Undoubtedly, 2014 will be characterized by the ascendency of a new type of healthcare consumer. “Consumers are no longer passive patients, but rather engaged—and more discerning—customers wielding new tools and better information to comparison shop. The year ahead will be marked by how well the healthcare industry responds to this shift. Organizations that fail to adapt will risk declining revenues as consumers turn elsewhere to have their health needs met.”1
Now that we are at the midpoint of 2014, it is interesting to take a look at how expert predictions are playing out in the marketplace. With a little help from my friends at PricewaterhouseCoopers (PwC) and their report from the Health Research Institute entitled “Top Health Industry Issues of 2014: A New Health Economy Takes Shape,”1 let us take a look at the scorecard of predictions for 2014 as they relate to healthcare consumerism: the rise of the retail marketplace, the new role for employer private exchanges, price transparency, and how new technology may help put all of this together.
I am no stranger to the retail healthcare marketplace, having been a board member of the iTrax Corporation, which was eventually sold to Walgreens. And Walgreens combined iTrax with other resources to develop what is now known as Take Care Health Systems—the pharmacy giant’s retail healthcare arm.
According to our colleagues at PwC and their detailed consumer survey, nearly 1 in 4 persons indicated that either they or someone in their household had sought healthcare treatment in a retail clinic in 2013.1 Of those who sought care, a whopping 73% said they would go back to a retail clinic again in the future.1 Clearly, the predicted “retailization” of healthcare is progressing, as Walgreens and CVS Caremark continue to expand their product and service offerings inside their stores to deliver medical management of chronic conditions.
“Walgreens, the country’s largest drugstore chain, announced last week that its 330-plus Take Care Clinics, will be the first retail store clinics to both diagnose and manage chronic conditions like asthma, diabetes, high blood pressure, and high cholesterol.”2
Not to be outdone, CVS Caremark is now accepting Medicaid in its 28 South Carolina retail clinics. The company reportedly has more than 800 clinic locations across the United States,3 and continues to rapidly expand this aspect of its business. Consumers want care when they want it—and it better be convenient, and at an appropriate price point.
After a rocky rollout of the exchanges, there are many more insured Americans now that the federal and state exchanges have completed their initial open enrollment. The implementation of the Affordable Care Act (ACA) has led to corresponding changes in the insurance market. As PwC predicted, there has been rapid growth in private exchanges, which are “reshaping the employer benefits landscape, drawing high profile converts, such as IBM and Sears.”1 These private exchanges offer a similar platform as those created by the ACA.
Because more than 156 million Americans receive health insurance through the workplace, private exchanges have a bright future. “At its core, a private exchange is an online marketplace for employers to send active or retired employees who shop for medical and other benefits with an employer contribution.”1 Think of these private exchanges as very narrow networks, with high-quality providers linked via digital communication and personalized information for the employee. “While employers are pushing private exchanges, a large number of diverse organizations, including brokerage firms, consulting companies, managed care insurers and high technology companies are also in the mix.”1
While the move toward retail clinics and private exchanges is certainly important, none of this would be possible without price transparency. I completely agree with PwC that this time it’s a different story. “As families pay more for their care, the demand for transparency—and lower costs—has risen.”1 There are key implications of greater price transparency. As employers look to reduce costs, they will play “hardball” with provider organizations. Businesses will make price transparency a primary factor in negotiating with insurers and provider organizations. Perhaps the private exchanges will fuel this push toward price transparency.
Citing a report from the Los Angeles Times, the PwC report discusses a very interesting development in California. “When the health benefits plan for California’s retirees [CalPERS] said it would pay no more than $30,000 for hip or knee replacements, its members changed how they selected providers and medical treatment….Providers responded by dropping their prices to compete. CalPERS saved $5.5 million in the program’s first two years and the price of the procedure dropped 26% or about $9,000.”4 Price transparency drove providers to change in a dramatic way.
Can we put retail clinics, private exchanges, and price transparency together on our mobile devices? As we move through 2014, I envision a future in which providers integrate patient data visible in their electronic health records with the information that patients share with them via social media. I also see patients having complete and unfettered access to their own medical records online. “Social mobile analytics and cloud technologies are the underpinnings for completing new business models in which organizations will be paid based on value rather than volume.”1
It only makes sense that providers, who will be under increasing pressure to keep costs down, would promote technology that helps patients manage health outside of the hospital setting. In other words, “today just 27% of physicians encourage patients to use mobile health applications, even though 59% of physicians and insurers believe that the widespread adoption of mobile health is inevitable in the near future.”1
Finally, as consumers assume more financial risks for their own healthcare, especially via high-deductible health plans, they may be more willing to pay for those social mobile analytics and cloud technologies that will enable them to manage their own health. This is the best example of a digital marketplace coming to healthcare, fueled by price transparency and consumer engagement.
So far, 2014 is most certainly playing out to be the year of the healthcare consumer. What are your predictions for the year ahead? I am confident and excited that as we move forward, our work, and all the articles published in American Health & Drug Benefits, will continue to reflect new developments in our nearly $3-trillion-a-year healthcare economy.
- PricewaterhouseCoopers Health Research Institute. Top health industry issues of 2014: a new health economy takes shape. December 2013. http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-top-healthcare-issues.pdf. Accessed May 1, 2014.
- Ganguli I. Chronic care at Walgreens? Why not? Boston Globe. April 22, 2013. www.bostonglobe.com/lifestyle/health-wellness/2013/04/21/chronic-care-walgreens-why-not/WVB3YqhyDIPqvI5APVuodM/story.html?event=event12. Accessed May 1, 2014.
- CVS Caremark. MinuteClinic. 2014. http://info.cvscaremark.com/better-health-care/minuteclinic. Accessed May 23, 2014.
- Terhune C. Hospitals cut some surgery prices after CalPERS caps reimbursements. Los Angeles Times. June 23, 2013.
- http://articles.latimes.com/2013/jun/23/business/la-fi-mo-calpers-hospital-surgery-prices-20130623. Accessed May 1, 2014.