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Low Consumer Literacy Costs Healthcare Industry $4.8B

Analysis  |  By Jack O'Brien  
   September 12, 2018

Due to the complexity of the healthcare system, the majority of consumers don't understand it and that dynamic is costing the industry billions of dollars, according to a new report.

As health system CFOs continue to search for effective cost-cutting measures in an era of shrinking margins, one area that might be worth reexamining is consumer literacy. 

Last year, low healthcare system literacy among consumers cost the industry $4.82 billion, according to a new report from Accenture released Wednesday morning. The survey found that 52% of consumers don't fully know how to navigate the healthcare system, which leads to challenges when it comes to choosing among insurance plans, treatment options, and paying for services.

The costs related to healthcare complexity stem from consumers struggling to make the appropriate decision for their care which lead to an increased administrative burden for health systems across the country. Accenture found that health insurers and employers spent $26 more on administrative needs per consumer based on low healthcare literacy. 

Consumer healthcare literacy measures:

  • 33% have no literacy
  • 32% are proficient
  • 19% are novices
  • 16% are experts

Jean-Pierre Stephan, managing director of Accenture’s Health Front Office, told HealthLeaders that the underlying problem shouldn't necessarily be pinned on consumers.

"We're at a point now where we've heard a lot about human-centered design, and really putting members at the center of this, so if we're really a following that paradigm, we wouldn't blame this issue on the member," Stephan said. "We would rethink the system and there are varying degrees of how do that, but the underlying problem is one that has a significant cost burden on the on the health system."

Stephan laid out three tiers of effectively addressing low consumer healthcare literacy: personalized communications, influencing the experience, as well as rethinking and redesigning the product.

1. Personalized communications

  • Stephan emphasizes meeting consumers on a level where the communication outreach is tailored to their personal understanding in order to maximize the experience.
  • This includes text messages to patients, but it also focuses on educating members when they're about to make a decision, not necessarily only at the start of a plan year or during open enrollment.
  • By using this approach, systems will be tapping into their data and intelligence operations to assist consumers in a more on-demand way than they had previously. 

2. Influencing the experience

  • Assisting consumers in a more tailored way that bolsters their understanding of the process ultimately falls on call-center agents or customer service representatives, Stephan says.

  • This includes a reemphasis of human navigators over digital care to clarify questions for consumers, like the differences between in-network and out-of-network.

  • Stephan says this trust has proven effective for Medicaid populations and draws on the strengths of a community to ensure quality health decisions are being made.

3. Rethinking and redesigning product

  • The final approach is the most "transformative" option, according to Stephan, because it challenges the current dynamic within the industry.
  • Stephan pointed to the modern product designs that may amplify business for benefit consultants and employer groups but only make it more difficult for the consumer to understand the process.
  • He indicated that some have reduced barriers for consumer confusion, like Bind, an on-demand health insurer that has also eliminated deductibles for members, and redesigned the product to fit consumer needs.  

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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