Skip to main content

Economist says Americans’ alarm over costs of care driving retail health option


Pharmacy and food retailers take note: As health-and-wellness consumers, Americans need you now more than ever. That was the message from health economist and futurist Jane Sarasohn-Kahn at a June 15 seminar on retail health care, the aging population and new trends impacting health delivery. The event, held in Bentonville, Ark., and co-hosted by Drug Store News and Mack Elevation Forum, gave retail leaders, health stakeholders and other experts a rare opportunity to explore the major trends driving the retail health movement.

(Click here to download the full Retail Health Summit special report.)

In a keynote address on “The new consumer in the new health economy,” Sarasohn-Kahn laid out the critical economic factors that are driving an urgent search by Americans and their health plan payers for new solutions to the rising costs of care, the rapid aging of the population and the explosion in chronic diseases. All those factors, she said, are propelling the rise of retail pharmacy providers as critical, accessible and cost-effective community health resources.

With out-of-pocket health costs rising to unsustainable levels for many families, the need for new solutions is urgent, said Sarasohn-Kahn, who authors the Health Populi blog. “Americans’ No. 1 pocketbook issue, above paying ... rent, utilities and food, is lowering ... healthcare costs,” she said, citing a consumer survey from Kaiser Family Foundation. “This is the new healthcare sticker-shock in America. This is that insurer’s explanation of benefits you get even if you [just] have a knee surgery — the thousands of dollars you may face in your high-deductible health plan.”

“It’s confronting all Americans, and it’s really eroding financial wellness and trust in the healthcare system because of lack of transparency,” she said.

It’s also impacting overall health rates in the United States. “About 52% of Americans ... do something to self-ration care due to costs,” Sarasohn-Kahn said. Among the ways they choose to ration that care, she said, are actions potentially detrimental to their health, like splitting prescription pills, not filling a prescription altogether, not getting a recommended lab test or failing to see a specialist recommended by their family physician.

“People are delaying care due to cost, which means they’re fiscally responsible maybe in the short run, but [it means] you go later to the doctor or the ER, or you have stage 3 cancer versus the earlier version,” she said. And even “when you’re willing to spend money on health care, you’re now starting to take money out of other parts of the household,” she said. “On the bottom, three-quarters of insured people are delaying vacations and taking away from household spending. That’s a big number.”

‘Tired of how health care is done’

Among the lingering impacts of the Great Recession of 2008 was a profound, national sense of economic disquiet and anxiety, Sarasohn-Kahn said. Accompanying that unease was “eroded trust in institutions,” and a much sharper awareness of the costs of health care and other basic needs. “Since the 2008 recession hit, consumers entered a new frugality,” she said. “Consumers started to feel ... their plans eroding, and they started to get more frugal. We never saw Lexus and Mercedes in the Walmart parking lot before 2008.”

Along with that new frugality, she said, was “more awareness on the money spent on health care.” Americans began showing a greater inclination to “patronize organizations that help [them] stay healthy and stay out of the healthcare system.”

Even in high-income brackets, she added, Americans are saying, “to pay for health care, I’m raiding my retirement savings, my kid’s student loans — future money I will need — to pay for current health expenses.”

“This is real to people, this financial unwellness that people feel,” she added. “And that bite is really impacting how people look at health spending.”

This perception of economic unease cuts across party lines, Sarasohn-Kahn said. “Four-in-10 Republicans now want a federally funded healthcare program providing insurance for all Americans. I’ve never seen a number like this on the Republican side. This tells you that many Republicans and Democrats are sick and tired of high deductibles, EOBs that aren’t clear, high costs, lack of service, etc. Americans are really sick and tired of the way health care is done.”

‘A major opportunity for retailers’

Couple those financial pressures with the explosion in mobile devices and instantly accessible information empowering consumers, and you have a convergence of tidal forces driving Americans to seek new, more accessible and more affordable alternatives to health-and-wellness services, Sarasohn-Kahn said. “They’re saying, ‘I want to streamline my life and save money,’” she added. “People want [access to] health everywhere. They want to engage with every industry for health.”

That’s a “major opportunity” for retailers, the economist said. “Consumers expect everyone to engage in health, across the board.” What’s more, she added, retailers have two key advantages in the fractured market for healthcare services: They’re already equipped to offer two critical components lacking in the traditional health marketplace — “transparency of costs” and a “value proposition.”

“You can guarantee an experience and a bundled price,” she told Walmart executives among the audience at the June 15 summit event. “You know how to do that” by offering “value and transparency” for consumers who want to know, ‘What am I going to get for a product or service?’”

But to seal the deal with health consumers as full-fledged community centers for health-and-wellness products and services, Sarasohn-Kahn said retailers must forge stronger links both with their suppliers and with the rest of the fragmented healthcare system.

“Walmart can’t do it alone; P&G can’t do it alone. [The current] healthcare [system] can’t do it hardly at all,” she asserted. It takes “experts collaborating on care — what we call a healthcare community. This is the real holy grail for the shopper.”

This ad will auto-close in 10 seconds