Consumer-Centric Healthcare Continues to Build. Here are 5 Reasons Why.

The term “consumer-driven healthcare” continues to bounce around the corridors of the nation’s healthcare providers. It flies in the face of the way healthcare has been delivered for decades.  In the November 19, 2018 “Keckly Report” Paul Keckly unpacks five reasons why the consumer’s voice is growing louder.  Here’s a summary:8

1. Consumer price sensitivity is increasing. Though consumer confidence in the U.S. economy is at a 12-year high (Economic Confidence Index), insecurity about health costs is the top concern in America’s households (25%), topping their worries about housing, food and transportation (Monmouth). Out-of-pocket costs are their issue: 40% say they skipped a recommended medical test or treatment in the last 12 months due to cost, and 32% were unable to fill a prescription or took less of a medication because of its cost (NORC).

2. Consumers’ expectations about health are changing. Healthiness and wellbeing are primary concerns to every American, but Millennials (83 million) and Baby Boomers (74 million) define them differently. Millennials associate health with their environment as well as access to medical facilities and clinicians: food, housing, mental health, social isolation and purposeful work are equally important to them. Boomers think health is about life expectancy and not being sick. They want a system that’s there when they need it regardless of cost. The English word “health” is derived from the Old English word “hælan,” which means to make whole, sound or well.

3. Employers are accelerating consumerism. Employers are a major catalyst for health consumerism. Almost half (46%) of the 155 million who are covered by employers have at least a $1000 deductible in their plan. From 2011 to 2016, employee wages increased +11%, their health insurance premiums increased 19%, and their deductibles were up +63% (Commonwealth Fund).

4. Consumers are unhappy with the status quo in healthcare. Per Gallup, trust in the U.S. medical system has eroded from 80% in 1975 to 36% today. 59% of adults favor a “Medicare for All” option over the status quo, and 75% say they prefer it as a public option for anyone who wants it (Kaiser Family Foundation). Overall satisfaction with health insurers and hospitals lags banks and telecom but rates just above the federal government (American Customer Satisfaction Index). Consumers are dissatisfied with the status quo: they’re open to alternatives.

5. Investors are betting on B2C healthcare. Private equity, strategic investors and venture capital are increasing their investments in B2C healthcare. Given the trends above, they see a bigger, more direct role for consumers in the U.S. health system.

Impact for Medical Device Companies:  Expect to see more pricing for hospital services and products listed on provider websites.  While not every provider may have made the January 2019 deadline, many have and their prices for a myriad of services—and key product up-charges—will begin a new era of pricing transparency.  While their costs may not be revealed, it may be easy to infer what some costs are, and the resulting markups.