Health systems' consumerism efforts stalled since early COVID even as competition from Amazon, CVS intensifies

close up of a mother and daughter consulting with their doctor over a video call on their digital tablet
Most provider organizations say they're well aware of the danger players like UnitedHealth Group, CVS and Amazon pose to their business and, in many cases, are looking toward partnerships to obtain consumer-friendly services they may otherwise be unable to offer, according to a new Kaufman Hall report. (Geber86/GettyImages)

Hospitals made a mad dash toward digital during the COVID-19 pandemic's early days. But health system executives say efforts to be more consumer-centric have lagged in 2021.

In a recent report surveying executives from over 100 provider organizations, Kaufman Hall found a much greater proportion of these organizations had increased their focus and investments in consumer-centric offerings like digital access points, strategic pricing and price transparency since polled in 2019.

Specifically, the group rated 53% of respondents within the first or second tier of its overall healthcare consumerism index compared to about 32% in 2019. Similarly, the percentage of organizations ranked at the lowest tier—indicating no ongoing work on consumer-oriented strategies—decreased from 29% in 2019 to 7% in 2021.

Survey respondents often pointed to telehealth and similar digital capabilities as areas of major gains, even if consumer demand for and utilization of these tools has somewhat dipped since pandemic highs.

However, “while hospitals and health systems rallied to meet the challenges of the pandemic in 2020 with new virtual care options, momentum has stalled,” Kaufman Hall Managing Director Paul Crnkovich said in a statement.

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“Today’s healthcare consumer is digitally savvy, and new competitors are offering innovative alternatives to hospitals and health systems, especially in primary care. Winning over consumers requires regaining momentum—and pushing beyond virtual visits and truly prioritizing digital capabilities that enhance the consumer experience,” he said.

The new care delivery capabilities most organizations have so far adopted are “incremental” services like telehealth (90%), walk-in clinics (73%) and ambulatory surgery centers (63%), the group found.

Fewer have embraced more “advanced” models like in-home patient monitoring (37%), home-based primary care (22%), artificial-intelligence-driven primary care (12%) and subscription-based primary care (10%).

The hospitals and health systems generally indicated that they are working to meet price transparency regulations that went live earlier this year but are often “more reactive than proactive to consumer pricing pressures,” according to the report.

Although numerous executives indicated that their consumerism efforts are moving forward with the interest of outpacing their competition, the specter of outside disruption is also looming large over provider organizations.

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Most executives said they are concerned about the “moderate,” “strong” or “extreme” disruptive threat of UnitedHealth Group/Optum (92%), CVS Health/Aetna (92%), Amazon (78%) or other market players, according to the report. They also listed companies offering new approaches to primary care, like One Medical, or insurance, like Oscar Health, among those posing a competitive threat.

At the same time, Kaufman Hall wrote that many of the executives they interviewed “indicated they are in the early stages of exploring partnerships or joint ventures with health plans, new healthcare entrants or retailers—which can help organizations offer new services they may not be able to currently provide on their own.”

The results from this year’s survey suggest that many organizations are taking stock after one of the most transformative—and hectic—years in their entire existence as healthcare providers, the group wrote in its report. “However, threats from new competitors and changes in healthcare delivery in the wake of the COVID‑19 pandemic are likely to intensify further. And consumers increasingly expect to be at the center of their healthcare journey, with care options at home or at convenient retail-oriented sites.”

Increasing consumer expectations were also the takeaway from a recent CVS Health poll, in which 77% of adults said that the pandemic led them to pay more attention to their own health. The retailer’s report went on to suggest a shift away from traditional avenues of care, a growing appetite for digital alternatives and increased shopping for services among younger demographics.