Are You Prepared for the New Health Care Consumer?

Can you imagine walking into your local big-box store and selecting a washer-dryer duo without any knowledge about the latest models? As retail consumers, we actively evaluate our purchasing choices using abundant quality, access and price information to support our purchasing decisions. Why not the same for health care?

Many of us are passive loyalists when it comes to selecting health care services. Our dedication to primary care providers and comfort level with the local health care system brand can make change unnerving. Increased out-of-pocket costs, public and private exchanges, expanded retail and virtual service offerings, and new pricing information are raising the consumer’s health care purchasing sophistication. These trends are opening new access channels and delivering performance transparency in ways unimaginable even five years ago.

Wholesale health care will continue to be prominent in the market. But price, quality, access and consumer experience are becoming the new competitive levers in the “retailization” of the industry. Providers must incorporate these new factors into their strategic prioritization process and meet consumers on their terms. As new market realities are contemplated and disruptive forces gain momentum, there are three questions to consider when evaluating the shift in your market.

1. How are acute and ambulatory services positioned from a price and value perspective in the market?

Early exchange plan data indicate that 70% of silver plans (the second lowest-cost insurance option) are narrow or ultra-narrow networks. Consumers in some situations are trading broad networks for cheaper insurance offerings and limited provider choices.

In the early-adopter phase, cost-estimation calculators are helping payers and consumers reel in benefit costs by providing visibility to lower-cost options. These tools haven’t been fully embraced by consumers yet, but they provide great potential to support future value-based care decisions.

Solution: Build a competitive market pricing index to understand how your prices stack up for elective services such as high-volume imaging and primary care visits. In addition to a competitive index, develop a prominent, public scorecard on outcomes, process and service variables that are outlined in basic terms meaningful to consumers. For example, Change Healthcare, an organization that offers cost transparency and engagement solutions, notes that even consumers loyal to their primary care physicians are willing to independently shop and switch for a host of big-ticket items. The company reports that ultrasounds and CT scans are two of eight services that fall into a high-cost/high-variability category.

2. How can we assess and improve consumer experience across the network?

Consumer experience means more than getting top-decile scores on the HCAHPS survey. It is about understanding the health care journey through the eyes of the consumer and beyond the four walls of the hospital.

Solution: Consider forming online research panels consisting of patients who use your health system’s web portal. Survey the panel to identify their wants and needs along with ways to improve their experiences. Additionally, measure average travel time between consumers and providers, and the number of health care access points required to receive routine care or an elective procedure. Use these findings to identify areas to improve the convenience of interacting with your system.

3. How can we prepare for external competition from virtual health channels in my market?

Virtual channels will disrupt the entire health care industry. Sg2 predicts that within the next 10 years, 15% of all evaluation and management (physician) visits will occur virtually. Virtual care provides many value-centric features such as low price, convenience and access. It also minimizes network leakage and creates new access channels for patients interested in convenient care. The momentum for reimbursement is growing, as private payers, Medicaid and Medicare (for rural areas with provider shortages) are beginning to open their pocketbooks for reimbursement in select states.

Solution: Assess care gaps in your market that may impact 30-day readmission penalties, population health initiatives and provider shortages. Test virtual urgent care in new markets where brick-and-mortar investments are not practical.

While disruptive market forces begin to reshape the health care landscape and alter consumer purchasing behaviors, the time is now to assess your organization’s readiness for change. Viewing consumers as active purchasers of health care services and building strategies that meet consumers on their terms are essential to future growth.


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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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