Consumers are becoming more engaged in their healthcare and want to be financially rewarded for their efforts, according to the findings of our new report we just released called the 2012 PSILOS Outlook on Healthcare Economics & Innovation.

Our report is focused on emerging trends in consumer engagement. We found that incentive programs and personalization are critical factors for enticing consumers to be more active in the day-to-day management of their health and wellness, and lowering the overall cost burden of healthcare today.

The fact that more consumers are actively engaging in their healthcare is positive news because action is instrumental to prevention. And prevention, of course, is crucial to changing the conditions that have led to spiraling healthcare costs. If we don’t begin to foster a prevention-oriented mindset, we will never break the cycle of chronic illness that is driving the vast majority of the cost of our system. Chronic illness currently accounts for about 75% of our national healthcare spend; we must help those with chronic illnesses help themselves to avoid the worst exacerbations of their conditions while training our next generation of citizens not to engage in the unhealthful behaviors that put us on the road to unsustainable healthcare system in the first place.

Although historically consumers have been largely absent from a healthcare discussion that tends to focus on what providers and payers need to do, we found that many consumers have indeed become more concerned and/or involved in their own healthcare in the last 12 months. More than 30% report taking some new action to improve their health status, including:

• 34.0% started an exercise regime
• 30.8% began to diet
• 27.3% saw a new doctor
• 15% read more or watched more TV programming about health
• 14.6% took required medications more often
• Alternatively, 31.6% revealed that they have not started anything new
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Alarmingly, however, more than 38% of respondents to a survey on consumer health engagement said they had not become any more concerned about or involved in thinking about their health in the last 12 months; of these more 6% said they had actually gone the other way.

Incentive Programs Key to Patient Engagement

Yet despite the fact that these behaviors should have intrinsic value, our study found that the vast majority of consumers believe there should be a connection between healthy habits and financial reward. 80% of consumers, in fact, want to be paid by their employers or insurers for taking such actions as losing weight, exercising and complying with their medication regimen. And employers are taking the bait.

In recognition that one may have to spend a little money to make some money (or at least save healthcare dollars), many insurers and employers have adopted programs that literally reward consumers for behavior that results in better health. Major companies like Safeway, Wal-Mart and Wells Fargo are championing health plans that reward healthy behaviors. Psilos portfolio company, SeeChange Health, has responded to the opportunity to engage consumers in creating a healthier and less expensive employee population by offering insurance products that tightly integrate benefit design, preventive health promotion and financial rewards products to engage plan members in their own long term health improvement. The results are notable, with dramatic reductions in claims costs for major chronic conditions such as diabetes; these results have translated to annual premium increases that have remained below 2% for three years running. This compares to the average health insurance premium increases of 10%+ that most employers are experiencing. Clearly investing in consumers’ knowledge and awareness of their own health can make a difference.

Effect of the Economy & the Patient Protection and Affordable Care Act (PPACA)
The recent downturn of the national economy is amplifying the healthcare cost challenges faced by consumers – and their employers – and they can no longer ignore the cost of health insurance or the cost of poor health. In a world where Starbucks actually spends more on health benefits than it does for coffee beans, and where health benefit expenses add $1500 to the price of every GM car, getting consumers aligned with their employers is essential to a healthy economy, not just a healthy workforce.

In fact, few years back the Rand Corporation did a study that found that every 10% increase in “excess healthcare costs” (the amount by which growth in healthcare costs exceeds GDP growth) costs the economy 120,800 jobs and $28 billion in lost revenues. Many experts estimate that more than 50% of the chronic disease burden in our country is the result of entirely avoidable behaviors such as smoking, overeating and lack of exercise. Clearly consumers have to be engaged in the process of improving their own health for the good not just of themselves, but of the overall economy.
Health insurance reform is also putting the spotlight on consumers and encouraging them to take greater personal and financial accountability for their own health. Finally, technology is starting to enable these changes in a practical way. The widespread availability of sensors and smartphones, augmented by the promise of social media applications in health, has made it far more feasible to effectively engage consumers in a cost-effective and widespread manner.

About the Survey

Our consumer engagement survey was fielded in February 2012 by Survey Sampling International, the world’s leading provider of sampling, data collection and data analytic solutions for survey research. Results include responses from 329 respondents who opted-in from a nationwide U.S. panel. Respondents were 25 years and older.

Lisa Suennen is a managing member of the Psilos Group, a venture firm focused on health care investments. Opinions expressed here are her own.

Image Credit: Psilos Group