Between 2010 and 2014, the proportion of U.S. residents under the age of 65 enrolled in either a high-deductible health plan (HDHP) or a consumer-directed health plan (CDHP) increased from 25.3% to 36.9%. This figure dipped slightly in 2015 (to 36.0%) after the Affordable Care Act went into full effect, but remains significantly higher than historical levels.
As a result, many consumers are pouring a record amount of their own dollars into the broader healthcare economy. According to the CDC, out-of-pocket healthcare spending grew by 40% between 2010 and 2014, and McKinsey estimates that “the choices [consumers] make have the potential to affect 61% of all healthcare spending.”
This ongoing shift of healthcare’s “first dollar risk” to patients’ pocketbooks has been the impetus behind a wide-ranging set of industry trends that have collectively come to be known as “healthcare consumerism.” As healthcare technology firm DataPath sums it up, “Healthcare consumerism…[puts] the economic purchasing power and decision-making in the hands of [healthcare] plan participants. In short, healthcare consumerism’s goal is to enable patients to become wholly involved in their healthcare decisions.”
The Growing Appeal of “Wellness”
This increased ownership over their care decisions has nudged many consumers away from a formalized medical system that has never quite managed to deliver consistently top-notch patient experiences toward a more retail-minded approach focused on their bigger-picture “wellness.”
As their out-of-pocket expenses continue to climb, patients are paying increasingly closer attention to the quality—and effectiveness—of the care they receive at their doctor’s office, as it’s a lot easier to brush off follow-up visits or a physician’s scattershot approach to lab tests when one’s insurance is footing the bill than when the cost is coming out of one’s own paycheck.
And while America’s traditional healthcare infrastructure is by no means on the brink of collapse, the rise of healthcare consumerism represents an immense opportunity for companies that provide on-demand, over-the-counter wellness-oriented products and services.
A Hypercompetitive Space
Capitalizing on this opportunity will require a marketing approach that borrows as much from the retail sector as from the medical sector. “We live in a world where an individual’s discretionary choices (food, clothing, travel) are increasingly driven by convenience and amenability to control—e.g., online shopping—and the prevalence of mobile apps,” reads a recent brief from Rice University’s Baker Institute for Public Policy. “These attitudes will only heighten with future generations, and it should come as no surprise that they greatly influence how people interact with the healthcare sector.”
Indeed, a Pew Research Center survey found that nearly three-quarters of internet users look for health information online, the vast majority (77%) using standard search engines such as Google, Bing, or Yahoo.
In addition to tens of thousands of health-related smartphone apps, consumers’ thirst for simple, convenient ways to manage their wellness has spurred the rapid proliferation of telemedicine, mHealth, retail diagnostic imaging, urgent care clinics, and digitally driven clinics in retail pharmacies such as Walgreens.
While, for consumers, this proliferation has come as a welcome development, it has also dramatically heightened competition among companies that deliver wellness-oriented products and services. Wellness companies don’t have the built-in consumer/patient loyalty that the traditional healthcare establishment enjoys, as the obstacles to experimenting with multiple options and, ultimately, switching products or service providers are significantly smaller when there are no prescriptions or doctor’s visits involved.
Consequently, in order to stand out in an increasingly competitive field, wellness companies need to engage in the kind of precise, data-driven analytics that are common in the retail sector at large but still relatively rare in the formal healthcare industry.
The Unique Value of Data Analytics in Wellness
Data-driven audience targeting should be priority number one for companies in the wellness space. In the age of healthcare consumerism, most patients want to take responsibility for their own health and wellness, but many are ill-equipped to do so.
Purchasing a pharmaceutical product or service—even one sold over-the-counter—involves far more industry-specific knowledge than purchasing a television or even an automobile. One need not have a deep technical background to research the difference between various resolutions or speaker setups and figure out which television in a given price range best suits their demands.
Conversely, researching—let alone understanding—the benefits and side-effects of a wellness product is a much more in-depth, personalized process. A flawed television is going to be flawed in more or less the same way for every consumer, but a wellness product that doesn’t work at all for one consumer may work well for another. As such, wellness companies must segment their audiences with far more precision than the average retail company.
Segmenting by demographics alone simply isn’t an option in the health and wellness space, which is where data analytics come into play. The mass digitization that has gone hand-in-hand with the rise of healthcare consumerism has given wellness companies access to immense volumes of data with which to determine which consumers are in the market for—but don’t have enough information to understand—their product or service.
Using predictive analytics tools grounded in sophisticated machine learning algorithms, marketers in the wellness space can single out groups of “persuadable” consumers who just need to see the right messaging at the right time to be nudged into a favorable purchasing decision. In the end, this will benefit both consumers and wellness companies alike.
Becoming a Consumer Partner
Healthcare consumerism has bestowed patients with an unprecedented amount of power over their own health and wellness, but as the adage goes, “With great power comes great responsibility.”
The long-term viability of the healthcare consumerism movement will pivot on how well patients are able to make their own healthcare decisions. This, in turn, will depend on how well-informed patients are, which is where precisely targeted—and genuinely informative—messaging will be so vital.
Ultimately, the health and wellness companies that are able to become true partners to patients who are still learning to wield their newfound decision-making power will be the best positioned to rise above the ruckus created by healthcare consumerism and cement an unassailable competitive advantage.