Activating Healthcare Consumers

Activating Healthcare Consumers

Part 1 -- The Marketplace

Markets work when hundreds, thousands, millions of individuals make choices based on objective and readily available data -- usually about price and quality. As you may have read in prior editions of this missive, the availability of information about the price of healthcare services is now legislated. All providers and payers have to post their real negotiated rates, not fantastically imagined and misleading numbers.

And information about the quality of healthcare is also easy to access, in particular on government websites that serve Medicare beneficiaries. The upshot is that the essential ingredient to power a functional market for health care services is in place. Of course, in functional markets, the buyer of services seeks out the seller of the services that offers that buyer the best value. Value is subjective from a buyer's perspective. For example, if I have a very limited budget, then price is likely to matter more than quality. For someone else, the decision may be different. The point is that the information guides the buyer, and the buyer applies their personal values to the information provided to make the decision.

Generally speaking, sellers of services or products that have an above average level of quality combined with a lower than average price, do well. They get more volume than their competitors.

When it comes to buying healthcare services, the debate about whether there could ever be a functional market has been endless, with the persistence of myths that are completely unfounded and need a solid debunking.

Myth 1 -- consumers are not price sensitive.

That one was debunked in the last century thanks to a seminal study by RAND called the Health Insurance Experiment. The study showed that consumers reduced their consumption of healthcare services as the price they had to pay increased. This has been proven to be true repeatedly and is the reason for Mark Fendrick 's continued crusade to have payers adopt value-based insurance design.

And what applies to individual services applies to bundles of services. The work done by the California Public Employee and Retiree System shows it clearly. When faced with a much higher price to pay for a procedure, plan members seek care from lower priced providers.

Myth 2 -- consumers don't use comparative information on providers.

This one was also debunked in the last century and again in this one. The reason it persists is because health plans continue to show that the websites they have created for plan members with information on the cost and quality of health care aren't used. To be fair, that has been true of other sites stood up by employer-vended solutions. Of course, the reason they fail at their objective is because they suck. They are poorly designed and difficult to find, and when found, the information is hard to interpret and understand.

However, several studies published by Judy Hibbard and Shoshanna Sofaer explain in detail how information should be displayed to consumers for them to act on. And another study done by a large employer shows how to engage employees and retirees in using the information with effective email campaigns.

Employers have been applying these principles very effectively in the implementation of Centers of Excellence and Networks of Distinction. The recipe is simple: they identify higher value providers, they reduce the cost-sharing that members have to pay (which is the actual price for the member), and they provide clear and easily accessible information.

And guess what, it works. In this series of articles published in the Harvard Business Review, large employers explain what they're doing, why they're doing it, and the results they have gotten. More recently, The Commonwealth Fund published a report on four employers, including the state employee plan in Connecticut, and showing how they are succeeding in activating their plan members and changing the market.

The agents of the status quo want you to believe the myths because they benefit from it. And every step of the way they raise barriers to implementing the changes that will make the market work. As we've discussed, some of those barriers have already been broken down by new laws, and other barriers should be broken down by mandates.

Nothing can stop 300 million activated consumers. Employers can activate half of those consumers by leveraging the best practices listed above. State and federal agencies can activate the other half. Providers, understandably, are worried about the effects of the change and the potential to get more patients that, while activated to seek information and get care from them, may not be activated personally and cause the provider to "look bad" because of bad outcomes from non-compliant patients.

But that too is a myth that we will next debunk.

Santiago Leon

President at SGL Insurance Inc.

2 年

de Brandt addresses and purports to refute “Myth 2 -- consumers don't use comparative information on providers.” Actually, based on the cases cited, it looks to me like the myth just needs a little editing- it becomes true if we add the words “unless someone identifies the preferred providers and pays the consumers to utilize them.”

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Joseph Johnson

Experienced Senior Physician Executive

2 年

Fran?ois - thank you for this well stated and very accurate briefing on the topic. As you mention there is a major distinction between Medicare- sold to one beneficiary at a time and employer purchased health plans. It is exciting to see CEO’s taking owership for this topic. It is well delieniated in, “The Company That Solved Health Care” by John Torino’s Jr. I had a recent discussion with a friend that there is hope we can improve the poor economics in healthcare. It is exciting to see that it is consumers who when empowered in an effective way, as you note, they create this change rather than the government. If we can move forward fixing the econonomics perhaps we will continue our journey on the Quadrable Aim.

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