The myth of the “empowered healthcare consumer”

October 29, 2018
Stephanie Burton Director, Healthcare Marketing

Think consumers are shopping for healthcare? Think again.

Reality check. Consumers aren’t shopping for healthcare. At least, not in the way we once thought they would. Even with the introduction of high-deductible health plans, price transparency calculators and a flurry of other consumer-friendly tools designed to make the Amazon generation shop for care, it’s just not happening.

At first blush, this doesn’t make sense. Americans like to shop. And, we’re eager to compare prices. In fact, McKinsey reports[1] that 49 percent of American consumers are increasingly looking for ways to save money. This number rises to 72 percent for millennial women who have children. So, why aren’t we shopping for healthcare?

Here’s the simple explanation: Healthcare is not a commodity. It’s complex. Too complex for most of us to understand, leaving the otherwise shopping-savvy consumer to throw her hands up in the air and hope she’s making the right decision.

Of course, there are other reasons. Let’s explore.


Only 7 percent of healthcare services are “shoppable”

So, what makes healthcare “shoppable”? The Health Care Cost Institute defined shoppable healthcare services as services that:

  • Can be researched
  • Are competitive (i.e. there are many providers of the service in the market)
  • Have pricing and quality data available

Based on these criteria, only 7 percent of out-of-pocket spending in 2011 was spent on shoppable services.[2]

Most often, consumers don’t have time or the capacity to shop for healthcare services. It’s not practical to expect a consumer to compare the cost of an emergency room visit or open-heart surgery. And, for some life-saving treatments (cancer treatment, for example), receiving life-saving treatment far outweighs the cost.

 

Even when shopping is an option, consumers rely on physician referral

Among shoppable healthcare services, MRIs are among the most commoditized. While the price varies significantly, there is very little difference in the quality of one MRI provider versus another. It’s one of the reasons MRI storefronts such as Smart Choice MRI have entered the market.

But patients still rely heavily on physician referrals, even when a healthcare service can be shopped, according to a study released by the National Bureau of Economic Research[3]. The study followed people with private insurance who needed a lower-limb MRI – a highly shoppable service. On average, patients drove past six lower-priced providers of MRI services in order to get to the facility recommended by their physicians.

 

Consumers use price transparency tools to plan, not compare costs

According to a 2017 report by Accenture, only 11 percent of consumers use price transparency tools to shop around for other providers[4]. But, nearly half of all consumers find price transparency tools to be helpful when planning for care. Here’s where it gets interesting: 60 percent of the consumers who use price transparency tools still choose to receive care from their preferred providers. Consumers are using price transparency tools as a way to plan for care.

Let’s not forget one important factor: Price transparency tools have limitations. While they may be able to show average prices for a particular procedure, they aren’t able to determine if a patient will need more anesthesia because he weighs more than 300 pounds. Because the care we receive is highly personalized, it is virtually impossible to accurately predict the final cost of one person’s procedure.

There is good news for providers. The information provided through price transparency tools is often not enough to disrupt patient loyalty.

 

High-deductible plans are going out of style

The premise of a high-deductible plan was simple: Place a greater financial burden on the employee and she will be more likely to “shop” for healthcare services. That didn’t happen.

“Because lots of medical treatment is unplanned, hospitals and doctors proved to be much less ‘shoppable’ than experts predicted. Workers found price-comparison tools hard to use,” according to Kaiser Health News.[5]

As a result, many employers are kicking the once popular high-deductible plans to the curb. While 91 percent of employers offered at least one high-deductible health plan option in 2018, the number of employers offering only a high-deductible plan will drop from 39 percent in 2018 to 30 percent in 2019, according to National Business Group on Health’s annual employer-sponsored health insurance survey.[6]

 

What does this mean for healthcare marketers?

Does a less empowered consumer mean that there is less need for healthcare marketing? Quite the opposite. But, we need to focus our efforts on what really matters. Here are some things to consider when setting your marketing priorities.

Focus on the brand. The health system brand is more important than ever. While consumers are not likely to “shop” for healthcare, they are forced to choose a provider. A brand’s top-of-mind awareness and perception will continue to play an important role in consumer choice.

Search for the influencers. While centers of excellence can provide a hefty halo effect for many health systems, consumers are often not able to shop for these services. Don’t forget to promote your primary caregivers. This is the entry point to your health system and a service that requires consumer choice.

Few influencers are more powerful than referring physicians. If your health system doesn’t already have a robust physician relations department, now is the time to start that conversation.

Keep the quick wins coming. Just because a consumer may not be able to easily “shop” for heart care services, doesn’t mean health systems can’t cater to this consumer. CRM systems and SEM campaigns will continue to help marketers learn about our healthcare consumers and more quickly cater to their needs.

Watch for the rising stars. While the “empowered healthcare consumer” may be a myth today, there are indications that services will become more shoppable in the future. Case in point: The National Business Group on Health reports that telehealth utilization continues to rise. Nearly 20 percent of employers who offer telehealth services report utilization of 8 percent or more.[7]

Stephanie Burton, APR is the Director of Healthcare Marketing at Core Creative, a branding agency that specializes in telling the life-changing stories for mid-market healthcare systems and the emerging med-tech world. Follow her on Twitter @shungerford. 

[1] “Meet Today’s American Consumer.” McKinsey & Company, June 2016

[2] “Spending on Shoppable Services in Health Care.” Healthcare Cost Institute, March 2016.

[3] “Are Health Care Services Shoppable? Evidence From the Consumption of Lower-Limb MRI Scans.” The National Bureau of Economic Research, July 2018.

[4] “Show Me the Money: Why Price Transparency for Patients is Good for Providers, Too.” Accenture Consulting, 2017.

[5] “High Deductible Plans Fall From Grace in Employer-Based Coverage.” Kaiser Health News, Oct. 3, 2018.

[6] “Large U.S. Employers Eye Changes to Health Care Delivery System as Cost to Provide Health Benefits Nears $15,000 per Employee.” National Business Group on Health, Aug. 7, 2018.

[7] “Large U.S. Employers Eye Changes to Health Care Delivery System as Cost to Provide Health Benefits Nears $15,000 per Employee.” National Business Group on Health, Aug. 7, 2018.

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