If you consider a normal purchasing funnel, the consumer at the start of the funnel is not actively engaged and spends no money. We then take them through stages of awareness, consideration, preference, and finally purchase. Money is spent when a consumer makes their way through these stages and buys something. Those who are not engaged in this process are not consumers and do not drive spend. This is how consumer markets normally work.
The un-consumer spends more in healthcare
Contrast that with consumption in healthcare. People who are not engaged in their own healthcare, I call them un-consumers, are consuming the most care. Individuals who lack awareness (for example, a lack of awareness of the consequences of diabetes and therefore maintain poor diet and behaviors) often suffer from the consequences of disease. Our healthcare system pays for this. Of those who have awareness, very few actively engage in consideration (for example, do I really need a procedure right now? Shouldn’t I be trying physical therapy or rest before jumping right to a procedure? ) and often get things done to them that they don’t seek out. Again, our healthcare system pays for this. And how often do consumers drive preference (for example, now that I know I should be getting a procedure, which physician and facility is the best one for me?)? Recent evidence suggests few consumers are shopping for services or drugs even when given consumer transparency tools on cost and quality. Once again, our healthcare system pays for this (except when we shift the costs to consumers by increasing deductible costs – which, by the way, incentivizes people to try and avoid procedures at all cost whether they should get it or not). By the time we get to the purchase stage, it’s painfully clear that the vast majority of “purchasing” in healthcare falls outside the traditional purchasing funnel, driven in large part by un-consumers.
If we apply standard consumer marketing approaches in healthcare, we would completely miss this important segment of consumption. In traditional marketing terms, non-engaged individuals should be spending very little. But in insurance risk terms, the non-engaged un-consumers are anticipated to be future high spenders.
Some argue that health literacy and better tools will help here, which I believe to be true to some degree, but that cannot be the complete answer. Even physicians have to routinely consult with other physicians in specialties because there is no way any clinically-trained person can know it all – so what hope does the average consumer (who does not go to nursing or medical school, internship, residency, and fellowships) have? And how many patients lack graduate education, or college education, or high school education, or don’t speak English?
Serving the consumer in healthcare can lead to engagement that fails to impact cost
Wellness solutions ran into this problem big time. Initial excitement with engagement and consumer uptake in employer-driven wellness programs were promising signs of engagement leading to impact. But, on deeper inspection it was revealed that the truly sick patients were not the ones getting engaged – it was the ones who were already active and healthy to begin with. So once they began to look for return on program spend in terms of medical cost reduction, it wasn’t there. It was so stark a distinction that one CEO of a wellness company who previously ran a consumer company said to me “the idea of a consumer in healthcare is a myth.”
Telemedicine is running into this problem as well. Individuals who use the service love it, and that speaks to the consumer-centric design of the programs. Yet a lot of the uptake has been with consumption for things that are new. Evidence has shown that it was not replacing spend by shifting to lower-cost care settings as some hypothesized. The people being engaged were those looking for convenience or providing additional care for their kids, not the ones driving additional costs. So again, healthcare costs are not being brought down.
And as a quick note, consumer-directed health plans are not consumer products. They are more appropriately called high deductible health plans that shift the medical cost burden away from insurers and employers to people, often forcing people who can’t even afford their premiums to cut down on necessary and unnecessary care indiscriminately.
We often confuse a consumer business model with consumer-centricity in healthcare
I like wellness programs. I like telemedicine. I like consumer tools for price and quality. Sure, there remains plenty of room for improvement, but all of these are moving us in the right direction by making the experience of people consuming healthcare better. Awareness is good, engagement is good – these also move us in the right direction by making the experience of people consuming healthcare better.
So here is the fundamental issue I have: the business model of healthcare is not a consumer business model. Because we insure healthcare in the U.S., the consumer business model is a critically flawed concept. What we need is consumer-centricity as a principle that helps drive the entire system to perform better for people. Better quality, lower cost, better value, better experience, better compassion and so on. This has to work within a healthcare business model. Companies that fail to understand this distinction put their enterprises at risk, and ultimately place the very people they are trying to help at risk.
