To continue deeper into the intersection of health, wellness, and technology theme – we’re going to discuss opportunities around the cost-conscious patient. Much like eBay and Amazon brought efficiency to the traditional goods marketplace, we’re going to see a great push to make healthcare products and services cheaper through better efficiency and visibility into pricing and options.
A recent Kaiser Family Foundation report found that 30 percent of Americans have had trouble paying medical bills in the past 12 months. Even worse, the same survey reports that 52 percent of those surveyed reported that the amount they paid for their families healthcare and coverage has increased over the last year. Just under 25 percent reported that their healthcare costs had “gone up a lot.”
Beyond public outcry for help, this has driven a large portion of Americans to healthcare self-rationing: with 40 percent of people in fair or poor health did not fill a prescription in the past year due to cost.
This same sentiment was echoed in a March 2010 Harris Interactive Healthday study in which 71 percent of Americans said were worried about rising healthcare costs. However, even more telling may be people’s perception of who’s to blame for rising healthcare costs, with over 60 percent of Americans blaming healthcare costs on the profits of insurance and prescription drug companies and 50 percent of Americans blaming hospital costs. Only 18 percent of Americans point to their own use of medical services as a prime cost of their healthcare bill.
This data points to a system where health stakeholders need to get more patient-centric, working to truly focus on designing services and products around health citizens’ demands and requirements, and enabling consumers to take charge of their healthcare decisions.
An April 2010, PriceWaterhouseCoppers report revealed that the biggest barriers to a digitally connected healthcare system are all related to consumers inability to access and use healthcare and market data effectively. Much as in other industries, by giving consumers access to pricing data and alternative options, they will be able to make more appropriate healthcare decisions.
Early market validation of these programs has been seen in patient data sites such as Change:Healthcare, DirectRX.com, and RateaPill.com, where users give access to their healthcare data to be able to make more informed choices about their healthcare future.
Employer Cost Concerns
Employer health costs are soaring along with employee health costs – up an estimated 10 percent in 2010 – about five times the rate of inflation. Even worse, healthcare costs for small companies are growing much faster than for big companies – nearly double the pace in 2009 – meaning the businesses who can afford it least are hit the hardest.
According to a recent PriceWaterhouseCooper report, employers see “cost-sharing among employees as a top #1 cost-control strategy” – even with this shift, employers can greatly benefit from enabling their employees to have the best access to medical pricing information.
There is a huge opportunity for a product that analyzes the medical services and prescriptions people receive, and proactively reaches out to employees when they are paying too much for a service or a prescription and tells them exactly where they can get it for less.
Insurance Company and PBM Opportunity
The same employers aren’t happy with their health insurers, as satisfaction with health plans has eroded in the past year, according to a survey from PricewaterhouseCoopers. Where 64 percent of large employers were satisfied with their health plans in 2008, only 59 percent were satisfied in 2009.
What do companies want?
According to the report, the two key components for rebuilding employer satisfaction with health plans are (1) meaningful data to help companies better control costs and improve health for employees; and, (2) better technology tools to empower employees to take better care of themselves.
Offering access to these types of tools would enable health insurance companies or PBMs not only to increase the happiness of their primary consumer – the company – but also increase the happiness of their secondary consumer – the employee – who would be likely to promote the company due to his happiness.
Legitimate online-pharmacy development has two drivers: a desire to match the ease and convenience of online ordering of books, movies or consumer goods; and a goal of better managing the medical and financial aspects of prescribing medications. The ever more cost-conscious consumer offers a great opportunity for traditional pharmacies to switch consumers over to automatic refill by mail and online pharmacies to gain market share. They can do this by providing an enhanced way to do price comparisons – comparing the same drug from different sources, but also recommending suitable alternatives or generics – and notifying consumers when a cheaper alternative is available.
Overall, this trend is being driven by four majors factors:
1. Greater consumer trust in sharing private health data
2. More openness from traditional medical providers on sharing health data
3. Ability to more cheaply compute massive sets of consumer data
4. Shrinking consumer budgets
Early market validation has occured with early startups in the space, but as these trends continue to grow – we’re going to more and more opportunities emerge within the space.
What are your thoughts? Is there an opportunity in helping consumer control healthcare costs or are government regulations still to strict for a company to disrupt the status quo?
P.S. Two of these graphs were borrowed from Jane over at HealthPopuli.com – which if you haven’t checked it out – is one of the best blogs about the convergence of healthcare and technology with some details around policy. Add it to your RSS Reader – you’ll be better for it.