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.

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