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Jul. 2005
Hospitals and Consumer-Driven Healthcare: Five Marketing Moves
First, let’s dispel the idea that employers are leaving the healthcare benefits arena and consumers are getting ready to run amuck--totally empowered over their healthcare dollars and decisions. Employers are indeed reducing their role and employees are shouldering more of the burden. The move is starting to take shape through the introduction of consumer-driven plans and associated health savings accounts. Now, instead of a $5 to $10 co-pay or a $500 deductible, an employee may face hundreds, if not thousands, of dollars in bills.
The tradeoff for higher out-of-pocket costs is a lower premium. And health savings accounts are a means to put money aside to pay for those higher out-of-pocket costs. This reality gives employees an incentive to avoid unnecessary care, to stay healthy, to participate in disease management programs and to shop, not just on quality, value and service, but on price.
Insurers realize their stake in this shift. The healthier their members, the less they will have to pay out for care. In fact, because of lower premiums for those opting for consumer-driven plans, it is imperative that insurers become more of a partner in the health of the employee. Insurers have already begun to take action. Long customer service calls are no longer frowned upon by the insurer. Service representatives are encouraged to take the time with callers to impart information and help them ask the right questions around quality, cost and efficiency. Changing patient behavior is more than a good thing to do--it’s the path to managing costs. So the insurer is providing tools and people to assist the consumer in making cost effective, quality healthcare decisions. While the marketplace battles over what will become the leading quality indicator, insurers are already taking the lead. Aetna, for example, has a hospital comparison navigator on its Web site that allows people to compare hospital indicators like the number of patients treated per year, complication rates, mortality rates and length of stay. Industry players are making preparations to introduce member ombudsmen and advocates, who will coach enrollees on good health behaviors, develop incentives for healthy behaviors and aggressively promote disease management programs.
What’s a Hospital to Do?
Hospitals can ill afford to stand by and watch from the sidelines. Even if it means taking a “if you can’t beat ‘em, join ‘em” outlook, hospitals should anticipate where the market is heading and to react to it sooner than later. Here are five preparations hospitals can make now.
According to recent data, hospital admissions are flat despite an aging population. People are living healthier, and more services are being moved out of the hospital to physician’s offices and homes. This will continue. In Seeing What’s Next – Using the Theories of Innovation to Predict Industry Change, authors Clayton Christensen, Scott Anthony and Erik Roth boldly state that ultimately people do not want to interact with the health system at all. Innovations in health care will revolve around anything that moves services closer to the consumer so that they can manage their own health. Technological advances are fueling this change.
Expect more consolidation of hospitals. To survive, hospitals will compete more than ever in terms of quality, service and price. Taking another look at your customer base will help you decide the best marketing strategy going forward. But be careful. You can get into a quagmire when talking about quality. A better approach: build long-term relationships with patients so that when they need healthcare, they will be favorably predisposed to your facility. Offer quality service to current patients and that will help spread the word about your customer service. Ironically, what has been clouded in mystery--price--may be the most tangible thing to market in the future.
The executive team must realize the need for transparency in pricing. Class action lawsuits and challenges to tax exemption are good reasons to pay attention to this. Those aside, a consumer having to dip into his/her pocket and pay well-earned money is going to demand to know what things cost and how you arrived at those costs. Speculation is that the industry will eventually need to move to a retail cost structure to satisfy the marketplace. The marketing director must play a pivotal role in demonstrating the value of transparency. If marketers take a seat at the table, they can help make adjustments to your healthcare marketing strategy in light of changes in the marketplace, and that is essential if hospitals are to adapt. A much-needed dose of reality needs to injected into how hospitals market. Healthcare is something people do not want. It is an emotional decision influenced just as much by friends and families as it is by physicians. It is a delayed purchase. When you really take these things to heart, fundamental marketing strategies need to change.
Yes, the real money is in the high-end services. However, the real relationship-building will be driven by your wellness offerings. You can choose to stand by while insurers and others become health partners with your potential patients, or you can develop services to assist them in leading healthier lives. Helping patients stay well leads to a relationship built over time. When they need acute care, patients will have trust to turn to you. If you already have wellness initiatives, consider giving them more emphasis in your marketing. And beat others to the punch by conducting a community health needs assessment to truly start understanding what you are facing and what needs to be addressed in the community.
If consumers now travel 50-60 miles to an alternate airport to save a hundred dollars for a flight, it is quite likely they will do the same for their healthcare services--all other things (quality and service) being equal. Rethink the scope and reach of your marketing. Hospitals typically can’t afford mass media in multiple markets. However, wisely diverting dollars to Internet strategies that make sense can increase your exposure and probably reduce your costs as well. Regional Internet advertising is starting to catch on. Consider having a live chat attendant ready when people start searching your Web site and have questions. You may find that you can divert someone from your traditional call center to handle this initiative.
Start worrying less about class action lawsuits based on price inequities. The marketplace will demand price transparency. Companies are springing up that are helping doctors and hospitals consolidate and publish price lists for services. That is one fundamental issue that will need to be addressed. But it goes beyond that. You will need to know how your competitors set prices. You will need to clearly state a value proposition of what you will receive for your money. And you will need to determine a price position you want to claim. Some providers will choose to cater to the high-end concierge audience, while others will position themselves to be the healthcare version of Wal-Mart. Once again, the assumption is that all things are equal in terms of quality and service. You need to be able to draft and tell your price story and philosophy.
The new public relations ambassadors for your hospital will be your accounts receivable and collections personnel. Consumer out-of-pocket spending will put more demands on the hospital in these areas. Customer service training is one area that will need attention. Employees will have to be retrained to handle collections in a professional and sensitive manner, as the number of patient interactions will increase.
You will also need to introduce services that correspond to this movement. For example, HSA debit cards are being introduced to pay for services. Customers will want online services similar to what banks offer in order to view their bills and balances and to make payments. Increased volume will demand that hospitals adopt best practices from the credit card and banking industries when it comes to collections.
Service representatives will become an important PR vehicle that can help create loyalists through good service or antagonists through bad service. Marketers must help drive messages through these representatives.
The good news is that consumer-driven healthcare is still in its infancy and just making its personality known. You have time to prepare now and avoid a late reaction. That said, more and more employers are introducing these plans. Still, before you do anything, take a step back and think like a consumer. Ask yourself what you would demand from your provider in this new world, and then let that motivate you to start discussing the issues. Business as usual will not be the way business is done.
Anthony Cirillo is president of Fast Forward Strategic Planning and Marketing Consulting, LLC in Huntersville, N.C. He may be reached at Anthony@4wardfast.com .
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