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 / Summer 2013 / Issue 71(originally published by Booz & Company)


Putting an I in Healthcare

Meanwhile, in developing countries, the struggle to extend basic healthcare to large portions of the population has been intensified by an explosion of “developed nation” diseases. A 2011 study by the World Economic Forum and the Harvard School of Public Health estimated that the cumulative costs of noncommunicable diseases—including cardiovascular disease, chronic respiratory disease, and cancer—in low- and middle-income countries would surpass $7 trillion by 2025. Diabetes is a case in point. Five of the 10 countries with the highest national prevalence of diabetes are in the Middle East. In Mexico, Type 2 diabetes is the leading cause of death among adults. And there are 92 million people with the disease in China and 63 million in India, according to the International Diabetes Federation.

These global healthcare challenges have revealed the cracks in the industry’s current operating models, and they demand a new way of thinking. The idea of consumer-driven healthcare has been around for years, but now healthcare companies are being forced to act. The U.S. is the bellwether in this regard. The Supreme Court’s upholding of the Affordable Care Act and the reelection of President Barack Obama in 2012 have effectively ended the debate on whether to pursue reform and turned the industry’s attention to how to achieve it. Thus, U.S. health insurers, care providers, and pharmaceutical companies are experimenting with a host of new models and technologies that should be replicable in the healthcare systems around the world.

Many of these innovative solutions are based on fundamentally sound ideas for cutting costs and improving care outcomes. But unless and until the consumer is positioned at the center of the healthcare industry, it is highly unlikely that such concepts will deliver their full potential. Just look at the fate of HMOs (health maintenance organizations) in the United States. In the 1990s, HMOs produced lower costs and provided care comparable to that of other healthcare benefit models. But because HMOs disenfranchised their members by imposing constraints on where they could go to obtain care and placed limits on the amount of care they could receive, they created a consumer backlash, and many of them failed.

The lesson: To successfully cure the systemic ills of healthcare in the U.S. and elsewhere, the industry will have to promote and support more control, awareness, and responsibility on the part of the healthcare consumer. The digital enablers of consumerization—big data, cloud computing, telemedicine, and social media—are already at hand, and can be leveraged by forward-thinking executives. Eventually, as consumer-focused initiatives multiply and their effects reverberate throughout the industry, they could bring about a dramatic improvement in health and a transformational reduction in costs.

Influencing Consumer Behavior

A fundamental reframing of the consumer’s role on the part of healthcare companies is a prerequisite for sustainable healthcare systems, because consumer behavior has an outsized influence on the demand for care and care outcomes. In the United States, fully 40 percent of deaths are attributable to behavioral factors—more than factors such as genetics, environment, and socioeconomics. And according to the American Medical Association, 25 percent of the United States’ total annual healthcare expenditures are the result of behaviors that could be changed, such as smoking, lack of exercise, and poor diet.

Furthermore, once people become ill, their behavior often exacerbates their condition, as many are unwilling or unable to complete their treatment. The lack of treatment adherence, such as failing to complete a medication regime or to cut fat or sugar from a diet, is the cause of approximately 125,000 deaths and 10 percent of hospitalizations in the U.S. each year, according to a study funded by the U.S. Department of Health & Human Services. In a recent analysis of the financial effects of five chronic diseases (namely, hypertension, asthma/chronic obstructive pulmonary disease, chronic back pain, depression, and rheumatoid arthritis) in Europe, Booz & Company and the Bertelsmann Foundation concluded that national productivity losses associated with a lack of treatment adherence were €10 billion to €20 billion ($13.5 billion to $27.1 billion) in Germany, €€8 billion to €€19 billion ($10.8 billion to $25.7 billion) in the U.K., and €€2 billion to €€4 billion ($2.7 billion to $5.4 billion) in the Netherlands (see “Unleashing the Potential of Therapy Adherence: High-Leverage Changes in Patient Behavior for Improved Health and Productivity,” by Peter Behner, Ab Klink, and Sander Visser, Booz & Company, July 2012).

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  1. Gary Ahlquist, Minoo Javanmardian, Sanjay B. Saxena, and Brett Spencer, “Bundled Care: The Voice of the Consumer,” Booz & Company white paper, January 30, 2013: According to the results of a recent Booz & Company survey, U.S. consumers are ready for the advent of healthcare bundles.
  2. Minoo Javanmardian, Ashish Kaura, Sanjay B. Saxena, and Brett Spencer, “Healthcare after the Ruling: Let the Work Continue,” Booz & Company white paper, June 29, 2012: What the upholding of the Affordable Care Act will mean for insurers, care providers, pharmaceutical firms, and other healthcare companies.
  3. Ashish Kaura, David S. Levy, and Minoo Javanmardian, “Health Insurance Gets Personal,” s+b, Autumn 2010: Earlier analysis of the health insurance market’s coming retail era.
  4. Avi Kulkarni and Nelia Padilla McGreevy, “A Strategist’s Guide to Personalized Medicine,” s+b, Winter 2012: The tailoring of treatments to specific populations is changing the game for key industry stakeholders.
  5. Ramez Shehadi, Walid Tohme, and Edward H. Baker, “IT and Healthcare: Evolving Together at the Cleveland Clinic,” s+b (online only), Aug. 6, 2012: CIO Martin Harris on how information technology is transforming patient engagement.
  6. For more thought leadership on this topic, see the s+b website at:
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