Increasing Consumer Engagement and Empowerment to Drive Value in Health Care

March 1, 2018 3:22 pm

Increased consumer engagement and empowerment in health care, although not new ideas, have recently shifted from concept to implementation in practical ways as innovators seek ways to better coordinate healthcare delivery and reduce growth in healthcare spending.

Three trends are primarily driving these efforts: new partnerships, mergers, and acquisitions, increased consumer cost-sharing, and rising healthcare prices.

New Partnerships, Mergers, and Acquisitions

When Amazon, Berkshire Hathaway, and JPMorgan Chase announced their plans to form a new independent, not-for-profit company to provide health care for their employees, JPMorgan’s CEO Jamie Dimon stated, “Our people want transparency, knowledge, and control when it comes to managing their health care.”

Although little is known about the venture, all three companies are known for their consumer-friendly technological platforms and for their tendencies toward disrupting the status quo. a Moreover, two of the entities’ top priorities are transparency and consumer engagement through technology. 

  • ¾including CVS and Aetna, Humana and Kindred, Ascension and Providence St. Joseph Health, Aurora Health Care and Advocate Health Care; and UnitedHealthcare’s provider acquisitions¾indicate an effort to stay competitive in health care’s “value environment” with its focus on lowering costs and improving outcomes. An investment outlook report co-authored by KPMG and Leavitt Partners suggests that consumer engagement will have an increasing impact in shaping innovation and investment. b

Consumer Cost-Sharing

Many healthcare consumers continue to see growing cost-sharing responsibilities with their health insurance. The Centers for Disease Control and Prevention (CDC) reported that in 2016, nearly 40 percent of Americans were enrolled in high deductible health plans (HDHPs) compared with just 26 percent in 2011. c As designed, increased cost sharing through high deductibles limits the degree to which consumers are shielded from the cost of care by their insurance and, thus, gives consumers incentives to participate actively in their healthcare decision making, driving greater demand-side value.  

Rising Prices

Rising healthcare prices also drive the desire for and need of increased consumer engagement in health care. For healthcare consumers, price transparency is a particular concern. In it recently issued report that looks at healthcare spending and utilization from 2012 to 2016, the Health Care Cost Institute finds that, although utilization remained steady or declined from 2015 to 2016, prices led overall spending during this period, growing more in 2016 than any other time in five years. d  Further, the report finds, although brand prescription drug utilization declined, spending on prescription drugs grew 27 percent from 2012 to 2016

Price Transparency

Significant progress has been made toward increasing transparency in health care. For example, in 2014, the HFMA Price Transparency Taskforce developed a framework and set of policy recommendations to increase price transparency, including the importance of developing quality transparency alongside price and gaining the buy-in of patients, payers, and providers. e However, for price transparency to work, consumers must be engaged, willing, and able to use the transparency tools available. Several recent studies have shown that even when price information is available, either through a hospital or state website on through another platform, there is limited consumer engagement. f

Prescription Drug Price Transparency

Government and private-sector efforts on both the federal and state level are underway to bring more transparency to prescription drug prices. During his State of the Union address, President Trump declared, “One of my greatest priorities is to reduce the price of prescription drugs.”

In February 2018, the President’s Council of Economic Advisers released a set of recommendations for reforming prescription drug pricing both in the United States and abroad. The report focuses on ways to lower prices by promoting competition, reforming Medicare and Medicaid payment policies, and implementing domestic reforms that limit drug underpricing, particularly through what the report refers to as “free-riding abroad.” g The President’s FY 2019 budget plan also includes a number of programs to address drug prices.

In March 2017, Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) introduced the Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act that would require more transparency from pharmacy benefit managers about the rebates they negotiate with drug manufacturers and the price passed on to the consumer. The bill’s supporters argue more transparency may lower the price consumers pay for prescription drugs; however, opponents worry this increased transparency may actually increase prices as drug manufacturers can see the rebates their competitors offer and reduce the size of their own rebates.

Numerous states have passed laws to improve prescription drug price transparency. For example, as of Jan. 1, 2018, California requires pharmaceutical companies to notify the state and provide a justification each time they want to increase the price of a medication by 16 percent or more in a two-year period. Maryland, Vermont, New York, and other states have passed similar laws, and stakeholders will be carefully watching to assess whether this type of legislation can control drug prices.

On Jan. 2018, Ascension, Intermountain Healthcare, SSM Health, and Trinity Health, in consultation with the U.S. Department of Veterans Affairs, announced their plan to address the high prices of generic medications by forming a not-for-profit company that would be an FDA-approved manufacturer of generic drugs. As drug prices continue to be a concern for both consumers and the federal and state governments, it will be important to watch these and future efforts aimed to increase transparency and lower the cost of prescription drugs.

Implications for Hospitals

The continuing trends toward increased consumer cost-sharing, consumer engagement, and calls for transparency have implications for hospitals.

First, as deductibles continue to rise, consumers may be less likely to seek elective procedures, which could cause some decline in hospital volume. Forgoing or delaying elective procedures may also, in some cases, contribute to more acute and even higher-cost needs later. Moreover, HDHPs also may contribute to higher uncompensated care costs, as consumers increasingly struggle to afford care. According to a recent AHA fact sheet, hospitals’ total uncompensated care, including fee and discounted care and unpaid bill, increased from $35.7 billion in 2015 to $38.3 billion in 2016. h

Second, new technology-savvy players will enter the market to meet the demand for transparency in the face of rising deductibles. Hospitals can use this opportunity to position themselves to show value to their community by analyzing their current level of transparency and consumer engagement, and they can utilize the toolkits available to improve their operational processes and offer transparency to an increasingly engaged consumer base.


a. “ Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on U.S. employee healthcare,” BusinessWire, Jan. 30, 2018.

b. KPMG and Leavitt Partners, 2018 Health Care & Life Sciences Investment Outlook , January 2018.

c. HDHPs are defined as health plans with a $1,300 deductible for single coverage and a $2,600 deductible for family coverage. See Cohen, R.A., and Zammitto, E.P., “High-Deductible Health Plans and Financial Barriers to Medical Care: Early Release of Estimates From the National Health Interview Survey, 2016,” National Center for Health Statistics, June 2016.

d. Health Care Cost Institute, 2016 Health Care Cost and Utilization Report , January 2018.

e. HFMA Price Transparency Task Force, Price Transparency in Health Care , 2014.

f. Desai, S., et al.. “ Association Between Availability of a Price Transparency Tool and Outpatient Spending,” JAMA, May 3, 2016.; Mehrotra, A., Branne, T., Sinaiko, A.D. “Use Patterns Of A Health Care Price Transparency Web Site: What Do Patients Shop For?Inquiry, Jan. 1, 2014.

g. The Council of Economic Advisers, Reforming Biopharmaceutical Pricing at Homes and Abroad , February 2018.

h. American Hospital Association, “Uncompensated Hospital Care Fact Sheet,” December 2017. 


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