Can “consumerism” work in health care?

“Consumerism,” — free market, open competition – regardless of the term used to describe this market behavior, can the concept of “natural market forces” exist in health care?  It seems as though observers of the health care “market” fall into two distinct points of view:

POV 1:  Consumerism in health care is a train that has already left the station.POV 2:  Health care is different and true market forces can never prevail because the players’ roles are so polarizing, and the “buyer” and the “consumer” are so disconnected.

I suspect that for anyone reading this, you have already checked off your respective point of view. (While the merits of this topic are worth debating, ultimately, time and events will answer this question.)

In the meantime, let’s consider the following:

First, let’s try to answer what drives consumer behavior and
consumer decision making. While I have a perspective, I turned to
Wikipedia for its.

Stage One – Problem Recognition    The consumer perceives a need and becomes motivated to solve a problem.Stage Two – Information Search    The consumer searches for information required to make a purchase decision.Stage Three – Alternative Evaluation    The consumer compares various brands and products.Stage Four – Purchase decision    The consumer decides which brand to purchase.Stage Five – Post-purchase evaluation    The consumer evaluates their purchase decision.

If we apply this model to health care, both of our proposed points of view quickly have merit.   

Problem recognition: Here health consumers fall into two categories:
       1. They have a problem – e.g. They’ve just received a
diagnosis, have an existing chronic condition or require emergency
attention.         2. They don’t know they have a problem – they consider themselves “healthy.”

Right out of the gate, health care is different. If we apply an
80/20 assumption, 80 percent of consumers don’t know they have a
problem or “health care need.”  The other 20 percent fall into the
“grey area” of health care. For example, no one really goes out and shops for
diabetes care. (My inclination would be to call this one
for the “health care is different” POV.

Information Search: Here, the web has had a major impact on
health care already — just ask any physician. Consumers use the
web in significant numbers to “self-diagnose.”  They are researching
their chronic conditions, their newly diagnosed conditions and every
ache and pain that they have.  (Score one for consumerism.)

Alternative Evaluation: This is definitely a grey area. While we’re
making strides in quality measurements there is a long way to go for
any consistent and reliable information regarding alternatives,
whether  it’s physician options, point of care options or even treatment
protocols.  (Score another one for the health care really is different POV.

Purchase decision: (From the get-go, let’s definitely call this a
"no, health care really is different.")  While some concierge-type
efforts are gaining traction for the masses, the purchase decision
process is controlled by a third party, and typically is not based on economics. If a consumer, now a patient, has a
serious health issue, the immediate expectation (insert: "God-given right") is
to apply any and every medical option available to address that
condition regardless of cost.

Post-purchase evaluation: There is the obvious evaluation: Did the patient survive?  But there
is definitely a growing and viral community of sharing information
regarding treatment and outcomes.  This is occurring both
through online communities and forums and through traditional word of mouth.  More
people are openly discussing their interactions with the health care
system.  (Score another for consumerism.)

If you accept this
analysis, then the results would support the perspective that health
care is just so different that true market forces cannot prevail in
this industry.

But is it possible that other forces have already been set in motion
that may yet cause the development of something much more akin to a
“natural” marketplace in health care?

I would suggest that two specific forces have conspired to drive
massive change in health care delivery as we know it.  They are
demographics, particularly the aging of the population, and economics.

The fundamental shift driven by the aging population is impacting the first stage of consumer
behavior: problem recognition. This is manifesting itself in a
variety of ways. For example, as adult children begin caring for parents, or
begin to consider extended careers or retirement, they are beginning to
recognize their own mortality and are beginning to ask questions. They want to know what they should be doing to improve their odds of
living not just a long life but enjoying an acceptable quality of life.

As health care costs continue to increase and an
increasing share of those dollars are being directly absorbed by the
“end-user” consumer of health care, the decision-making process will
begin to evolve. Already, consumer-directed health plans have hit the
market. While the plans’ acceptance may not be as high as anticipated, they
will continue to gain ground as costs shift. Moreover, new programs
will likely evolve to address the economics of care. This cost
shift will create an “information vacuum,” in which consumers require
more information in general and more personalized information
specifically to make effective decisions regarding their
health and the financial options concerning how they budget for their
health care.

These two forces create a situation in which increasing portions of our population
are becoming "health aware."  They are beginning to recognize that
good health cannot be assumed.  Medical advances in genomics and personalized medicine will continue to fuel this growing awareness.

If you follow me this far, (congratulations) – but more importantly what does this imply for the health care industry?

I believe the implications are increasingly clear. We have evolved
to the point that our society has become a “packaged oriented”
society in a “service oriented” economy.  In other words, we look to products/services, brands, organizations and experiences to solve
our problems and address our needs. We’ve been drinking coffee for a
long time. Starbuck’s came along and created a coffee experience, and
drinking coffee has never been the same.

Perhaps what has been missing in health care is a rich suite of consumer products.  Specifically, products and services that have a
tangible value proposition and address real consumer needs. To the
extent that an experience exists in health care today it is generally
a one-size-fits-all:

Don’t feel well, go to the doctor.  Primary care generally
refers to specialty care.  A treatment is prescribed – depending on
severity – could be a behavior change, a medication, surgery, etc.
Debate with your payer over the claim and move on.

This experience is completely out of synch with the mindset of
virtually all consumers.  Where is the customization? Who is concerned
with our satisfaction levels? Where are the options?

One size does not fit all. Health needs may be latent, but they are
evident and increasingly so. What is lacking is consumer choice.  But
this is changing.  Hospitals have been competing for profitable
business by creating a “better experience” – birthing centers, hand
centers, oncology centers.  How long will it be before we separate the
front end, such as health maintenance or back end in condition
management?  As Americans spend billions on weight management and
fitness, clearly there is an interest in spending on health
maintenance/improvement needs.  What is lacking is organized products that mix clinically appropriate paths and alternative/holistic
approaches to better health that are integrated with existing care
delivery models and result in an overall improved consumer experience. For


  • A product, that addresses the need of an adult caregiver to support the health needs of their aging parents.
  • A product that assists parents in better managing the health of their child – in collaboration with their pediatrician.
  • A product for aging boomers struggling to better understand their
    specific risk factors and what they can and should be doing to optimize
    their health.
  • A product that focuses on the needs of
    college aged individuals on their own for the first time and oblivious
    to health issues and limitations.  What would a parent pay to provide a
    robust health “plan” to start their children down a path of sound

I believe the market is there, but what is required is a
new way of looking at how health services are delivered. Future delivery should engage consumers by drawing them into the experience. If there
is a specific value delivered, the consumer can be engaged.

BUT, who will pay?  I think even this is a red-herring issue.

If value is defined and delivered, the consumers will pay.  But health care is different. It is a social issue, and a common level of care
must be provided across all segments. If new products can be developed
and introduced that result in the engagement of consumers (an
experience that actually draws them into a proactive model of health
care and maintenance), financial models will evolve to extend the reach
of these services throughout our society. The evolution of the
Internet certainly demonstrated that. No federal agency singularly set
out to fund the expansion of the internet. Market applications were
developed, market demand evolved and so to the internet expanded to
support the unprecedented level of demand.

So, can consumerism work in health care? The jury will be out for
some time. But I believe the creativity of market forces should not be
underestimated. Our very ability to support the cost of health care
going forward will largely depend on the health “consumer” becoming a
more active participant in the management of his/her own health. For
that to happen, services must be packaged in a way that is engaging,
delivers clear value and yes, may even be entertaining.

Brian Baum was the co-founder and CEO of the Health Record Network
at Duke University and the founding President and COO of U.S.
Preventive Medicine.  He is now working in the industry to create new
products and “experiences” for consumers throughout health care. E-mail
him at bjbaum@yahoo.com.

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spencerrbaerPeterBrian BaumFrustrated Consumer Recent comment authors
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Brian Baum
Brian Baum

Rbaer – we are exactly on the same page. It is a cultural issue, and it is beyond the reach of our health system alone. However, I think our health system needs to be integrated into the cultural shift. Two points here – physicians are not properly incented to aggressively practice proactive/preventive medicine. Our reimbursement model does not support this. This reality is showing up in our medical institutions. A good friend, Dr. David Nash at Thomas Jefferson University in Philadelphia laments about the challenge of filling slots at the medical school for internists – the front line docs. Specialities… Read more »


Taxing unhealthy habits and using that money to fund healthy habits over the long term would change mind sets. Brian, I suggest, “The Omnivore’s Dilemma” by
Michael Pollan as a good place to start for understanding how we got here and why we continue to get sick.


Thank you, Dr. Baum, for your comments. I don’t want to keep the last word at all; the following is just a thought that I forgot to write about in my above post, and that Dr. Baum just mentioned above, namely the issue of prevention (versus sick care). I do think that most countries, esp. the US, could benefit from better prevention. While I think that the healthcare system could be much more supportive of prevention (some ideas below), I think it is wrong to place the burden of making prevention happen on the healthcare system only. I personally think… Read more »

Brian Baum
Brian Baum

I have definitely enjoyed the dialogue on this thread. To provide a bit more context on where I’m coming from – I have traveled the country speaking mainly to employers – of all sizes, providers – both docs and health systems, the occasional “consumer”, and representatives of states and the federal government. A very common theme has emerged in virtually all of these discussions – “our total healthcare system – defined as providers and consumers – must do more to keep people healthy.” In other words – once someone presents with a chronic illness – they are on a new… Read more »


What’s up with consumerism in health care? The only way we can reduce health care costs is to focus on improving the public’s health. The Zaftig Redhead blogs about this issue in the context of McCain’s healthcare plan.


Actualy Brian Jiffy Lube’s business became possible when service stations could no longer offer oil changes just for the price of the oil and filter and you had to wait longer as well. Premium pricing allowed higher profit margins which enabled Jiffy Lube to exist as a one service shop. BTW dino oils don’t have to be changed every 3k either – as a consumer did you know that? Consumers are only as good as the information they can not only get but analyse. The causes and effect of disease are so complicated that it’s hard enough for even doctors… Read more »


BB and, apparently much more so, F. Timmins want to perceive that buying health is an ordinary act of consumption care (“To a man with a hammer everything looks like a nail”). First, they both fail to identify the product that they talk about: is it the insurance coverage? The provider? A healthcare system? Each individual diagnostic or therapeutic step the provider suggests? If HC consumerists can clarify this, we can deepen the discussion. Now, is purchasing any kind of healthcare product, whatever it is, comparable to buying a car (BTW, the claim that car buyers are “extremely informed and… Read more »

Brian Baum
Brian Baum

Ok – I’ll grant you “Jiffy Lube” may not have been the best example. However, the origins of Jiffy Lube do date back to pre-synthetic oils when oil changes were a bit more frequent. Additionally, they filled the void left a very long time ago when “full service” gas stations regularly checked fluid levels, (and doctor’s made house calls). The point – people didn’t necessarily know what routine maintenance was required on their cars. A service industry evolved to fill the overall void. I think we’re in a situation where the average consumer knows more about the maintenance schedule for… Read more »


“Just as Jiffy Lube created a widespread mentality that every three thousand miles you need to change the oil in your car, how can we get our society to look at managing their health in the same proactive manner?” I’m not sure Jiffy Lube “created” the mentality but they capitalized on the misconception carried over from the early years of automitive oils and engine technology. This is a concept based on profits not proper engine care. If this example doesn’t highlight the problems of consumerism in relation to our present health cost delivery system I don’t know what would. Jiffy… Read more »

Brian Baum
Brian Baum

Well first, thanks for the comments back on my article. I wanted to respond to several points of view expressed. I would categorize the comments in three buckets – 1. the issue of health insurance, 2. the definition of an “informed health consumer” and 3. the existing “free market” in health care. On the first point – insurance – insureds vs. uninsureds – who pays for care, etc. This is obviously a substantial issue, and I’m sure we can expect to hear a lot about it in the coming months as we move to the general election this fall. The… Read more »

Frustrated Consumer
Frustrated Consumer

It’s funny how most people seem to forget that we’ve had a ‘free market’ in healthcare for over 100 years – with it’s concomitant market failures – that has resulted in the patchwork system we have now. Heck, Medicare came about because – surprise! – insurance companies don’t make money covering the old and sick who need a lot of care. And you don’t have access to our healthcare system without insurance. Market Failure = government steps in. The simple fact is too many people are making too much money off the current system for it to change anytime soon.… Read more »

F Timmins
F Timmins

My comment is more in response to the “MSG’s View” than the article by Mr. Baum. Of, course “some” healthcare expense is beyond the financial ability of most of the populace. This is a separate issue with separate solutions. Insurance, insurability, or lack of either is not really what I perceive this article is about. The discussion is whether or not “Third Parties” can determine both the effectiveness of healthcare services and its cost better than the individual involved. The second paragraph at least addresses the pertinent issue. I find the argument that presumes average people are incapable of learning… Read more »

F Timmins
F Timmins

My comment is more in response to the “MSG’s View” than the article by Mr. Baum. Of, course “some” healthcare expense is beyond the financial ability of most of the populace. This is a separate issue with separate solutions. Insurance, insurability, or lack of either is not really what I perceive this article is about. The discussion is whether or not “Third Parties” can determine both the effectiveness of healthcare services and its cost better than the individual involved. The second paragraph at least addresses the pertinent issue. I find the argument that presumes average people are incapable of learning… Read more »

MSG's View
MSG's View

I think that those of us with a certain degree of wealth and education have trouble recognizing how different the world is for people without savings or discretionary income, without in-depth understanding of healthcare and the healthcare system… While this review is very interesting, it fails to understand that the populace cannot afford our healthcare system today. Over 20% of the country does not have an insurance product at some point during the year (largely due to cost) and it is likely that the only reason why this number is as low as it is results from employer sponsored health… Read more »