Hospitals face challenge in finding healthcare's 'missing consumer'
At the outset of the COVID-19 pandemic, hospitals experienced unprecedented declines in volumes as non-urgent procedures were halted and patients worried about infection-delayed care. Since the spring, patients have been slowly but steadily returning to hospitals and physician practices. Yet as procedures have resumed and providers have found ways to treat COVID-19 patients in separate settings, volumes have remained stubbornly below their pre-pandemic levels, and a sharp wave of infections this fall is causing continued uncertainty.
The October edition of Kaufman Hall’s National Hospital Flash Report finds hospital discharges are down 12% year-to-date nationally. Health system leaders interviewed for Kaufman Hall’s 2020 State of Consumerism Special Report indicate broadly similar volumes within their facilities. In the long run, the ability of a provider to ultimately regain 90% or 95% of its pre-pandemic volumes will have an enormous impact on that provider’s margins and future operations.
Accomplishing that goal requires understanding how the pandemic has accelerated the ongoing shifts in how consumers access and experience healthcare services. Changes in the consumer healthcare journey — from scheduling appointments online to accessing a growing number of outpatient and virtual care options by traditional providers and new entrants alike — were already taking place prior to the pandemic. But as infection rates skyrocketed in the U.S. in early March, these slower, more-incremental approaches fell by the wayside as providers quickly launched or accelerated their consumer project timetables, including telehealth and online scheduling, from years to a matter of weeks and even days.
Patients warily return, but uncertainty remains
Starting in March, providers and public health officials alike urged patients with non-urgent conditions to avoid seeking care in hospitals and other care settings. Many states also mandated temporary halts to elective procedures, and some providers voluntarily shut down certain services.
As the pandemic lingered, health system leaders report quickly taking a variety of proactive steps to communicate with patients about safety within their facilities and the importance of seeking needed healthcare services, from multifaceted public relations campaigns to more informal communication by their clinicians.
As in-person care options shuttered, virtual visits, and the corresponding demand for reliable online scheduling, quickly emerged as a viable, scalable short-term alternative to traditional physician visits. And when healthcare facilities gradually reopened, new social distancing protocols led to concerted efforts to meet consumers’ long-standing demands for shorter in-person wait times.
Economic factors influencing access to care have also modestly eased in recent months. According the Bureau of Labor Statistics, U.S. unemployment rate rose to 14.7% in April 2020, before declining to 6.9% for October. In September, 20% of consumers surveyed by Kaufman Hall said they or a loved one had experienced a change in insurance status, down slightly from 22% in April.
Virtual care takes off
The rapid rise of virtual visits in the spring of 2020, followed by a tapering off in ensuing months as in-patient care visits began ticking upwards illustrates the uncertainty facing hospitals as they plan their future service mix.
Over the long term, as patients grow more accustomed to the benefits of telehealth, providers whose services are limited in scope, capacity or functionality will have difficulty competing against the more sophisticated solutions offered by other providers or new entrants with retail experience, including CVS Health and Walmart.
However, a permanent shift toward a higher proportion of telehealth portends significant financial challenges for hospitals. On the revenue side, providers will need to understand and plan for the possibility that lower payment for telehealth services will mean less revenue for organizations already damaged by revenue losses from COVID-19. The reality of lowered payment rates will require them to develop a leaner business model and make changes to in-person service levels and capacity.
On the expense side, if the shift toward telehealth is broad and lasting, hospitals may be able to rethink some facility and real estate expenses. Regardless of an organization’s current positioning, the current moment requires the development of a sustainable, comprehensive telehealth offering that can position the organization for success in the pandemic and beyond.
The shift to telehealth services at the outset of the pandemic was a major force triggering wholesale changes in how patients access and experience care throughout their journey, starting with increased use of online scheduling services. When patients began returning to hospitals and physicians’ offices, providers took steps to reduce the amount of time patients spend in physical waiting rooms, from limiting the number of people in a given space to texting patients instructions to enter a site of care.
The importance of consumer-driven pricing
Even before the pandemic, an increasing proportion of consumers were enrolled in high-deductible health plans, elevating awareness of out-of-pocket costs. The economic upheaval wrought by COVID-19 has further accelerated this movement. In addition, many millennial consumers are more comfortable than previous generations shopping for needed healthcare services among traditional providers, telehealth providers and retail clinics.
These generational trends have increased overall consumer shopping activity in healthcare, as well as the proportion of consumers actively engaged in researching the price of their care. The Kaufman Hall Consumer Shopping Activation score (CSA™) measures the percentage of commercially insured consumers who have actively shopped for care on the basis of price and are incentivized to choose a lower-cost option. That figure has nearly doubled over the past two years to more than 11%.
Meanwhile, CMS is moving forward with new pricing transparency rules that would require hospitals to publicly share information about their charges for items and services starting in 2021.
Given the combination of consumer expectations for value and regulatory pressure around transparency, hospitals and health systems have an opportunity to embrace a more strategic, consumer-driven approach to the pricing and delivery model of healthcare services, particularly outpatient “shoppable” services that are particularly vulnerable to industry disruptors.
Consumerism in the COVID-19 era
Hospital and health system leaders agree that the COVID-19 pandemic has unmistakably accelerated demand for more consumer-friendly services and processes. As providers continue efforts to lure back the still significant number of “missing consumers,” and as the current wave of infections shows no sign of abating, the importance of coordinated, strategic efforts to give consumers better access, experience, pricing and infrastructure has never been greater.