Sunday, December 8, 2019

Hospital Price Transparency Equals Accountability and Healthcare Price Wars. Getting Ready Starts Now - Update.

In August, I wrote about the coming hospital price wars as pricing transparency becomes a reality in,  Here it Comes. The Healthcare Price Wars. Getting Ready Starts Now.”

Well, we all knew that the lawsuits would be filed once the final regulations were put in place. Sure enough, in this past week, the suits were filed with a variety of reasons as to why accountability and transparency is a bad thing for hospitals and health systems. The image of Foghorn Leghorn is what hospital and hospital association public statements are looking like to the healthcare consumer. (Image courtesy of Looney Tunes and Merry Melodies.)

The best reason I read was a hospital CEO stating that it would lead to higher prices.  Why may you ask? Because when hospitals learn that others in their market are charging more than they are for some of the 200 common procedures, we will raise prices.

Really? Stop and think about that one for a minute. Mr. or Ms. Hospital CEO, do you actively want to be on the PR tsunami on that issue. Hospitals are seen as greedy overpriced providers with less than an ideal patient and consumer experience. But that is a post for another time.

I can understand why providers are trying to stop this massive consumer-focused change in the marketplace. Who wants to be accountable or be forced to show the hospital is clueless about why they price the way they do. The emperor has no clothes. But this is only a delaying action that will not stop the inevitable.

The time to get ready is still now, but with several new twists.

Marketing ready.

Getting marketing ready for price transparency or pricing war is not easy, but it is inevitable. It is no longer a question of if, but when.  But by taking the steps forward now, instead of hiding the organizational head in the sand, healthcare providers can get ahead of the price wars.

Don’t get ready for price transparency now. Don’t, and you will be found on the ash heap of healthcare consumerism.

Here are the marketing concepts for moving forward. Numbers 1-4 are new and other steps modified for clarity.

1.       Stop making grandiose statements about world-class care, Centers of Excellence, etc. For 40 years, hospitals and health systems have been making unsubstantiated quality claims. Consumers view hospitals like all are the same because of the endless and sometimes baseless claims. 
2.       Create stronger differentiation and consumer-focused messaging. Stop focusing on the look at us with these great facilities, high technology, etc., imagery and messaging, and start using the patient as brand ambassadors and patient testimonial marketing.
3.       Get ready for a new economic model for doing business.  I can already see the application of the pricing model that the airlines use. Think about what happens. A carrier raises its process for certain routes. The carrier than waits to see what the competition does. If the competition raises the process of airfares, it sticks. If the competition doesn’t follow suit, the fare increase is rolled back. Think about imaging in this model, for example. It would work you know. 
4.       Start the education of the healthcare consumer in your market about what pricing means. You can either use the time between regulation implementation and lawsuits to change the narrative in the consumer's mind to your benefit.  Either way, it is going to happen. So why not be the first. 
5.       Figure out your core service offerings. What pays the bills and keeps the lights on? If you will have to defend your core business in a transparent price market. Meaning the healthcare organization will have to make some painful decisions on strategy, focus, and market healthcare offerings. You can’t be everything to everyone. 
6.       Understand that the big box hospital is obsolete. One only needs the hospital for three things - acute complex medical care, emergency care, and intensive care. Everything else can be obtained in a higher-quality, lower-cost, and more convenient ambulatory environment, not hospital-based. Price wars will only make defending the hospital more difficult. 
7 .       Price transparency starts today, not when Modern Healthcare tells you it began. The hospital must shift from marketing random unrelated acts of advertising services and all about us stuff promotions or occasional newsletters to your primary and secondary service area. The new healthcare marketing is about price, convenience, access, and experience. 
8.       There’s an app for that.  Well, maybe not now, but you can bet there will be.  Pricing tools that will allow the consumer to shop for healthcare services by price are a click away. Think Kayak or Maybe even name your price? 
9.       Market research. Better to know the needs of the market and how to price, rather than to think you know it all and can throw whatever you want out there for consumer consumption. Trust us doesn’t work anymore. It hasn’t for a long time now. 
10.   Prepare your Board, medical staff, and employees.  All hands-on deck is moving in the same direction, with the same message, at the same time. Can you say culture change? 
11.   You must become the market focused consumer-centric provider that you say you are. Most provider organizations aren’t, and I can prove it to you. I refer to a previous blog post that outlines the key indicators of what a consumer-focused healthcare enterprise functions. Based on research, it’s not an opinion piece but a blog post based on facts. It may be a few years old but still relevant today.  “What does a customer-focused hospital or healthcare enterprise look like? 
12.   Be the first in your market. It’s not a question of if but when. Why not be the first?

Exciting times we live in, eh?

Michael is a healthcare business, marketing, communications strategist, and thought leader.  As an internationally followed healthcare strategy blogger, his blog, Healthcare Marketing Matters is read in  52 countries and listed on the 100 Top Healthcare Marketing Blogs and Websites ranked at No. 3 on the list by Michael is a Life Fellow, American College of Healthcare Executives. An expert in healthcare business and marketing strategy, digital marketing & social media, Michael is in the top 10 percent of social media experts nationwide and is considered an established influencer. For inquiries regarding strategic consulting engagements, call Michael at 815-351-0671 or email Opinions expressed are my own.