N = 1

February 2015 Vol 8, No 1 - Editorial
David B. Nash, MD, MBA
Editor-in-Chief
American Health & Drug Benefits
Founding Dean
Jefferson College of Population Health
Philadelphia, PA
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The regular readers of this column know that I am a voracious consumer of private sector reports regarding the healthcare industry. Several recent reports and insights gleaned during my travels across the country have led me to think differently about the ways in which we will purchase healthcare services in the future. I have written previously in this space about consumerism in healthcare1 and about public accountability for the outcomes2; this time I would like to focus on the individual consumer of healthcare.

At a corporate board briefing dinner several months ago, I had the privilege of listening to business consultant Ram Charan speak in person. Ram is among the best known management consultants and authors in the business world. Despite his age (75 years), he continues to travel the globe, advising corporate leaders. At the briefing, he described the future of healthcare as focused on the “N of 1.” When I first heard this, I was incredulous! What did he mean? How could we really move from our long history of market segmentation, severity of illness adjustment, and related decades of work to a totally disruptive view of the patient?

Subsequently, I have read (and thoroughly enjoyed) several recent reports that have helped me connect the dots about the “N of 1” consumer revolution in healthcare. Let me explain. In their recent privately published report, “The Patient-to-Consumer Revolution,” Main and Slywotzky state, “These days, the surest sign that an industry is about to undergo wrenching change is a sudden influx of tech entrepreneurs backed by venture-capital investment….The process has created immense value for consumers but has been brutally hard on the companies that traditionally dominated those sectors—at least those that failed to respond quickly and well.”3

Main and Slywotzky continue, “And so the tech entrepreneurs are doing what they do best, redefining the rules and tipping value their way, creating magnetic new products and services that eliminate hassles and delight consumers. Some provide general health information (such as Greatist or WebMD), help consumers prepare healthy meals (Zipongo), or even provide live, video-based personal training sessions (Wello). Others drive personalized engagement by aligning consumer actions and behaviors with incentives and rewards (Welltok), offer primary care based on a whole new model (Iora Health), or enable consumers to find doctors, make appointments, and identify low-cost opportunities (Castlight and ZocDoc).”3

So, what exactly is going on here? As our readers surely know, there is a huge amount of waste in our healthcare system—waste that has been studied, cataloged, and talked about for nearly 3 decades. Venture capital firms understand that a windfall could be accumulated if they can translate even a small portion of that waste into value for consumers. By honing in on the individual consumer experience, making it as seamless as OpenTable or Uber, healthcare could become very profitable. Recent activity supports this notion. As Main and Slywotzky explain, “Where there is accelerating consumer demand, there is investment. In 2010, the year the Affordable Care Act was signed into law, only 17 healthcare-focused software companies attracted seed or Series A investment of $2 million or more. In 2013, the number was 89, and according to Rock Health, total VC [venture capital] investment in digital health was just under $2 billon, doubling the figure from just two years before.”3

Who are these new consumers who are open to using web-based applications and receiving their care in nontraditional settings? In a recent study by Estupiñán and colleagues, we learn a lot about exactly who these new consumers are and how they view this new ecosystem.4 Based on their comprehensive national telephone survey, conducted by a company with deep expertise in this arena, Estupiñán and colleagues note that “Consumers, particularly younger ones, increasingly expect healthcare to work the way other digital markets work, with user-friendly interfaces, clearly defined pricing, and a wide selection of product option designed to meet their needs.”4

What surprised me about the results of this report were their findings that “consumers are getting comfortable with exchanges far more quickly than expected, and they’re highly loyal to the first insurance plan they purchase.”4 It turns out that more than 50% of consumers say they are very satisfied with the experience of buying health insurance on these new exchanges. In fact, they want more online services. Apparently 80% of the respondents in this survey noted that they would engage with digital services that helped them manage their healthcare, but only 23% said they could currently find appropriate online tools. Talk about a new disruptive industry!

Of course, purchasing health insurance online via an exchange, and then Skyping with your primary care doctor is not for every “N = 1.” As Estupiñán and colleagues note, “the elderly and the wealthy are largely unmoved by price variations in various aspects of their care, whereas the young and the healthy consider price to be paramount in their decision-making process, assigning it 20 percent more value than their elderly counterparts do. The key driver of decision-making among respondents older than 65 was the ability to trust their provider’s advice.”4 Although the elderly may not all engage online, there is no question, according to the best newly available evidence, that “consumers today are savvier and more skeptical, have more options for managing their health, and expect their individual preferences to be met.”4

Finally, another big surprise for me from the report by Estupiñán and colleagues was the notion that “40% of consumers report that they’d trust large retailers like Walmart or Target to manage their health, compared with 39% and 37% who place that kind of trust in providers and insurers, respectively.”4 In other words, why not get an inexpensive prescription for generic drugs from WalMart or Target? Why not talk to a nurse practitioner in a “big box” store? If it is convenient and is delivered by a trusted brand, the “N of 1” consumer is comfortable with this choice.

In summary, I am convinced that the consumer movement in our industry is a major disruptive change. What I’ve learned in the past few months is how Wall Street views this disruption, and the accumulating recent evidence about the power of the online exchanges.
Ram Charan was right. We better listen up! For provider organizations, the pharmaceutical industry, and payers, we all have to find a way to connect with the healthcare consumer of the future. Our survival is at stake.

I will continue to track this movement and report back to you periodically. If you’re engaged in disruptive work, connecting consumers to providers, I would like to hear from you. As always, you can reach me at david.nash@jefferson.edu.

Appropriate letters will be published in American Health & Drug Benefits, with minimal editing for grammar and length.

References
1. Nash DB. 2014: the year of the healthcare consumer [Editorial]. Am Health Drug Benefits. 2014;7:198-199.
2. Nash DB. Read all about it [Editorial]. Am Health Drug Benefits. 2014:7:425-426.
3. Main T, Slywotzky A. The patient-to-consumer revolution: how high tech, transparent marketplaces, and consumer power are transforming U.S. healthcare. Oliver Wyman. 2014. www.oliverwyman.com/content/dam/oliver-wyman/global/en/images/insights/health-life-sciences/2014/October/The-Patient-To-Consumer-Revolution.pdf. Accessed November 30, 2014.
4. Estupiñán J, Fengler K, Kaura A. The birth of the healthcare consumer: growing demands for choice, engagement, and experience. Strategy&, formerly Booz & Company. PwC. 2014. www.strategyand.pwc.com/media/file/The-birth-of-the-healthcare-consumer.pdf. Accessed November 30, 2014.

Last modified: February 25, 2015
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