Consumerism_Virtual Care_the Next Frontier

SHOPPING THE SYSTEMCONSUMERS FIND VALUE IN VIRTUAL CAREBy, Kevin Smith, DNP, FNP, FAANP

Shopping the System: Consumers Find Value in Virtual Care 2

About the AuthorKevin Smith has been a leader in innovative care delivery since 1999, when he joined physician and business partners to help develop MinuteClinic (originally QuickMedx), the first retail-based clinics in the country. Throughout his time at MinuteClinic, he contributed to electronic health record design, integration of evidence based content and clinical quality control, serving in various leadership positions. In both clinical practice and his doctoral studies, Dr. Smith has focused on innovative applications of technology, clinical decision support, and analytics to drive clinical quality improvement. In his role as Chief Clinical Officer at Zipnosis, he continues to be a force for positive, innovative change in the healthcare industry.

TABLE OF CONTENTS Introduction 3 Consumers are Choosing Convenience 4Value and the Healthcare Consumer 5 Real Value Is Customer Focused 6 Qualities Consumers Value 7 Virtual Care Delivers on Value 8Patients Are Looking for More 9 Where Will Your Patients Go? 10Retail Healthcare: An Analog for Virtual Care 11 The Foundation of Disruptive Healthcare 12 The Retail Clinic S Curve 13Climbing the S Curve 14 Virtual Health Is the Next Frontier 15 Business Growth and Patient Adoption 16 Virtual Care is Growing 17The Time is Now 18 Virtual Care Rising 19The Zipnosis Solution 20 The Zipnosis Virtual Care Platform 21References 22

Kevin L. Smith, DNP, FNP, FAANPChief Clinical Officer, Zipnosis


I N T R O D U C T I O N


INTRODUCTION PATIENTS ARE CHOOSING CONVENIENCE

Is your health system, hospital or clinic prepared to meet the new demands and expectations of consumer-minded patients?

The shift from passive customers to savvy healthcare consumers has been predicted for years, but traditional brick-and-mortar care providers have remained relatively immune. Not anymore. Shifts in the market and advances in technology, among other factors, have given patients the incentives, tools and options to make different decisions about how they receive care.

Market Incentives Technology Tools Competing Care Options

Patients are paying more out-of-pocket

Mobile devices, wearables and apps

are a way of life

Retail clinics and virtual care services

offer customer-friendly convenience

“Thanks to technology and shifts in financial incentives, care will begin to move into the palms of consumers’ hands, providing care anywhere, anytime.” i

- PwC Health Research Institute

“The tension in the shift to a customer-service orientation is the divergence between changing consumer expectations and a healthcare industry unused to dealing with consumerism. A deep understanding of the consumer’s attitudes and behaviors is vital in an environment that places patients at the center. How an individual perceives healthcare is unique and intensely personal...” ii

- Deloitte


V A L U E A N D T H E H E A LT H C A R E C O N S U M E R


REAL VALUE IS CUSTOMER-FOCUSEDHow patients measure value in healthcare has changed over time. Traditionally, value in healthcare has focused on the doctor-patient relationship; later value was tied to in-network providers and services covered by insurance. Today, how healthcare consumers define value is changing to a venn diagram of convenience, cost, quality and service. Driving this shift are three key changes in the healthcare landscape: the emergence of choice-oriented insurance, employer risk-sharing and enhancements to support consumer choice, and improved accessibility to quality ratings and price information.iii

Harvard Business School professor Theodore Levitt once said, “People don’t want a quarter-inch drill, they want a quarter-inch hole.” Innovation guru Clayton Christensen defines customer value in terms of the real jobs a customer wants a particular product or service to do. Value, in other words, is a measure of how well the customer’s “jobs-to-be-done” are satisfied.

So what does value mean to the patient-consumer? Every patient is going to have different wants and expectations depending on priorities and needs. Every provider will have different capabilities or specialties to shape their competitive offering. However, there are four fundamental areas in which those providers will be judged.

“Whether healthcare companies need to perform as well as Apple and Amazonon customer experience remains to be seen. However, the evidence suggests that just performing better than other current healthcare competitors will not be sufficient. Customer expectations are being set by non-healthcare industries, and meeting those expectations is likely to be critical to ensure satisfaction and loyalty.” iv

- McKinsey

“The implementation and effective use of Internet, mobile and video technologies offer hospitals, physician groups and health plans ways to improve their performance and provide greater convenience and value to patients.” v

-American Hospital Association

Shopping the System: Consumers Find Value in Virtual Care

Q U A L I T I E S C O N S U M E R S V A L U E

THE DRIVERS OF CONSUMER VALUE

What do healthcare consumers want?The same things they want in every industry:

% of respondents (N=2,255)

Non-healthcare companies

Healthcare companies

Providing greatcustomer service

Delivering onexpectations

Making life easier

53

53

42

43

37

37

39

36Offering great value

0 20 40 60 80 100

Service

Quality

Convenience

Price

1Participants were offered 10 qualities and asked to select the 3 they thought mattered most.

Source: McKinsey 2015 Consumer Health Insights Survey


V I R T U A L C A R E D E L I V E R S O N V A L U E

Price• High deductible plans are

putting more of the cost burden on individuals. In 2013, nearly half of healthcare consumers reported higher out-of-pocket healthcare spending from the previous year. Expenditures are projected to rise to 5.5% by 2023, up from 3.2% in 2013. vi Meanwhile, employer benefit costs are expected to rise 6% in 2016.vii

• Patients are starting to shop, compare and demand more accurate pricing. viii Price transparency will hit care providers and payers hard. Once price factors into decision-making, customer expectations change.

Convenience• In a 24/7 world, patients

want convenient healthcare. Retail clinics, mobile apps and virtual health meet this demand.

• Most retail clinics accept commercial insurance, Medicare and Medicaid; all accept cash. ix Most visits happen after normal business hours x... because clinics are convenient.xi

• 78% of employers want to offer telemedicine to employees, up from 48% in 2015.xii 60% of consumers would video consult a clinician. Millennials prefer virtual health over in-person visits.xiii 58% of clinicians wish to provide some care virtually.xiv

• From 2013 to 2015, adoption of health-related smartphone apps doubled.xv 21% of patients have ordered prescription refills by mobile device.xvi

Service• Expectations for customer

service in healthcare are similar to other industries. 53% of US healthcare consumers want great customer service, 43% want expectations met, 37% want health companies to make their lives easier, and 36% want great value. xvii

• Consumers measure clinician empathy, support and information about treatment even higher than outcomes when assessing satisfaction with their care. xviii

• New healthcare companies are winning through positive customer experience. They “provide a service, offer information and advice, and empower consumers to take a more direct role in their own wellness and care.” xix

Quality• Healthcare measures

quality through internal numbers like length of stay, readmission rates and errors, but these metrics mean little to consumers. Quality is a table stake in the consumer mind; there’s no more room for providing service below baseline expectations.

• Already, retail clinics deliver care “equivalent, if not superior to the quality of other ambulatory care sites.” xx

• To secure quality care, 46% of patients are willing to travel longer distances, 33% are okay with longer wait times, and 19% will accept higher costs.xxi

• Virtual care offers a new avenue for quality reporting. Zipnosis, Inc. recently reported a 98.4% guideline adherence rate for treatment of acute sinusitis. xxii


PA T I E N T S A R E L O O K I N G F O R M O R E


W H E R E W I L L Y O U R PA T I E N T S G O ?

Once patients are gone, they are hard to get back.

Direct-to-consumer virtual health and telemedicine companies are backed by billions of dollars in venture capital. And competing health systems are increasingly employing telemedicine services or virtual care offerings. These competitors are coming hard for your patients with consumer-focused digital solutions, just as patient mindsets are becoming more sophisticated and value-conscious.

With more than 60% of healthcare consumers stating they rate health systems that offer the newest, most innovative technology higher than their counterparts xxiii and 76% of patients stating that access is of greater importance than than human interaction with their providers,xxiv it’s clear the public is primed for virtual care.

What will this cost you?

Patient leakage is a growing concern, even for health systems in less competitive markets. With the lifetime value of a patient approximately $1.5 million,xxv imagine the impact to your system if 4-5% of your patients leave each year in search of more convenient care. The effects will not be limited to a decrease in revenue. The adage that it costs more to attract a new customer than it does to retain one is true in healthcare as in other industries. The need to replace patients that have jumped ship can cause health systems to divert capital away from care and into patient acquisition efforts.

Your best source of competitive advantage is to link efficient virtual care offerings with your trusted brick-and-mortar brand.

“New entrants are flooding into healthcare riding the waves of innovation, technical capabilities, and scientific discoveries. Start-ups are targeting clinical delivery, health and wellness, population health management, data, and analytics. Many see consumers as a natural entry point and are built to support patient engagement by helping patients manage their health and care by providing information, skills, capabilities, and support to help consumers make smarter choices.” xxvi

- McKinsey


R E T A I L H E A LT H C A R E : A N A N A L O G F O R V I R T U A L C A R E


This is not the first time the healthcare industry has faced widespread disruption. I’ve seen it before - with the launch of retail clinics in the early 2000s.

Virtual care’s impact on the healthcare industry is tracking closely with that of retail care clinics less than two decades ago. Already, health systems are competing with direct-to-consumer virtual offerings, mirroring the industry’s response to retail clinics in the early 2000s.

Retail healthcare began in Minnesota with the 1999 launch of MinuteClinic - called QuickMedx at the time. I joined the venture that year to build the nurse practitioner side of the business, while working with the team to write the clinical protocols for care offerings and developing the organization’s ability to manage quality.

From the beginning, I was sold on the power of bringing a consumer focus to healthcare. In this industry, we talk a great deal about putting the patient first, but at MinuteClinic, we actually were. Coming at care delivery from the patient’s perspective was wonderfully exciting. We couldn’t believe no one else was catering to patients as customers in this way.

We quickly found out why: the medical establishment stood in the way. Physicians and hospitals were resistant to care being delivered in retail settings by nurse practitioners. In response, our strategy was to let the quality of care speak for itself. Every time we encountered an influential critic, we invited that person in for a tour of one of our MinuteClinic locations. Typically, they walked away very impressed.

Overcoming patient resistance was easier, though. The user experience was amazing. People couldn’t believe how easy it was to walk in and get their health needs taken care of so quickly and inexpensively.

“In 2016, millions of American consumers will have their first video consults, be prescribed their first health apps and use their smartphones as diagnostic tools for the first time. These new experiences will begin to make real the dream of care anywhere, anytime, changing consumer expectations and fueling innovation.” xxvii

- McKinsey

T H E F O U N D A T I O N O F D I S R U P T I V E H E A LT H C A R E


In early years, growing the MinuteClinic business was a hard slog, despite early adopters like Blue Cross and Blue Shield of Minnesota. By 2005, there were 11 clinics in Minnesota, and we had only extended into one additional state. Then CVS acquired the company in 2006.

Over the next seven years, growth continued at a snail’s pace, and by 2013, the retail clinic experiment was considered a disappointment by some. Experts blamed U.S. healthcare’s perverse incentives and regulatory impediments for slow growth. The slowdown was temporary and today, growth is accelerating.

The trajectory of retail clinic business, however, is almost beside the point. Even early on, retail clinics caused a significant shift in “business as usual” throughout the healthcare industry. Clinics began extending their hours to better serve patients, and many health systems opened urgent care facilities – bearing striking similarities to the retail clinic model – when they realized how appealing the convenience retail clinics afforded was to patients.

In 2010, when CVS moved the MinuteClinic headquarters from Minneapolis to its Woonsocket, Rhode Island location, I left MinuteClinic for a new area of healthcare innovation - telemedicine and virtual care, joining Twin Cities-based Zipnosis.

While market forces are different for virtual care, the philosophy is the same. Engaging clinicians and driving new patient acquisition are critical for health systems, but we are still enticing health care consumers through the promise of convenience, service, quality and price.

And healthcare consumers are responding. At Zipnosis, we see virtual care helping health systems with both patient retention and acquisition. In markets where regulations permit, our new to existing patient ratio is 50:50 on average. And, having a virtual care offering can be a deciding factor in attracting new patients into a health system.

T H E R E T A I L C L I N I C S C U R V E


C L I M B I N G T H E S C U R V E


VIRTUAL HEALTH IS THE NEXT FRONTIERIf it feels as though the pace of change is picking up, that’s because it’s true. Product life cycles are faster than ever from development through widespread adoption. While it took nearly 15 years for retail clinics to achieve a sustainable business model, their disruptive influence on the industry became apparent much more rapidly. Similarly, direct-to-consumer telemedicine companies are already making ripples in the healthcare community, and their path is made easier by infusions of capital from venture firms and other investors. The road to virtual care delivery promises to be much faster and smoother.

“We believe that healthcare consumerism will soon enter the steep slope of the innovation S curve and become a much more significant force. Payers and providers need to begin making plans now if they want to be ready to respond to, and perhaps shape the evolution of, healthcare consumerism.” xxviii

- McKinsey

“New databases and database tools will allow industry players to analyze data from many sources in novel ways, finally unlocking insights embedded in the reams of information being collected about health consumers.” xxix

- PwC Health Research Institute


B U S I N E S S G R O W T H A N D PA T I E N T A D O P T I O N

Retail Clinic Adoption

In 2010, there were 1,183 stores. By 2015 the number was 1,866.xxx This number is expected to jump to over 3000 in 2017, as CVS alone, which operates about half of existing clinics, plans to reach 1,500 clinics by then.

Num

ber

of U

.S. R

etai

l Clin

ics 3,000

2,600

2,200

1,800

1,400

1,0002010 2011 2012 2013 2016

Source: Convenient Care Association

Year

Virtual Care Adoption

The number of telehealth customers is expected to increase to seven million by 2018.xxxi

Between 2015 and 2016 the number of large employers offering telehealth options jumped from 48% to 74%. xxxii

Over half of millennials would choose a primary care provider that offers a virtual care service over one that does not. xxxiii


The key driver in virtual care’s growth is consumer demand. Once consumers have been primed to expect value in a new product or service, they drive that growth faster.

The challenge for incumbents is speed and value. Hospitals and health systems will get passed by, just as they were by retail clinics, if they do not adopt and implement an effective virtual care strategy soon.

V I R T U A L C A R E I S G R O W I N G

Patients Clinicians Health Systems

Comfort with technology Ease of use Prevent patient loss

Expectations for convenience Convenience in workflow New patient acquisition

Power to compare Quality of interaction First on the block

Ability to manage own data Better access to data Driving up value

What’s Driving Adoption?


T H E T I M E I S N O W


In the face of healthcare consumers’ new value focus, health systems are faced with a difficult decision: adapt or become irrelevant. Fortunately, virtual care offers not only a way to meet the consumer demand for convenient, quality care, but a strong value proposition and ROI fueled by increased clinical efficiency, diminished patient leakage and new patient acquisition. Systems that move quickly have an opportunity to position themselves as leaders in their markets.

The Zipnosis platform is the optimal answer to needs of both health systems and healthcare consumers.

V I R T U A L C A R E R I S I N G

Patients Health Systems

Convenience of an anytime, anywhere care and diagnosis

Increased efficiency using marginal clinical capacity

Inexpensive means of obtaining quality care Proven clinical quality

Seamless experience from virtual to in-person visits

White-labeled, brand-forward platform

Confidence comes from working with a trusted

health system

Smart triage and follow-up options, keeping patients

in-system


T H E Z I P N O S I S S O L U T I O N


T H E Z I P N O S I S V I R T U A L C A R E P L A T F O R M

PriceVirtual care is inexpensive;

providers can set their own price.

ConvenienceThe asynchronous interview is the most convenient entry

point for patients and clinicians.

ServicePatient data is captured from the outset, so the care path is

seamless and integrated.

QualityThe clinicians are yours and care delivery is inside your system, so you have total

confidence in quality and cost management.

BrandWhite-labeled platform creates a seamless brand experience.

Clinical quality Evidence-based protocols with clinical decision support and curated diagnosis pathways produce high levels of guideline adherence.

Clinical efficiency Ability to use marginal clinical capacity to deploy without increasing staff or outsourcing clinical functions.

Flexibility Multiple access points to adapt to patient and regulatory needs

Partnership Team committed to collaboratively building a comprehensive virtual care service tailored to unique business and patient needs.

Why Health Systems Choose Zipnosis Over Other Options

ZIPNOSIS VALUE PROPOSITION


R E F E R E N C E S

i http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

ii http://www2.deloitte.com/content/dam/Deloitte/tr/Documents/life-sciences-health-care/DR16_rising_consumerism.pdf

iii http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-chs-quest-for-value-in-the-health-care-102414.pdf

iv http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism

v http://www.aha.org/research/reports/tw/15jan-tw-telehealth.pdf

vi http://www2.deloitte.com/content/dam/Deloitte/tr/Documents/life-sciences-health-care/DR16_rising_consumerism.pdf

vii https://www.healthcarelawtoday.com/2015/12/10/consumerism-drives-employer-retail-clinics-telemedicine-adoption-in-2016/

viii http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

ix https://www.manatt.com/Insights/White-Papers/2015/Building-a-Culture-of-Health-The-Value-Propositi

x https://rockhealth.com/retail-clinics-the-skinny-for-entrepreneurs/

xi http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism

xii https://www.healthcarelawtoday.com/2015/12/10/consumerism-drives-employer-retail-clinics-telemedicine-adoption-in-2016/

xiii http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

xiv http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

xv http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

xvi http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

xvii http://www.mckinsey.com/industries/healthcare-systems-and-services/our-

insights/debunking-common-myths-about-healthcare-consumerism

xviii http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism

xix http://www.strategy-business.com/article/The-Coming-1.5-Trillion-Shift-in-Healthcare?gko=f0e72

xx https://rockhealth.com/retail-clinics-the-skinny-for-entrepreneurs/

xxi https://rockhealth.com/retail-clinics-the-skinny-for-entrepreneurs/

xxii https://aci.schattauer.de/contents/archive/issue/2329/manuscript/25818.html

xxiii http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-virtual-health.pdf

xxiv http://www.aha.org/research/reports/tw/15jan-tw-telehealth.pdf

xxv http://www.physiciansweekly.com/alienating-patients-cost/

xxvi http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism

xxvii http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism

xxviii http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism

xxix http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

xxx https://rockhealth.com/retail-clinics-the-skinny-for-entrepreneurs/

xxxi http://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

xxxii https://www.healthcarelawtoday.com/2015/12/10/consumerism-drives-employer-retail-clinics-telemedicine-adoption-in-2016/

xxxiii https://www.salesforce.com/form/conf/industries/2016-state-connected-patient.jsp

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