THE BLOG
07/31/2014 06:26 pm ET Updated Sep 30, 2014

Understanding the Implications of Consumer Empowerment in Health Care

The days of the passive patient and omnipotent Marcus Welby-like physician are long gone. Since the 1990s, consumer empowerment in health care has been increasing, most notably with the advent of direct-to-consumer advertising for prescription medicines. Then, the rise of digital media allowed consumers to search symptoms and create communities around common disease experiences. More recently, the ability to shop for health insurance through health care exchanges and obtain treatment at drug store clinics has led to a new age of consumer empowerment.

We've gone from a B-to-B model to a B-to-C model in health care. This shift in power to consumers has many implications when it comes to how we make decisions about our health care. Here are six ways that a behavioral lens can help us understand the implications of empowering consumers in health care:

1. Heuristics

Heuristics are very important. These mental shortcuts or "rules of thumb" allow us to make decisions efficiently. However, these judgments are subject to non-rational (or biased) influences in the marketplace. For example, a retail promotion like a drug store coupon can affect the price on which patients "anchor" their judgments about the appropriate cost of health care. And a retail clinic can affect the appeal of non-healthy alternatives with their location, like in the candy aisle. While this may not have been a big deal before, it is an important consideration in a B2C retail environment.

2. Social Perceptions

Research has shown that product efficacy can be shaped by social perceptions around cues like brand names and white lab coats. Both create expectations that can lead to greater confidence in the health care outcome. Similarly, the recent ban by CVS on selling tobacco products also serves as a cue. By banning tobacco, it creates a greater perception of legitimacy as a health care provider. These expectations may be conducive to better health care outcomes, not unlike placebo effects. My research (1) shows that, as a result of these expectancies, brand names can both increase and decrease product efficacy. If we have different expectations for the same health care products at a CVS vs. a doctor's office, this could have real implications for our well-being.

3. Digital Media

The rise of digital media and the availability of health care information also impacts how health care decisions are made. By conducting online research, learning about others' experiences (consumer-to-consumer advice sites), and asking doctors questions online, consumers may feel more empowered prior to actually making a choice. But this consumer empowerment may come at a price. As we know, there are lots of factors that sway online opinions: biased reviews, outlier narratives (2), and persuasive marketing tactics.

4. Risk Perception

As retailers like CVS and Walgreens move into the provider arena, there will hopefully be easier and less expensive access to care, but this it is not necessarily a substitute for a doctor's visit. Consumers need to understand when it's appropriate to visit the clinic (for a wellness exam, low-level tests, flu shots, etc.), and when a doctor's appointment is the better choice. This requires identifying the biases at play when we make risk assessments. When you make those biases salient, you are better able to avoid them. Then, you can make a better decision about your health.

5. Regret Aversion

Regret aversion is another implication of this shift in the health care model from B2B to B2C. Studies have shown that when there is a difficult health care decision, people cope better when a doctor makes that decision on their behalf. As patients become more empowered (requesting brand name medications or choosing minute clinics over physicians), they also take on more responsibility for their health outcomes. This may affect decisions as patients seek to avoid regret. To the extent that retailers create customer experiences that are consistent with optimal health care -- like focusing on preventative health care with flu shots and hypertension testing -- it makes them important partners in achieving health.

6. Variety

Studies show that we have a non-rational bias toward wanting variety. However, research has also found that consumers become overwhelmed and tend to fall back on default choices. Consider your last trip to the cereal or toothpaste aisle in the supermarket: It's just not possible to effectively process all of that information. This is particularly important in health care, as most consumers don't have nearly the same level of expertise as their doctors (3). This also is relevant when it comes to choosing health insurance. The way that alternatives are presented has huge implications for insurance choices.

So, will the rise of B2C health care be a gain or a loss for patients? Despite our susceptibility to non-rational decision-making, the net impact may be positive. One key to neutralizing biases is to become aware of them. As long as we can recognize our biases to avoid making suboptimal decisions, consumer empowerment can be a positive change.

Renée Richardson Gosline is the Zenon Zannetos Assistant Professor of Marketing at MIT Sloan School of Management.

References:

1) Gosline, R., S. Banker, J. Lee (2014), " The Status Paradox: How High-Status Products Impair Cognitive Performance," Working Paper. (This is my working paper on brand effects on efficacy, with Sachin Banker and Jeffrey Lee.

2) My current research on outlier narratives in social media, with Glen Urban and Jeffrey Lee.

3) Williamson, O. E. (1975). Markets and hierarchies. New York, 26-30.