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The Myth of Health Care Consumerism

Last weekend I heard several great presentations at a meeting convened by Jeff Goldsmith, but one contained a point I hadn’t heard nailed down before. Kaveh Safavi MD JD, from Thomson Healthcare’s Center for Healthcare Improvement, detailed the results of several large sample surveys on consumers’ attitudes toward web-based health care information.

One of Dr. Safavi’s opening slides came from Solucient’s HealthView Plus 2006 data, and was focused on "Quality-Driven Consumers," people who are "likely to research ratings information on hospitals or doctors," and likely to change providers if the one they originally preferred received a low rating. Strikingly contrary to the conventional wisdom, this group makes up only 19%, or one-fifth, of American adults.

Qualitydriven_consumers

The other categories are equally interesting. About one in eleven of us (9%) are "likely to
research" but "unlikely to change." This group goes through the motions of
investigation but won’t switch when they find information counter to
their original preference. 

One-third of us (34%) lackadaisically go with the flow. They are "unlikely to research" and "unlikely to change."

And (this is my favorite) nearly two in five of us (38%) are "unlikely to
research" but "likely to change," traits one audience member suggested be renamed to "Ignorance On Fire.")

Assuming the trends described here hold up, these data have critical weight for the many health care organizations that are focused on consumer empowerment. If only 19% of America’s 200 million adults engage to discover health care information that can be meaningful to their own circumstances, then that changes things considerably. 38 million or so people is still a big number, but it is a lot less than 200 million.

And that raises some questions. Will consumers use Personal Health Records? When they discover they have a particular condition, will most people dive into the available resources to become knowledgeable about it? Will the numbers described by the survey change as technology evolves and we evolve along with it? Is our broad resistance to pursuing information that is in our own interests a passing cultural phenomenon, or is it a steadfast part of the human condition?

The data go on to show that Quality-Driven Consumers are predominantly higher income, boomers, and Gen X adults. My guess is that education, a comfortable technology proficiency, and reasonably good personal management skills are common threads here.

But the subtext of this information is undoubtedly that the most important changes coming in health care will occur not only in the ways that consumers get and act on information, but in the ways that organizations – health care and non-health care businesses – do. Even though health care information can have serious utility for individuals, many of us simply don’t appear to be built to chase and use it. Businesses are different though. Most are based on a discipline of following through, and they succeed or fail on their ability to use information effectively.

All of this re-enforces my belief that, while we’re in a fascinating, rich early stage of Health 2.0, where many of the sites are focused on consumer empowerment, the bigger play will be for sites that, in an increasingly competitive and value-sensitive marketplace, create value by helping health care purchasers and vendors of all types make better, data-driven decisions.

This will become meaningful as it becomes more and more possible for businesses to buy coverage based on which health plan has the best performance record. Or as health plans really do try to assemble the most efficient (rather than simply the largest) provider network. Or as hospitals focus on identifying the best performing hip for their hip-replacement patients. Or as doctors determine to follow a condition-specific protocol that has a track record of consistently producing the best outcomes at the lowest costs.

Consumer-oriented applications are easier and cheaper to develop and bring to fruition than business-oriented, data-intensive ones. But the imperative to succeed in an intensifying marketplace could ultimately swing the pendulum toward Health 2.0 applications aimed at business. If and when it does, then the resulting transparency, decision-support and impact on market dynamics could drive many of tremendous changes in health care that we’ve all been looking for.

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24 replies »

  1. very good article and the Health Industry has grown to such a large extent these days that no person could afford to live without insurance

  2. The current situation is far from consumer/patient friendly. It is all about big corporations/insurance companies, drug companies, and huge health organizations, all in bed with the big government, and their regulations. The regulations are carefully crafted not to hurt the major players, that is, the government, and the large companies.
    Instead, the major players should be the physicians and the patients!
    Whenever there is talk about consumer driven health, some commentators argue against the consumer driven healthcare, based on the assumption that people do not want to take responsibility to educate themselves sufficiently to be able to make their own health decisions. This clearly is a huge assumption, based on little data. Fact is, we, (US or the world) never had consumer or market driven healthcare. Never. If you want to call high-deductible insurance plans combined with an HSA or similar attempts in dentistry like LocalDentist4Less.com market driven health care, you ain’t seen nothing yet. So basically, we never had consumer really make decisions so far. So there is no data. Get seriously started with it, collect your data, and then create opinions. Otherwise its all hot air and keyboard clicking.
    And, if the system is not drastically changed, and regulations and monopolies are not removed, it will implode onto itself, just like the banks are imploding now. In the best case, health care will become too expensive, nobody will be able to use it, and it will
    implode. I have no problem waiting for that to happen.

  3. The current situation is far from consumer/patient friendly. It is all about big corporations/insurance companies, drug companies, and huge health organizations, all in bed with the big government, and their regulations. The regulations are carefully crafted not to hurt the major players, that is, the government, and the large companies.
    Instead, the major players should be the physicians and the patients!
    Whenever there is talk about consumer driven health, some commentators argue against the consumer driven healthcare, based on the assumption that people do not want to take responsibility to educate themselves sufficiently to be able to make their own health decisions. This clearly is a huge assumption, based on little data. Fact is, we, (US or the world) never had consumer or market driven healthcare. Never. If you want to call high-deductible insurance plans combined with an HSA or similar attempts in dentistry like LocalDentist4Less.com market driven health care, you ain’t seen nothing yet. So basically, we never had consumer really make decisions so far. So there is no data. Get seriously started with it, collect your data, and then create opinions. Otherwise its all hot air and keyboard clicking.
    And, if the system is not drastically changed, and regulations and monopolies are not removed, it will implode onto itself, just like the banks are imploding now. In the best case, health care will become too expensive, nobody will be able to use it, and it will
    implode. I have no problem waiting for that to happen.

  4. Consumerism does work in some markets, but not at all times. Certain brands are more successful because they make a reliable product and consumers base their perceptions on that–Toyota and GE for instance. There are also success stories for poor products–Microsoft’s Vista operating system. Consumerism is a tricky thing. How it plays out will be interesting. Will the web sites that rate healthcare quality become as successful as Consumer Reports in driving purchases?

  5. “But why shouldn’t the auto industry have an interest in producing an electric car?”
    jd, glad you asked. Because electric cars only require a fraction of the parts and service. Rent a DVD titled, “Who Killed The Electric Car”. You’ll see how consumerism was killed by big oil, big auto and their “fixing” the system in big government (another GW Bush victory). CARB (CA Air Resources Board) played a big part as well.
    This is why consumerism in healthcare doesn’t stand a chance, there’s too much being made by inefficiency.

  6. Brian–
    I agree completely regarding consumers. The “two in five of us (38%) who are “unlikely to research” but “likely to change” says it all. (And “ingnorance on fire” is a great line.
    Regarding employers, I’m just not convinced that most will make better use of information to try to select high quality care. Though I wish that were true. But most don’t expect to hold onto their employees for 10, 15 or 20 years, and thus they’re inclined to choose health care plans based on price rather than whether the plan will promote long-term health (through chronic disease management, etc. )
    I’m much more hopeful that hospitals and physicians will pay more attention to data about what works as they move toward evidence-based medicine.
    Willfor-profit health plans follow suit? Maybe. Though I think it’s more likely that financial pressure on Medicare will force reform at CMS, and that Medicare will begin to base its coverage decisions on comparative effectiveness research. If Medicare does that, then I think for-profit insurers will follow Medicare’s lead.
    Of course lobbyists representing the health care industry will fight rational reform of Medicare, but here, perhaps, other businessmen will stand up and say, “No we cannot afford to continue to pay for ineffective care.”

  7. Peter,
    Your last question is the trillion dollar question here Clearly the oil industry does not have any interest in conserving oil, except to the extent that a long slow decline in supply would be more profitable than a rapid decline in supply. But why shouldn’t the auto industry have an interest in producing an electric car? They don’t make money off oil, so why should they inherently care if the car they make runs on oil or electricity or gumdrops? They don’t, and Toyota is a good example of how being willing to lead the way can be profitable.
    Here’s what I think: the provider side of the industry, particularly hospitals, are like the oil companies you mention. But insurers are more like the car companies. Just because they now engage in risk selection doesn’t mean they have to do so. You can risk-adjust premiums (as Medicare and Medicaid now do, and as they do in Germany and the Netherlands) so that the focus is on managing care, and you can build other mechanisms into the system so that the focus also turns to prevention/wellness.

  8. 1. All
    2. Perception is everything. Are costs being reduced?
    3. The ones that confirm your existing perceptions.
    4. Lots of existing evidence and history out there.
    5. Politicians – campaign donations, lobbying jobs
    Employers – reduced costs
    Insurers – higher premiums, lower claims
    Providers – higher fees, less outside controls
    Consumers – same habits, less cost
    6. See #5
    7. Have they ever tried, I mean, REALLY tried?
    8. Equate cost with action – taxes work really well at point of sale.
    9. Why would the sickcare industry have any stake in a healthier consumer? Does the oil industry have any stake in conserving oil? Does the auto industry have any stake in producing an electric car?

  9. I’m reposting to fix typos:
    So the questions are:
    1. Who is responsible for wellness care and decision making: Providers, government, employers, consumers, all of the above, none of the above?
    2. What percent of the population needs to change behavior for behaviorial change programs to be considered successful? 25% to 30% still smoke, I think.
    3. Which researchers have credibility: All, some, none?
    4. Can health insurance markets be tested without giving more power to politicians, employers, insurers or providers and less power to consumers?
    5. What financial incentives do politicians, employers, insurers, providers and consumers need to care about healthy lifestyles? Why?
    6. What are the cost/benefit ratios in terms of money, political power, egoes for each of the players noted above?
    7. How have our government-funded and operated health insurance systems—Medicare, Medicaid, VA, Military, public health—changed their beneficiaries’ behavior over the last couple of generations, if at all? What were the cost/benefit ratios and what percent of the beneficiaries targeted changed behaviors in positive ways? What percent of the programs backfired?
    8. How can behaviorial change programs designed to reduce health care costs be effective considering that well people don’t think about their health much and won’t pay attention while the sick are focusing on specific, perhaps unrelated illnesses, and also are unlikely to be responsive to any marketing programs or financial incentives.
    9. Why would anyone assume consumer marketing companies are any more qualified to deal with health consumers than insurers and providers, which could hire all the expertise they needed if they wanted to venture into manipulating the consumer more than they already try to do?

  10. So the questions are:
    1. Who is responsible for wellness care and decision making” Providers, government, employers, consumers, all of the above, none of the above?
    2. What percent of the population needs to change behavior for behaviorial change programs to be considered? 25% to 30% still smoke, I think.
    3. Which researchers have credibility: All, some, none?
    4. Can health insurance markets be tested without giving more power to politicians, employers, insurers, providers and less to consumers?
    5. What financial incentives do politicians, employers, insurers, providers and consumers to care about healthy lifestyles? Why?
    6. What are the cost/benefit ratios in terms of money, political power, egoes for each of the players noted above?
    7. How have our government-funded and operated health insurance systems—Medicare, Medicaid, VA, Military, public health changed their beneficiaries’ behavior over the last couple of generations, if at all? What were the cost/benefit ratios and what percent of the beneficiaries targeted changed behaviors in positive ways?

  11. In case it wasn’t clear, in the last paragraph I was discussing what employers think about when choosing health benefits.

  12. Some lessons from actually trying to get people to change behavior from a population standpoint (as opposed to one-on-one).
    Money matters, but human psychology is not that of homo economicus posited by classical economics. If you don’t know Kahneman and Tversky and the burgeoning field of prospect theory, then you do more harm than good when you talk about consumerist vs. state-sponsored solutions. To give one example: a small incentive at regular intervals for doing things like taking health risk assessments and keeping your cholesterol below a certain level make far more of an impact than simply giving people “skin in the game” by providing a higher deductible. High deductibles by themselves are almost useless as a health improvement tool, because (as we all know, I hope) most people will pursue short-term pleasures at the expense of harms that will only come in the long term, and most people who eat (or whatever) to excess are doing so as part of a stress reaction or out of depression. People are off balance, and getting them to change is far more involved than simply telling them they’ll be liable for 50% of the cost if they get diabetes or cancer….or, doing that and giving them a bunch of information and online tools, no matter how good they are. This is something the Health 2.0 community has not given sufficient attention to. Yes, community helps and yes, interactive tools help, but you need more structure to get most people to change behavior.
    Employer wellness programs are probably the best candidates for this out there right now, since they provide institutional support, encouragement (ideally in the form of the CEO taking the lead in participating and promoting it), and crucially, financial carrots and sticks that convert actions with long-term benefits into things with clear and relatively short-term rewards.
    I also want to reinforce the comments made by Brad at the top of the thread. Employers, by and large, do not get it. Commenter MG’s counterexample, typically, involved a large purchaser. The IBMs, Boeings, etc. do exist, but for the large majority of medium-sized employers and the vast majority of small employers, what they care about is the following (1) price, (2) price, (3) network size and penetration in the relevant area, (4) quality measures, health tools and everything that actually has an impact on improving health.

  13. There is a significant portion of the population that doesn’t respond to rational information, be it about health choices, food, auto purchases, political candidates, etc, etc. They’re simply not rational actors.
    There are hundreds of thousands of cars that Consumer Reports rates with one star that are sold in the US every year.
    That doesn’t mean that irrational, disenagaged consumers won’t respond to anything. It’s the difference between marketing “Vitamin Water” on its nutritional benefits and having 50 Cent Rap about it.
    The “big mistake” that plans and other make, though (and Jeff hit on this with his discussion of the “people like us” phenomenon), is to understand that different people respond to different messages. One size doesn’t fit all.
    The messages that will drive consumer activation are more likely to come from those who understand the vagaries of consumer behavior (P&G, Disney, Coke, Oprah) than from software companies, health care wonks or health plan marketing departments.

  14. “When they become sick and need good medical decision making, they are in no condition to select providers or make critical medical decisions, at least not while they are in the initial stages of dealing with an illness or accident.”
    And that’s exactly the time when you find out if the insurance policy/company you bought actually looks as good and performs a well as described by the salesman/broker/brochures/web site you bought it from. It’s also the time you see how well the fine print clauses (that you never read or understood) work for the insurance company and if you can get enough cash together to pay the deductibles and co-pays while still paying the premiums. It’s also the time your insurance company gets to fine-tooth comb your application to see if they can wiggle out of payments by policy recision. So now I hope you see why health insurance is not like buying shoes, the touchy-feely comes way too late in the decision process.

  15. What the studies show is that there can be no one solution for all. Some consumers want to be involved in medical decision making and in selecting providers. Most don’t want to be or just don’t have the expertise. Years ago there was a study that said 37% of patients are self-empowered when it comes to medical decision making, which is more pertinent, I think, than choosing physicians and hospitals.
    What the study doesn’t address is how consumers might be empowered to choose insurers, which is what they are most qualified to do. Not only are consumers more likely to choose the insurance policy that is best for them, they can be given financial incentives to seek out the best plans. But first, consumers must be freed from their employers health benefits managers, the most dishonest brokers in the market.
    Given financial incentives to seek out the best health insurance for them, consumers will seek out the best plans, and information providers will have financial incentives to compete to become the best sources of that information, allowing the health insurance markets to work much better than they do today.
    All of this talk about consumer decision making relative to providers and treatments misses the point, which is that consumers must be allowed to make the decisions that they can make better than anyone else. They make the best decisions about what to do with their money. When they become sick and need good medical decision making, they are in no condition to select providers or make critical medical decisions, at least not while they are in the initial stages of dealing with an illness or accident.
    So, I think the study cited asked the wrong questions in an effort to reach the wrong conclusions. The researchers wanted to prove consumer-driven health care won’t work, that Hillary Clinton or John McCain would be more qualified to select health care insurance coverage for consumers than consumers would be. Having asked the wrong questions, the researchers failed to make their point.

  16. Eric, you’ve read my solutions here many times. The people who want consumer driven heathcare solutions really don’t want change, they know that it won’t work and things can pretty much stay the same – at least for now. Ever think we’ll get consumer driven energy solutions and consumer driven global warming solutions?

  17. I would echo Mr. Novack. These data tell us what we already know: Most people don’t make good choices, because that’s sometimes hard. That fact does not justify taking choice away from them. If I’m not free to make a bad choice, I’m not “free to choose”. Hey, that would make a nice book title…

  18. Peter— so your solution is???
    Brian— question for you: what would your pie chart look like in other areas of the economy? Without seeing how consumers react in other areas makes this data interesting, yes, but there is no context… I would postulate that consumer decision making across all areas is very similar to the pie chart you provided.
    To all— if we agree, then, that people– even when given the opportunity to see, evaluate, and make choices with ‘good’ information (an area of often significant debate in its own right)— make the ‘wrong’ choices, what should government, experts, and bureaucrats (with their own very real biases) be able to do to control the people?
    All talk about health care reform, particularly by those who want a government-run, ‘managed’, VA style, etc., etc., system— that does not answer that question first, is being intellectually dishonest to the very same public they are claiming to protect and help.

  19. I liken this miracle of consumer driven healthcare to consumer driven eating habits. Lots of information available, lots of, “I know what’s good and bad for me”, lots of alternatives. But do we have anything close to a massive change in consumption habits that is driving better health through better food? Not that I can see as we’re still getting fatter.

  20. It was an interesting meeting and Brian did an excellent job in his 2.0 presentation.
    Kaveh’s data dovetailed with Deloitte’s data on the same subject and convinced me that there is a very good reason why the health plans and disease management firms talk about consumer “activation”: there are a lot of “unactivated” consumers.
    I think how “activated” you are depends, as Brian suggested, on education, but it is also state dependent (presymptomatic, chronic, acute) and also condition dependent (cancer, depression, low back pain). And when we are activated, some of us head straight for the Internet, some for our sister-in-laws or neighbors. And some of us go straight for our doctor and then go straight where he or she says, even if it is straight to a golfing partner, without any due diligence.
    The healthcare consumer discussion suffers massively from the “people like us” phenomenon (nowhere more seriously than Reggie Herzlinger’s writing). “People like us” are vigilant, empowered, tech savvy comparison shoppers and don’t want anyone else to think otherwise. How many “people like us” are there, and how many of us are really like that in real life?

  21. The definition of consumer “tools” is so broad (e.g., clinical vs. financial/administrative) but so far tools alone haven’t been enough to really impact PHR adoption/utilization. Some functionalities maybe but not the “tools” in and amongst themselves. Take a wait and see because there is going to be a lot of develop and refinement here in the near future.
    I do know that some of the large employers though are worried that what the kinds of employee behavior that happened with 401k accounts (e.g., refusing to enroll) with also occur with efforts to drive consumerism in healthcare. Employees just won’t be engaged enough or at all and this will cause big problems with healthcare consumerism efforts by employers.

  22. Unfortunately, I have to completely disagree about employers and VBP. First, it is not really a new concept. First came in vogue in the late 1990s when you first started to see the big HR firms (Towers Perrin, Hewitt, others) along with academic papers appear on the topic. If anything, the most prominent case of employers and VBP to date was the experience that Boeing and Regence tried to implement a few years ago. Turned out to be a disaster for Boeing and Regence.
    It has gotten more attention recently though. Here a few good reads on it:
    High-Performance Health Plan Networks: Early Experiences
    Issue Brief No. 111
    May 2007
    Debra A. Draper, Allison Liebhaber, Paul B. Ginsburg
    http://www.hschange.com/CONTENT/929/?topic=topic04
    Benefit Design Innovations: Implications for Consumer-Directed Health Care
    Issue Brief No. 109
    February 2007
    Ha T. Tu, Paul B. Ginsburg
    http://www.hschange.com/CONTENT/913/?topic=topic23
    Think Jamie Robinson said it best though recently in Jan ’08 edition of Health Affairs:
    “These initiatives to promote value in health care are tentative, and they do not address many of the major sources of cost growth, which include intensive services for severely ill patients not managed in a coordinated fashion. But these experiments are important signposts on the long journey toward a health care system that balances the costs and the benefits of particular treatments before recommending them to patients and reimbursing them with social resources.”
    Basically on VBP to date has largely been kind of one-off case studies. I think Bruce Landon at Harvard is working on a big project through to identify VBP efforts in over 30 markets. Not sure if published or findings released yet. Michael Chernew at Harvard has all done a lot of research in this area.

  23. Interesting, although I think there are some assumptions underlying your post that are not necessarily to be taken for granted. For example, the notion that by providing consumer empowerment tools, we will immediately see dramatic changes in consumer behavior. Obviously, there is an adoption curve that has to happen. It takes time for behavior to change, and people are notoriously poor at predicting how and when their behaviors will change. Asking someone to guess what he or she might do at some point in the future, given access to an unfamiliar tool, is not going to buy you much in the way of accurate forecasting. By comparison, if you had asked people in 1980 whether they would change their car-buying behavior if they had instant access to dealer invoice prices and inventory availability, do you think they would have foreseen the car-buying behaviors of today? Would they have forecast the dramatic change that these consumer empowerment tools have brought to the marketplace? I truly doubt it.
    The truth is, we will not know what will happen with healthcare consumer empowerment until it happens. One thing I know for sure—it won’t be exactly what anyone predicts today. All the more reason to go ahead and implement it. Not a reason to pull the plug—which isn’t going to happen anyway. The consumer empowerment train has left the station and debates about whether it should be allowed to depart are moot.

  24. There was study in Annals of Internal Medicine the last 6 months or so and its conclusions were the same for business as they were for lay public, as you lay out above. HR departments were not taking advantage of performance reports and quality data and were choosing insurance products strictly on price. Their conclusions: we have a long way to go. I am not so sanguine.
    Brad

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