The dynamic between patients and providers is changing significantly as patients become increasingly activated “consumers” of health care. This change is driven by numerous factors, including growing individual responsibility for choosing health plans, rapidly expanding enrollment in high-deductible health plans that involve greater out-of-pocket costs for patients, the wide availability of price transparency tools, and the emergence of new competitors that offer lower-priced, more convenient care.
To remain relevant, hospitals and health systems must identify and understand the consumers in their local markets—their attitudes and needs, and what they value in choosing and experiencing healthcare services. The goal for healthcare providers should be to build a relationship with consumers throughout the path to purchase, as consumers identify, compare, and select specific networks, clinicians, and facilities.
The fundamental questions to ask are: What matters most to our consumers? And how does that vary by segment and service? Providers must answer these questions to be able to develop an effective consumer-centric strategy, which means moving beyond traditional ways of thinking about patients.
“Grouping” Patients vs. “Segmenting” Consumers
Understanding an organization’s consumer base requires a combination of primary research and data analysis. Data may come from various sources, including patient surveys, service line analytics, electronic health records, and local demographic statistics.
Identifying the right groupings is critical. Grouping patients by age and income, for example, can provide basic insights into a provider’s customer base in key services—but many factors that shape consumers’ healthcare decisions and priorities do not line up cleanly with demographic groupings. Whether the business purpose is to understand a consumer’s path to purchase for a lumbar MRI, to identify the most appealing features of a narrow network health plan offering, or to decipher which incentives are most likely to prompt different individuals to adjust behaviors within a population health management program, effective consumer segmentation must be driven not only by demographic considerations, but by consumer attitudes, behaviors, and beliefs.
Segmentation analyses provide insights about an organization’s overall consumer base and guidance on how to position strategies and communication for specific market segments. Rather than thinking about patients as “old,” “affluent,” “healthy,” or “chronically ill,” for example, health systems can segment consumers into statistically and strategically meaningful categories such as “Only the Best Will Do,” “Engaged High-Risk,” or “Wellness Advocates.”
By gaining a comprehensive understanding of patients’ needs and attitudes, organizations can better discern what drives their selection of specific networks, providers, and services.
Leveraging Consumer Intelligence
Price quickly is becoming a key factor in care decisions for many healthcare consumers, but most hospitals and health systems cannot (and should not) compete on price alone. Providers should find other ways to differentiate themselves from competitors—such as through strong brand recognition or by offering a high level of convenience, a positive customer experience, high-quality care, and multichannel access, among other advantages.
Similar to the pricing dynamics that hospitals are facing today, many regional grocers have had to be innovative to compete against Walmart’s entrance into their markets with “everyday low price” grocery offerings. As Walmart has expanded in markets around the country, successful regional grocers have leveraged consumer insights and found other angles to differentiate themselves for local consumers. Key strategies have included appealing to specific consumer segments with unique products and signage, leveraging strengths such as offering the freshest produce and deli products, and understanding the products for which price competition matters and those for which it is less important. As a result, many regional grocers, such as H-E-B in Texas and Wegmans in New York, continue to thrive and have exceptionally strong customer loyalty.
Hospitals and health systems need high-quality consumer information and insights and an effective consumer relationship strategy to compete in the face of numerous disruptive forces that are reshaping the healthcare industry. Becoming an effective, consumer-oriented organization likely will require extensive research and significant investments in people and technology over several years. Organizations that wait to build the expertise will be left behind. The time for healthcare leaders to define their approach to consumer strategy is now.
Dan Clarin is a vice president in the strategy practice of Kaufman, Hall & Associates, LLC, Skokie, Ill.
This article was published in the hfm Blog on Tuesday, August 11, 2015
Copyright 2015, Healthcare Financial Management Association.
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