At the Helm

So you’re bought into the idea of consumerism. Now what?

There’s a lot of hype right now around consumerism in health care. In fact, much of our research last year covered the wave of market trends forcing health care leaders to be mindful of consumers, and shift toward business practices that have proven successful in other industries.

For health systems, consumerism is the shift from a provider-centered way of doing business to a business model based on the election of services by end users. Many of the health system leaders we meet with have bought into this idea, but are unsure how to design a consumer strategy that’s right for their organization.

First things first, you have to know your consumers

Consumerism may be newer to health care, but getting to know consumers by way of consumer segmentation isn’t. Traditionally, health systems have segmented consumers using basic demographic and age-based cohorts, with the goal of driving volume to key high-margin service lines.

More recently, some innovators have begun to use the patient risk pyramid, which consists of a sturdy base of healthy patients, with low or at-risk patients a level up, rising risk patients above that, and high-risk or high-cost patients at the top of the pyramid, to guide how they prioritize their consumerist efforts.

That’s good, but often incomplete. We’re finding two gaps in health systems’ segmentation efforts.

First, for health systems to really get in the game of consumerism, leaders need to take their consumer segmentation efforts beyond health status. Health systems need to start with the patient risk pyramid and then look at marketing preferences, insurance and funding, total spend, and demographics for each population.

Second, when health systems are looking at consumer preference, we are seeing them target a specific group from the outset—the group or groups they want to serve. What they’re not doing is looking at and segmenting the consumer base they currently serve. Health systems need to first focus on the people they’re caring for now, and create a strategy that best serves their majority. Then, they can look at and develop a plan for the consumer base they want to grow.

Why the distinction matters: A closer look at two polarized segments

It's one thing to understand consumers, and another to use it to drive your business. If you’ve bought into the idea of consumerism in health care, you need to understand your current consumers—who they are and what their needs and preferences are—then segment delivery resources and coordinate efforts to ensure no patients fall through the cracks.

Most of our current health system clients are looking for help designing strategies to better serve consumers at the top and the bottom of the pyramid. It makes sense for executives to be focusing on these two segments in particular. High risk patients at the top of the pyramid might represent a small population, but they account for a large percentage of total health care spend—often associated with overutilization and waste. And healthy patients at the base of the pyramid not only represent the long-term strategy of maintaining relevance in the market and building loyalty, they are also a priority for employers looking to contract directly with health systems.

Not only are the health care needs of these two segments vastly different, but their preferences are different as well. Take convenience, for example. For a top-of-the-pyramid elderly patient with multiple chronic conditions, convenience means getting diagnostic tests, lab tests, and pharmaceuticals at the same place. Whereas for a bottom-of-the-pyramid 24 year-old who is at work with a sore throat, convenience means stepping out at lunch for a half-hour and returning with a prescription and lunch in hand.

These distinctions may seem like common sense, but few health systems know how to execute a consumer strategy that caters to the health care needs and preferences of these very different populations. Here’s a look into how we develop a consumer-driven strategy for these segments:

For high risk, high cost patients at the top of the pyramid, health systems should turn to a complex chronic care model, like an extensivist model. The current delivery system is not designed to provide the high touch relationship needed to address all patient needs with a single point of accountability and coordination.

Therefore, leaders need to establish an exclusive offering for these patients to preserve their quality of life, avoid acute episodes, prevent ED and inpatient hospitalizations, and address end-of-life. It should also be designed to help manage the social and behavioral needs of patients by engaging loved ones and providing more at-home and virtual care options.

Download this illustration to learn more about the complex chronic care model and how it addresses the medical, social, and behavioral needs of these patients.

For healthy populations that constitute the bottom of the pyramid, it’s all about the health system’s ability to meet these consumers where they’re at—financially, geographically, technologically, and sociologically. Health systems need to implement the right operational components to interface with their consumers in a more appealing way, and simplify the consumerist efforts of their physician partners.

For these patients, health systems need a strategy that includes retail partnerships, price transparency, five-star customer service, and centralized scheduling accessible on a smart phone—and much more. But doing each of these piecemeal isn’t enough to win consumer-loyalty or market share. Each element must be part of a comprehensive, integrated strategy and executed flawlessly.

Download our executive summary to learn how to meet the needs of low-risk, high-volume patients and see the next-generation consumer-centered strategy.


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