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Psychographic Segmentation Helps Address Health and Insurance Literacy

Psychographic Segmentation and Health Literacy

The number of Americans covered by high-deductible health plans has risen dramatically in recent years — and not just among consumers who have acquired health insurance coverage through the Affordable Care Act’s marketplace. According to research by PWC’s Health Research Institute, employers have embraced high-deductible health plans as a way to reduce their own healthcare spending, leading to a nearly 300 percent increase in the high-deductible health plans on offer in less than seven years.

Theoretically, high-deductible health plans, whether acquired via the marketplace or an employer, are meant to incentivize individuals to shop smart for healthcare services. The approach seems to make sense. After all, Americans are the ultimate bargain shoppers — just look at the hoopla that surrounds Black Friday.  Yet, burgeoning healthcare consumerism does not automatically equip consumers to make the right decisions when it comes to purchasing health insurance or considering the necessity and cost of healthcare treatments or procedures.

The Dangers of High Deductible Health Plans

As both employers and individuals seek out lower premiums for health plans, the real costs of high deductibles are beginning to take shape, and the results are not living up to expectations.

While a study by the National Bureau of Economic Research did discover that employers offering high deductible health plans reduced healthcare costs over three years, the savings could very well be off-set by higher healthcare costs in the long run. Why? Because consumers are ill-equipped to shop for healthcare services, leading many to delay needed care. The Commonwealth Fund has found that 40 percent of people with high deductibles report that they have:

  • Put off going to the doctor when they are sick
  • Failed to seek preventive care
  • Avoided a recommended follow-up test
  • Skipped needed specialist care

Moreover, 43 percent of consumers with high deductible health plans told the Commonwealth Fund that their deductibles were “somewhat,” “very difficult” or “impossible” to afford. That’s not surprising, considering that employer-sponsored health plan deductibles have grown 67 percent since 2010, according to the Henry J. Kaiser Family Foundation. Likewise, the popular Silver plans from the ACA marketplace — selected by 65 percent of consumers — generally come with out-of-pocket expenses equivalent to 30 percent of total healthcare costs.

What’s Hindering Consumers from Shopping Smart?

All might be well if, in fact, Americans could shop for healthcare services the way they shop for airline tickets. Unfortunately, the higher level of cost sharing is driving down spending for the wrong reasons. CBS News reports that “consumers tend to respond to higher deductibles by cutting back across the board, regardless of whether the treatments are useful or potentially wasteful.”  In fact, a Families USA survey from 2015 found that 25 percent of healthcare consumers avoid needed care due to costs, particularly low to middle-income individuals. A RAND study, which revealed similar results, expanded on the danger notes a Health Affairs blog, calling it “… a potentially hazardous vicious circle: individuals in poorer health tend to be ordered more medical services that can result in comparatively greater financial burden, leading to noncompliance, which in turn sustains adverse health.” How can health insurance and healthcare providers help to avoid the potential negative health outcomes driven by high deductible health plans?

Insurers and healthcare providers need to ensure that consumers are not only motivated, but adept at shopping for health insurance and healthcare services, and price transparency, comparison tools and improved health literacy will be a good start, but that’s easier said than done.   

  1. Complicated coding systems and variations in the costs of care make it difficult to achieve the price transparency consumers need. An associate editor of JAMA Internal Medicine, Yale University’s Dr. Joseph S. Ross, wrote an editorial suggesting that “high-deductible health plans take advantage of an irrationally designed health care system. In fact, information about our health care system is asymmetric in that it is better understood by physicians and less so by patients, which means patients obtaining care are not truly informed decision makers.” He is not alone in his assessment of the current state of transparency in healthcare. A Wall Street Journal blog noted that during the National Summit on Health Care Price, Cost and Quality Transparency in Washington DC last March, speakers denounced a system where “the same services can be priced five or 10 times more at one facility than at another down the street, for no apparent reason.” The demand for price transparency is likely to be further fueled by both growing healthcare consumerism and pressure on healthcare providers to shift from fee-for-service to value-based reimbursement.
  2. Consumers need more than price information to make informed decisions. Imagine how consumers make other large purchases, such as buying a house. Price may be the first attribute that consumers consider, helping to narrow the field to houses that fit their budgets. Beyond price, however, consumers consider a whole slew of attributes — from the size, condition or amenities of a property itself to location details such as quality of schools, convenience to work and shopping or proximity recreational attractions. And consumers want the ability to similarly compare healthcare services. The Journal of Patient Safety conducted a consumer survey and found 97 percent of respondents ranked high grades for safety above price when choosing hospitals. In addition to developing tools to help with comparison shopping for healthcare, consumers also need tools that enable them to better understand the long-term impact of foregoing preventive care or failing to proactively manage chronic health conditions. 
  3. A lack of health literacy also impedes consumers shopping for health insurance plans and for healthcare services. Larry Boress, the president and CEO of the Midwest Business Group on Health, notes that “it’s really all about communication and education.” Too many consumers purchase health plans based on the monthly premiums. While that approach may work for young consumers who have few health complaints and are less likely to need services beyond the covered preventive care and screenings, it is not a sound approach for consumers who already have chronic conditions. Additionally, even those young consumers may not seek out covered services because they haven’t been adequately educated on plan benefits.

Using Psychographic Segmentation to Improve Consumer Outreach

As other industries like retail and financial services have discovered, a one-size-fits-all approach does not drive engagement for all consumers. Health insurers and healthcare providers need to take a page from leaders in these industries to develop customized communications that deliver the right message via the right channel to improve health literacy. The five distinct psychographic segments defined by c2b solutions can help organizations identify the unique attitudes, preferences and motivations that influence consumer behaviors. Let’s look at how this type of segmentation can be applied to healthcare consumers to aid in promoting health literacy.

  1. 27 percent are Willful Endurers. These consumers live in the moment and go to the doctor only when absolutely necessary. They are unlikely to be swayed by communications that are oriented to some future need. Since they aren’t going directly to traditional sources of information like insurers or providers, organizations need to offer health literacy materials and shopping tools where these self-reliant Willful Endurers are — via apps, websites or even through text messaging.
  2. 24 percent are Self Achievers. As the name suggests, Self Achievers are the most proactive segment, likely to engage regularly with healthcare providers. Their willingness to spend what it takes on their health and appearance can be both a blessing and a curse. On one hand, they are highly motivated to adhere to care recommendations. On the other hand, they may be more likely to pursue unnecessary tests. Since they respond well to goal-oriented tasks, health literacy tools that incorporate an interactive feature like quizzes, for example, can motivate participation while also providing organizations with meaningful feedback as to the effectiveness of the information.

Innovative health literacy solutions such as the Edlogics platform engage consumers with quizzes and incentives, “gamifying” the experience to make learning health information fun and rewarding.  An impressive 88 percent of consumers complete its program modules once they participate.

  1. 18 percent are Balance Seekers. Balance Seekers are proactive with their health as well, but they are less focused on the recommendations of healthcare professionals. They look to a wide variety of information sources to inform their healthcare decisions. Pushing out health literacy information on social media channels, for example, can help attract Balance Seekers’ attention, luring them to seek out more information.
  2. 18 percent are Priority Jugglers. Proactive when it comes to their family’s health, but reactive to their own health issues, Priority Jugglers need health literacy and shopping tools that fit into their busy lifestyles. Organizations need to offer online convenience and succinct messages — not pamphlets that get pushed aside in the daily rush or long, complex explanations that appear too time-consuming to be worthwhile.
  3. 13 percent are Direction Takers. This segment can be deceiving. Although they look first to the experts for guidance on healthcare decisions, they often struggle to implement the recommendations they receive. They are likely to need a hands-on approach — in-person guidance through the process of choosing insurance, for example, with follow-ups via phone or text, to ensure follow through.

High deductible health plans aren’t going away. Neither is healthcare consumerism. To help prepare consumers for this new reality, health insurers and healthcare providers alike need to recognize the differences among consumers and fine-tune their engagement efforts to ensure they are empowered to, not deterred from, getting the care they need.

Psychographic Segmentation and its Practical Application in Patient Engagement and Behavior Change


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