Business consultants urge healthcare providers to embrace consumerization

Last year an eye-popping $4 billion went into venture capital for new digital-health companies, accelerating the growth of a business sector that has now more than quadrupled in the past three years. Stated another way, a whole new spate of players has entered healthcare, and they’re saying: “No industry has ever been disrupted by an incumbent—and we’re here to disrupt healthcare.”

With that, Sam Glick, a partner in the health and life sciences division of the multi-industry, 25-country consulting firm Oliver Wyman, launched into a May 20 webinar discussion on how traditional healthcare providers can “survive and thrive” amid the commercialization of healthcare.

“Healthcare is a funny industry. We’re the only ones who get together at conferences and talk about how to make ourselves smaller,” said Glick, adding that, in his former sphere, high tech, nobody ever said, “Gee, wouldn’t it be nice if people spent less on software?”

Healthcare is different, he acknowledged, as $3 trillion—almost $1 of every $5 dollars of gross domestic product—is, as a matter of public policy, “a terrible amount to have to spend on mediocre outcomes.”

However, there’s another $1.5 trillion being spent by consumers of healthcare-related products and services, everything from nutritional supplements to Weight Watchers to assisted living for aging parents, and traditional providers are in fine position to capture or otherwise control a nice slice of that.

$1.5 trillion up for grabs

Glick showed a chart illustrating that, by 2018, self-insured employers will be spending $150 billion on wellness and many other services that aren’t covered by health insurance but are related to health—health risk assessments, rewards programs, online engagement programs and so on.

In surveys today, Glick said, some 92 percent of these self-insured employers report that they either don’t get a positive return on investment in wellness and self-care programs or they can’t measure ROI on them at all. “They would love to have a health-provider system come to them and say, ‘We can help you do this. We’re in your community, you trust us, and we’re building capabilities to manage populations and engage people.’”

Glick encouraged attendees to think about the increasingly consumerist healthcare ecosystem as a world of opportunity.

“Let’s get out of the world of just thinking about payer mix. That matters a lot and, in fact, the single greatest correlate for a health system’s profitability in this country still remains commercial payer mix,” he said. “But there’s $1.5 trillion that individuals are spending on things that we could think of as commercial healthcare business. There’s about to be $150 billion that employers are spending on [non-claims healthcare]. Those are the opportunities to get out there without necessarily having to flip your whole enterprise overnight. Get out there and capture meaningful, incremental revenue and start to move into new commercial worlds.”

‘New front door to healthcare’

Niyum Gandhi, also an Oliver Wyman partner specializing in health and life sciences, spoke at the webinar about what he called the “new front door to healthcare.” This he defined as the end-to-end integration of the entire spectrum of what the consumer thinks of as healthcare.

He pointed to the quick clinics proliferating at Walmart and CVS stores, for example, at which patients happily pay out of pocket thanks to fast service and low costs, and asked if providers have been thinking of those entities as competitors or potential partners.

“If we’re thinking of those places as competitors to our primary care, we are going to fail,” said Gandhi. “Because who is better positioned to build the ecosystem of all of this than a healthcare provider organization, in partnership with the sources of convenient care that people ask for?”

Gandhi pointed out that WebMD attracts approximately 140 million unique visitors every month, while Google searches for symptoms have become this generation’s first stop, guiding the decision on whether or when to see a doctor.

Access strategies

“Imagine if we were to take a brand-name health system, put it on this new front door to healthcare, involve an application or a website that people can plug into very easily and seamlessly, and offer people physician-guided self-care,” possibly supported by something like IBM’s Watson, Gandhi said. “We could give people guided self-care that is better than the generic information they find on WebMD.”

Such a system could be made to integrate seamlessly with in-person care via nurse triage lines, primary-care doctors’ scheduling systems, convenient-care clinics, ERs and so on, Gandhi said.

“Many of the health systems I work with will say they’re figuring out their telemedicine strategy,” he added. “I challenge them to think about their access strategy, because telemedicine is only one element of this” new front door to healthcare. “It’s a tool, as are retail clinics, as are urgent care sites, as is your primary care footprint. Truly stitching all of that together is something that very few health systems are doing right now. But it’s absolutely a way to get out in front of what today’s consumer actually wants and provide them something of great value.”

Gandhi pushed providers in attendance at the webinar to leave their “ivory towers” and stop saying, “If it’s not physician-directed care, delivered in an office and in the way we’ve always done it, it’s not good care.” That’s not true, he said, and people are voting against it with their feet. “We need to meet them where they are while also using the knowledge and power that we have to deliver a better product than others might be able to.”