Tuesday, August 30, 2011

Have Direct-Care Healthcare Providers Become a Commodity?

In a most robust discussion on LinkedIn, in the Society for Healthcare Strategy and Market Development group page, regarding meaningful differentiation in healthcare, a question was posed by one of the participants, that received no comment, but is very important.

Has healthcare become a commodity?

If we look at the definition of a commodity as I remember it from my graduate econ classes, a commodity has the following properties: It is produced and sold by many companies; There is generally uniform quality between competitors' that sell or provide it; There is demand for the product or service; And it is supplied without qualitative differences between one company's products and services from another.

Sounds like a hospital, doctor, home care agency, infusion center and specialty pharmacy company to name a few.

When you think about it in this light, I would maintain that the majority of healthcare providers can be considered commodities, with a few notable exceptions, such as the Mayo Clinic, The Cleveland Clinic, M D Anderson and a few select others. Maybe not to patients at this time, but to employers, insurance companies, the self-insured and governments to name a few, that healthcare providers are commodities.

In the absence of qualitative data on quality and outcomes, that would generally available and understandable to consumers, then how does one tell the difference between direct-care providers?

For example, hospitals nearly all have the same clinical programs and services, JACHO accreditation, technology, insurance contracts, community- based medical staff's, MOBs. surgical-centers , ERs etc. It's the old a hospital, is a hospital, is a hospital argument.

A consumer really can't tell on the face of it, meaningful qualitative differences between providers. And I don't think it is because they can't or don't have the ability, but because they simply don't have the right information. Since healthcare consumer's can't identify and hence don't know, what those differences are, the direct-care providers in the healthcare industry are allowing their healthcare vertical to become commoditized. Everyone looks the same.

With the introduction innovative tools from payers, (Are you ready for price competition?) where insurance plan members at Aetna's Payment Estimator, WellPoint's AIM subsidiary and United Heath with its Innovation Center , allow members to compare and shop on price and determine their co-pay or deductible for their out-of-pocket expense, you have the introduction of consumer shopping behavior. And these tools are not just limited web site use. They have mobile applications as well in most cases. What we see is that these tools, interject a new level of commoditization to hospitals, physicians and others. The assumption is that quality is equal across providers.

Say what you want about the quality argument. Until you can qualitatively define your quality as better than a competitor, just saying you provide quality care is a hollow argument.

As consumers become more price conscious and take more control in the decision-making process, it behooves direct-care healthcare providers to become more market differentiable, based on qualitative data. You may not like it, but the sooner you get ahead of the commoditization spiral, if that is even possible, the better off you will be.

Healthcare is rapidly changing, from a provider-controlled and dominated decision-making model, to a consumer-controlled, decision-making model. And in a consumer-controlled model, absent meaningful and understandable qualitative differentiation, healthcare services become just another commodity. One that is in the end whose purchase will be based on price.

Now there's real healthcare reform.

You can continue the conversation with me on:

For more information, or to discuss your strategic healthcare marketing, customer experience management, marketing/sales integration or start-up needs, you can learn more at my web site the michael J group; email- michael@themichaeljgroup.com; or phone by calling me at 815-293-1471.

Wednesday, August 24, 2011

Is Meaningful Differentiation Lacking in Healthcare Marketing?

The other day, I was reading my local community newspaper, the Herald-News and a national publication, The Wall Street Journal. Yes, I am kind of old fashion that way, reading a newspaper where you actually have to touch and turn a page, and move your head to read a story. In both papers, I saw several healthcare advertisements and a placed story.

Normally, one would probably would scan the ads or the story, make a fast determination of usefulness, and move on. Especially, if you don't need that particular service or clinical capability at the time. The placed story led with "A spa like atmosphere". Really.

But when looking at all the placements, I asked myself, what were the distinguishing differentiation characteristics, that separated everyone? What was the brand promise? What were the key messages? And most importantly, what, as a healthcare consumer, did you expect me to do?

Sadly, I could not find any clear and unambiguous differentiation.

This is not a challenge to be overcome, to be politically correct. It's a marketing problem. Period.

And it goes on in markets all across the U.S.A. on a daily basis.

What it reflects, is an old way of doing business. In a dynamic and rapidly changing healthcare market, where the consumer, is beginning to assert more control over the decision-making process, healthcare providers need to begin paying more attention to what they are, and are not saying. Just saying we provide quality care, have the best physicians, treat you with the latest high-tech toys, or provide an exclusive hotel-like experience doesn't work.

Those messages do not differentiate you. Everybody is saying the same thing.

The healthcare consumer of today, is looking for meaningful information upon which to make a reasonable and rational decision.

They are looking for answers to such questions as:

Why should I choose you?

What makes your doctors different, from the physicians in the other hospital, office or clinic down the street, who by the way, practice medicine in your hospital, and as your physicians do, admit to that hospital too?

How are your high-tech diagnostic and treatment tools, so outstandingly different from the ones in other settings. How do they make an outcome difference?

Do you really think that I care that you have a "spa like setting", big screen HD TVs, or internet access and will use that information to make one of the most important decisions in my life?

There are no easy answers.

The answers do require, that healthcare leadership and many marketing departments, begin to admit, and recognize, that the old way of healthcare marketing doesn't work anymore. Your brand messaging and advertisements, direct mail, web site, social media efforts etc., will have to become clearer. Much more clear on the benefits of, and reasons for, choosing you. That means treating the new healthcare consumer not as an idiot, but as a partner in the decision-making process. It means becoming transparent and open about outcomes. It means educating the healthcare consumer, about what the value is of an award is and what that award means to them.

It means changing attitudes toward, and practice of, marketing in your organization. Understanding that the old ways of healthcare marketing just don't work anymore.

To the major health system, that ran the cardiovascular ad in the Wall Street Journal, placing the Thompson Reuters Top 100 logo for excellence in that service-line, pay attention. The date on the logo of the award is 2008. It's 2011.

Since that award is bestowed annually and it's two years old, do you think that maybe the consumer, is asking what happened the last two years that you didn't receive the award?

Never let a consumer think of, or ask a question you don't want to answer.

Repeat after me: Brand. Price. Value. Differentiation.

You can continue the conversation with me on:

For more information, or to discuss your strategic healthcare marketing, customer experience management, marketing/sales integration or start-up needs, you can learn more at my web site the michael J group; email- michael@themichaeljgroup.com; or phone by calling me at 815-293-1471.

Tuesday, August 16, 2011

Are You Ready for Healthcare Price Competition?

The game is changing. Rapidly.

That's what I call Aetna's introduction to its members, of its easy-to-use, out-of-pocket payment estimator. Simple really, know the cost of a test, visit or procedure; know what it will cost you. But it doesn't stop there, it allows the healthcare consumer to compare the cost across multiple network providers. You can compare costs across 10 different hospitals and doctors.

WellPoint through its AIM subsidiary has shown where it was possible to incentivize physicians and plan members, to shop for radiology services and choose the lowest cost provider. It's reducing healthcare costs; while maintaining quality.

United HealthCare, though its Innovation Center , is empowering its clients and 70 million members across a broad array of data driven products and services, for the healthcare consumer to better understand their healthcare utilization, and make cost effective choices.

And these are just a couple of the price and cost decision-making information that the healthcare consumer is starting to receive. (I receive no remuneration from mentioning these three companies. As a matter fact, they didn't even know I did this.) How long do you think it will be, before everyone else plays follow- the-leader?

As I have written in the past, healthcare is rapidly changing from a provider-dominated and controlled model, to a consumer-dominated and controlled model. And these changes are further evidence of the change. Nothing like having higher out-of-pocket expenses, coupled with the ability to obtain pricing information, then combined with the ability to estimate your own costs, to get healthcare consumers to pay attention. Shopping for care.

Member co-pays and deductibles are rising. Healthcare consumers are facing the economic reality that they now have some "skin-in-the-game". Can you really think of any better way to control healthcare costs and introduce a level of price competition, by providing information which really up until now, was essentiality unattainable?

Forget the quality argument.

Just because you charge more doesn't mean you have higher quality. The healthcare consumer already assumes quality. And they assume that it is equal across multiple providers. Saying you have high quality when you are unable to differentiate yourself in the market, because you won't use outcomes data, is a claim that falls on deaf ears. It's a given. It's the business you are in.

Pricing begins to rear its head in the healthcare consumer's decision-making process. And when all other things are equal, in the mind of the consumers, price wins. Quality is assumed. Caring is assumed. It's what you do.

Your marketing needs to change. Now.

Most healthcare organizations that are consumer facing, have never really had to deal with the pricing equation on a competitive basis. For insurance, medical device, pharma and other suppliers to healthcare, price competition has been a requirement in their markets since the beginning of time.

Now, doctors, hospitals, and others will need to change their marketing operations and begin to deal on price. Your brand and brand reputation, takes on new meaning, when price and choice become a critical component in the healthcare consumer decision-making process. High price, undifferentiated quality, won't cut it anymore.

Competing on price vs. claims of quality, requires a different set of marketing skills than what you have traditionally found in most healthcare marketing operations. It requires more than a communications skill set, or senior leadership thinking that they know how to market. This is a game changer, and if marketing is not at the senior management table now and involved across the organization, then you are already in deeper trouble than you think.

Change is never easy. Eespecially old attitudes towards the value of, and need for, healthcare marketing. With an industry changing as rapidly as healthcare. With price competition now entering the equation. I prefer to think that a potential golden age of healthcare marketing is upon us. One where the old attitudes are going away. Highly trained, experienced and professional marketing people will take their place at the senior management table. And in the process, healthcare becomes more accountable to the consumer in ways never imagined.

Repeat after me: Brand, Price, Value.

Exciting times we live in. Game on.

You can continue the conversation with me on:

For more information, or to discuss your strategic healthcare marketing, customer experience management, marketing/sales integration or start-up needs, you can learn more at my web site the michael J group; email- michael@themichaeljgroup.com; or phone by calling me at 815-293-1471.

Monday, August 8, 2011

Are You Ready for the Healthcare Consumers Called Baby Boomers?

Really. Have you given any thought to the marketing and operational challenges that Baby Boomer consumers represent to healthcare? In a time of great change in healthcare, from a provider directed and controlled model, to a consumer directed and controlled healthcare model, the Baby Boom generation will have a more significant impact than maybe what you have considered.

Think about it for a moment.

The Baby Boomer wave has changed virtually every industry they have encountered. Identified what they wanted and forced that industry to adapt to them. Brand, brand promise, and brand experience delivered they way they want it and when they want it, has changed entire industries. It has brought new products and services to market; created entirely new industries and channels. They have buried products, services, markets and channels on the ash heap of history, for not meeting their needs or expectations.

What makes you think that the Baby Boomer won't be focused heavily on healthcare, as an involved consumer, who expects high-quality, outstanding-experiences and value, delivered at a price that they deem to be reasonable?

And that will pose some significant challenges to many healthcare organizations and models of care that frown upon a "healthcare consumer" aka patient, questioning what is going on and demanding better.

With their out-of-pocket costs for healthcare increasing, Boomer 's will demand whole lot from you.

Better quality.

Better experiences.

Better value.

Better price.

Better brands.

Boomer's are getting ready to turn the healthcare process over on its head, but is anyone listening?

Marketing will play an ever increasing role in healthcare providers in understanding the massive change about to take place. That of course assumes, a rapid maturing of the understanding of marketing and its place in the organization. And for many a healthcare provider CEO that means, marketing is elevated to the senior management table in presence, focus and resources.

Boomers are bursting onto the healthcare scene as a wave crashes upon the beach. They will be informed. They will be questioning. They will demand answers and involvement in the process of care. They will demand much more from the healthcare system in the way of choice, quality, experience and brand. If Boomers' don't get what they want, they will take their healthcare dollar elsewhere.

That light you saw at the end-of-the- tunnel because of healthcare reform and the mandatory health insurance provision, if you can just survive until then, is an oncoming train that's not slowing down in the least.

Time to change.

You can continue the conversation with me on:

For more information, or to discuss your strategic healthcare marketing, customer experience management, marketing/sales integration or start-up needs, you can learn more at my web site the michael J group; email- michael@themichaeljgroup.com; or phone by calling me at 815-293-1471.

Tuesday, August 2, 2011

Is Patient Experience Management the New Healthcare Imperative?

The new healthcare consumer is seeking information on great outcomes and experience. That's right, great outcomes and experiences, not ordinary outcomes or experiences. You are expected to care. You are expected to provide high-quality care. Telling the healthcare consumer that you provide compassionate care and high-quality medical care, is falling on deaf ears. Especially, when the experience doesn't even come close to the claim.

And as time moves along, healthcare consumers will bypass those hospitals and healthcare providers that have less than great outcomes or experiences.

I am not saying that is fair, or right. It is a reality of a changing marketplace.

When healthcare executives are surveyed, the majority say that Patient Experience Management is a critical business success factor along with patient safety and cost reduction. But at the same time, the majority of healthcare CEOs, admit that they really don't know where to start on successfully managing the patient experience.

If you read my previous seven posts on Customer/Patient Experience Management, you would have a clear rationale and model for moving forward. Clarity, purpose and resolve provided.

And it is just not hospitals. Insurance companies, specialty pharmacies, PBMs, home health and others, that are experiencing the same challenges in managing patient, consumer or member experience.

Considering the ever increasing role of satisfaction scores in the CMS value purchasing programs, it has a direct financial outcome. Do well and receive additional revenue, fail and it will cost you. Insurance companies will follow CMS and move to more value purchasing arrangements as well.

A financial whammy approaches that requires new ways of doing business for the healthcare provider. Change and you can prosper. Refuse and find financial difficulties caused by market share losses.

Patient Experience Management is all about the culture.

It is not managing to a survey.

It is not just patient satisfaction. Patient satisfaction is an outcome of experience management.

It is not just a program.

It is not just a one-time activity.

Experience Management is about changing the way you deliver care to the patient by your employees, based on an understanding of what the patients expectations are, not yours. Experience Management is culturally and organizationally uncomfortable. And that is because it's not about you anymore.

You have to have a formal definition of patient experience and that only comes from talking to patients, or consumers, or plan members.

So I answering my own question, patient experience management is the new healthcare imperative.

The speed of change in healthcare has accelerated beyond the point of no return. Healthcare providers no longer have the time to engage in endless internal dialogue, and paralysis by analysis planning loops, before moving forward. Individuals expect you to care. Individuals expect you to have high-quality outcomes.

The only way you can differentiate is through creating and maintaining that exceptional patient experience. And that only comes through active management of the experience process.

So, tell me, what you are still waiting for to get started? Time to deliver.

You can continue the conversation, linkup or follow along with me on:

For more information, or to discuss your strategic healthcare marketing, customer experience management, marketing/sales integration or start-up needs, you can learn more at my web site the michael J group; email- michael@themichaeljgroup.com; or phone by calling me at 815-293-1471.