Characteristics of Convenient Healthcare Provision for Millennials

Analysis of the Impact of Millennials to Healthcare Delivery in the US

B S N S 5 5 0 5

B u s i n e s s S t r a t e g y a n d P o l i c y

J o h n P e a r l s t e i n P h D

O c t o b e r 1 7 t h , 2 0 1 7

I. Summary

Millennials and generation Z are currently considered the most influential generation due to their focus on the fast pace of technology. The increased focus of the millennials on technology is changing the course of health care delivery systems in the United States. The primary influence of millennials in healthcare provision involves the need for health care organizations and providers to focus on electronic communication systems, conveniences in the provision of care and development of easy payment procedures. In the article outlined in the healthcare registration, Merisalo (2018), indicates that serving the millennial patients will require health care providers to develop processes that align with the millennial characteristics such ad being up to date, the light user of health care services and being young and health concise.

II. Macro-Environment

Macro-environment Shift; According to the United States Census Bureau, the millennials consist of about 25% of the US population which translates to over 83 millennials consisting of people born between the period between the 1980s and 2000s. The group is tech-savvy, have high expectations, seek flexibility, focus on time management and work-life balance, career-oriented and upfront with estimates to ensure future planning. Based on the demographics, millennials occupy the largest population in the US therefore become a significant factor in the developments in the healthcare industry. According to the findings of Frostin (2018), millennials are highly health concise thereby focuses on more engagement with health care providers and development of healthy behaviors through enrolment in health programs and participation as well as the use of technology.

Socio-economic shift: The consideration of healthy behaviors have a social impact in the healthcare industry through influencing the change of professional behaviors through paying attention to convenience, use of digital healthcare platforms and effective communication. Additionally, due to millennials focus high satisfaction rates, the professionals and organizations must pay attention to quality and efficiency as a means of achieving sustainability and profitability in the competitive market by attracting as many millennials to their services through using their healthcare purchasing behaviors and needs. Therefore, on the social shift involves change of behavior of the healthcare professional and organizations to serve the interest of the millennial patients.

On the economic front, the high population of millennials will influence the development of several organizations in healthcare innovation and technology to try and gain profits from the changing needs of the millennial consumers. Furthermore, the high spending rates of the millennials will increase the economic gains of healthcare providers that focus on the development of mobile healthcare services as well as convenient healthcare consultation services. Additionally, the millennials will also highly impact other Strategic Groups through increased revenues due to their tech savvy characteristics.Industry giants, including Facebook, Google, Walmart, Apple, Amazon, and Virgin Group are focused on the technological advancements to achieve the high service and product delivery needs of the millennials. For instance, Facebook understands the special attention of millennials to stay connected and develop new networking channels. Therefore, it incorporated Instagram into its business to ensure high connection and sharing of information among millennials. Additionally, retailers such as WalMart and Alibaba have been involved in the development of online product ordering and delivery systems to mine from the long hours spent by millennials in online shopping events. Financial institutions such as banks are creating convenient ATMs and agents in close proximity to living areas to benefit from the high spending characteristics of the millennials and also bring convenience to access to cash and payment services.

III. Industry Characteristics for Convenient Healthcare Provision to Millennials

Healthcare revenues; According to the American Hospital Association (2018) statistic, the American healthcare revenues is constantly growing and is expected to hit 1.2 trillion dollars by 2022. The highest gainers of revenue in the American healthcare industry are the digital healthcare companies based on the increased use of technology driven healthcare systems such as eHealth, electronic health record and digital health payment systems. The top digital and health IT companies based on revenues include Optum (8.087 billion dollars), Cerner Corp (5.140 billion dollars) and Cognizant Technology Solutions (4.263 billion dollars) (Statista, 2018)

Growth Rate of Industry; The American pharmaceutical and healthcare are forecasted to experience a 5.3% annual growth rate through to 2022 as a result of increased spending in the development of healthcare technology and convenient healthcare provision tools (Fitch Solutions, 2018).

Key Success Factors; the first success factor involves the ability to develop international collaborations as well as the creation of private-public partnerships to ensure the creation of new healthcare technology and increasing the provision of affordable healthcare services. For instance, in July 2018, Pfizer, a giant pharmaceutical company in America, committed to the reduction in drug prices to ensure the implementation of President Donald Trump’s healthcare blueprint known as ‘American Patient First’ (Fitch Solutions, 2018). Secondly, the increased focus of generation Y and Z on the urgent care model of healthcare provision. The millennials and the young generation are not committed to the development of immediate healthcare issues (Sweeny 2018). Lastly increased focus and investment of technological giants to provide satisfaction and convenience. Millennials are focused on achieving effective communication and work-life balance therefore technology-driven healthcare services will be a significant step for the future (Mercer, 2018).

Scope of Rivalry; The competition in the US health care sector is not as robust as it should be. As noted by Dafny and Lee (2016), the Affordable Care Act expanded the access to care. However, limited competition is apparent in the sector. The limited scope of rivalry is attributed to different factors such as limited market share, limited reimbursement based incentives, and inadequate knowhow. There is high competition in the US among health technology companies based on the need to create quality products.

Rate of Innovation;

though the rate is not as fast as expected, the rate of innovation in the health care sector is high. The innovations are mainly in the form of new technologies used for diagnosis and management of different diseases. Also, there is a surge in the number of health information systems designed to address inadequacies that characterized the sector.

Economies of Scale;

Few health care facilities in the country rely on economies of scale as a model for sustainable performance and growth. Each of the facilities have a specified target market. For instance, some facilities specialize in specific diseases, which limits their capacity to rely on economies of scale.

Advertising Intensity;

In the recent past, few health care facilities have invested in television adverts to popularize their services. However, the ads are not as intense as other consumer products. However, pharmaceutical companies are leading in advertisements in the sector.

Industry Concentration;

The US health care sector us fairly concentrated. There are up to 5534 registered health care facilities of different types (American Hospital Association, 2018). The high number of health care facilities fairly distributed in the country serves the population.

Vertical Integration;

Though most of the health care facilities operate as standalone establishments, there are a number of health care systems in the country. The different part of the system are modelled to focus on the delivery of a specific service.

Industry Life Cycle;

The health care sector is at the mature stage. Most of the developments have been attained and the current status is characterized by improvements. The health care sector can be rejuvenated or will experience a decline.

Five Forces

The threat of New Entrants; Low; In general, the health care industry, due to its capital intensive nature is characterized by limited number of entrants. Furthermore, laws, regulations and a high requirement for compliance in human health lower the rate of new organizations entering the market.

As a consequence, there is a low entry of organizations into the healthcare technology industry to achieve millennials convenience and satisfaction needs and require high investment capital and resources.

Substitutes; Moderate; the high-level hospitals, referral hospitals, private clinics, and convenient dispensaries and pharmacies provide an alternative to technological opportunities such as eHealth.

Rivalry; Low; the current major players in the medical and healthcare technology in the US include Medtronic, Johnson & Johnson and Abbott Laboratories which have about 25% of the market share while the rest is shared among several small and medium-size healthcare tech institutions.

Supplier Power; High; Suppliers in the health care sector influence the availability of resources vital for the operationalization of different aspects. As such, though they may not influence all aspects of the sector, they play a crucial role in ensuing different organizations in the sector operate as required.

The millennials will always be enticed by a high level of satisfaction rates, urgent care services, and mobile healthcare services thereby increasing the demand for healthcare technology.

Buyer Power; High; Generally, the patients, who are the buyers in the health care sector influence the availability of services. Health care facilities avail services only when they are certain of people who will need the services.

Given that millennials have high levels of health conciseness and focus on the achievement of convenience the demand for healthcare technology will be high allowing healthcare organizations are developing Health technology to keep a high number of customers.

IV. Impact of the Macro-Environment Shift

The high population of millennials is significant to the healthcare technology industry through the provision of the constant and consistent customer base for the new technological advancements in covering millennials healthcare needs. While the competition and new entrants in the market are low, the buyer and supplier power remain high coupled with moderate substitutes will ensure a great future for growth and development in the industry.

Millennials healthcare needs to be focused on convenience, high quality, high satisfaction and use of technology have profoundly impacted the development of healthcare technology in the United States. Healthcare service providers and technology organizations should, therefore, focus on the creation of applications that ensure effective electronic communication and consultation between millennial patients and the care providers, allows easy payment and provide a future schedule to increase patient awareness and track of their health. Furthermore, healthcare providers should focus on the development of technologies that ensure a reduction in the cost of care while achieving high quality services to attract more millennials to their services.

References

American Hospital Association (2018). Fast Facts on U.S. Hospitals, 2018. Retrieved from https://www.aha.org/statistics/fast-facts-us-hospitals

Fitch Solutions (2018). Pharmaceuticals & Healthcare Q3 Round-Up. Retrieved from https://www.fitchsolutions.com/

Fronstin, P. (2018). Consumer Engagement in Health Care among Millennials, Baby Boomers, and Generation X: Findings from the 2017 Consumer Engagement in Health Care Survey. EBRI Issue Brief, No. 444

Mercer, C. (2018). How millennials are disrupting medicine. CMAJ: Canadian Medical Association Journal, 190(22), E696.

Merisalo. L. J. (2018). Millennials: Changing the Face of Health Care Connecting with an influential generation

Statista (2018). Top 50 IT companies in the United States by revenue as of 2017. Retrieved from: https://www.statista.com/statistics/453472/leading-health-information-technology-companies-in-the-us-by-revenue/

Sweeny. J. F. (2018). Preparing your practice for tomorrow’s patients. Retrieved from: https://www.medicaleconomics.com

Dafny, L. S., & Lee, T. H. (2016). Health Care Needs Real Competition. Harvard business review, 94(12), 76-87.