jackie wells 7 th october 2003 meeting consumer healthcare needs

Jackie Wells

7th October 2003

Meeting Consumer Healthcare Needs

Presentation Structure

• What factors are driving consumer change?

• How are consumers changing?

• What does this mean for healthcare products?

• How well is the industry responding to these needs?

• Future opportunities and potential market gaps?

Forces re-shaping consumer view

Employer attitudes

ConsumerismConsumerism

Govt. PolicyGovt. Policy

Working Patterns

Government Policy – Healthcare Reform

• “Health of the nation” policy• NHS Performance• Increased budget• Informed choice• Visible improvements?

“If the NHS is not basically fixed by the next election, then I am quite happy to suffer the consequences. I am quite willing to be held to account by the voters if we fail”. Tony Blair

Tony Blair, January 2002

Government Policy - Indirect

• Focusing on three pillars of welfare

• work and skills, income and public services

• “Savings and Assets for all” - Benefits of savings

• Independence through their lives

• Security if things go wrong

• Comfort in old age

• Asset based welfare – benefits to wealth and health

• Increase educational attainment

• Ageism policies

• Informed Choice agenda

• Support for Equity Release

Regulatory Approach

• FSA regulation likely to bring industry under focus

• Sales process more complex

• LTC prohibitively so?

• Scope for misselling claims

• Fewer brokers / intermediaries?

• Future government intervention in product design?

• Stakeholder healthcare insurance?

Working Patterns

• Low unemployment and increased job flexibility

• Leading to change of mindset for protection

• Noticeable shift in emphasis

• away from complex plans to simple

• away from insurance to self-fund

• Widespread recognition of need to generate ‘income’ in periods of unemployment

• from insurance or own savings

• Self-employment / contract work viewed by some as form of protection from changes in working patterns

Demographics

• Increasing uncertainty in employment patterns

• Growth of single households

• Awareness of ageing

• Baby Boomer demands and expectations

• NHS ageism?

• Is ageing population really the burden it seems?

Consumerism

• Clear evidence of growing consumer interest in health• Comparative information likely to fuel trend for “consumer

oriented” behaviour and approach to the NHS

• Recognition of reduced future role for Government

“As people’s expectations rise and their income follows suit, they will demand more

power and flexibility over the manner in which they and their families are treated”

John Reid

Consumerism - Awareness

• Media• NHS crisis coverage• Men’s Health, Health Which?, Discovery Health Channel etc, • School initiatives – “Wired for Health”, “Healthy Schools

Programme”

• League tables• Retailers• Health clubs• Internet

“a first step towards giving the public hard information about the

performance of every doctor and the right to chose between them”.

Consumers - Wealth

WealthSource: Wealth & Portfolio Choice 2002

Age x Average Wealth - £k

-20 0 20 40 60 80 100 120 140 160 180

18 to 25

25 to 44

45 to 64

Pension Liquid Housing Debt

Note: Housing wealth is net of mortgage, & includes value of endowment. Debt excludes mortgage

• Economic pressures allied to new working patterns

• Decline in traditional ways of providing benefits

• Leading to decline in paternalism

• New approach characterised by facilitation

• Handing control to employee

• Providing choice and flexibility

• Increase in lifestyle benefits

• Financial drivers leading to transfer of risk to employee

Employer mindset changing

Employer Employer RiskRisk

Traditional benefitsTraditional benefits

Employee Employee RiskRisk

DC PensionGPPP

Stakeholder

Car AllowanceChildcare

Health club

DB PensionLife Cover

PHIPMI

Company CarTraining / education

Lifestyle benefitsLifestyle benefits

Trends in employee benefits

Source: Deloitte research

Pension Reform

• Next few years will bring significant change

• Shift to emphasis on the individual

• Providers gearing up to providing packaged

solutions to pensions and savings

• Bypassing traditional intermediaries

• Education and information at heart of new solutions

• Value will lie in controlling the portal to the employer

• Protection benefits sit within portal

Consumer mindsets are changing

Two distinct mindsets:

• Find a New Nanny

• Take Control

Find a New Nanny

• Traditional response to market• Supported by industry view of consumer• Supported by complex product structures• Supported by intermediary behaviour• Protection comes in guise of:

• Advisor• Big brand• Regulator• Employer

Take Control

• Rapidly emerging behaviour• Information not advice at heart of decision making• Lack of trust in formal channels• Supported by government and regulator• Current response is to reject industry solutions• Protection comes in guise of:

• Understanding products and services• Making own decisions• Using experts where add value

Implications for Healthcare

Find a New Nanny

• Employer central to decision

• Group schemes succeed

• Consumer held at arms

length

• Transparency not required

• Complexity supported

Take Control

• Individual makes decision

• Individual controls contract

• Consumer perspective

imperative to success

• Simplicity and comparative

information critical

Consumers increasingly looking for…

Guilt free

Guilt free Flexibility

SimplicityGuilt free Flexibility

Certainty

Affordability and VFMCertainty

Industry struggling to deliver -

Increasing / renewable premiums

Perceived complexityStigma remains Some flexibility

Expensive / Unclear value

But some positive signs -

Stigma remains

• Choice between NHS and private

• Government changes will ease

• Growth in self-pay will change attitudes

….. positive signs -

Some flexibility

• Menu approach - tailor / choose level of cover

• Employers offering flexible benefits

Perceived complexity

• Growth of cash-plans

• Standardised critical illness definitions

Increasing / renewable premiums

• Long term pricing (fixed price policies)

• Budget plans

• Healthy life style rewarded

Expensive / Unclear value

• No claims bonuses

• High excess or personal funding

• Information, advice and support

Future Challenges

• Making healthcare plans affordable

• Education of consumers

• Comparative Information / standardisation

• Providing certainty of cover for long term contracts

• Fit with NHS / state benefits

• Shift from traditional group plans to individual

• Access for new collectives?

Future Opportunities

• PMI – High Excess, Simplification, Transparency

• CI – As part of menu of lifestyle benefits

• Income Protection – Education, Simplification,

Affordability, Access, Medium Term

• LTC – Managing assets, Point of need, Information

Jackie Wells

7th October 2003

Meeting Consumers’ Needs in Healthcare

jackie wells 7 th october 2003 meeting consumer healthcare needs

consumer change

healthcare products

consumer oriented behaviour

discovery health channel

future opportunities

wealth portfolio choice

future government intervention

public hard information

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