2007 Quality Driven Consumer Tr Final

ReseaRch PaPeR

The QuesT for The QualiTy-Driven Consumer

SEPTEMBER 2007

LINDA MACCRACKEN, MBAGARY PICKENS, PHDLEAH RAY, MBAKAVEH SAFAVI, MD, JD

Quest for the Quality-Driven Consumer 3

Defining The QualiTy-Driven Consumer

As price transparency and excellence in healthcare quality continue to gain momentum and grow in magnitude, the hospital and physician selection process increases in complexity.1 For many consumers, location and a friend or family member’s recommendation no longer shape healthcare decisions as much as high-quality physicians and the best treatment options. At the same time, healthcare change concepts, such as value- and results-based competition,2 raise the question of how much consumer preference truly matters.

Consumers are demanding comprehensive, quality-driven information on providers, and healthcare organizations are listening and responding. Hospitals are proactively communicating areas of excellence and differentiation in their advertising and communication vehicles,3 and they extensively promote third-party awards, top rankings, and improved or better-than-average outcomes. Government organizations such as Hospital Compare (www.hospitalcompare.hhs.gov) are providing quality information on thousands of individual hospitals as well as comparisons against state and federal benchmarks.Numerous other organizations, such as The Leapfrog Group (www.leapfroggroup.org) and the Agency for Healthcare Research and Quality (www.ahrq.gov), provide vast amounts of information on quality to any interested consumer. As the demystification of healthcare quality continues and processes become increasingly transparent, healthcare organizations are increasingly interested in defining the target groups most focused on quality.

The need for hospitals to differentiate themselves in the marketplace has never been so compelling. Many are responding by engaging in an image makeover4 targeting the engaged consumer5 who actively evaluates healthcare providers. Consumer research, linked to market segment characteristics, identifies the attributes of the quality-driven consumer who is most likely to search for quality information and switch hospitals accordingly.

The term “quality-driven consumer” is an evolution of the term “quality-conscious consumer,” coined in 2004 by Solucient, which was acquired by the Healthcare & Science business of Thomson Reuters in 2006. Both terms represent consumers who would seek quality ratings information about providers and change their loyalty if their hospital received an unfavorable rating. With the quality-driven consumer, the focus is the action taken based on quality information. New research included in this paper reveals key insights into who quality-driven consumers are, how they search for health information, and what kinds of services they use.

4 Quest for the Quality-Driven Consumer

Key Findings

For 58% of the adult population, good physicians and the best treatment options drive opinions on •quality healthcare. Conversely, only 7% of adults are far less likely to indicate good hospitals as the top factor in quality healthcare.One in five customers is a quality-driven consumer who is likely to research information on doctors and •hospitals and likely to change loyalty if their preferred hospital received an unfavorable rating.If shown a low quality rating for their hospital, 57% of adults would change hospitals; 24% of adults •would change private physicians if shown low quality ratings.One in five quality-driven adults is more likely than other adults to be invested in planned and •preventive care — using physician referrals, wellness/fitness programs, and health education events.Quality-driven consumers choose physicians, hospitals, and specialty care based on different priorities •than all adults. Further, specialization is highly influential to quality-driven consumers, whereas it is of no importance to other adults.Willingness to pay more for highly rated providers and trusting quality organizations and quality rating •Web sites are unique to the quality-driven consumer compared with all other adults.High income and education levels are key attributes of quality-driven consumers. Quality-driven •consumers are more prevalent in the Sun Belt than the metropolitan areas of the coasts or Midwest.In terms of healthcare advertising, response rates for quality-driven consumers are uniformly higher •than all other adults. Quality-driven consumers are more interested in all types of healthcare information.Most adults strongly prefer the Internet as a source of healthcare information. For quality-driven •consumers, the Internet is by far the most preferred source, comprising a twice-as-high ranking (over 55%) to the second most preferred source, a private physician (approximately 25%).

The QUesT To disTingUish and PinPoinT QUaliTy-driven ConsUmers

Although Thomson Reuters data suggest that the healthcare consumerism movementhas stabilized, understanding quality-driven consumers is a powerful tool for healthcaremarketers with significant implications for targeting this unique consumer segment. Thequest to distinguish and pinpoint quality-driven consumers begins with an exploration offive business questions:

Q• uality focus: What defines the quality-driven consumer?U• tilizing services: Which healthcare services do they use?e• xhibiting behaviors: Which healthcare behaviors do they exhibit?s• egmenting and targeting: What are they like?T• ailoring communications: How can they be reached?


QUaliTy FoCUs: WhaT deFines The QUaliTy-driven ConsUmer?

Approximately one out of five adults is a quality-driven consumer — likely to researchinformation on doctors and hospitals and likely to change their loyalty if their preferredhospital received a low rating. For the last five years, quality-driven consumers have consistently comprised approximately 20% of the adult population. Interestingly, however,the largest segment, representing 38% of all adults, is unlikely to research healthcareinformation but is likely to change providers. Further research is needed on this uniquegroup of individuals. One possible implication is that it is too difficult for these consumersto research hospital quality information. (See Figure 1.)

FiguRe 1: ONe OuT OF FiVe u.s aDuLTs WiLL sWiTch hOsPiTaLs Because OF LOW RaTiNgs

When all consumers are asked to define high-quality healthcare, good physicians and thebest treatment options are the top two factors, comprising 58% of responses. Interestingly,good hospitals are significantly lower at 7%. These findings suggest that the perceptionof what makes a good or great hospital is still open to interpretation. For marketers, thisinformation translates into an examination of how these impressions are conveyed toconsumers and how the marketing opportunity can be best shaped to the target marketsegments. (See Figure 2.).

Good Physicians37%

Best Treatment Options21%

Treated With Respect10%

Good Service9%

Good Hospitals7%

Advanced Technology6%

No Waiting6%

Healthier Patients3%

Clinical Trials1%

Consumer Definition of Quality Health Care“Most Important Factor in Defining Quality Health Care (Choose One)”

Source: HealthView® Plus 2006

Quality-DrivenLikely to Research,

Likely to Change19%

1 out of 5 U.S. Adults are Quality Conscious about Healthcare

Quality-Driven Consumer is:• Likely to research ratings information on hospitals or doctors• Likely to change hospitals if preferred hospital received a low rating

Quality-driven consumers use the same amount of services as allother adults.

Unlikely to Research,Unlikely to Change

34%

Likely to Research,Unlikely to Change

9%

Unlikely to Research,Likely to Change

38%

Source: HealthView® Plus 2006

FiguRe 2: MOsT iMPORTaNT FacTOR iN DeFiNiNg QuaLiTy heaLThcaRe (chOOse ONe)


UTilizing serviCes: WhiCh healThCare serviCes do QUaliTy-driven ConsUmers Use?

The healthcare utilization patterns of quality-driven consumers are quite comparable to those of the general population. Consumers were asked about the following healthcare services: screenings, health education programs and referrals, therapies and procedures, healthcare facilities, and use of healthcare professionals. The concentrations of screenings, therapies, and procedures and the use of numerous types of healthcare facilities and healthcare professionals were similar, with quality-driven consumers slightly higher across all areas.

In terms of health education, quality-driven consumers are more likely than other adults to use physician referrals, fitness/wellness programs, and health education events. This information may provide valuable insights to marketers on the best channels to use to reach quality-driven consumers. (See Figure 3.)

FiguRe 3: use OF eDucaTiONaL seRVices sLighTLy higheR ThaN geNeRaL POPuLaTiON

exhibiTing behaviors: WhiCh healThCare behaviors do QUaliTy-driven ConsUmers exhibiT?

Despite the compelling similarities between quality-driven consumers and the general population in terms of healthcare utilization, quality-driven consumers behave in unique ways. The following factors were considered: physician selection and drivers in switching, hospital selection and drivers, willingness to pay more based on doctor or hospital ratings, and confidence in hospital or doctor ratings sources.

Regarding physician selection, quality-driven consumers place more emphasis on physician credentials and background than other adults. More than 20% of quality-driven consumers look at physician credentials versus 10% of all other adults. Like all other adults, quality-driven consumers largely rely on family referrals to primary care physicians, and primary care physician referrals to specialists.

Quality-driven consumers place a higher emphasis on advanced technology and research than other adults. Conversely, physician recommendation, previous experience, and location are more important to all other adults. Both groups continue to select hospitals primarily on reputation. (See Figure 4.)

FiguRe 4: QuaLiTy-DRiVeN cONsuMeRs PLace MORe eMPhasis ON hOsPiTaL TechNOLOgy aND ReseaRch

Utilization: What Services do they Use?Healthcare Facilities: Use of Services Similar to General Population

Source: HealthView Plus 2005-2006

% o

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sum

ers

Quality-Driven Adults: YesAll Other Adults: No

0.0%

2.0%

4.0%

6.0%

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12.0%

Health Care Info./Phys. Referral Fitness/Wellness Program Health Education Event Birthing Class Quitting Smoking Program

Opinion: What are Key Attitudes?Hospital Selection Drivers: Reputation and Information Dominate


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5.0%

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Strong ReputationOverall

PhysicanRecommendation

Most TechnologicallyAdvanced

Previous Experience

Research Location Friend/RelativeRecommendation

Quality-Driven AdultsAll Other Adults


For hospital specialty care, quality-driven consumers are more interested in state-of-the-artfacilities, advanced technology, comprehensive care, and medical staff. Location is moreimportant to all other adults. These findings logically follow the previous findings thatquality-driven consumers place more emphasis on advanced technology, research, andphysician credentials and background. (See Figure 5.)

FiguRe 5: hOsPiTaL sPeciaLTy caRe PReFeReNces

Quality-driven consumers also select hospitals by specialty. Specialization is highlyinfluential to quality-driven consumers, while it’s of no importance to the majority of otheradults. More than 60% of quality-driven consumers indicated that hospital specialty ishighly influential on their choice of hospitals, while more than 70% of all other adults saidthat hospital specialty has no influence on their choice of hospitals. (See Figure 6.)

FiguRe 6: QuaLiTy-DRiVeN cONsuMeRs seLecT hOsPiTaLs By sPeciaLTy

Opinion: What are Key Attitudes?Specialty Hospital Selection Drivers: High Tech most Important


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State-of-the-Art

Advanced Technology

Patient Care

Comprehensive Care

Preventive Care

Referral M

D

Location

Medical Staff

Family Experience

Clinical Trials

Support Group

Internet Inform

ation

Teaching

Appearance

Advertising


Opinion: What are Key Attitudes?Hospital Selection Drivers: Specialization Highly Influential


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10%

20%

30%

40%

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No Influence Moderate Influence High Influence



Quality-driven consumers express a greater willingness to pay more for highly rated providers than do all other adults. Sixty-three percent of quality-driven consumers and 47% of all other adults are willing to pay more for highly rated providers. (See Figure 7.)

FiguRe 7: QuaLiTy-DRiVeN cONsuMeRs WiLLiNg TO Pay MORe

In addition, quality-driven consumers trust quality organizations and quality rating Websites much more than all other adults. All other adults have a slightly higher level of trustin health plans than quality-driven consumers. (See Figure 8.)

FiguRe 8: higheR LeVeL OF TRusT iN QuaLiTy ORgaNizaTiONs

Furthermore, all consumers are more likely to change hospitals than physicians for poor ratings. If shown a low quality rating for their own physician, only 24% of consumers would switch doctors, whereas 57% of all consumers would change providers if their hospital received a below-average quality rating.

segmenTing and TargeTing: WhaT are QUaliTy-driven ConsUmers liKe?

Generally speaking, quality-driven consumers are high-income, highly educated households that seek healthcare and ratings information over the Internet. The ability to identify and target quality-driven consumers depends on the appropriate use of a segmentation system that accounts for the key drivers of consumers’ healthcare decisions. High income, Baby Boomer, and Generation X (ages 25-34) dominate quality-driven consumers. Quality-driven consumer households vary by household characteristics and appear to be disproportionately present in high-income adults and Generation X, regardless of income. As the segments change in terms of age, from older to younger households, income becomes less important.

Opinion: What are Key Attitudes?How much more would you be willing to pay to use a higher rated doctor or hospital?


Quality-Driven Adults All Other Adults

Nothing53%

< 10% more26%

10%-25% More16%

25%-50% More3%

> 50% More2%

Nothing37%

< 10% more25%

10%-25% More26%

25%-50% More6%

> 50% more6%

Opinion: What are Key Attitudes?Hospital Rating Information: Higher trust in third parties


% o

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5.0%

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Quality Organization Quality Rating Web Site Hospital Health Plan



Lower-income families have a low prevalence of quality-driven behavior. Quality-driven consumers are notably less prevalent in lower-income adults over age 35 and single female households with children, regardless of income. On a per capita basis, quality-driven consumers are more prevalent in the Sun Belt region of the South and Southwest than the metropolitan areas of the coasts or Midwest, consistent with recent population shifts. (See Figure 9.)

FiguRe 9: QuaLiTy-DRiVeN cONsuMeR POPuLaTiON DOMiNaTes suN BeLT

Collegiate and post-collegiate education is a key attribute of quality-driven consumers.Twenty-five percent of quality-driven consumers have a college degree or higher, and 28%of quality-driven consumers have household incomes of $85,000 or more per year. Quality-drivenconsumers are also predominant in the African-American segment with an incomelower than $55,000. (See Figure 10.)

FiguRe 10: eDucaTiON is a Key aTTRiBuTe OF QuaLiTy-DRiVeN cONsuMeRs

Quality-Driven Consumer Penetration

Top Quintile Penetration > 22.5%

Bottom Quintile Penetration < 13.6%

Quintile 1 — Highest PenetrationQuintile 2Quintile 3Quintile 4Quintile 5 — Lowest Penetration

Source: HealthView® Plus 2005-2006

Education is a Key Attribute of Quality Conscious Consumers


All Adults:19.4%

Education:< College Degree

16.3%

Education:College Degree or More

25.1%

Income< $55K:14.8%

Income:>= $55K

Education:< Post-Grad

23.3%

Education:Post-Grad

28.8%

Income:< $85K22.8%

Income:>= $85K28.4%

Race:White, Native American

13.8%

Race:White, Asian,

Native American 18.9%

Race:African American, Other

26.7%

Race:African American,

Asian, Other18.1%



QUaliTy-driven ConsUmers: mosT-PeneTraTed hoUsehold segmenTs

In addition to age, income, and household composition data, the HouseholdView™ segmentation system of HealthView Plus® is based upon similarities in healthcare attitudes, behaviors, and utilization patterns. It is absolutely critical that a healthcare-specific segmentation system be applied. Regardless of which segments are most prevalent, it is essential to understand how these segments are clinically relevant, financially appropriate, and behaviorally responsive. (See Figure 11.)

Quality-Driven Consumer Profile: AntiquersBetween the ages of 55 and 64•Married, with or without children•High income•Service utilization: Somewhat high for chronic and preventive services while average for outpatient and •alternative care servicesHigh propensity to research healthcare, research ratings, and use the Internet for healthcare research•Do not view cost as a main driver when making healthcare decisions and are less likely to view hospitals •in their area as the sameMedia responsiveness: Average for traditional media (TV, radio, and print), direct mail, and non-•traditional media (Internet, physician office, friends and family)

Quality-Driven Consumer Profile: High SocietyBetween the ages of 45 and 54•Married•High income•Service utilization: Somewhat high for preventive services while average for chronic, outpatient, and •alternative care servicesVery likely to research healthcare, research ratings, and use the Internet for healthcare research•Do not view cost as a main driver when making healthcare decisions and are less likely to view hospitals •in their area as the sameMedia responsiveness: Higher than average in terms of traditional media and direct mail •responsiveness, while average for non-traditional media

FiguRe 11: MOsT-PeNeTRaTeD hOusehOLD segMeNTs: aNTiQueRs aND high sOcieTy

chaRacTeRisTics OF MOsT PeNeTRaTeD hOusehOLD segMeNTs

householdview segment

U.s. Population-2006

Quality-Conscious Consumer Penetration

market size head of household age

household Composition

household income

Antiquers 19,743,000 25.4% 5,014,000 55-64 Married w & w/o Kids Upper

High Society 15,637,000 26.1% 4,081,000 45-54 Married Upper

Time to Travel 8,173,000 28.3% 2,313,000 65-74 Married w & w/o Kids Upper

Settling Down 7,579,000 23.9% 1,810,000 25-34 Married Upper Middle, Upper

Great Expectations 7,096,000 24.9% 1,770,000 25-34 Married w/ Kids Upper

Spa Goers 4,797,000 27.3% 1,310,000 55-64 Single Female w/ & w/o Kids

Upper

Enjoy Your Time 4,557,000 23.9% 1,087,000 25-34 Married Lower, Lower Middle

Made Her Way 3,931,000 25.0% 984,000 35-54 Single Female Upper

On Her Own 3,347,000 24.0% 804,000 35-54 Single Female Upper Middle


QUaliTy-driven ConsUmers: leasT PeneTraTed hoUsehold segmenTs

Although the least penetrated household segments are far less likely to change providers because of quality information, understanding this group is often useful for healthcare marketers. There may be significant marketing and education opportunities for these least penetrated segments to discover the power and value of provider quality information. (See Figure 12.)

Profile: Coupon ClippersBetween the ages of 35 and 44•Married with children•Modest income•Service utilization: Less likely to use preventive care services, average use of alternative services, and •higher-than-average use of chronic and outpatient servicesStrongly view cost as a main driver when making healthcare decisions and are somewhat highly likely •to view hospitals in their area as the sameLess likely to use the Internet for healthcare research and average propensity to research healthcare •and ratingsMedia responsiveness: More responsive to nontraditional media, and average in responsiveness to •traditional media and direct mail

Profile: Making DoBetween the ages of 55 and 64•Married, with or without children•Modest income•Service utilization: Very likely to use chronic care services, somewhat highly likely to use outpatient •services, average utilization of preventive services, and less likely to use alternative servicesLess likely to use the Internet for healthcare research and have an average propensity to research •healthcare and ratingsSignificantly more likely to view cost as a main driver when making healthcare decisions and are •somewhat highly likely to view hospitals in their area as the sameMedia responsiveness: Significantly high level of responsiveness to nontraditional media, traditional •media, and direct mail

FiguRe 12: LeasT PeNeTRaTeD hOusehOLD segMeNTs: cOuPON cLiPPeRs aND MaKiNg DO

chaRacTeRisTics OF LeasT PeNeTRaTeD hOusehOLD segMeNTs

householdview segment

U.s. Population-2006

Quality-Conscious Consumer Penetration

market size head ofhousehold age

household Composition householdincome

Carpool Moms 9,605,000 12.5% 1,198,000 18-34 Single Female w/ Kids All

No Frills 3,751,000 11.8% 441,000 45-54 Married w/ Kids Lower

Earlybird Specials 4,029,000 10.3% 414,000 75+ Married Lower

Coupon Clippers 4,694,000 8.8% 412,000 35-44 Married w/ Kids Lower

Making Do 3,995,000 8.7% 347,000 55-64 Married/Married w/ Kids Lower


Tailoring CommUniCaTions: hoW Can QUaliTy-driven ConsUmers be reaChed?

Quality-driven consumers strongly prefer the Internet as a source of healthcare information, with 55% ranking it number one. The second most preferred source, a private physician, was selected by approximately 25%. Quality-driven consumers also have a uniformly higher response to all sources of advertising. (See Figure 13.)

FiguRe 13: QuaLiTy-DRiVeN cONsuMeRs PReFeR The iNTeRNeT

Quality-driven consumers are more interested than all other adults in all types of healthcare information. Most report that the focus of the information sought is an understanding of conditions and drugs, not provider information.

Quality-driven consumers trust quality organizations and quality ratings Web sites more than other adults, with more than 30% of quality-driven consumers having a lot of trust in quality organizations, compared with 20% of all other adults. Both groups trust hospitals only slightly more than health plans. (See Figure 14.)

FiguRe 14: MORe TRusT iN QuaLiTy ORgaNizaTiONs aND RaTiNgs WeB siTes

Communication: How to Reach ThemType of Information: Internet is dominant preferred medium


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Internet Your Doctor YourPharmacist

Info MailedTo You

MedJournal

Paper/Mag YourHospital

OtherHealthcare

Provider

LibraryBook

ReportCards

Employer TelephoneInfo Line


Quality Conscious Consumers Trust Quality Organizations More Than Other Adults“From what sources would you have a lot of trust in hospital or doctor ratings?”


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Doctor Quality Organization Quality RatingWeb Site

Hospital Health Plan



reaChing QUaliTy-driven ConsUmers

One out of five adults is a quality-driven consumer who is interested in searching for hospital quality ratings and motivated by these ratings to switch hospitals. Additionally, one out of two consumers is interested in hospital quality ratings, but not yet motivated to switch because of these ratings. With the increasing focus on transparency and sharing quality ratings, the four out of five consumers who aren’t currently searching for ratings information may become more interested in quality ratings.

In the quest to find the quality-driven consumer, how should healthcare organizations target them? The quest has revealed that the quality-driven consumer is a target group in which:

Quality ratings matter•Hospital technology and physician credentials make a difference•Service specialization is important•Population is concentrated in the Sun Belt•Quality rating organizations and Web sites are preferentially trusted, followed by physicians•

Healthcare organizations have an additional opportunity to provide quality information through physicians and quality-rating agencies. One hallmark of success is the engagement of physicians in developing how quality-rating postings and explanations are deployed.6 With detailed, refined customer insights, segmentation, and targeting activities, providers and payers have a greater likelihood of an intimate customer experience that leads to acquiring new customers and retaining existing ones.

aBOuT ThOMsON ReuTeRs

The Healthcare business of Thomson Reuters produces insights, information, benchmarks and analysis that enable organizations to manage costs, improve performance, and enhance the quality of healthcare. Thomson Reuters is the world’s leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, scientific, healthcare and media markets, powered by the world’s most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minn., Thomson Reuters employs more than 50,000 people in 93 countries. Thomson Reuters shares are listed on the New York Stock Exchange (NYSE: TRI); Toronto Stock Exchange (TSX: TRI); London Stock Exchange (LSE: TRIL); and Nasdaq (NASDAQ: TRIN).

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©2009 Thomson Reuters. All rights reserved.PRO-6706 05/09 MC

aboUT healThvieW PlUs®

Data for this analysis were gathered from the Thomson Reuters HealthView Plus® national healthcare consumer research tool and represent the collective responses of nearly 20,000 households annually. This research tool helps hospitals understand the attitudes, behaviors and decision-making patterns of healthcare consumers in their local markets. Covering such topics as health status, chronic conditions, utilization, hospital and physician selection, use of information resources, and media and lifestyle behavior, HealthView Plus provides the information hospitals need to support development of highly targeted consumer marketing strategies and tactics.

FootnotesData for this analysis were gathered from the Thomson Reuters HealthView Plus® national healthcare consumer research tool, and represent the collective responses of nearly 20,000 households annually. This research tool helps hospitals understand the attitudes, behaviors and decisionmaking patterns of healthcare consumers in their local markets.

1 Berenson, et al. “Specialty Service Lines: Salvos in the New Medical Arms Race,” Health Affairs, vol. 25, 2006.

2 Porter, Michael and Tiesberg, Elizabeth. Redefining Healthcare, Harvard Business School Press, 2006.

3 Francis, Theo. “How to Size Up Your Hospital,” The Wall Street Journal, July 10, 2007.

4 Johnson, Rick. “Image Makeover,” HealthLeaders, March 14, 2007.

5 “Meet the Engaged Consumer: Informed and Involved,” Healthcare Strategy Alert. Forum for Healthcare Strategists, January/February, 2004.

6 “Rolling Out an Online Quality Report,” Spectrum, Society for Healthcare Strategy and Market Development, January/February, 2006.

2007 Quality Driven Consumer Tr Final

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