Saturday, August 4, 2012

Will price competition change healthcare marketing?

The game is changing. Rapidly.

Game changer. 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 tools that the healthcare consumer is starting to receive. Nothing like having higher out-of-pocket expenses, coupled with the ability to obtain pricing information, combined with the ability to estimate your own costs to get healthcare consumers to pay attention. Shopping for care and it's not mystery shopping..

Member co-pays and deductibles are rising. Employers moving to defined contributions. Millions of individuals potentially coming online with health insurance in 2014. 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 by introducing a level of price competition and 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.

So now , 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.

Most healthcare organizations aka hospitals, 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 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 sell.

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.

Change is never easy, especially old attitudes towards the value of, and need for, healthcare marketing.

Repeat after me: Brand, Value, Price.

Michael Krivich is an internationally followed healthcare marketing blogger with over 4,000 monthly pages views in over 52 countries worldwide. He is founder of the michael J group, a healthcare marketing consultancy dedicated to creating value through strategic marketing for hospitals and health system regardless of payment mechanism, either fee-for-service or value-based to increase market-share, revenue , brand and demonstrate actual return on marketing investment. Michael is a Fellow, American College of Healthcare Executives and a Professional Certified Marketer, American Marketing Association.

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