Hospitals and providers are faced with fierce competition these days, and the competition is coming from unexpected places.

A strong merger and acquisition market has created larger players in most urban and suburban areas that can put the squeeze on smaller hospitals and providers. But more worrisome for providers are the non-hospital competitors that threaten to disrupt the market with more consumer-friendly care options.

Nearly 9 in 10 hospitals are concerned about rising competition from disruptors offering a superior consumer experience. Failure to meet consumers’ needs and expectations is a key reason why providers are at risk of losing market share to non-hospital competitors. When asked to rank potential competitors, healthcare leaders cited UnitedHealth Group/Optum, CVS Health/Aetna, and Amazon as posing strong or extreme threats.

The ability to compete and remain relevant requires some type of transformation, but transforming an established organization can be difficult. Leaders must find a way to combat the status quo while simultaneously charting a better path forward.The good news is that healthcare organizations have a secret weapon: the incredible amount of data available to them on patient care, pricing, outcomes, relationships with payers, and more. However, they lack actionable insights into the data they already possess, which prevents hospitals and health systems from achieving true transformation, according to Kaufman Hall’s 2019 State of Consumerism in Healthcare report.

The sheer amount of data flowing through electronic health record (EHR) and budgeting systems can be overwhelming. Many health systems lack the tools and processes to evaluate and disseminate data in a timely fashion, or they measure the wrong things in regard to consumer engagement. Leveraging correct, timely data can uncover early declines in performance, revenue, or market share — and allow for quick corrective action.

More than half of hospitals “talk the talk” on the consumer experience, crafting consumer-centric missions and strategies, but most can’t “walk the walk,” because they either aren’t collecting the right data or aren’t analyzing it quickly enough to make a difference. Healthcare leaders’ reactive approach to the patient experience gives disruptors the upper hand.

Consumer experience lacking

Competition among health systems and providers in the same geographic area isn’t new, but the nature of this competition is changing. New entrants to the industry are leveraging high-touch, highly personalized innovations to threaten market share in the outpatient business.

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One reason healthcare is prime for disruption is a mismatch between consumer-centric priorities and the capabilities of healthcare organizations. Most patients face out-of-pocket costs of $501 to $1,000 during a healthcare visit, yet large gaps remain in healthcare providers’ efforts to deliver price transparency, Kaufman Hall research shows. For example, 12% of organizations offer no pricing transparency options, just 10% offer price guarantees, and only 18% provide clinical staff with transparency tools to respond on-the-spot to patient questions regarding costs for recommended services.

Between 2017 and 2018, patients’ out-of-pocket costs rose 12%, so interest in upfront estimates continues to rise. CMS has even proposed a requirement for hospitals to post payer-negotiated rates for certain shoppable services starting on Jan. 1, 2020.

Failure to address this issue threatens market share and consumer trust, and price transparency is just one area where healthcare organizations’ consumer-centric priorities differ significantly from their capabilities (see Exhibit 1.)

EXHIBIT 1: Consumer-Centric Priorities vs. Capabilities Among Hospitals and Health Systems

The paradigms of care are rapidly changing on both ends of the age scale, but health systems are struggling to adapt. Ten thousand Baby Boomers turn 65 each day, and many want to age in place by living in their own home and community safely, independently, and comfortably. On the other end, tech-savvy Millennials and those in Generation Y actively search for the next innovations, such as home monitoring services, virtual care, or direct-to-consumer phone visits. Yet many hospitals are still stuck in a brick-and-mortar mentality: if you want care, get in your car.

Healthcare organizations have a lot of room to improve consumer access. Survey results show:

  • Nearly 80% of organizations report having no subscription-based primary care services
  • A third offer widespread online self-scheduling for existing patients, but few offer this service for new patients
  • 38% of respondents offer widespread “Save a Spot” urgent care, while nearly 60% offer it on a limited basis or not at all
EXHIBIT 2: Consumer Convenience Initiatives at Hospitals Are Sparse—Despite Strategies

The chart above shows how few hospitals and health systems have adapted to consumer demands for virtual health services. This disconnect between consumer demands and health system offerings demonstrates the need for data-driven insights that can more closely align consumer expectations with health system services.

Data is the key to proactively improving the healthcare consumer experience, and staying ahead of the competition. See Part 2 of this blog series for top strategies around putting data to use for your hospital or health system.


Meet the Authors

Kermit S. Randa

Chief Executive Officer, Kaufman Hall Software
As Chief Executive Officer of Kaufman Hall’s Software division, Kermit Randa oversees all product development, sales, implementation, training, and support functions for the firm’s...
Learn More About Kermit S.

Read Part 2