A survey of ideas, trends, people, and practices on the business horizon
GRIST
What Health Consumers Want Consumers of health care constitute a market that is as diverse as a market can be, yet the idea that companies might profit by segmenting customers to address their varied needs seems almost foreign to the health industry, despite the billions of dollars at stake. We believe companies can uncover areas of untapped value by analyzing patterns in demand for health products and services. A particularly revealing way to segment health consumers, according to our
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research, is to analyze health and wealth at the same time. In a survey of 570 people, we looked at consumers’ medical needs, their attitudes about staying healthy, their financial requirements, and their financial confidence. We also asked about a range of related issues, such as which providers the respondents trusted and which they didn’t. (The research was conducted with Patricia O’Brien, MD.) Our analysis revealed four broad groups of
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consumers, each with a distinct health/ wealth profile: Healthy worriers are receptive to new health products and services and are willing to change their behavior to improve their health. But as they see health costs rise faster than their income, they feel intense financial pressure. They believe they must make trade-offs between their health and their wealth, and they lack confidence about their ability to pay for future care. Their survey responses
John Coulter
by Caroline Calkins and John Sviokla
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indicate that the best way to reach them may be through their employers and that these consumers want services to be convenient and simple. Indeed, many of them feel overwhelmed by choices. The healthy, wealthy, and wise are the most fit, health conscious, and financially confident of the survey respondents. Many of them would purchase complex health- and wealth-related products such as high-deductible health insurance, confident they would use them effectively. They want more choices. Relationships, self-directed analysis tools, and quality service are the keys to influencing their decisions. The unfit and happy are self-directed when it comes to finances but are overconfident about their health and ability to pay for future care. They tend not to trust doctors or other health care providers, and although relatively affluent, they are the least receptive to new products and services. Serving these individuals means providing tools and incentives to enable them to help themselves. Hapless heavyweights score below the mean on financial confidence and are the least health conscious; some 72% of them are overweight. They resist help yet feel incapable of improving their situations on their own. Of all the segments, this group needs the most external motivation, including support groups and financial penalties. Segmenting consumers this way, we believe, will generate innovative thinking on the part of companies within and on the edges of the health industry – organizations ranging from medical practices to life insurers. As an example: Financial services firms could target certain of the segments, offering savings and investment programs that meet segment members’ particular needs. They could respond to healthy worriers’ desire for simplicity – and their desire to save for future health needs – by marketing “opt
out” savings programs in which an amount is deducted from each paycheck unless participants go to the trouble of declining the offering (such programs have radically higher compliance rates than the opt-in variety). Focusing on the healthy, wealthy, and wise, firms could market tax-free health savings accounts to consumers who choose high-deductible insurance plans. Providers, insurers, and employers could use the segmentation to better communicate with and engage members of the various groups. For the benefit of the unfit and happy among its employee base, for example, a company could explain the financial incentives of vari-
Caroline Calkins (caroline.calkins@ diamondconsultants.com) directs research on consumer, technology, and management trends for Diamond Management & Technology Consultants, based in Chicago. John Sviokla (john.sviokla@diamond consultants.com) is vice chairman of Diamond and a former professor at Harvard Business School. Reprint F0712A
PANDEMIC PREPAREDNESS
Who’s Your Weak Link? by George Abercrombie
The 2004–2005 flu vaccine shortage that followed British regulators’ shuttering of a Liverpool plant for manufacturing violations was a wake-up call for me. Pandemic preparedness is top of mind at Roche because we produce a frontline antiviral drug that the World Health Organization and the Centers for Disease Control and Prevention agree will be important in a flu pandemic. The sudden evaporation of nearly half of the expected U.S. flu vaccine supply that year brought home how vulnerable our complex supply chains really were and how serious a vaccine disruption could be during the annual flu season, let alone during a pandemic. It became crystal clear that while Roche had a comprehensive pandemic plan to maintain business continuity and to protect our 68,000 employees worldwide, our supply chain was only as strong as its weakest link. With this in mind, we set out to engage our suppliers, to ensure that their pandemic
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ous health options, showing how much of their own money consumers could save over time by participating in, say, a diabetes management program. Studying consumers’ health/wealth profile will have additional implications for many participants in the health care industry.
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preparedness was as robust as ours, and to see what we could learn from them. Here are the steps we took that every company should consider: Play host to educate suppliers about pandemic planning. Earlier this year, Roche gathered executives from more than 100 of our suppliers and business partners at our headquarters for a daylong discussion. The focus was on making supply chain central to business continuity management in general and to pandemic planning in particular. The meeting was designed to raise awareness about supply chain vulnerability as well as pandemic-related legal and medical issues companies may face. It also served as a forum for exchanging preparedness strategies with leading experts. Determine which partners are critical to your operations. To identify weaknesses in our supply chain, we rank each of our vendors on a three-point
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