Pearson Innovation - Innovation Consultants

Consumerisation of Health

Mike Pearson MD of Pearson Innovation explores the consumerisation of health and the

Commercial opportunities are emerging in the ‘wellness’ sector of healthcare as a result of several factors such as new technology and changing social pressures.  What become apparent is that this commercial opportunity may not emerge if we simply adapt current consumer or healthcare methods.  This is because wellness is a new and unique sector that sits between consumer and healthcare markets, with facets of both.  It will blend the sales approach of consumer products with the service model of healthcare whilst becoming heavily reliant on brand. 
Having said that, few companies would seem able to supply medical devices into wellness under a service model that also have brand strength in the consumer area.  This raises the concern that the speed at which these commercial opportunities will grow could be limited.  For medical device and pharmaceutical companies, even those active in consumer health, wellness is going to need a different approach.  Until now their customers have been health service providers so they do not deal directly with the end user and show some naivety about dealing with mass markets.  Conversely brand led companies outside healthcare eye opportunities in wellness but see this market as highly regulated and risky.  This article explores these issues, looking at what will affect the growth of wellness.  It also explores the contribution brand will play in this new area and how the medical device sector may react.

Commercial models

Two dominant commercial models are used in western society.  They differ principally in terms of the relationship between seller and customer or supplier and end user.
The consumer sector takes a simple approach to its customers - sell them a product they need or that persuasive advertising makes them want.  It is a very sophisticated system, yet a transaction requires virtually no specific knowledge or understanding of an individual consumer.  Even if addressing niche markets very little changes, manufacturers advertise in more focused places but this specialisation does not lead closer involvement with the customer.  Interaction between supplier and customer is basic and terminates after a simple financial transaction.  What is important is that in this sector individuals are not required to, nor willing to impart personal information beyond that needed to complete a transaction, namely address and email, so the levels of intimacy and trust built up between parties are minimal and short-lived.

Brand
The need to differentiate products led to the consumer sector becoming dominated by brand in the 1980s.  Sophisticated techniques are now used to build and maintain the association of a product with a set of brand values, usually based on personalities, lifestyles and events.  What is important is the fact that effective use of brand is a powerful tool to create demand, generate customer loyalty and build trust, whilst helping reinforce purchase decisions and command higher prices. 
Consumerisation of Health articleWhen Unipath built its OTC Clearblue brand in the 1980s and 90s they were owned by Unilever whose approach to their marketing was developed on Persil and Typhoo tea.  They forced Unipath to apply FMCG marketing methods that required a better understanding of the customer and market than was normal at that time.  It helped them create a huge consumer health sector in pregnancy testing, fertility and contraception and become market leader.

Brand in healthcare
The use of brand to build trust and promote sales has had limited impact in most of healthcare apart from consumer health.  Generally brand does not reach the patient in healthcare and they are not consulted except where it affects treatment.  So using brand values, as opposed to branding, to promote healthcare sales is largely ineffective.  Hardly surprising given the complexity of a system where most products and services are specified on the basis of technical performance and cost.  Brand became strong in the pharmaceutical sector some years ago, but healthcare suppliers feared it was being used to command higher prices, which created a backlash. 
Healthcare includes some of the world’s largest companies but few choose a single central corporate brand, with associated values, to market pharmaceuticals or devices.  They prefer instead individual product brands for sector and product offerings.  There are good reasons for this.  These large companies have grown by merger and acquisition, often cherry picking from smaller specialist areas.  This has produced a market fragmentation such that within a single organisation the user, purchaser and purchase decision may differ hugely between devices and from country to country.  So a single coherent brand is unnecessary because integration provides few of the symbiotic benefits that might be seen in the consumer area.  In fact the reverse applies; in risky markets it becomes a better strategy to create silos of activity that minimise the chance of cross contamination of ones brand by problems in one area.

Healthcare commercial model
In most societies healthcare is the provision of services to the ill - those in need of primary or secondary healthcare or pharmaceutical involvement.  The end user, the patient, contracts with their supplier, usually the state or insurer, to make them well when sick.  That supplier in turn engages with healthcare companies for products and services that meet the needs of the patient.  The difference between consumer and healthcare sectors lies in the quality of the relationship between the customer or patient and their supplier, typically a GP.  This relationship is intimate, trusting and gives then GP access to a lifelong record of health, habits and susceptibility to illness.  The trust between GP and patient is sacrosanct and even under private healthcare provision the commercial relationship never intrudes.

Service models in the consumer sector?

Apart from healthcare there are very few examples of service models within the consumer sector, especially in the UK where we are accustomed to buying cars and houses whilst in the US and Europe they would lease or rent.
In the consumer sector new service models are emerging that give an idea of how wellness may evolve.  If our underlying desire was to listen to music we might have chosen to purchase a CD.  But that all changed when downloading music was pioneered by Apple iTunes which provides music on a purchase-per-track model.  Apart from certain security restrictions the customer owns the content.  The service model is flexible though and now iTunes is meeting competition from Napster, which works on the principle of unlimited downloads for a fixed monthly subscription.  The customer never owns the music but merely holds a licence to play it that expires as soon as the monthly subscription stops.  This is a true high volume consumer service model where something we traditionally buy and own turns into a service.  What would a consumer health service model look like if it were applied to and wellness?  We would not need to buy analgesics if we subscribed to a service that made our headache go away - if an analgesic failed to do so the service could offer to test for allergies, review our diet or check our central heating was not producing carbon monoxide.  This requires none of the intimacy and trust between provider and customer that is a characteristic of healthcare.

Growing use of brand to market to consumers in healthcare
In some healthcare sectors there is a trend toward advertising directly to the patient, hoping they pressurise their GP or insurer for specific treatment.  This type of advertising dominates daytime television in the US and is beginning to be seen in the UK.  Devices such as blood glucose meters or COPD oxygen concentrators have evolved into consumer products through their use in domestic environments alongside similar products such as mobile phones.  There also devices such as blood glucose meters are provided free on diagnosis and are used daily for long periods, effectively turning the patient into an experienced consumer.  Such users start to see the benefits of an upgraded meter and are willing to buy for themselves OTC.  In this example the effect of direct advertising to end users helping establish brands in the device sector, giving it a consumer like vibrancy.

Wellness
Wellness sits between the consumer and service sectors of healthcare and although not new it is comparatively small but rapidly expanding because media and social pressure is turning an interest in our health into a concern or worry; a worry we are willing to pay to ease.  It is a worry that the overall ageing of population will make it necessity for us to remain well and work later in life to meet pension shortfalls.  The media makes us worry about our diet and realise it can lead to obesity and diabetes.  Their message that early action prevents problems later feeds the number of interested, concerned and worried well, whilst at the same time tools, technologies and techniques have emerged able to supply valuable and meaningful information to the individual and help them make daily decisions on health and wellness.  And communication technology has matured so that it is possible to move and analyse information quickly and cheaply.  Before you just worried about illness now you are able to do something about wellness.
An example is in the use of vitamin supplements.  The decision to take high dose vitamins was seen as a sensible normal lifestyle choice, until it emerged in the media that in some cases this could be detrimental.  In the absence of clear information, the vitamin supplement market collapsed.  Yet nobody denies the benefit of vitamin supplements in the case of deficiency - but without the means to monitor vitamin levels it relies on hit-and-miss self-dosing.  New technology makes possible medical devices that monitor vitamin levels in the body and provide the information to adjust diet with supplements if needed.
So a combination of technology and attitudinal change in society has created an atmosphere in which wellness services can flourish.

Wellness market

At the consumer end of the wellness market are products and services such as health clubs that may charge £100 month to help you stay well, pro-biotic yoghurt drinks, well-man tablets, vitamin supplements, low cholesterol margarine, and just about anything organic.  In these examples consumers are happily paying from their own pocket.  At the centre of wellness we see huge growth in cosmetic surgery and a variety of stem cell technologies such as those to promote hair growth in baldness.  Then as you move from wellness to healthcare a range of specialist medical devices and services are being developed that allow monitoring of chronic diseases as service.  Some may well be paid for the by patient, which is starting to blur the boundary between healthcare and wellness.  Where these services differ from the healthcare (illness) sector is that they are generally proactive not reactive, still involve trust but the patient or customer pays directly for them. 

Wellness is a one-to-one sale

If a consumer sale requires little personal information or trust, just money, a wellness transaction may require lots of trustand information and little money. For wellness to prove of value to us it will generally require the collection of detailed and personal information about an individual, causing us to look closer at those who want it and increasing the intimacy of the relationship between supplier and purchaser.  This could be seen as a problem, whereas it could actually represent major opportunity; just one that is yet to be unexplored.  Wellness retailers need to find ways to interact with consumers in a new way.  One that ensures confidentiality, honours intimacy and rewards openness.  It is certain to lead to new ways to approach customers and for those companies willing to explore these new transactions, it is sure to reap rewards .

Brand in wellness
So now we begin to see why brand may prove to be the missing link.  These new opportunities may still rely on selling something to the public but will involve more trusting forms of interaction between customers and supplier.  Brand is key to building this trust. Producing an offer in wellness that the public want to buy depends being able to provide valuable information backed up by intimate and personalised support that translates into simple and effective actions.  This intimacy depends on trust.  Trust in what?  Trust that what is being bought or provided will work, is safe, will deliver a benefit that is needed and that is suited to you i.e. personalised.  The most common way to create that trust is through brand yet few seem to exist that could adapt or stretch into wellness.  So if nothing exists now then, on the basis that it takes considerable time to build a consumer brand, it could take even longer to build a wellness brand, meaning that a restriction on growth of the wellness market is the lack of any major brand.

Where will the Wellness Players come from?
It is logical to expect wellness to involve those companies already in healthcare, but difficult to identify any one company that could easily make the transition.  Our research showed that a brand possible to succeed would be Johnson & Johnson if only for their high street in presence baby lotion, but equally it could be GE, Roche or Abbott.  But within J&J there is an overriding principle of safety first; do nothing risky or controversial as it might upset the whole J&J brand.  Hence the silo mentality discussed above makes it that much less likely that a major healthcare brand will want to take is recognised brand into wellness.

Peripheral player in healthcare

There are those with a more peripheral role in healthcare who could step up to the plate and in the UK most obvious is Boots, who seem ideal from their strong high street presence.  But for them it is a time of merger and acquisition.  Having had their fingers burned by previous excursions into services such as dentistry they are cautious.  Nevertheless installing patient consultation areas in their stores seems an ideal stepping stone to wellness provision.  Generally there seems strong evidence of a move toward using pharmacies as a place to assess and diagnose both illnesses and wellness in the future.  Despite this Boots principally have a retail mentality and little experience of medical devices.  They would certainly need to work with the medtech sector but also those in communications and data management to make a convincing package.

Moves from outside Healthcare

Then there are those companies from outside healthcare that want to move into wellness.  Philips is an interesting example of a company working hard to achieve brand stretch.  They will have an easier job than some through currently having both consumer and healthcare offerings.  Both were once of equal value but one based on high volume sales and low value added and the other the reverse.  They now seek to bring the two together into one brand that spans consumer and traditional healthcare (although no mention is made of wellness specifically).  They could still be inhibited by baggage from those years of volume sales into the less onerous consumer electronics markets.  Just about every household has owned a product made by Philips and it must surely, at some time, have broken down.  So what must be of concern to any company seeking to move their current brand into wellness is what effect a past trading record has?

A Brand that Works

So lastly what about a brand that could work?  NHS is a UK healthcare brand that could work in wellness.  It is generally trusted, is not seen as a commercial entity yet manages and maintains budgets just like any company and lastly already has NHS Direct, which shows some of the ingredients of a wellness offering.  NHS already holds intimate data about every person in the UK and with the recent introduction of patient information records will certainly be involved in the steps make access to some of that information more readily available.  What ever happens, involvement of the NHS (or for US markets read health insurer) seems key to growth.

Side Effects

Project just a little further into the future and it is possible to see how brand might start to reverse back into the illness region of healthcare.  Just as we will see a blurring of the division between the consumer healthcare and wellness so we are sure to see the same between wellness and illness.  It could allow brands that work in wellness to be stretched back into illness. 
Very soon UK patients in need of surgery will be required to choose a hospital and surgeon and it may not be long before consumers want to make decisions about choice of stent or hip implant based on brand driven information. 

The Future - Wellness as a Blend of Consumer and Healthcare

So wellness will blur boundaries between consumer and healthcare markets but is set to become a huge sector of its own.  Brand must become important in wellness because transactions will have the intimacy of healthcare with the commercial drivers of a consumer market.  And eventually the consumer principles that underlie the wellness offering could have positive effect on healthcare, blurring the boundary between customers and patients.
Yet despite interest even the largest healthcare companies seem to unwilling to try to explore the uniqueness of this wellness market but prefer to see it as a stretch of their healthcare illness offering.  This lack of vision and the lack of brand could delay the wellness opportunity for many years. 
Finally it could be necessary to recognise that no one company will have the resources to crack wellness alone, especially if they come from medtech. Anyone attempting must recognise that they need to engage with key partners.