Market Forces and the New Focus on Demand-Driven Healthcare

By Frank Hone 

EMPLOYEE BENEFIT NEWS - January 5, 2007

Macroeconomic forces are at work redefining the landscape of employee health. It has been some time in the making, but now the convergence of an array of complementary factors has set the stage for today's tipping point toward consumer power in healthcare. Yes, the era of health care consumerism has arrived.

The times are changing, and fast. This article identifies the major factors that created and are feeding this movement and outlines the strategic implications for corporations.

Four factors drive change

Health care consumerism did not begin with high-deductible health plans and health savings accounts. Let's look at the macro forces leading the evolution to this new healthcare approach. Four stand out above all others.

First, we have the emergence and expansion of direct-to-consumer (DTC) advertising of prescription drugs over the past decade. Pharmaceutical marketers used a variety of advertising tactics and persuasive promotion to empower consumers to ask their physicians for prescription brands by name. This unconventional shift toward the consumer caused much debate and some concern, but in the end led to a more informed and confident patient base and helped create a demand-driven market.

The parallels of the DTC movement to health care consumerism in the employer setting are marked. They also have important ramifications for employers, which will be discussed in detail in an upcoming article in this series.

Second is the preponderance of health information now available, particularly on the Internet. At the height of the dot-com boom, some 15,000 health sites were up and running - some excellent, others not very good - providing a wide array of access to data, facts, opinion and resources for consumers. And now, in the era of Web 2.0, the level of sophistication and quality has grown to a point where patients have nearly the same access to drug and disease information as health care professionals. And they are using it proactively and productively.

Third, with the first group of baby boomers reaching 60 last year, there is now a decade's worth of AARP-aged adults with a greater need for health care resources. Boomers don't stand still waiting for things to happen. They've spoken out for their beliefs, led revolutions and created meaningful societal change before. Their power will help transform healthcare.

Fourth is the fact that the health care system itself is already evolving. The fee-for-service era we grew up with was supposed to be erased by managed care. But now that managed care has declined in popularity and economic effectiveness, it's time for a new model.

Early adopters take back control

A growing number of progressive companies are now using the tenets of healthcare consumerism to rein in the health care costs. They recognize that in order to tame the beast, they must first regain control of it.

For too long, employers have allowed the responsibility for health benefits to be managed by some combination of outside consultants, major insurers, third-party administrators and others. Outsourcing will, in fact, continue to grow, but employers must move to wield greater strategic oversight.

Over the past decade, the provider side of health insurance has restructured, evolved and found ways to charge more for less from our dysfunctional health care system. These supply-side shifts have tended to feed the revenue lines of the major players inside the present medical model, to the detriment of those on the demand side.

But the demand side has begun to fight back. Look at the bold moves from Pitney-Bowes a few years ago. The company used financial incentives to encourage employees to use their asthma and diabetes drugs, and their overall cost of care declined. Pitney-Bowes paid more for the medicine and saved money in the end.

Innovative leadership yields powerful solutions

Corporations have the responsibility and opportunity to be the guiding drivers toward positive change in their organizations and in the nation as a whole. The more progressive corporations are doing so with a long-term vision in mind, formalizing strategies for employee health based on health care consumerism. These companies are putting their efforts and investments in one of their greatest assets - their people.

The employee health benefit should not be simply a tax deduction to be administered by others as caretakers. It, and the surrounding supportive structure, can and should be an essential core of corporate culture. It is, and should be seen as, a potential competitive advantage. The fact is that America's global competitive superiority is slipping. Leadership in employee health can be a powerful competitive asset.

A few leading-edge employers have begun to view the future differently by creating the position of "Chief Health Strategy Officer." This role provides strategic oversight of benefits, employee communications around health, metrics, and lessons learned. It will set the direction for employee health for the short term and the long haul. By leveraging results and successes as important company milestones, the process of change can gain real momentum.

One overarching point about the changes required is that focus needs to shift from supply-side approaches to demand-driven strategies that engage the consumer and motivate personal responsibility - the true cornerstone. Companies that take these important steps will not only be contributing to positive change on a national level, but also will also see important improve-ments in employee productivity, job retention, positive spirit of corporate culture and overall improved health and well-being.

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