Consumerism in healthcare: how did we get here?

Health insurance

Billions of dollars are spent each year in an attempt to seduce potential buyers into making purchase decisions, across all industries. A consumer-driven market is one that is highly competitive, differentiated, price conscious and searching for convenience, and can be influenced by a number of factors, including branding, messaging, access and speed to market. Today this applies just as much to the healthcare industry as it does to retail or the automotive sector.

When I started out in healthcare 35 years ago, I never thought I would be describing any aspect as being ‘consumer-driven’. But times have, and are continuing to, change rapidly. Post-ACA, Obamacare has resulted in the average patient experiencing incredibly high deductibles (the amount that must be paid before insurance pays for services), sometimes in excess of $10,000. This, coupled with a lack of information about the cost of care, is debilitating. The resulting medical bills, as patients are only too aware, can be insurmountable.

This shift from a reimbursement-supported industry to one in which the patient is responsible for the cost is not only painful for individuals and families – it is catastrophic for the service provider. Hospitals that have historically maintained 45-60 days of cash on hand now have just three to four days of cash at their disposal. This cash deficit is due to exploding patient balances, with little to no expectation of collection. The cost of care is not sky-rocketing as some reports in the media would have you believe, but the question of who is going to pay the bill has dramatically changed.

This question of where the payment is coming from is causing patients to act like consumers; as the patient is now responsible for a big part, if not all, of the cost, price has become a significant part of the decision-making process. This means patients are shopping around with different providers to establish who can provide the best value. The decisions being made by patients regarding care are mirroring those we make when we buy clothing, food, housing, automobiles, changing everything about the patient experience. This mindset has implications for the doctor-patient relationship itself, as less affluent patients are forced to choose treatments based on affordability first.

Consumerism already has a foothold in the healthcare market through Amazon’s sales of medical supplies to hospitals, and the formation earlier this year of the Amazon-Berkshire-JPMorgan Health Venture – apparently intended to remove the middlemen from the healthcare system – goes a step further, if only for employees of the business triumvirate. It’s only a matter of time before this kind of activity is ramped up.

So what is the solution? Certainly, giving patients access to information could go a long way towards alleviating distress, something I am working towards day and night as the Founder of Medical Expectations. Creating a fuller understanding of costs and who is responsible for paying those costs would be a positive step. Giving patients – that is to say, consumers – choices such as access to cheaper pharmaceuticals, alternative providers or even enabling self-care, would all be important in helping them to secure healthcare that is both effective and affordable.

A decision may require a patient to make a trade-off between a small increase in your chances of survival, and a large out-of-pocket expense. Studies have shown that giving patients information about the costs and benefits of health-related choices won’t always lead to optimal decisions. Sadly for some, ‘do nothing’ is becoming a more popular choice. And that is where we need to break the link between consumerism and necessity.

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