The Rise of the Empowered Healthcare Consumer

05/09/2016

Welcome to the world of the engaged, aware and empowered healthcare consumer. Transformative market forces, coupled with rapid advances in digital technologies, are placing consumers at the center of an increasingly virtualized, personalized and delocalized healthcare system.

Responding to this transformation is an existential challenge for traditional healthcare organizations – one they must master if they hope to thrive in the new digital economy. Successfully engaging the accountable healthcare consumer will require broad new capabilities, from business models based on quality of outcomes, to digitized processes that address consumer demands for product customization and more control over their care decisions.

As these objectives are accomplished, the industry can more effectively reduce waste and costs and improve efficiencies – thus solving many of its own enduring challenges while meeting the needs of a new generation of health consumers.

The Forces Reshaping Healthcare

A wide array of market forces is reshaping the healthcare industry as we know it. While many factors are in play, two will have particularly transformative impacts on traditional health insurance and care delivery models:

• Consumerism and the expansion of direct-to-consumer retail insurance markets. 
• Value-based care and the shifting of risk and accountability away from payers and toward providers and members. 

And while the healthcare industry has grappled with these transformative market forces, a parallel set of digital and societal forces has been brewing:

• Rapidly evolving technology.   SMAC technologies (social networks, mobility solutions, big data analytics and cloud computing), along with artificial intelligence and the Internet of Things (IoT), are poised to become table-stakes capabilities in the healthcare industry.
• New virtualized ways of accessing healthcare.   Advances in telemedicine and telehealth, as well as the proliferation of mobile health apps and remote patient monitoring technologies, are resulting in new business models capable of delivering an increasing range of healthcare services virtually – resulting in new “unwired” and delocalized care delivery models.
• Democratization of healthcare data.   The healthcare industry was slower than most to digitize its data sets, and historically, most data was siloed and proprietary. Data and information was “gated” and inaccessible. However, investments in electronic medical records (EMR), electronic health records (EHR) and health information exchanges (HIE) over the past decade, along with advancements in data standards and interoperability, are finally paying off. 
• Demographic shifts.   The millennial generation has grown up with the Internet and has different expectations regarding information and services access. They represent an ever-increasing proportion of healthcare consumers and are demanding the same level of digital consumer experience and self-service in healthcare as they routinely find in the retail and entertainment sectors. 

These market, regulatory, technology and digital forces are poised to quickly accelerate across the healthcare industry, and portions of the healthcare value chain will be disintermediated, virtualized or delocalized along the way. As we have seen in other industries, the end result will be a radically transformed consumer-centric model – with accountability residing not with insurers, and not with providers, but squarely on the backs of empowered consumers.

Meanwhile, the combined effects of consumerism, value-based quality-driven care and digital technologies – from apps, to wearables, to diagnostic advances in custom medicine – are forcing incumbent healthcare stakeholders to rethink their business models. This has resulted in:

• Continuing consolidation and M&A activity across all segments of the industry to generate economies of scale and mitigate margin pressure. 
• Diversification strategies focused on higher margin, non-insurance lines of business. 
• Provider and health systems consolidating and reorganizing the care delivery system so they can scale to be sustainable risk-bearing organizations (RBOs) as accountability shifts and new value-based reimbursement models mature. 

This is spurring investment in digital capabilities to support population health management and patient engagement, as well as in the administrative and information management infrastructure, tools and platforms that are needed to deliver better care at lower costs.

The Future: An Industry Aligned with the Accountable Consumer

All this activity will increasingly place the consumer firmly at the center of healthcare industry business models. While it is impossible to predict exactly how the industry will evolve, it is clear that successful industry players will need to cultivate the following qualities:  

• Patient-centered thinking
• Agility
• M&A and integration competencies
• Change management skills
• Collaboration and partnership capabilities
• Health information technology adoption 
  
  

Driving Digital Innovation at Scale

These unique market dynamics are creating a dual mandate whereby healthcare stakeholders need to continue to focus intently on operational efficiency while at the same time driving digital transformation and innovation at scale.  Industry-leading organizations are recalibrating their spending accordingly, moving dollars from “lights-on” maintenance and operations projects to invest in new digital initiatives. Digital is more than just technology; it combines technology, data science, devices and design to reinvent a customer experience or business process.  Successful digital enterprises will achieve enhanced efficiencies and productivity while simultaneously reimagining business processes and driving digital transformation at scale.

Given the pace of technology change, businesses need more than single-point digital solutions; they need to incorporate innovation into the organization’s DNA. As digital technologies become mainstream, organizations will need to continuously innovate to maintain market differentiation based on business and clinical performance.

To enable comprehensive digital innovation at an enterprise scale, healthcare companies will need to scale up their digital initiatives by re-architecting legacy environments, connecting new solutions to existing systems, and creating the supporting capabilities necessary to bring digital ideas to enterprise scale. 

Engage the Empowered Healthcare Consumer…. or Else

The empowered healthcare consumer is already emerging. The trend will continue as market, regulatory and digital forces play out across the healthcare ecosystem. That said, the accountable consumer still faces numerous barriers that will persist for some time.

The industry remains burdened with legacy technologies that impede interoperability, as well as overly complex insurance products and provider contracts that defy automation and inhibit innovation. Industry participants need to address these issues by adopting standard, transparent pricing for evidence-based procedures; otherwise, disruptive new entrants, unburdened by the complex legacy of traditional players, may prevail.

Empowered, accountable consumers will not be willing to subsidize the industry’s traditional inefficiencies. Instead, they will increasingly channel their healthcare spending to the health plans and providers that have invested in industry-leading, digitally optimized systems of consumer and patient engagement.



Authors

Patricia (Trish) Birch is a Senior Vice President and Global Practice Leader, Healthcare, for Cognizant Business Consulting. She has 25 years of experience in healthcare operations and management consulting. Trish is also a published author and speaker on issues facing the healthcare industry. Trish can be reached at Patricia.Birch@cognizant.com.

William “Bill” Shea is a Vice President, Healthcare, for Cognizant Business Consulting. He has over 20 years of experience in management consulting, practice development and project management in the health industry across the payer, purchaser and provider markets. Bill has significant experience in health plan strategy and operations in the areas of medical management, claims management, provider and network management and product development. He can be reached at William.Shea@cognizant.com.