthcare provider relationship remains the top priority for patients. About 75 percent of consumers “moderately” or “strongly” trust medical doctors, and almost 70 percent are confident in the services of nurse practitioners and physician assistants. More than half of patients said “trusted healthcare professionals” would motivate them to take a more active role in managing their health.

Just as the trend of healthcare consumerism evolves, so does our coverage of this issue. In the near future, this page will examine what today’s patients expect from healthcare and what tools and strategies providers can employ to meet those preferences.

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