Consumer expectations around shopping have changed over the past decade. Amazon is redefining retail by altering how people look for and consume products, creating new economies of scale, and building a massive tech stack that is both a tool for Amazon’s services and a product itself. This has put pressure on the rest of the retail industry to be creative and unconventional to compete with this behemoth.
Mobile technology has made it easy to find, compare, purchase and quickly receive goods with very little effort. In addition, retailers are finding ways to add value for both stores and manufacturers. For example, presenting customers with items related to purchases and search history, or with targeted coupons based on personal shopping history. This level of convenience and customization is becoming ingrained in the consumer mind. The travel and hospitality industries only add to this trend with loyalty programs, personalized experiences and excellent customer service from the top brands.
As retail is finding new ways to engage consumers, healthcare is learning to engage them for the first time. Historically, the healthcare industry has not had to consider the expectations and behaviors of individuals – i.e., the patients – because it has in effect operated as a business-to-business industry. Payers and providers negotiate payment and service networks. Individual patients only hold limited financial responsibility for services, and therefore go to whatever provider their plan dictates (“in-network”) while paying set out-of-pocket costs.
This old model still accounts for the majority of healthcare transactions but is financially unsustainable. Fee-for-service combined with relatively low out-of-pocket expenses incentivize the patient to consume as much care as possible. As costs have risen, employers have borne the brunt with insurance companies passing on higher premiums. This arrangement has has reached a breaking point as we now see individuals taking on more financial responsibility for their care. High-deductible health plans are on the rise, lowering costs for employers and premiums for employees, but leaving them with a much larger out-of-pocket expenses when receiving care.
Demographic and technological shifts are also forcing the healthcare industry to choose between changing or collapsing. Millennials approach both health and shopping differently than the Baby Boomers. Members of this younger generation, along with Generation Z right behind it, are already showing that it won’t consume healthcare in the same way as their parents.
Furthermore, tech titans – particularly Amazon but also Apple, Google and others – are affecting delivery and consumption of care. As large employers, they are focused on reducing their own healthcare costs, leading them to self-insure and create new partnerships to streamline delivery of care and improve outcomes for their employees. At the same time, they are creating services to improve healthcare for the population at large, building on technology that the legacy industry hasn’t bothered with.
All told, we are seeing shifts that point to a massive long-term reorganization in how care is delivered and paid for as care moves out of hospitals and the consumerization of healthcare begins in earnest. We see these trends as a huge opportunity for the healthcare industry to partner with and learn from retail. It’s already in progress with mega-mergers like CVS-Aetna. It’s also happening with urgent care clinics taking up residence in grocery stores and other retail outlets. Creative relationships between healthcare and retail will be necessary for forward-thinking healthcare organizations to navigate the new, low-reimbursement, consumerized landscape about to sweep the industry.
What does a creative partnership between healthcare and retail (or another industry) that actually reduces costs and improves health look like? Let us know in the comments.