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(originally published by Booz & Company)


Planners, Shoppers, Contenders, and Cavaliers: How Consumerism Is Changing the Health Insurance Industry

Next are the steady contenders. This group makes up 28 percent of the population, and they tend to be content with what they have and would prefer to stick with it. They need a very compelling reason to change.

Last are the cavaliers. They want nothing to do with health care. They’re the most likely to smoke and are in the worst physical condition. Cavaliers account for a little more than a fifth of the population.

Based on this segmentation, we interact most with the assured planners and the enlightened shoppers. Each has a lot of touch points and teachable moments. We mapped 264 touch points, which include everything from health ID cards, to an explanation of benefits (EOB) sheet, to a health statement. For enlightened shoppers, Web-based information and fact-based touch points are the most meaningful. The assured planners are most likely to call on trusted advisors.

For the steady contenders, it’s a different approach. To have an impact on someone in this group who has suffered a trauma, for instance, a nurse might call him every week to make sure he’s taking the right medication and monitor his progress. The cavaliers are probably lost to our services; trying to reach them is a challenge.

Moving the Industry

S+B: How important is provider competition?
It’s essential to driving meaningful change. Several things have to happen: There must be considerable variance in both the cost and quality of the medical services provided to overcome any bias or convenience factor, and to drive a change of behavior based on choice. The competing services must allow enough time for the consumer to compare offerings and make an informed decision. Of course, this isn’t possible in an emergency, but for something that’s a nonemergency, such as having an MRI scan, it’s ideal to be able to compare the services available to the patient. And, finally, there must be an adequate supply of services offered in a given region.

Based on that framework, CIGNA has embarked on an aggressive path to create information transparency on cost and quality for various services. For example, we have the only point-of-consumption pharmacy pricing tool. Members can identify, based on their benefits, the out-of-pocket costs for pharmacy A versus B versus C. We are also working to create transparency in diagnostic services. We have already identified the highest-performing specialists and the average-performing specialists for about 20 specialty types in specific geographies. If the employer wants, we can provide different benefit coverage programs that create incentives for members to use the higher-performing providers.

S+B: How receptive have providers been?
They have been quite receptive. Their major concern is that there are no standards for quality, so they want to see how we’re handling the provider evaluation. But they’re happy we don’t go just on cost.

Before providers can be rated, they need to have fulfilled an adequate number of procedures. We don’t start tracking quality until they’ve completed at least 20 cases, and we track their performance throughout the entire process, not just what takes place in the provider’s office. That’s why creating quality measurements for specialists is so important. For example, a patient who has undergone coronary bypass surgery will be monitored for the duration of his hospital stay and throughout his rehab, as well, to assess the level of care he’s receiving.

What you won’t see us do is take a provider fee schedule, look at it in a vacuum, and put it on our Web site. Similarly, we won’t take a hospital charge master — the list of prices for every procedure and supply — put it on our Web site, and declare that we’re the transparency leaders. Why? Because we don’t think it’s actionable in isolation. It doesn’t make sense to pay more for a service unless you know that service will be high quality. That’s why we believe it’s important to evaluate quality and cost together. We follow a restaurant review approach: one, two, or three stars with financial ranges attached.

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  1. Gary Ahlquist, David Knott, and Philip Lathrop, “Prescription for Change,” s+b, Fall 2005: Why consumer-directed health plans are the last chance to avoid a government-controlled monopoly. Click here.
  2. Joe Flower, “Five-Star Hospitals,” s+b, Spring 2006: How some hospitals are thriving by taking a consumer-centric approach to care. Click here.
  3. Joe Flower and David Knott, “Does Health Care Have a Future?” s+b, Spring 2007: Eight books about the health-care system diagnose its problems and offer solutions. Click here.
  4. The Kaiser Family Foundation and Health Research and Educational Trust, “Employer Health Benefits, 2005 Annual Survey”: Annual survey examines the state of employer-based health coverage. PDF download.
  5. David Knott, Gary Ahlquist, and Rick Edmunds, “Health Care’s Retail Solution,” s+b, Spring 2007: How a consumer-oriented marketplace could improve the crippled U.S. health-care system. Click here.
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