Special Focus: The Rise of Consumerism: Labs Must Address Convenience, Price, Value In Patient-Centric Delivery Models

Strong consumer trends are reshaping how patients access and purchase health care. The coming year is expected to be a pivotal one as health care companies transform their business strategies to address the growing importance of the end user. Experts say that in order to survive this transition, laboratories must act now to address this cultural shift by considering such issues as convenience and price transparency. “As patients become more sophisticated purchasers of health care, they will push competition in health care delivery to look increasingly like that in consumer-goods industries,” write Robert S. Huckman, Ph.D., and Mark A. Kelley, M.D., in a perspective piece published Oct. 16 in the New England Journal of Medicine. “This competition could lead to product offerings that appeal to consumers with different needs. While some patients may seek greater odds of survival, others may seek a faster return to work or lower out-of-pocket costs. These options are at the core of ‘patient-centered’ care.” Early manifestations of these trends can be witnessed in shifting delivery models and laboratories’ adoption of information technology systems capable of integrating multiple systems to provide additional informational value from laboratory results and unified, real-time financial data for both the patient and the laboratory. These emerging models all coalesce around the unifying themes of convenience, transparency, and access. The Convenience Factor With an emphasis on moving care to lowest-cost, decentralized settings, comes a focus on convenience and patient satisfaction. “As ‘patients’ behave more like ‘consumers,’ health care companies need to deliver a higher level of personalized service, satisfaction and overall experience—or risk losing business to the competition,” conclude the authors of Pricewaterhouse Coopers’s (PwC’s) 2012 Experience Radar survey, which measured the experiences and attitudes of 6,000 U.S. consumers across 11 industries. The survey found that while health care is beginning to look more similar to other consumer industries, it is still unique in some ways. Price was the top influencer in selecting a provider for all other industries, except health care (8 percent in health care versus 55 percent in retail and 69 percent in leisure airline purchases). In health care, personal experience was ranked first by 42 percent of respondents. For factors of convenience, though, health care expectations show a similar pattern to other retail options. Individuals value convenience in a physical health care setting, with nearly 70 percent of survey respondents wanting multiple services in one location and nearly 65 percent valuing online and mobile information exchange. More specifically, half of consumers value extended clinic hours (Monday to Saturday, 8 a.m. to 10 p.m.) and nearly half of consumers said they want insurer information in paper and online formats. “The consumers just by virtue of the fact that they are spending more of their own money are beginning to take a much harder look at what they get for their health care dollars,” Ceci Connolly, managing director of PwC’s Health Research Institute, says in a Health Leaders interview. “So they are saying, if I can do my banking in my pajamas at midnight on my couch why can’t I make my doctor’s appointment then or why can’t I get my lab results on my smartphone? Consumers are starting to demand better pricing or at least transparency in pricing and ‘what am I getting for my money?’” The earliest indicator of this focus on convenience in health care delivery has been in the development of retail health clinics. The Convenient Care Association, the national trade association for retail-based health care locations, says that since these clinics’ inception in 2000, the industry has grown to between 1,500 and 1,600 clinics in 40 states and Washington, D.C. But, a recent study from the Center for Health Care System Change suggests that penetration, while growing, remains rather low, with 3 percent of U.S. families having used a retail clinic in the previous year. The industry, though, has plans for significant expansion. Walgreens (Deerfield, Ill.), which has also begun to integrate laboratory testing into stores through a national partnership with Theranos (Palo Alto, Calif.), has integrated 400 retail health clinics into its 8,100 existing stores across the country, and according to USA Today, the company plans double-digit percentage growth in the number of these clinics during 2014. While experts believe other laboratories will attempt to partner with retail clinics, the competitive advantage offered by the Walgreens-Theranos partnership is significant and not just limited to the added convenience factor for the patients. “It is a national footprint with a robust information management system,” says Robert Boorstein, M.D., Ph.D., director of the laboratory consulting firm ClasGroup (New York). “Doctors are already used to ordering prescriptions online and patients are used to going there to pick up their prescriptions … Spreading out demand will affect labor costs and be much more efficient than standalone draw stations.” Boorstein predicts much like Amazon is changing the retail model through use of technology and new distribution methods, laboratories need to think outside of the box for wholly new models. “With new customer paradigms, laboratories need to evaluate where they will fit in,” says Boorstein. “It is hard to envision the logic of freestanding draw centers at some point. Why would you need separate facilities if draws can be done at drug stores up to 24 hours a day?” Boorstein says that if laboratories think of extensions of customer-driven models and the fact that most pricing models underestimate the value of time and that consumers are willing to pay for convenience, home or office draws may be appropriate in some markets where people may be willing to pay. And while much of the convenience discussion revolves around the ease of specimen collection for the patients, laboratories must consider ease of results for physicians as well. Returning all results at one time, when possible, in one format adds value for time-constrained physicians. Actionable Data Many clinical laboratories today are developing data repositories to logically link all transactional and other information about a patient, says Michelle Del Guercio, vice president of marketing for laboratory informatics company Atlas Medical (Calabasas, Calif.). When data is coalesced in a patient-centered way, physicians can see all relevant clinical information, identify longitudinal trends, and provide better care, enabling labs to provide greater value to their physician customers, as well as other system stakeholders, including increasingly accountable care organizations. “In strictly an accession-based model there is no way historically to track if a patient has already had the test from a different physician,” explains Del Guercio. “Laboratories need to adopt a patient-centric approach to survive. With duplicate or unnecessary testing they won’t get reimbursed and will be losing money.” A key component of these laboratory data repositories is financial data including test pricing, real-time information on copays and deductibles, as well as any past due or collections data. With patients footing a larger portion of their own medical bills as a result of higher-deductible plans, for the first time laboratories are having to deal with consumers’ increased price sensitivity. Price Transparency Average deductibles are increasing for both in-network and out-of-network services. Additionally, the number of high-deductible plans is increasing. According to PwC the number of employers only offering high-deductible health plans jumped from 13 percent in 2012 to 17 percent in 2013. For 2014 and 2015, more than 44 percent of employers are considering offering high-deductible health plans as the only option. “One of the problems of high-deductible plans is that the high deductible is not really backed by financial resources,” says Boorstein. “If you have a high-deductible auto policy and don’t pay your bill at the body shop, you won’t get your car back. In health care we don’t have those levers and patients can run up significant bills.” As consumers make more cost-conscious choices, laboratories will face an increasing number of “walk-outs” of patients who arrive at a laboratory to get a test, discover the price is too high, and walk away without being tested. “This is retail terminology, but laboratories need to have a strategy and scripts to handle walk-outs,” says Boorstein. The challenge for laboratories is not just posting the prices of tests but also being able to keep up in real time with patients’ deductible status as well as past-due amounts owed directly to them. To do so, laboratories are increasingly turning to information systems capable of integrating disparate systems in order to achieve a patient-centered view so that when a patient shows up for a new draw, past-due balances will be evident so the laboratory can attempt to collect in person, which has been shown to have a higher success rate. Similarly, a patient-centric view allows for combined statements from three different encounters that will both reduce mailing costs and enhance clarity in patients’ ability to understand that receiving three bills was not a mistake. Takeaway: In order to survive the transition to new patient-centered delivery models, laboratories must immediately focus on adding value for end users in terms of convenience and price (both transparency and sensitivity). Side Box: PwC’s Advice to the Health Care Industry In order to adapt their businesses and address patients as consumers, PwC suggests that the health care industry:  

• Invest in understanding customer preferences;

• Focus on transparency and convenience;

• Allow for different preferred means of communication;

• Allow for multiple access points and seamlessly moving between channels to engage consumers;

• Invest in customer service training for all patient-facing staff; and

• Be committed to enhancing the customer experience.

Source: PwC’s 2012 Experience Radar survey