Driving My Life Away, Looking for a Better Way…to Engage Consumers

Attention to health is life’s greatest hindrance–Plato

Let’s just say you own a car. You have undoubtedly purchased insurance for the car and if you are diligent and worried about value and performance, you also are diligent about maintenance. You get the oil changed according to schedule, you fill it with the right kind of gas, change the tires when they get old, and take the car to the mechanic when a warning light indicates there’s a problem you can’t fix yourself. If you are a typical motorist, you also avoid life-endangering behaviors. You drive relatively safely, you don’t speed along cliffs or play chicken with other cars on the freeway. You are, effectively, an engaged consumer of cars. You carefully shopped for it, you don’t abuse the expensive asset you purchased, you take it for care when needed. As a result, it lasts a long time unless some idiot causes an unavoidable accident that wasn’t your fault.

Now consider your body. Granted, you didn’t exactly choose it, but as its sole owner, you have the option to care for it just like you would your car. If you were acting like an engaged consumer in the same manner, you would feed your body healthy foods (not the cheap stuff that makes it run badly); you would exercise to keep gunk from clogging your valves; you would take it to the doctor when you see symptoms that aren’t natural; you might push it a little now and then by drinking or eating too much or forgetting to take your medicine for a day, but you wouldn’t make that a regular habit. You wouldn’t smoke. You would do whatever you could to secure health insurance in the event you have a medical crisis, and, if you are diligent and worried about your body’s value and performance, you would have regular check-ups and take whatever medications were prescribed to maximize that performance.

But here’s the question: How many people take care of themselves as well as they do their cars? And what would it take to get them to take better care of themselves?

OK, that’s two questions.

Still, there has been an increasing buzz out over the last couple of years about the importance of engaging consumers in more actively taking care of themselves. And it’s not just freeway noise. In a country where 75 percent of all healthcare costs are due to chronic illnesses, many of which could be completely avoided, we have to figure out a way to get more people on the road to a healthier way of life. Consider this: Two-thirds of all people who have ever been 65 or older—in all the world and all of human history—are alive right now. And if they are in the U.S., they probably have at least two chronic diseases, according to the Centers for Disease Control. In 1965, the year that Medicare was launched to pay for the healthcare needs of Americans over the age of 65, the average life span was 70.2 years.   Today the average life span in the U.S. is 78.7 years, but the health of those over 65 is abysmal. People are living longer, but those extra years are not characterized by good health.  No one ever planned on that combination of events when Medicare was initiated, but today we are paying for 8 extra years of very unhealthy, very expensive life.  If consumers took better care of themselves, the years could be even longer and the costs far less.

As a result, the budgetary strain of Medicare on our national economy is beyond the breaking point. According to an op-ed piece written by Steven Rattner, a counselor to the Treasury secretary in the Obama administration, “Medicare was under-financed by a staggering $37 trillion as of Sept. 30 [2011].  That’s the amount — about two and a half times the annual output of the United States economy — that would have to be deposited into the Medicare trust funds to adhere to the principle that members of each generation would contribute enough to Medicare while they were working to pay for their care after age 65.”

So as a nation, where are we on this consumer engagement thing and what do we have to do to change the clinical and financial death spiral on which we have put ourselves?

To contribute to the discourse on this question, Psilos Group (the healthcare investment firm which I co-founded with my partners), has continued its history of publishing our findings and predictions about the healthcare industry’s evolution by releasing our fourth annual healthcare industry outlook report today.  The Psilos 2012 Outlook on Healthcare Economics and Innovation has a specific focus on how consumers are engaging in their own health and healthcare.  The Psilos 2012 Outlook, which can be accessed HERE, explores the changing landscape of consumer behavior  as well as what factors might amplify consumers’ willingness to take positive action to increase their own health.

Here are some key highlights of Psilos 2012 Outlook, including the results of a consumer survey conducted to further explore these questions:

When asked if they have become more concerned and/or involved in their own healthcare over the last 12 months, 30.1 percent of respondents stated affirmatively that they have become more engaged. For many people, engagement translates into taking direct action: They have started a new exercise regime; begun to diet; or complied with doctors’ orders to take prescribed medications.

Not surprisingly, the survey found that illness was the number one reason why consumers became more engaged in their healthcare (nothing like being sick to make you think about your health). Almost 22 percent of respondents stated that they became more concerned and involved with their healthcare in the past year after being diagnosed with a health issue. Another big motivating factor was the influence of family and friends (11.5 percent) in encouraging them to take action.

In contrast, 38.1 percent of survey respondents stated that they have not become any more concerned or involved in their health in the last year. And 6.4 percent have even become less concerned or involved in the last 12 months, which suggests that the consumer engagement message is not always being received (and no doubt a lot more Triple Baconators are being consumed). Among those people, 23.8 percent stated they were too busy to think about their health, and another 23.8 percent said they were sick and tired of hearing about healthcare issues in the media. Being sick of hearing about healthcare has to be one of the greater ironies I can think of. Nothing like a little petulant denial to bring sunshine to your world.

Because this is America and cash is king, we were not entirely surprised to find in the survey results that one of the most effective ways to engage consumers in their health and to keep them engaged is through financial incentives. It is human nature for people to respond positively to rewards and incentives, and these incentives need to become more prevalent, more consistent, and more personalized in the healthcare industry if they are to have a long‐term impact. This fact was clearly reflected in the study, with nearly two-thirds (65.4 percent) of respondents saying that health care insurers should reduce the premiums of people who take actions to improve their health. Additionally, half (49.9 percent) of the respondents say employers should pay an incentive to employees  who take steps to improve their health, like beginning an exercise program. Mahatma Gandhi once said, “It is health that is real wealth and not pieces of gold and silver,” but American consumers clearly don’t distinguish between the two.

What is clear is that efforts to combine financial incentives with health-improving activities and programs are key to building a healthier nation. Unfortunately, there is not enough time in the TV programming day to enroll every single American in The Biggest Loser, so we have to look at other approaches such as value-based insurance programs.   SeeChange Health is a company that has demonstrated how the value-based model can work.  By using financial incentives and consumer education to engage members in undertaking health-improving behaviors, this San Francisco, CA-based insurer has demonstrated significant cost and quality results. Members who agree to get regular check-ups, undertake basic biometric tests each year and follow basic protocols to effectively manage chronic illnesses benefit by receiving reduced insurance premiums, and lower copayments and deductibles that amount to an average of more than $500/year in a member’s pocket.  The results have been profound.  In a population of 500,000 covered members, SeeChange saw a reduction of over 19% in diabetes-related costs over a two-year period as a result of their consumer engagement programs.

I have written much about these newfangled health insurance products, which tightly integrate health incentives with benefit design to create changes in consumer engagement in healthy behaviors.  You can see a prior post about this topic  HERE.  But you can also read about this topic and see the rest of the survey results and analysis in the Psilos Outlook on Healthcare Economics & Innovation.

Have a healthy day!

Note: this post will also appear April 17, 2012 in Xconomy