With all the significant pressures providers find themselves under especially financially, the last thing hospitals and health systems need to worry about is market disruptive innovation in the delivery of basic healthcare services that focuses on price, convenience and access.
Well, that is exactly what has happened with Walmart introducing disruptive innovation in the pricing and delivery of some basic healthcare services. The following articles detail the move, Healthcare Finance News August 7, 2014,”Walmart wades into provide territory”, and Healthcare Payer News, “Retail 2.0: A new retail price”. A couple of months ago I posted a blog on June 1 in Healthcare Marketing Matters, “Ready for the tyranny of healthcare price competition”.
For a while now I have been writing about a semi- retail healthcare market that was evolving. Well it’s here and here in a very big way.
And frankly, I don’t know how providers can compete with Walmart on price, convenience, service and access. And if one thinks they can make the quality argument as differentiation to justify higher prices than what Walmart is promising and delivering to the healthcare consumer, it won’t work. It won't work unless the hospital or health system wants to be price and outcomes transparent for the healthcare consumers benefit. But that is a big gamble as well.
Part of this is the power of the brand at work. And Walmart has a higher brand profile, brand promise and value proposition that a hospital or health system does. Plus Walmart delivers on the brand promise day in and day out.
It’s easy to say that in the end these are simple tests and services that you can live without, but that is a dangerous attitude and dismissive at best. It’s the first foray into retail healthcare and as Walmart gains knowledge and skill, don’t be so surprised when they go after diagnostic imaging or any other number of ambulatory services that they could provide, and cut the price floor right out from underneath the hospital.
After all, quality for the healthcare consumer is a non-argument. Hospitals and health systems for years have all made high quality claims with no proof points. So, when Walmart tells the healthcare consumer about a better price and the same if not better quality, it’s a believable story. And in a retail environment, when all things are equal in the mind of a consumer, price wins.
This does not mean by any means that hospitals are going to close their doors and be put out of business by Walmart. But what it does mean is that price is becoming king and unless the price, experience, brand and brand promise work together, one has a long hard road ahead.
Healthcare is changing more rapidly than anyone ever expected. Hospital and health system leadership don’t have the luxury of not understanding a retail medical model, or not responding to dynamic disruptive innovation.
Part of that response is getting the marketing house in order and moving from a marketing communications effort to a true marketing operation where price, access, convenience and what the healthcare consumer wants is king, not what you want to give them.
Repeat after me, the healthcare consumer and price is king.