Study Finds Consumers Are Taking More Responsibility for Healthcare Decisions

As consumers take on greater cost responsibility in their health-care, they are beginning to act like true retail customers. A new study by the management consulting firm Booz Allen Hamilton found that many health-care consumers are shopping for products and services, and expecting competition among providers and suppliers–but they still lack the information they need to make informed choices in critical areas. In many cases, consumers expect physicians to provide information on cost and quality. However, physicians are often unwilling or unable to assume that role and unaware of other changes needed in the traditional physician-patient relationship. The gap between emerging patient needs and what providers are supplying has opened up a need for new trusted sources of health-care information.

Booz Allen commissioned a Harris Interactive poll of almost 3,000 consumers and 600 physicians in the U.S. to examine how the transition to a retail market in health-care is impacting decision-making and influencing behavior. Consumers surveyed included individuals enrolled in traditional health plans, as well as patients with greater cost responsibility enrolled in high deductible health plans (both those with and without associated savings vehicles like Health Savings Accounts and Health Reimbursement Arrangements). Key findings of the study include:

Consumers with greater cost responsibility are more aware of cost and quality differences, but are only beginning to act upon this information to “shop” for value. These consumers are more likely to substitute lower-cost options for products or services; nearly 40 percent reported being very or extremely likely to use a primary care doctor instead of a specialist for advice and treatment, or to change prescription drugs to secure a lower price. In fact, 68 percent were willing to switch from a branded prescription drug to a generic to save money, and 34 percent would change from one branded drug to another for the same purpose.

Although only a minority of consumers in this group appear to be active in managing their health-care costs, they are clearly more active than consumers with traditional health plans. Twenty percent of consumers with high deductible or consumer-directed health plans indicate that they have asked their primary care doctor upfront about the price of services, compared with just 13 percent of individuals in traditional health plans. Further, 35 percent of consumers with more cost responsibility will inquire about prices on prescription drugs before purchasing them, while only 20 percent of traditional health care consumers will do so.

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Consumers in plans with health savings options appear more willing to spend now to avoid potential health complications later. Consumers in plans with Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs) are notably different from others in planning for future health-care costs. Sixty-three percent of these consumers say they plan for future costs, compared with 38 percent of individuals enrolled in plans with no savings vehicle. Over forty percent of consumers with HSAs or HRAs would pay an additional $500 out-of-pocket today to avoid health complications in the future. Eighteen percent are even willing to spend up to $2,500 to avoid possible future health issues.

Consumers expect physicians and other providers like hospitals to compete primarily on quality, health plans to compete on price, and pharmaceutical companies to compete primarily on price, and, to a slightly lesser degree, quality. Nearly half of all consumers surveyed expect primary care and specialist physicians to compete on quality, while only 10 to 16 percent expect physicians to compete on service. While all consumers expect competition, those in high deductible and consumer–driven health plans have even higher expectations for competition.

Physicians’ perceptions of the basis of competition are different from the consumers’ perceptions. Almost 60 percent of physicians surveyed believe that they currently compete for patients based on clinical quality, and an overwhelming 80 percent of physicians believe that they currently compete on the basis of “personalization of service.” Less than a third believe that they compete today on price, and only a quarter of physicians see consumer-directed health-care forcing them to lower the prices they charge in the future.

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Consumers lack the information and advice needed to compare alternatives and make informed choices. Complicating this situation, consumers and physicians have different emerging views on the best source of this information. Consumers look to physicians, as well as family and friends and independent sources like Consumer Reports, as trusted sources for both cost and quality information. They consider health plans among the least trustworthy for health information, along with employers, the government, and pharmaceutical companies. Physicians have a different view — 60 percent consider health plans the best source for cost data on physician prices. For information about prescription drugs, consumers have the most trust in pharmacists—even more than their physicians.

“Both consumers and physicians want better information on the cost and quality of health products and services,” said David G. Knott, Senior Vice President at Booz Allen. “However, they disagree on the most trusted sources to fill the current information void. Consumers are turning away from traditional information sources such as employers and the government, in search of new, independent sources such as Consumer Reports.”

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Although physicians think consumer-directed health-care will have a significant effect on their practices over the next three to five years, they have mixed views on its potential impact. Fifty-five percent of physicians surveyed consider consumer-directed health-care to be an enduring trend, compared with 18 percent who view it as a passing fad. Nearly nine out of ten physicians expect to see an increase in the share of their patients enrolled in high-deductible plans over the next three to five years.

Physicians believe employers, followed by health plans and patients, have the most to gain in this environment — and physicians, pharmaceutical companies, and hospitals have the most to lose. Approximately 40 percent of physicians surveyed think consumer-directed health-care will have a very or somewhat negative impact on hospitals, pharmaceutical companies, primary care doctors and specialists.

Fewer than 20 percent of physicians believe that consumerism will produce better health outcomes or more rewarding patient-physician relationships. In fact, many physicians also think consumer-directed health-care will have a negative impact on patients. Fifty-eight percent of physicians expect patients to limit their use of necessary health-care services and procedures, and 69 percent believe patients will have difficulty paying health-care bills, and expect to see more bad debt.

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Many physicians do expect some positive outcomes, however. More than half of all physicians surveyed felt consumer-directed health-care would lead to greater patient attention to clinical quality. Seventy percent expect it to lead to greater patient attention to the level of service received from providers, and 84 percent believe it will result in greater patient attention to health-care costs.

Consumers want physicians to provide more cost and quality information than they are willing or able to offer. Ninety percent of consumers with greater cost responsibility would find data on expected out-of-pocket costs for a medical product or service useful, as well as quality information about a provider’s medical errors and safety rate for a specific type of treatment. Few physicians, however, are taking steps to provide all the information patients want. For example, just 19 percent currently make information on their safety or medical error rate for specific treatments available, and just 16 percent of physicians surveyed plan to do so in the next two to three years.

“Despite the potential impact of consumer-directed health-care on their practices, many physicians do not appear to see their future role or behavior changing dramatically,” said Booz Allen Vice President Rick Edmunds. “There is a gap between consumer demands and what many providers are preparing to deliver – while some consumers are beginning to act like true retail buyers and shop for value, many physicians are not responding to consumer demands for additional information, more competition, and an enhanced advisory role.”