Consumers Are Catalysts of Health System Innovation

After years of stagnant business innovation, health organizations are now being poked and prodded by consumers to innovate. The consumer cry for change is based on their experiences in other parts of the economy. They want access their medical information on mobile devices and they want to receive care at convenient locations and times. In response, new innovations are on the way from businesses eager to create a better customer experience.

It is no secret that the health system has struggled in this arena. Consumers still experience paper medical records, inconsistent quality and inconvenient access points for care. The health sector has been slow to adopt the latest technology and streamlined processes that have become a routine and integral part of the manufacturing and service industries. But pressure from consumers and employers who are paying the bills is changing this dynamic.

More than half of the employers surveyed by PwC’s Health Research Institute are considering increasing their employees’ share of health benefit cost in 2013. They are doing this by moving more employees into new insurance plans that require consumers to pay higher deductibles, copays and co-insurance—money that comes out of their own pockets. In 2006, only 4 percent of US employees were in a high deductible plan. Since then, enrollment has quadrupled, rising to 17 percent in 2011.

When consumers have a larger financial stake in their healthcare, they want a better health experience. One example of this is the rise of retail health clinics, which are often cheaper, faster and more convenient than a traditional doctor’s office or clinic. In 2007, fewer than 10 percent of consumers surveyed by HRI used a retail health clinic. But by 2011, use had more than doubled to 24 percent. The retail health experience is even stronger for younger people, with 42 percent of 18-24 year olds preferring treatment in those types of settings.

Consumers also want to know how doctors and hospitals rank on quality and service. Efforts by the federal government and the private sector to improve transparency have improved over the years, but they still have a long way to go. This data is so important to people that in a recent HRI survey, consumers said they would be willing to spend an estimated $8.9 billion of their own money on resources that rate physicians and hospitals. The ability to comparison shop has become routine in other parts of the economy, allowing consumers to knowledgeably compare everything from cars, mutual funds and even universities.

But there are signs that the health industries are catching up. The newest innovation in healthcare are mobile health applications, which provides the ultimate consumer experience by giving users information and tools literally at their fingertips. Just as the financial sector provides access to account information, research, and data, consumers say they want the same experience from their healthcare providers—and they’re willing to pay to get it. In our HRI survey consumers said they would be willing to spend up to $700 million annually on mobile health applications.

Much of the momentum behind mobile health has come from outside of the healthcare sectors, primarily from traditional tech and telecommunications firms wanting a toehold in the lucrative health market. Other new entrants include wellness and lifestyle companies that integrate personal data with mobile phones, and entertainment companies that connect people through health video-games.

Not all innovation will come from outside the health industries. Medical advancements are still largely developed in the halls of our academic medical centers and in the research and development departments housed in many pharmaceutical companies. But the patient experience centered on the quality and delivery of healthcare services is being profoundly changed by bold new companies that want to meld ideas from other economic sectors to the health industries. The question for health leaders is not when you will innovate, but how.

— Benjamin Isgur is a director in the PwC Health Research Institute.