The ramifications of consumer behavior extend to choices regarding care options and healthcare insurance. A 2012 survey by health insurer Aetna Inc. found that Americans rank choosing a health plan as the second most difficult decision in their lives (choosing a retirement plan was first). The survey also revealed that 43 percent of consumers rarely or never track their out-of-pocket care costs. The Consumers Union studied the ability of consumers to select a health insurance plan, reporting in January 2012, “Almost all participants were stymied in their desire to identify the best value plan among those offered. While their concept of value was sophisticated, participants had little ability to assess the overall coverage offered by a plan.” The Affordable Care Act is a first step in demystifying the healthcare process for consumers, but they will need sustained guidance and support.
Influencing consumer behavior, whether through outright incentives or the design of the subtler, supposedly more effective changes in choice architecture advocated by economist Richard H. Thaler and legal scholar Cass R. Sunstein in Nudge: Improving Decisions about Health, Wealth, and Happiness (Yale University Press, 2008), is no trivial task. Certainly, it will require more than the estimated 4 percent of national healthcare expenditures in the U.S. currently devoted to behavioral change.
The Building Blocks of Consumerization
There is no fixed starting point or one-size-fits-all strategy for consumerization. The different healthcare sectors and the organizations within each sector will pursue it in their own ways. But three building blocks are essential to any successful adoption: (1) product and service portfolios based on insights that are derived from a nuanced understanding of consumers; (2) tools and programs that engage consumers in care delivery and influence their behavior, and enable service providers to optimize and coordinate patient-centric care; and (3) end-to-end customer experiences that produce consumer satisfaction, trust, and brand loyalty.
In developing these products and tools, healthcare companies will have to master new capabilities—with all the skills, knowledge, behaviors, processes, structures, and technology inherent in those capabilities—or risk disintermediation.
1. Insight-powered products and services. As companies such as Starbucks and Facebook have demonstrated, if products and services are accessible and can be personalized in ways that make them highly relevant, consumers will do more than just buy them: They will alter their lifestyles and behaviors to use them (for example, paying $4 for a cup of coffee).
Occasionally, such products and services are born of intuition. But in most cases, their genesis is found in insights that come from a deep study of what consumers need and desire, and how they act. As healthcare companies become more effective gatherers of insight, they will seek to study their consumer markets in increasingly sophisticated ways. They will segment them according to preferences, health status, care utilization levels and patterns, lifetime customer value, and propensity to purchase specific products and services, whether those offerings are insurance plans, medical care, or medications and medical devices.
We are already seeing the glimmerings of this more sophisticated, consumer-centric approach to product and service innovation in the health insurance sector. In the absence of a clear value proposition, accessible language, and a full understanding of their own insurance needs, consumers are struggling to make sense of what kind of coverage to buy. In response, the industry has begun developing more insight-driven offerings, such as life stage–based products that are tailored to match consumers’ evolving health and financial needs as they enter the workforce, start families, or prepare to retire. For example, for budget-conscious young people, insurers are offering policies that feature low premiums and catastrophic coverage, while they offer a more comprehensive set of benefits to pre-retirees who seek coverage for preexisting conditions and protection for their nest eggs. As insurers draw on ever-expanding data sources, we would expect to see more and more of these tailored products, perhaps including products that are co-branded with hospitals or that give rewards for healthy behavior or offer money-saving coupons for health-related consumer products.