Defining Consumer-Driven Value in Healthcare

To answer the question of how consumers define value, Market Strategies worked with Novant Health to develop a means to measure, analyze and track consumer perceptions of value in healthcare.

Defining Consumer-Driven Value in Healthcare

The word “value” can mean many things in healthcare. We hear about “value-based purchasing” (designed to increase the overall quality of care) or “value” as it relates to patient outcomes relative to cost of care (a payer-centric focus). In both of these examples, consumers are assumed to be beneficiaries of these system-driven efforts.

Yet, a third definition of value is garnering greater attention among health systems; value is consumer-defined. Instead of assuming a passive role, consumers are adopting a proactive approach when making healthcare decisions. Why? The increasing prevalence of high-deductible health plans (HDHP) puts a spotlight on out-of-pocket costs. When consumers spend money, they look for value.

Understanding how consumers assign value to their care is now a critical component of managing a successful health system. The simple question is, “How do consumers define value?” The simplicity of the question belies the nuances involved in learning how consumers assign value. Healthcare concepts like quality, price, advanced technology, reputation, and compassionate care drive perceptions of value. How consumers perceive these concepts is often different from how healthcare experts do.


To answer the question of how consumers define value, Market Strategies worked with Novant Health, a not-for-profit integrated system of 14 medical centers and 1,123 doctors in 343 clinic locations, as well as numerous outpatient surgery centers, medical plazas, rehabilitation programs and diagnostic imaging centers, to develop a means to measure, analyze and track consumer perceptions of value in healthcare. The goal of this research was to explore how consumers perceive value in healthcare and then model those perceptions in a scientifically rigorous and replicable way. A critical component of this effort was to ensure that the final outcome provided actionable results. We began with exploratory qualitative research.

Exploring Value

We conducted several focus groups among consumers in Winston-Salem and Charlotte, North Carolina, and Fairfax, Virginia. Discussing the concept of value in healthcare was novel to most participants and tended to elicit feelings of frustration. Consumers reported feeling that the value of healthcare is diminishing because they are faced with increasing costs and lower benefits every year.

Because cost and benefits are subjective, we asked participants to identify and explore factors and images they associate with healthcare. Key associations included:

  • Costs (such as premiums, deductibles and co-pays)
  • Experiences (such as annual physicals, emergency care and in-patient stays)
  • The national debate (Obamacare)
  • Emotions (ranging from feeling healthy and secure to being angered and frustrated by the expense and complexity of healthcare)

Though consumers indicated that no one organization can influence all these factors, the move to population health will likely demand that health systems offer a range of services that touch all of these consumer associations. As a result, health systems will need to define their role and accountability in delivering the continuum of care to better manage consumer perceptions of the value they provide. To inform this process, we sought to better understand how consumer interactions with health care providers and services impact perceptions of value.

Modeling Value

Our exploratory research identified a plethora of factors that influence consumer perceptions of value. To help us make sense of what we found, we developed a model of value and commitment. Perhaps not surprisingly, our healthcare model was complicated. Over 15 factors drive perceptions of value and commitment. Working under the assumption that these factors are not equally weighted among consumers and may vary based on consumer characteristics, we conducted a quantitative survey with over 900 insured consumers to identify the factors that matter most.

Our findings found strong support for the following:

  • People who work in healthcare perceive value in care much differently than those who don’t. Organizations that design value models based on “intuitive” beliefs of its leaders and internal designers will likely miss what matters to consumers.
  • Experiences in healthcare (such as overnight stay, outpatient surgery, rehabilitation, treatment of chronic conditions, or no recent history) alter how value is defined. In other words, there is no one-size-fits-all model. For example, though quality is a key driver of value in overnight stays and rehabilitation, perceptions of quality have little impact on those with chronic conditions. Increasing perceptions of a health system’s value, therefore, will demand tailored interventions based on consumer conditions.

Leveraging Value

Whether the objective is finding a health plan, selecting a new primary care physician (PCP) or deciding where to go for an urgent care need, consumer choice influences how healthcare dollars are spent. Health systems that provide services in ways that align closely with how consumers perceive value will have an advantage. Results from this kind of research can help by uncovering insights into the minds of consumers and informing the development of patient experience models.

As out-of-pocket costs continue to rise in healthcare, consumers will be driven to seek greater value. Health systems must be prepared to respond. Our next steps include investigating whether HCAHPs data can be repositioned, modeled and analyzed to help organizations measure the value they provide to consumers. If results are consistent to what we found here, using data that hospitals already have will provide a cost-efficient tool that will inform the development and assess the impact of patient interventions.

To learn more, join Jack Fyock and Robert Seehausen on Friday, May 2 at the Healthcare Marketing and Physician Strategies Summit in Orlando where they will present “Understanding and Delivering Value: The Consumer Perspective.”

Special thanks to Robert Seehausen for his contributions to this post.

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