Consumerism and Disruption: Lessons from Florida Blue, Part 1

Editor’s note: In a three-part series, Morrison explores the consumerist-led disruption of conventional health care. The first part of this series introduces the five dimensions of consumerism and shows how health plans are becoming more consumer friendly. You can read part two here, and part three here.

As we enter a new year, the health care sector is once again all atwitter about the megatrends of the year. Chief among them is the rise of consumerism. I’ve been in the health futures business for over 30 years; Dude, every year is the start of the rise in consumerism. It’s been the future for a long time.

But there is some validity to the argument that we have reached a tipping point in the role of consumers in health care, not the least of which is the increasing responsibilities consumers have for selecting plans, providers and treatment options, and more importantly, in paying out of pocket for the privilege of choosing. 

Consumer “empowerment” to make plan selection and provider decisions is a major shift that has occurred not just in Affordable Care Act (ACA) Marketplaces but in Medicare Advantage (which continues to grow rapidly and accounts for a third of all Medicare enrollees); in managed Medicaid, where in many states enrollees must make choices; and in the employer-sponsored market, where more of the decision making and economic burden is placed on consumers through higher deductibles and copayments. 

Some conservative observers say this latter trend toward rising out-of-pocket costs is overplayed (and cite the fact that relative share of out-of-pocket expenditures as a total of national health care expenditures is actually going down over time, not up). Nevertheless, the prevailing sense in the marketplace is that consumers are paying more out of pocket in absolute terms and perceive themselves to be paying a bigger share of costs (certainly in the employer-sponsored market). 

Consumers are increasingly responsible for choices and are often ill-equipped to make those choices in a way that best serves their health. For example, there is a massive body of evidence that now supports the obvious: that high-deductible care is a blunt instrument that causes patients to forego both necessary and unnecessary care in almost equal measure.

All actors in the health care sector are trying to deal with consumerism in their own way. With mega deals such as the CVS acquisition of Aetna being consummated – and as health care stakeholders anxiously eye Amazon, Apple, Google and Facebook as they lurk on the edge of the health care sector – there is considerable anxiety in the health care ecosystem about consumerist-led disruption of conventional health care.

What is consumerism?

Consumerism means different things to different people. One angle is the increased use of transparency and consumer navigation tools to guide choices, particularly when those choices have significant financial incentives attached, such as in narrow networks, reference pricing, high-deductible health plans, tiered benefit designs and so forth. 

A second dimension of consumerism is the sheer importance of consumer experience to providers and plans, both in terms of patient acquisition, retention and loyalty, as well as patient satisfaction (which increasingly carries dollars with it in terms of patient experience measures in value-based payment under Medicare and in Medicare Advantage).

Third, consumerism in health care is seen as a strategic imperative of meeting consumers’ expectations (particularly tech-savvy Millennials), all of whom increasingly have ever higher expectations of service industries driven by their positive experience with high-technology–enabled consumer offerings such as Netflix, Amazon, Uber and Airbnb.

Fourth is the notion that consumers need to be more proactive and engaged in their own health and wellness and take more personal responsibility for their health and lifestyle choices. As one doctor asked me recently, “When are the patients going to be accountable?”

Finally, perhaps the most significant dimension of health care consumerism is the economic out-of-pocket cost burden being placed on consumers going forward – and the battle that ensues for wallet share in the wellness, health and health care fields that are now colliding. 

We will cover all five of these threads in this discussion, but it is important to recognize that they are different and in some senses complementary.

Health care stakeholders on the consumerism journey

Hospitals are behind the curve in their understanding of consumers. (They are quite advanced in their understanding of patients, but that isn’t always the same thing.) Most Americans don’t get admitted to hospital in a year (only about 14 percent), while 80 percent of Americans visit a doctor, 90 percent now have a health plan relationship, and probably an even higher percentage visit a retail facility with a pharmacy. 

Hospitals should know the answer to the basic consumer questions: How many unique consumers do you touch, who are they, what do you do for them, and how is that working for them and you? As hospitals integrate across the continuum of care, absorb more risk and pursue population health initiatives, these questions become increasingly important. 

With close to 90 percent of Americans having some relationship with health insurers, health plans have made significant strides to be more consumer friendly by improving their navigation tools, their customer service and support functions, and their outreach to consumers. Let’s be clear: health insurers are coming from a difficult position at the bottom of the heap of consumer ratings. Technology leaders like Apple, and elite retail and fast food outlets, enjoy net promoter scores in the 70s, which are considered world class. (Net promoter score is a measure of consumer loyalty and willingness to recommend a product or service on a scale of plus 100 to minus 100. A high positive score is desirable, and 70-80 is considered world class.)

Most of health care ranks pretty low in net promoter scores, but there are exceptions like Kaiser and the Mayo Clinic. The health insurance industry generally has negative or low double digit net promoter scores; but progress is being made, and many large insurers now tie executive compensation partly to improvement in net promoter scores and other consumer measures (United, Aetna and Anthem, in particular). 

Next: How a health insurer became consumer friendly.

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to AHA Today. The opinions expressed by the author do not necessarily reflect the policy of the American Hospital Association.