Many of the designations in health care infer that — unlike other industries — individuals play a primarily passive or reactionary role: “patient,” “enrollee” or even “subject” in clinical trials. Yet there are signs that consumers are ready to become more active, informed decision-makers and a five-year poll of 4,000 U.S. adult consumers points to new levels of engagement, and areas of opportunity for businesses in the health care sector.
In classic business pedagogy, a consumer is the end user who has the willingness, opportunity and resources to purchase a product or service. Consumers are the foundation of the United States’ economy: 70 percent of our Gross Domestic Product (GDP) is dependent upon personal consumption;1 their needs and wants drive innovation in every domain of our daily lives … except, perhaps, health care.
In the health care industry, physicians call consumers “patients;” health plans call them “enrollees” or “members;” and bio-pharma companies refer to them as “users” or sometimes “subjects” if they are involved in a clinical trial. Many of the designations in health care infer that—unlike other industries—individuals play a primarily passive or reactionary role.
Recently, health policy experts and economists have challenged the health care industry’s disregard of consumerism; they reason that costs would be lower, service better and quality substantially improved if the industry repositioned itself as a consumer market. Among consumers, there is a widening gap between their unmet needs and the system’s performance. Still, many stakeholders doubt that the health care industry could function in a consumer economy, reasoning that health care can be too complicated for the “average Joe” to engage with it knowledgeably and appropriately. Consumers’ decisions to purchase or utilize health care services and products often hinge on the recommendations of medical experts who have specialized knowledge and skill to diagnose health problems and identify treatment options. In addition, many consumers’ choices are affected by health insurance, which can distort the true cost of health care services and products. Increasingly, consumers are bearing the costs of health care; expenditures for personal consumption of health care are the second-highest household expense after housing/utilities. Although the idiosyncrasies of the health care system are likely to characterize the health care market for a long time to come, there are signs that consumers are ready to become more active, informed decision-makers.
Since 2008, the Deloitte Center for Health Solutions has annually polled up to 4,000 U.S. adult consumers about their interest in and ability to operate in a consumer health care market.2 These surveys have queried adults in various age, health status, income and insurance cohorts to gauge the degree to which consumers are prepared to engage with the health care system as “patients” or “consumers.” The distinctions between the two are stark; the implications are transformative—not only to the health care industry but to every U.S. household, company and government agency.
This article highlights data-driven insights gleaned from five years of Deloitte* consumer surveys and other Deloitte studies that point to untapped potential for increased health care industry engagement with consumers and, with that, new challenges and opportunities for providers, health plans, employers and government.
The difference between patients and consumers
|Level of engagement in decisions about their
|Low: depend on physicians to make decisions on their behalf||High: depend on physician recommendation
and personal verification
|Level of awareness of
treatment options and
|Low: depend on physician opinion||High: depend on online tools and social media|
|Source of trust in providers they use||High: based on personal experiences and word-of-mouth||High: based on personal experiences and
|Primary unmet needs||Access within a reasonable timeframe + personal attention||Value: access + service
delivery + outcomes + cost
|Unmet need from insurance plan sponsor||Large networks of providers to enhance access and convenience + manageable out-of-pocket costs||Narrow networks of high-performing (high-value) providers + predictable costs|
Key findings from Deloitte consumer surveys (2008–2012) and other Deloitte studies
The U.S. health care system impacts every consumer in the country. Most people are direct users, and some care for others; health care costs are embedded in every element of the U.S. economy, and they are ultimately passed through to consumers as co-pays, taxes or retail prices.
Consumers are heavy users of the traditional health care system (see figure 1). According to Deloitte survey results, in 2012, nearly 8 in 10 consumers report having a primary care provider, and 3 in 4 consumers say they sought medical care from a doctor in the last 12 months. Over half currently use prescription medications, and nearly one-third are using over-the-counter medications. More than 4 in 10 consumers say they received care in a hospital in the last year, either as an outpatient (23 percent), emergency patient (19 percent), or inpatient (8 percent).
Overall spending on health care services and products reached nearly $2.6 trillion in 2010, according to national estimates that include spending on hospital care, physician services, long-term care, prescription medications, medical devices, public health services, research and other related services and products.3 Overall spending tops $2.8 trillion when supervisory care for others, complementary and alternative medicine, mental health/substance abuse facilities, nutritional products and additional health-related expenses are included.4 Consumers’ out-of-pocket costs for health care services and products are a substantial and increasing burden for many households. Recent estimates suggest that the average consumer spent $1,892 out of pocket in 2009 on direct costs (co-pays, deductibles, premiums and direct purchases) and indirect costs for supervisory care (lost wages and replacement costs).5 Today, these costs are likely to be higher for many consumers—in Deloitte’s most recent consumer survey (2012), nearly one-third of respondents (31 percent) report that, compared to the previous year, their household’s health care spending increased as a proportion of their household’s total spending (43 percent say their spending stayed about the same, and 23 percent say it decreased).
The majority of consumers feel that the U.S. health care system is complicated (3 in 4 consumers surveyed say they do not understand how the system works) and may not be the best in the world (3 in 4 believe that other systems may work better). Satisfaction is low in 2012 (22 percent), but it may be improving (up from 16 percent in the previous year).
Health care system use is driven largely by the need to address acute, chronic and long-term-care health problems before, during and after they arise. Whether acting as an individual or on behalf of a family member, it is at the point of deciding to seek medical attention and choosing particular health care settings, services and products that people become health care consumers. These decisions are affected by the choices individuals have, which are influenced by the availability of health care resources in their vicinity and their access to them; their ability to pay, which is influenced by income and insurance status; the degree to which they can exercise personal autonomy and decision-making in the face of professional advice and direction; and their assessment of the trade-offs among cost, convenience, quality and other factors that are important to them, which is influenced by the information individuals have about their options.
Figure 1. Percentage of consumers who have used health care services and products in the last 12 months.
Some types of services are less discretionary than others. For instance, many hospital stays are not determined by a consumer; they result from a doctor’s diagnosis and order for care. It is not surprising, then, that use of inpatient services has remained steady over the past five years (see figure 1).
Figure 2. Consumer views of the U.S. health care system
Other services, including preventive health, use of wellness programs, over-the-counter and prescription medications, and walk-in clinics, are more subject to consumer discretion. These trends are seen among individuals with and without chronic conditions, as well as those with and without health insurance, suggesting that external conditions, such as the recent economic downturn, may be leading consumers to pull back somewhat on their use of certain services and products. This is further supported by Deloitte survey findings that indicate cost considerations have increasingly contributed to consumers’ decisions not to seek care from a doctor when they are sick or injured (46 percent of those who say they skipped care in 2012) or to delay or forego treatment that has been recommended by a doctor (58 percent of those who say they delayed or forewent treatment in 2012).
Consumers relate to health care on a deeply personal basis. Their understanding of the “health care system” is based almost exclusively on their personal experiences. As a result, they hold strong opinions about its performance.
The majority of consumers feel that the U.S. health care system is complicated (3 in 4 consumers surveyed say they do not understand how the system works) and may not be the best in the world (3 in 4 believe that other systems may work better) (see figure 2). Satisfaction is low in 2012 (22 percent), but it may be improving (up from 16 percent in the previous year). Only 1 in 3 consumers surveyed give the system a favorable report card grade (similar to physicians’ responses in a recent Deloitte study),6 but that is also higher than in previous years. Increasing perceptions of waste and lack of value may be contributing to dissatisfaction with the system; in 2012, 62 percent believe that 50 percent or more of the dollars spent on health care are wasted, and only 25 percent feel that the best value is obtained for the money spent.
In contrast to 70 percent of physicians and 67 percent of employers who were recently surveyed, less than half (46 percent) of surveyed consumers believe that consumer behavior (such as unhealthy lifestyles that contribute to obesity) has a major influence on overall costs.
In contrast to 70 percent of physicians7 and 67 percent of employers who were recently surveyed,8 less than half (46 percent) of surveyed consumers believe that consumer behavior (such as unhealthy lifestyles that contribute to obesity) has a major influence on overall costs. More commonly, consumers believe that hospital costs (59 percent), fraud (55 percent), and insurance company administrative costs (52 percent) are major cost drivers, and nearly as many point to the influence of defensive medicine (43 percent), government regulation (41 percent), and payment incentives that reward volume instead of performance (37 percent).
Consumers are receptive to innovations that improve the health care system’s performance. They want a “high-tech, high-touch” system.
Many consumers are interested in using innovative technologies that could enable self-monitoring, facilitate interactions and information exchange with doctors, and support treatment adherence if those technologies were to become available to them (see figure 3). Consumers who are less interested say they prefer to communicate by phone or in person (50 percent), have concerns that the privacy and security of their personal health/medical information might be at risk (31 percent), or believe that the technology might cost too much (23 percent). Addressing these barriers may generate even greater consumer interest as technologies continue to evolve.
Source: Deloitte analysis
Figure 3. Interest in using innovative health information technologies, 2012
Consumers say they value having access to portals and websites that provide direct access to personal information about their health plan, medical history and treatment plans, as well as offer capabilities such as appointment scheduling and prescription refill ordering. Use of health plan websites and enrollee portals is currently more common than use of doctors’ websites and patient portals (see figure 4). More than 4 in 10 of those who currently have access to a secure portal or website through their doctor’s office, and 6 in 10 of those who do not, say having access to this kind of health information technology (HIT) system is or would be important to them.
Figure 4. Use of health plan and doctor websites and portals, 2012
Consumers are testing alternatives to traditional health care products and services.
Increasingly, numerous innovative models and nonconventional offerings for health insurance, health care and health products are becoming available in the marketplace. Consumer use of and interest in some of these are displayed in figure 5. The observable gaps between current behavior and willingness (future behavior) suggest a readiness among consumers to take advantage of new options and choices.
Generational differences might set the stage for increased consumerism in the U.S. health care system. Consumer engagement will likely increase as a result.
While a portion of each generation is actively engaged as consumers (versus passive patients) in decisions about their health, health care and health insurance, the youngest generations appear to be especially receptive to taking a more active role. According to our findings, Millennials (ages 18–30) are more likely than Gen X (ages 31–47), Boomers (ages 48–66), and Seniors (ages 67+) to express the desire to customize their health plan and use innovative technologies that support greater self-engagement (see figure 6). Also, they are more likely to report seeking cost and quality information, as well as asking about and negotiating pricing with providers (see figure 6). Consumer demand for more options, better information and greater support of consumer involvement in decisions and care management is bound to intensify as members of these younger generations age and develop increased needs for health care, while health care systems respond to such demands by setting up innovative tools and opportunities.
Figure 5. Interest in innovative or nonconventional products, services and care settings
Figure 6. Percentage of consumers reporting interest and behaviors by generation, 2012
Implications for consumer engagement in health care
Consumerism in health care is threatening to some individuals and organizations. To physicians and health professionals, it means answering questions, using technologies to eliminate unnecessary visits, reducing redundant paperwork and improving service. It also means their performance—safety, outcomes and cost-effectiveness—will be widely accessible via the Internet as blogs and social networking supplement word-of-mouth conversations.
For hospitals and health insurance companies, consumerism means creating a new set of tools to equip individuals to make judgments about various health care options with an understanding of the potential risks and benefits of each. It means real-time decision-making in which consumers are armed with tools to ask appropriate questions and knowledgeably engage with providers and health plans. And it means customizing solutions to consumers’ problems that reflect the level of risk individuals wish to take financially and clinically, based on their health condition and personal circumstances.
For many industry stakeholders, consumerism in health care is problematic. Although inevitable, it is disruptive to “standard operating procedure”—in some cases, requiring massive overhaul of business models and personnel. But it’s necessary and worth it. The beneficiaries of consumer engagement in health care are individuals and families that purchase services from the system, employers that support health benefits, and the local communities in which the individuals live and companies operate.
Consumers may benefit by driving more value into the system. Its traditional paternalism toward “patients” results in higher costs, poor service and in many cases, avoidable errors. An informed consumer, equipped with the proper information and tools, will hold the system accountable for improved value and shop for alternatives that respond appropriately.
Employers may benefit by having a healthy, productive, stable workforce, which contributes to company growth and ongoing viability. Consumers (employees) seek job security first and foremost, and health care benefits are part of that security. Most companies, in turn, value health care benefits for their employees, but they increasingly face tough choices about how to continue providing them. Without changes to the current system, the threat of nonsustainable health care costs on the solvency and liquidity of companies large and small may lead them to one of two actions: drop benefits altogether or dramatically curtail benefits and hope for the best.
Finally, communities may benefit when the local delivery system—doctors, hospitals, pharmacies and testing facilities—and local health insurance plans collectively deliver improved value to consumers. Lower per capita health costs attract businesses to communities. Better outcomes improve the stability of the workforce. And the relentless pursuit of value in a community by its health care system spurs economic vitality and job creation.
Igniting consumer engagement starts by recognizing that the health care system’s traditional inclination to cater to “patients” no longer works. Consumers want to engage the health system directly and purchase health services with the same energy and passion they use when selecting cars and homes.
The new normal
Five years ago, findings from Deloitte’s first consumer survey (2008) revealed that users of the health care system are “neither patient nor patients. They are consumers.” Changes in the health care landscape since then have accelerated consumers’ impatience and desire for change; industry stakeholders need to be prepared to deliver.
As the health care marketplace moves toward one that is grounded in value-based competition, innovation and consumer engagement, what has the industry learned about how consumers view their health and the health care system? More critically, what more do stakeholders need to know about health care consumers’ behaviors, expectations and unmet needs? How best can consumers be reached? The challenge posed by decoding health care consumerism is to grasp where the end-recipient fits into the “new normal” of health care and to see what opportunities may be around the corner when consumerism is translated into a high-performing, consumer-centered system of care.
EndnotesView all endnotes
- Bureau of Economic Analysis. Gross Domestic Product: First Quarter 2012 (Advance Estimate). April 27, 2012.
- A nationally representative sample of the U.S. adult population of up to 4,000 U.S. consumers. Results are weighted to ensure proportional representation to the nation’s population with respect to age, gender, income, race/ethnicity, and geography.
- Centers for Medicare & Medicaid Services, NHE Tables 2010. <http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/tables.pdf> Accessed April, 2012.
- Health Care Reform: Center Stage, Deloitte Center for Health Solutions and Deloitte Center for Financial Services, March 2011. (Deloitte Development LLP)
- Ibid., “Physician perspectives about health care reform and the future of the medical profession.”
- The Deloitte Employer Survey (Deloitte Development LLP), 2012 (forthcoming).