Earlier this summer, the Chicago-based consulting and software services company Kaufman Hall released a report based on a survey, finding that efforts by traditional providers to address consumers’ demands continue to focus on bricks-and-mortar access points rather than on innovative digital health strategies. The fourth annual report of its kind, entitled “2019 State of Consumerism in Healthcare: The Bar Is Rising,” found that “An overwhelming 88 percent of U.S. hospital and health system executives agree that their organizations are vulnerable to consumer-friendly offerings from non-hospital competitors, such as Optum, CVS Health, and Amazon. Yet many are not doing enough to develop the strong, consumer-centric foundations their organizations need to compete in today’s online, convenience-obsessed, and increasingly consumer-focused world,” according to the press release published at the time of the release of the report in June.
As the June 4 press release noted, “The fourth annual report provides a lens to industry performance related to consumerism, based on survey responses from hospitals and health systems nationwide. It found that top performers kept pace with previous years, while many underperformers fell further behind. The Kaufman Hall Healthcare Consumerism Index ranks participating organizations based on an overall measure of how well they are meeting rising consumer demands across the core areas of consumer access, experience, pricing, and infrastructure. For the second consecutive year, just 8 percent of organizations rated as Tier 1 performers and only about a quarter rated as Tier 2. The most significant changes occurred in the lower tiers. Thirty-nine percent of organizations ranked as Tier 3 this year, compared to 52 percent in 2018. Meanwhile, those in Tier 4 increased from 17 percent in 2018 to 29 percent in 2019.”
> Hospitals and health systems continue to emphasize building facilities over creating convenience. While more than half of respondents offer urgent or ambulatory care centers, only a third offer widespread, basic online scheduling for existing patients
> While improving consumer experience is a high priority for hospitals and health systems nationwide, few are offering real-time scheduling and communications options necessary to keep pace with the evolving needs and wants of today’s digitally connected consumers
> Many legacy providers continue to take a traditional approach to pricing, focusing on what is “defensible” from a published charge basis or rebalancing payer contracts for revenue neutrality, rather than responding to changing marketplace demand. Few offer true price transparency
“Many hospitals and health systems remain focused on a brick-and-mortar model of offering consumers access to their providers,” said Dan Clarin, senior vice president, strategic and financial planning at Kaufman Hall, in a statement upon the report’s release. “Consumers are accustomed to the convenience of being able to access the goods and services they need on their smartphones, tablets, and computers. Healthcare organizations that want to connect with new or potential consumers should adapt their delivery models to remain relevant in an increasingly digital environment.”
With regard to all of this, Clarin spoke this summer with Healthcare Innovation Editor-in-Chief Mark Hagland regarding the report and its findings. Below are excerpts from that interview.
What are the most important overall findings from the survey, from your perspective?
There are two things that I’d highlight: with regard to the hospitals and health systems that are higher-performing, what we call our Tier 1, based on our analysis, the size of that group is remaining about the same, as we now are in our fourth year of doing this. There’s a small group, less than 10 percent, that seems to be keeping pace with best practices. But there’s a lot of flux in the rest of the population of providers. We’ve seen a lot of movement around, and in this most recent year, we’ve actually seen some backsliding where there were more in Tier 4 and fewer in Tier 3. And as we looked into the information… And it’s not the same survey every year, because the market is changing every year. And as it says in the title of the report, the bar is rising. We’re making it more difficult every year to stay in Tier 1. So some are falling behind, particularly around access—in terms of physical access, the process of accessing the system, and the leveraging of digital tools to provide access. We’ve made it a more rigorous set of tools involved to keep pace.
And it’s not like these are totally unheard-of capabilities; at the end of the day, these are fairly straightforward tools and solutions—online scheduling, extended hours for visits—that some just aren’t offering at this point.
Why are the ones who are moving forward successfully, doing so? And why are those who aren’t moving forward successfully, not doing so?
The simple answer won’t be complete, but tells a lot of the story, and is based on my experience talking with health system leaders from around the country: there’s a mindset among the leadership that we want customers to pick us and stay with us. And in my experience, that doesn’t involve any of the particular local healthcare dynamics, though those play a role. The number-one factor to me is the consumer focus, and acknowledging the idea that we need to compete for consumers.
Are things moving more slowly than you would have expected, in terms of moving forward on the consumer experience?
It’s not moving forward more slowly than I’d expect, but more slowly than I would wish for. Healthcare is moving forward more slowly than in other industries, around consumerism.
Is it because healthcare is still very provider-centric?
Yes, it is. Certainly, you can make the argument that incentives are not appropriately aligned for providers to prioritize the needs of consumers over the traditional way of doing business, which traditionally has treated providers as the most important customers—that we need to make sure that they’re happy, and we have to be really careful about impact the physicians’ experience, because that could really injure us as a healthcare system. But any of those rationales for why we’re not customer-centric only take us so far, when in reality, it’s simply not being prioritized. And it’s incumbent upon health systems to change. You mentioned Amazon… Although we do this survey of HC providers, HC providers need to get used to the idea of comparing themselves to non-HC entities.
What would you advise patient care organization leaders to do first?
I like the idea of taking one service that’s important to the health system—so that if you were go to in and talk to one health system and ask them what a few services are that are core to them, and you were to take a particular service from beginning to end, from finding a provider to scheduling a visit to getting checked in, to the actual clinic or hospital experience, to the post-care delivery experience—if you were really thinking about this entire experience, rather than just selling the clinical interaction—starting with just one service, and mapping out that journey, and understanding where the pain points are, and how those could be fixed, and you used that case to generate momentum, and to make broader changes, that would be the way.
In terms of healthcare IT, what will the few most important technologies or forms of leveraging of technologies, be, in the next few years?
The idea of consumer decision support is very important. One of the biggest challenges that folks have in dealing with the HC system is that, as a consumer, I know that I have a certain need; but I don’t know how to get that handled. I don’t know which provider to go, why I should pick one rather than another, what the costs will be, etc. So this idea of a technology-enabled solution that helps people go through that decision-making process, is important. And this isn’t something that really exists today. There exists the idea of decision support. But the idea that Amazon, for example, could be your first stop around HC decision-making—and then they’re going to suggest a decision for you—could be a game-changer, and could totally change the way people access HC. I think that’s something that people need to look at.
Is there anything you’d like to add?
One thing that I’d like to highlight is that there continues to be a lack of capability and energy devoted to the idea of having a pricing strategy, of having a rational approach to pricing services. And it comes through in the survey results related to price transparency and developing a pricing strategy, the self-reported capability numbers are very low. And that comes as a bit of a surprise to me, given that consumers are researching costs, and the fact that they need to seek out care that’s appropriate to them and that they can afford. And the idea of having an intentional and rational approach to how you price your services, plays into this: the approach to pricing has been to focus on the Chargemaster and to making incremental changes to that every year; but that’s not necessarily a strategic approach to pricing, where we might price certain services higher or lower, based on market conditions or consumer elasticity—really, a market-based approach to price transparency.
How do you see the landscape around all of this, five years from now?
There’s going to be a real separation between the organizations that have made it a priority to invest in consumer-facing digital technology, and also in terms of the customer experience itself. You’re going to continue to see a greater and greater separation between the Tier 1 organizations, that are dedicating themselves to customer service and ease of access, and those that aren’t. And it will be a gap that will be increasingly difficult to recover from, if you’re not investing in those assets.