Illustrations by Michael Klein
In a shopping center on the western outskirts of Harrisburg, Penn., sandwiched among a women’s clothing shop, a pet supply store, and a dental clinic, sits a window into the future of healthcare in the United States: Highmark Direct. Open since 2009, it is part of a small chain of nine retail health insurance stores scattered across Pennsylvania owned and operated by Highmark Inc., the fourth-largest plan in the Blue Cross and Blue Shield Association, which serves 4.9 million members in Pennsylvania, West Virginia, and Delaware.
The retail stores run by Highmark, a US$14.8 billion, diversified health-services company, are a direct channel into the growing market for individual health insurance created by a combination of reform and budget-strained employers, many of whom are off-loading healthcare coverage decisions and costs to their employees. Consumers walk in or make appointments for consultations with Highmark’s licensed agents, who help them navigate the often confusing world of health insurance and assist them in identifying and applying for coverage. Seniors attend informational seminars that explain their Medicare coverage and supplemental insurance needs. Plan members learn how to better manage their own health with Highmark’s wellness programs, and can contact customer service via self-service kiosks and videoconferencing.
The last few years have seen a handful of other U.S. health insurers enter the bricks-and-mortar retail business, including Florida Blue (a licensee of the Blue Cross and Blue Shield Association), which operates a chain of 11 stores stretching the length of its state, and United Healthcare, which opened 30 pop-up stores and more than 1,400 kiosks in shopping malls in October 2012. These companies are being driven by a nascent trend that is quickly becoming an industry imperative: the consumerization of healthcare.
Health insurance stores are only one of its manifestations—other consumerization initiatives are currently under way among insurers, care providers, and pharmaceutical companies. Accountable care organizations, for example, are beginning to tie physician compensation to population health. Healthcare bundles combine medical care, coverage, and support across a care episode or condition—such as a knee replacement or coronary bypass surgery—at a fixed, risk-adjusted price. And capitation payment contracts pay providers an annual rate per patient, no matter how much care they require. These and other efforts skim the surface of a game-changing industry transition.
The word consumerization has several meanings, but we use it here to describe the transformation of an industry from a primarily business-to-business (B2B) enterprise to one that focuses on business-to-consumer (B2C) activities. In today’s B2B health marketplace, business is transacted among large employers, payors, providers, and pharmaceutical companies. The people being insured and treated have little involvement in or responsibility for their own care and cost choices. In the years ahead, healthcare will evolve into a B2C industry, in which consumers will take a much more active role in their healthcare decisions and expenditures. And, as a result, every healthcare company and organization will need to become more consumer-centric. The deck is being reshuffled, and there will be new winners and new losers, depending on how companies play their hand.
This shift is both a reaction to and a result of the state of healthcare systems around the world, which are characterized by high costs, lack of access, and unsatisfactory outcomes. The U.S. system has been in the spotlight for years because of double-digit cost inflation, frustratingly complex patient experiences, and, most recently, the controversial Affordable Care Act. But the much-lauded, publicly funded healthcare systems in nations such as Canada and the United Kingdom are coming under pressure, too, as their foundation in fixed-budget, capitation-based care is strained by rising healthcare costs and demand. This is creating allocation challenges; for example, the benchmark target wait time for a knee replacement in Canada was 182 days in 2011, and 25 percent of patients were not served within that period. It is also creating equity challenges: In the U.K., a secondary healthcare system is developing, which calls into question the viability of universal healthcare. Private medical insurers, hospitals, and care providers are springing up to answer the demands of consumers who want more timely care and can afford to pay for it.
