What is Healthcare Consumerism?

What is Healthcare Consumerism?

“Healthcare consumerism” is the rapidly growing trend that positions patients as the primary decision-makers when choosing care providers and treatment options. This reimagining of the healthcare system relies upon an understanding of patients as purchasers, informedly shopping for care as they would for any retail purchase.

As the name suggests, consumerism represents a philosophy centered around the individual as an economic agent. Healthcare consumerism represents a dramatic departure from the US healthcare’s traditional perspective, which regarded patients as “walking conditions.” 

As the trend gains momentum, providers must define their value proposition in healthcare and adjust their approach to care, providing value over volume to patients.1

Patient-Consumers Demand Transparency

A consumerist approach to care requires patient access to personal and educational information, price transparency, healthcare decisions and care options from which to choose. 

Facilitated by technological advancements and data—and accelerated by COVID-19—patients continually seek out the means to take decisions into their own hands, becoming actively participating consumers who are shaping the healthcare ecosystem.

Quantity Over Quantity—The Legacy of Volume-based Care

This shift towards healthcare consumerism coincides with the long-term transition from “volume-based” to “value-based” healthcare. The volume-based model is also referred to as “fee-for-service” (FFS). In FFS, payors reimburse providers according to the number of patients treated and the number of tests and procedures carried out. 

The structure incentivizes providers to emphasize quantity over quality.2

Before the 1980s, healthcare providers billed payors for every individual care service and consumable used. If providers gave a patient three ibuprofen, each was included as a line item. The longer patients remained under active care and the more consumables used, the more providers could bill payors.3 

This system financially incentivized providers to see more patients and carry out more procedures over delivering quality care.

The introduction of “diagnostic related groups” (DRGs) sought to curb these expenditures by segmenting patients according to their demographics and diagnoses. Payors reimbursed health care providers with a flat amount based on the patient’s DRG and the cost of an average patient within that grouping.3 

While the new system disincentivized excess procedures and patient stays, the average reimbursements created a higher likelihood of revenue leakage.

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Transitioning to Value-based Care

Contrasted with volume-based care and DRGs, value-based care seeks to enable patients and incentivize providers to pursue the best and most efficient means of treatment. With value-based care, financial incentives for providers and payors revolve around:

  • Reducing overall costs and maximizing treatment efficiencies
  • Minimizing inappropriate procedures, readmissions, and hospital-acquired conditions (HACs)
  • Continual engagement and monitoring with patients after their discharge from primary care (“proactive approach” instead of reactive)
  • Better communication among patients and different clinicians or specialists
  • Patients actively participating in health monitoring

Value-based care meshes well with healthcare consumerism, as both foster comparative effectiveness research and the patient’s engagement with their ongoing treatments as a stakeholder. The Institute of Medicine of the National Academies defines comparative effectiveness research as “a strategy that focuses on the practical comparison of two or more health interventions to discern what works best for which patients and populations.”4 

The Affordable Care Act and the Patient-Centered Outcomes Research Institute

The initial growth of value-based care can be attributed to 2010’s Affordable Care Act (ACA), beginning with the legislation’s creation of the Patient-Centered Outcomes Research Institute (PCORI). PCORI—an independent, nonprofit, nongovernmental organization—describes its mission as providing clinicians and patients with the appropriate information to determine the best care options available to them.5

As more Americans flocked to purchase health insurance on the public market, many began choosing high-deductible plans to reduce monthly expenses. Well before COVID-19, the 2016 open enrollment period saw 90% of the 12.7 million enrollees choose high-deductible coverage. These consumer choices have led to higher out-of-pocket healthcare spending, which has led to patients adopting a more discerning, consumerist approach.1

As David Betts, a Deloitte Principal, simply phrased it, “healthcare customers now have more skin in the game.”1

Healthcare from a Consumer Perspective

With patients more financially responsible for their ongoing care efforts, they’re less willing to passively follow recommendations from their providers or their payor’s network and procedure restrictions as they once did. 

Instead, patients want to develop partnerships with their caregivers. 

They want to hold high confidence that the determined treatment paths are right for them as individuals regarding their long-term wellness, personal preferences, and financial burden.

Data-Driven Decisions

The proliferation of health data and its growing accessibility further allow patients to adopt a consumer approach to their healthcare. While still somewhat difficult for patients to navigate and understand, personal health data, tracking technology, and treatment costs have never been more accessible. Patients increasingly rely on this data to make decisions about their care.

Personal Health Data and Information Availability

Today, patients have much more insight into their own health data and information across the web that can help them better understand their conditions and possible treatments. As of April 2021, U.S. healthcare providers must now provide free access to electronic health records (EHR).6 However, adoption rates had reached an overwhelming majority by 2017, as 86% of office-based physicians provided access to EHRs.7

Patients increasingly gravitate towards readily accessing their health information electronically. 

In a Pew Charitable Trusts survey, 61% of respondents expressed interest in downloading their personal health data to their mobile device, and 81% would like to access media (e.g., their x-rays), though legislation currently does not require it.8

Tracking Technologies

Patients readily adopt wearable and easy-to-use tracking technologies that allow them and their clinicians to monitor ongoing health. 

  • Diabetic patients can now test their blood sugar with a smartphone rather than fingerpricks. 
  • The Department of Veteran Affairs has partnered with Fitbit to provide 10,000 veterans, caregivers, and other staff with the company’s health monitoring devices and digital tracking services.9
  • According to NRC Health’s 2021 Healthcare Consumer Trends Report, more than half of survey respondents want the data collected by a wearable device to be used by their care providers. Despite this growing preference, roughly 50% of providers do not ask about their patients’ use of wearable and smartphone monitoring.10

As technology increasingly removes the barriers inhibiting patients from accessing their health data, they more readily engage in their personal care management. 

In addition to self-monitoring, providers can leverage the data to promote shared decision-making that further invests patients in action plans. Additionally, a payor can use the data to provide financial incentives to patients whose healthy choices help prevent chronic conditions.

Treatment Cost Transparency

Patients now hold greater visibility into estimated costs for treatment and clinical visits. The ability to reference expected costs allows patients to approach their care as informed consumers. When patients do not know the potential cost of care services, they are more likely to defer treatment, which can exacerbate conditions (and treatment prices). 

In fact, 53% of healthcare consumers avoid treatment due to financial uncertainty.11

When healthcare prices are made transparent to patients, they can approach their decisions as informed consumers. After comparison shopping amongst different providers, patients realized a 19% reduction in costs per service.11 

Telehealth and Transportation

Accessibility for patients has improved beyond EHRs. Mainly driven by COVID-19’s need for safe social distancing, telehealth—or remote care provided via phone and video conferencing software—adoption rates have tripled since 2018.10

In-person access to healthcare providers has also increased due to partnerships with ride-hailing services such as Uber and Lyft:9

  • Uber has partnered with ScriptDrop to offer more prescription deliveries.
  • Lyft’s Pass for Healthcare program allows patients to schedule rides for care visits.
  • Doordash has begun offering COVID-19 test kits with same-day delivery in conjunction with Vault Health and Everlywell.

Healthcare Consumerism’s Benefits for Providers

While the sudden surge in healthcare consumerism may represent logistical challenges for providers still adjusting from volume-based care and DRGs, the benefits and financial incentives offer more reasons to embrace the change.

Providers who adopt more consumerist approaches stand to attract more patients who regularly engage in treatments. Over 33% of consumers do not demonstrate healthcare brand loyalty, which means providers who offer them the desired care experiences stand to increase their number of patients.10 Providers and payors who make treatment costs transparent will reduce patients’ care deferments, leading to shorter and more regular revenue cycles.

In addition to gaining more patients, providers who continually engage patients reap the benefits of payors’ new financial incentives for meeting value-based care metrics. Payors save when patients minimize chronic conditions and seek treatments earlier. When providers can demonstrate fewer readmissions and HACs—and higher patient satisfaction—per value-based care’s aims, reimbursement rates rise.

As the leading outsource solution of managed care contracts with over 25 years of experience, PayrHealth can help providers navigate payor negotiations to discover and benefit from the financial incentives healthcare consumerism offers.

Sources: 

  1. RevCycleIntelligence. Preparing Providers for the Healthcare Consumerism Shift. https://revcycleintelligence.com/news/preparing-providers-for-the-healthcare-consumerism-shift 
  2. National Library of Medicine. Moving (realistically) from volume-based to value-based health care payment in the USA: starting with medicare payment policy. https://pubmed.ncbi.nlm.nih.gov/21673117/ 
  3. Verywell Health. Diagnostic Related Grouping and How it Works. https://www.verywellhealth.com/drg-101-what-is-a-drg-how-does-it-work-3916755 
  4. Institute of Medicine of the National Academies. Initial National Priorities for Comparative Effectiveness Research. https://www.nap.edu/catalog/12648/initial-national-priorities-for-comparative-effectiveness-research 
  5. Patient-Centered Outcomes Research Institute. Our Story. https://www.pcori.org/about-us/our-story 
  6. Verywell Health. Patient Access to Medical Records is Set to Become Mandatory. https://www.verywellhealth.com/opennotes-medical-records-5087871 
  7. The Office of the National Coordinator for Health Information Technology. Health IT Quick Stats.https://dashboard.healthit.gov/quickstats/quickstats.php 
  8. Healthcare IT News. Patients want to download their own health data, report shows. https://www.healthcareitnews.com/news/patients-want-download-their-own-health-data-report-shows
  9. Beckers Healthcare. 12 key healthcare consumerism moves in 2021. https://www.beckershospitalreview.com/consumerism/12-key-healthcare-consumerism-moves-in-2021.html 
  10. NRC Health. 2021 Healthcare Consumer Trends Report. https://nrchealth.com/fr12dmjkohbt/ 
  11. Privia Health. Why Price Transparency Improves Healthcare Consumerism. https://www.priviahealth.com/blog/why-price-transparency-improves-healthcare-consumerism/