Health consumers migrating to retail
Futurist/economist Jane Sarason-Kahn
Healthcare goods and services will account for nearly 1-in-4 dollars spent in the United States within the next three years. That massive growth in spending will pose huge challenges for patients and health plan payers, said health economist Jane Sarasohn-Kahn. But it will thrust retail pharmacy even further into the front lines of care as the nation’s stressed health system desperately seeks ways to curb unsustainable costs, expand patient access and improve health outcomes.
Addressing the Health Innovation Summit, co-hosted in June by CVS Health in partnership with DSN and Mack Elevation, Sarasohn-Kahn highlighted the economic stresses Americans face as they grapple with rising out-of-pocket costs. “Increasingly, the patient is the payer,” she said. “The mass of Americans … haven’t had a wage increase in years, but [their] health costs are jumping. This is really part of our culture now.”
Americans’ alarm over the costs of health care is well documented. A recent Gallup poll found that “the cost of health care is Americans’ top financial concern,” and “leads the list of what Americans consider the most important financial problem facing their family,” Gallup reported.
Behind those concerns is the very real expansion of health costs in the United States. Between 1980 and 2015, healthcare costs as a share of the gross domestic product doubled, from 9% of the GDP to 18%, according to Gallup.
For that and other reasons, Sarasohn-Kahn said, “We must understand what our patients want. Say we prescribe something for patients that [costs] $90,000 a year. If that patient doesn’t have enough food to eat, the drug really isn’t going to work very well.”
But unsustainable out-of-pocket costs are only one of the stresses Americans are facing as they grapple with an opaque and disjointed health ecosystem, said Sarasohn-Kahn, who authors the Health Populi blog. Costs and quality of care can be wildly dissimilar and out of sync from one region to the next, and even from one community to the next, she said, depending on which health provider or hospital system serves that community, and which insurance plans are available.
“What really matters to your health is where you’re born,” she said. “You can have very different health outcomes two miles away from your own community, and state by state, your well-being is different.”
Both health plans and many local and regional health systems have failed to provide a clear picture of care and cost options, or to rein in rising out-of-pocket costs, Sarasohn-Kahn said. “People feel … pretty confused and dazed when they get sick and have to deal with the labyrinth of health care in this country,” she said.
As a result, she said, “Health plans are really … the lowest-rated industry segment in America. When it comes to the legacy healthcare system, … consumers don’t feel they get any respect.”
Instead, she said Americans increasingly have turned to such retail settings as pharmacies and in-store and stand-alone clinics as places that provide “trust to help [them] manage [their] health. Consumers are looking for transparency — ‘how much is it going to cost me, what’s the quality and is there a report card for this doctor?’ So whom do consumers love in terms of experience? Supermarket chains … and retail pharmacy.”
Given those trends, Sarasohn-Kahn said, “This is a great time in health care to be in this business … because we now have the technologies to help people turbocharge their engagement in their health.”
Supermarket and mass pharmacy operators that provide a broad array of groceries have an additional advantage as health care becomes more self-directed and patient controlled, she added. “Food has become really, really important” to the pursuit for healthier lives, she said. “Food is a gateway drug. People with chronic conditions are really serious about it, and need a lot of help.” That means that combo and superstore retailers that “figure out how to help people build a healthy grocery cart” will have a powerful market advantage. “Food and fitness are colliding. Hy-Vee now has a fitness center in a few stores,” she said.