Consumer Focused Health

Service has largely been squeezed out of care provided by 3rd party payor medical systems: Rationing and long waits are expected in nationalized systems from Europe to Canada; hour-long waits are common in US primary care and emergency rooms as well. People even wait to get coverage before dealing with chronic health conditions. Until service quality is so bad that people stop showing up (and switch payers), there was no incentive for a third party to pay for its users convenience/ experience.

Recently, that trend appears to be reversing, through innovation occurring in the US and the privatization of the NHS system. It is interesting to look at the similarities and differences of the two major starting points in the US system: boutique care and retail clinics.

Boutique care/concierge medicine
A membership model has started to emerge, led by groups like MDVIP. Equated to a country club, there is a steep price to get in–which buys you access to additional services and fewer people in line. There is significant variation in services that come with the subscription, but they generally include reduced wait times, increased communication options (cellphone, beeper, email) and more time to speak with the physician. Tests and other normal procedural pieces of medicine are generally billed to an insurance company, although there are practices that only take cash. Because of its primary care focus, this model hasn’t spread to specialists. However, recent innovators do seem to be taking the model downstream to the average individual (thanks to Kevin MD and The Medical Quack for the link), in a stripped down, no-frills approach approach that seems reminiscent of Costco. The Qliance model seems like one mechanism where better service may become available to the masses.

Retail clinics
A recent phenomenon in the medical space, nurse-practicioner staffed clinics are sprouting up in pharmacies across the US. Although significantly cheaper than physician visits, the main sell appears to be convenience and improved service for simple health issues. While insurance company co-pays may mask the improved financial value, convenience appears to be driving growth of these clinics to a drugstore near you. This increased convenience and additional benefit to the rest of the pharmacy (through increased purchases of goods and pharmaceuticals) is likely to bring simple services outside the primary care doc’s offices (once they realize they’re competing in a way they will lose, they can move up the value chain and provide distinctive services appropriate for their advanced training).

So what trends can we see in the growth of these two sets of businesses?

1. Consumers are much more satisfied with their care when they get good service
2. Consumers believe service is worth paying for (even hundreds of dollars up front)
3. Consumers may prefer time available to advanced training for simple primary care issues

And what is holding back these types of businesses?

• Up-front subscription payments require a trusted relationship (need to try before buy)
• Lack of brands or third party intermediaries lower awareness of different offerings in a fragmented market
• Unseen insurance payments remove per-transaction revenues for superior service (there is no clear premium or tipping)
• Consumers are not accustomed to paying for healthcare services (insurance buffet model today)
• Physicians protecting turf on low-margin, low-complexity conditions far below the level their training and income should have them see

What these businesses allow to happen next:

• Retail space with nursing support for telemedicine/ teledermatology for more efficient, faster access to specialists
• More convenient access and computerized records for follow-up care for wounds, diabetes care, counseling (e.g., smoking), nutrition/ diet
• Ways to check (at the pharmacy) for med compliance/ understanding of medication needs