Healthcare: Where the Customer is Occasionally Present

On Tuesday of this week I hosted the 2^nd Annual Consumer Health & Wellness Innovation Summit.  We were fortunate enough to have an incredibly strong and diverse array of speakers and nearly 200 participants.

It was funny, but a colleague asked me why I was the one hosting a consumer-focused conference when historically I have been far more focused on enterprise type investments.  What I told her is that while her statement is true, the real focus of the healthcare system simply must move to the consumer if we are ever to make progress on the cost and value front.  Yes, I still feel that consumers, aka patients, are loathe to part with their money when there is a payer in the house, more and more the patients themselves are becoming the first line of financial responsibility.  And while difficult, it is probably a good thing for the system.  Each key party—patient, payer and provider—needs to stand up and deliver to make the system work more effectively for the long run.

I had a lot of positive feedback on my opening “speech” at the beginning of the conference so I thought I would reprint it here for those who missed the day.  There was so much incredibly good content that I suspect this is not the last post you will see on the subject, but there are also two great summary articles that already appeared already about the conference, thus freeing me up to repackage my own work!  The two articles, one by Forbes’ wonderfully smart David Shaywitz and one by equally wonderfully smart Health Populi’s Jane Sarasohn Kahn, can be found HERE and HERE, respectively.

But back to me!  Here is how I framed the day and what will hopefully lay the groundwork for some material to come.  And don’t feel bad if you missed it, as we will be back at it next year!

Lisa’s 2013 Consumer Health & Wellness Summit Opening Statement:

The US healthcare industry is undergoing rapid transformation.  Payers are becoming highly diverse organizations, providers are becoming integrated delivery systems and a wide array of new technology and service companies have entered the healthcare fray.  In the end, the purpose of all this change is to be able to take better care of people—the so-called consumers after which the conference is named—and to do so at a lower cost than we have in the past.

Everyone has an interest in how this dynamic plays out, whether from a company building standpoint, an investment standpoint, a business development standpoint, or a patient standpoint, us all being patients and thus consumers of healthcare products and services at various times in our lives.

There has long been a fundamental lack of recognition that the healthcare system is not end-user driven and wasn’t really designed with the customer in mind.  The industry has been built around throughput, which makes personalization challenging and has led to a skewed system of financial incentives that often gives little credence to consumer desires.

According to the government and industry organizations that make our healthcare system tick (unfortunately they are ticking like a time bomb, not a Swiss watch), they are trying to work their way back towards the consumer.  Consumer engagement has become the buzz-word of the last year (and is giving previously favorite buzzwords like “pivot” and “ecosystem” a run for their money).  But what does consumer engagement really mean and who is the consumer anyway and what exactly do people—us–really want? How does the healthcare industry respond to a customer who has a very mixed desire to play his or her own role.

Consumers tend want to spend their money on things they want, not things they need.  And consumers don’t want healthcare, they want health.  It has become a generally accepted principle in healthcare that consumers won’t spend money for things even when they need them.  With rare exception, that principle is true, even when it comes to lifesaving medicines.  And the problem is particularly complex in the US because we are made up of all different kinds of people with all different kinds of needs and motivations and varying socioeconomic and education levels and widely varied access to healthy foods and activities.

And all of these issues are compounded by the inherent conflicts between our healthcare industry and our country’s public policy and public health systems.  For example:

• We pay nearly $5 billion per year in corn and soy subsidies that largely end up in unhealthy foods and then we go and create a healthcare law that incentivizes weight loss.

• We strike down legal limits on smoking and make sure there are smoking areas for those who need them, and then sponsor health plans to that pays you 50% to stop

• Our scientists are telling us that sugar and soda are our number one national security threat, but we strike down laws limiting soda size and cafeterias charge more for salads than processed foods.

We have created a perpetual motion machine designed to produce bad health and then foster demand for health interventions.  Check out these facts:

• Between 1985 and 2010 the price of beverages sweetened with high-fructose corn syrup dropped 24 percent, and by 2006 American children consumed an extra 130 calories a day from these beverages.

• Over the same period the price of fresh fruits and vegetables rose 39 percent. For families on a budget, the price difference can be decisive in their food choices.

Furthermore, the whole issue of consumer engagement raises an interesting problem of finding the right balance between paternalism and individualism, big brother and indifference.  And the complexity of public policy issues makes it even more challenging to figure out what will work.

We could do as Denmark as done and create a “fat tax” on high fat and sugary products, but that does little or nothing to stop manufacturers from spending billions to make those products and effectively advertise them to us.  What could be more ironic than a major sporting event sponsored by a major soda or cigarette manufacturer?  It’s like a road-runner Olympiad sponsored by Wile E Coyote.  Nice gesture, but really?

And this begs the question:  is consumer/individual health an issue of personal responsibility or social responsibility? If one is healthier it improves one’s own life and but also the greater good from an economic perspective.  How do we re-imagine our system to maximize these opportunities and incentivize people to care both about themselves and the greater community in which they live? What technologies, services and activities can we create to improve health and wellness, engage consumers in the process, and make the US a healthier nation while maintaining the health of the healthcare system itself?

The big challenge we all face is how to turn the current paradigm on it’s head so consumers begin to seek a key role in maintaining their own health and preventing their own sickness, in partnership with the providers and payers who serve them. We need to find ways of balancing population-based approaches that serve the most people against the individualized needs of specific people.  We also need to identify new and better ways of bringing consumers and their motivation willingly to the table.

In 2012 Psilos sponsored a study that found that more than 50% of consumers surveyed had become more concerned about or involved in their own healthcare within the last year.  That’s a good sign.  Of the people surveyed,

• 34% began exercising
• 31% began dieting
• 27% saw a new doctor
• 15% read or watched more on TV about health
• 15% took required medications more often

On the other hand, 32% said they had done nothing new in the past year to enhance their health.  That’s not so good.  Nearly 1/3 of people are saying, “Stop bugging me about my health and hand me a Coke, will you?”

Engagement is really hard but everyone is trying to figure it out.  Over 50% of employers offer wellness programs and they clearly believe that they are valuable in improving health and bottom line.  Employees want to know the programs are there and view companies favorably when they are.  But those same employees don’t want to use the programs.  It’s kind of like owning a fire extinguisher—you’re glad you have to but here’s to hoping you never have to use it.

Among people specifically targeted for employer sponsored wellness programs as chosen through biometric screening results, only 1/5 chose to participate, despite the fact that programs usually offer money (bribes, incentives, call it what you wish) to get people on board.  And those payments help, but they don’t convince everyone and they don’t ensure persistence of the behavior change.  And a persistent behavior change, or a persistent good behavior is what we really are after.

But employers really care about these programs because working age people are getting chronic and expensive diseases, reducing productivity, increasing absenteeism, and raising the cost of providing benefits.  Employers overwhelmingly believe in them but can’t measure them, and when they try, the results are hard to see with the human eye. A recent Rand study showed that:

• weight loss programs sponsored by employers resulted in an average 1 pound weight loss per year

• there was not a statistically significant cost savings from formalized wellness programs but trends show at least cost neutrality over 5 years.

That last one is kind of a bummer because the average job tenure in the US is 4.6 years, although this does vary by sector and age group.

When we think of it the traditional way, we generally think of health and wellness as being associated with activities like exercise, nutrition, smoking, drinking, stress and resulting impact on chronic disease, especially diabetes, heart disease and lung disease.  There are also are health promotion activities, such as onsite vaccinations and healthy food programs.  But of course health and wellness consists of every aspect of one’s body and sweeps in everything from early cancer screening to medication compliance to social aspects of healthy aging and mental health to taking the best care of chronic conditions one already has.

One interesting bright light on the consumer front has been the rapid rise in consumer demand for wearable sensors.  People may not like to be told what to do about their health at work or by their health plan, but they are so far willing to part with billions to buy Nike Fuel bands and Fitbits and Jawbone UP devices and assorted other Batman belt items.  ABI Research reports that 230 million wireless body sensor devices were shipped in 2013 and that number will nearly double in 2014.

It is worth noting that what the electronics and consumer products industries know about consumers dwarfs what the healthcare industy knows about selling to consumers by a long shot. For this reason many, including me, believe that the real winners in the consumer health revolution will be traditional consumer firms, not traditional healthcare firms.  But in my opinion, we will need experts from both sides of that coin to engage together to create businesses that truly respond to consumer desires.

I find it so interesting that companies who we used to think of as having nothing to do with healthcare are now among its key innovation drivers.When Fortune started it’s Fortune 500 list in 1955, 2% of the companies on the list had a significant healthcare component.  Today 25% are firmly in the healthcare sector and more than half of the companies in the Fortune 50 have healthcare efforts and/or real businesses that are targeted to consumer-focused healthcare in one way or another. These include such traditionally consumer- oriented companies as Apple, Wells Fargo, WalMart, GE, and Verizon.

The conference is meant to explore how the big companies and the small companies and the players from inside and outside the healthcare system are navigating their way towards consumers and seeking ways to innovate around health and wellness using new technologies and service delivery systems and financial methodologies.  Since I got to set the stage and pick my own speakers, I am particularly excited to start the meeting with a panel made up of people who represent consumers, not others, speaking about the Fact and Fiction of Consumer Preferences.  I go to too many conferences where we all talk about consumers but no one actually speaks from that point of view.  That is why I invited Charlotte Yeh, Chief Medical Officer of AARP, Dr. John Santa from Consumer Reports, consumer advocate, Kim Goodwin, VP of User Experience at Patients Like Me, and Kim Whittemore, Director of the Institute for Sexual Medicine, to be here to represent.

“Can you imagine?” I said to them,  “Actual consumers talking about consumers at a consumer health conference?  Go figure.  It will be a nice refreshing change from everyone else in the healthcare system talking about how consumers feel about changes in the healthcare system.”

And with that, the conference had begun….