Have Direct-Care Healthcare Providers Become a Commodity?

In a most robust discussion on LinkedIn, in the Society for Healthcare Strategy and Market Development group page, regarding meaningful differentiation in healthcare, a question was posed by one of the participants, that received no comment, but is very important.

Has healthcare become a commodity?

If we look at the definition of a commodity as I remember it from my graduate econ classes, a commodity has the following properties: It is produced and sold by many companies; There is generally uniform quality between competitors' that sell or provide it; There is demand for the product or service; And it is supplied without qualitative differences between one company's products and services from another.

Sounds like a hospital, doctor, home care agency, infusion center and specialty pharmacy company to name a few.

When you think about it in this light, I would maintain that the majority of healthcare providers can be considered commodities, with a few notable exceptions, such as the Mayo Clinic, The Cleveland Clinic, M D Anderson and a few select others. Maybe not to patients at this time, but to employers, insurance companies, the self-insured and governments to name a few, that healthcare providers are commodities.

In the absence of qualitative data on quality and outcomes, that would generally available and understandable to consumers, then how does one tell the difference between direct-care providers?

For example, hospitals nearly all have the same clinical programs and services, JACHO accreditation, technology, insurance contracts, community- based medical staff's, MOBs. surgical-centers , ERs etc. It's the old a hospital, is a hospital, is a hospital argument.

A consumer really can't tell on the face of it, meaningful qualitative differences between providers. And I don't think it is because they can't or don't have the ability, but because they simply don't have the right information. Since healthcare consumer's can't identify and hence don't know, what those differences are, the direct-care providers in the healthcare industry are allowing their healthcare vertical to become commoditized. Everyone looks the same.

With the introduction innovative tools from payers, (Are you ready for price competition?) where insurance plan members at Aetna's Payment Estimator, WellPoint's AIM subsidiary and United Heath with its Innovation Center , allow members to compare and shop on price and determine their co-pay or deductible for their out-of-pocket expense, you have the introduction of consumer shopping behavior. And these tools are not just limited web site use. They have mobile applications as well in most cases. What we see is that these tools, interject a new level of commoditization to hospitals, physicians and others. The assumption is that quality is equal across providers.

Say what you want about the quality argument. Until you can qualitatively define your quality as better than a competitor, just saying you provide quality care is a hollow argument.

As consumers become more price conscious and take more control in the decision-making process, it behooves direct-care healthcare providers to become more market differentiable, based on qualitative data. You may not like it, but the sooner you get ahead of the commoditization spiral, if that is even possible, the better off you will be.

Healthcare is rapidly changing, from a provider-controlled and dominated decision-making model, to a consumer-controlled, decision-making model. And in a consumer-controlled model, absent meaningful and understandable qualitative differentiation, healthcare services become just another commodity. One that is in the end whose purchase will be based on price.

Now there's real healthcare reform.

You can continue the conversation with me on:

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Web site: http://www.themichaeljgroup.com

For more information, or to discuss your strategic healthcare marketing, customer experience management, marketing/sales integration or start-up needs, you can learn more at my web site the michael J group; email- michael@themichaeljgroup.com; or phone by calling me at 815-293-1471.

>>> Have Direct-Care Healthcare Providers Become a Commodity? >>>

Heathcare is Bulit for a Tie

Score Tied and No Extra Innings
Ever think about it? Healthcare is built for a tie. Throughout the industry no one can ever get a competitive leg up. We all have the same managed care contracts, similar programs and services, even our docs go to a group of hospitals. So, in a commodity market environment, which healthcare is, and price is becoming king, how can anyone expect anything less than a tie? You can not be a clear winner, you can not dominate your market, you can not keep out new entrants. Okay, maybe for a short while but not indefinitely. Tie score, 7-7, "same ol same ol" across organizations and it may not change anytime soon. We all do the same things.

Breaking the tie
The only way you can break a tie is with your people. That's right, your employees. They make the difference and set you apart from the field. In a zero sum game where the truth be told, no one can really define service and quality, people make the difference. That is what doctors and patients will remember. That is how you can gain an advantage, that is part of the road to prosperity as an organization. Train them and get them into the community with presentations.

And oh by the way, there should not be a single presentation that anyone gives from the CEO on down that is over six slides. If you can't deliver a presentation in 4-6 slides, then you do not know what you are talking about. Stop the show up and throw up approach to information. People aren't stupid, they can read and that is exactly what they do when you put miles of information with 60 slides in a presentation. They read and don't listen, so why did you even bother giving a presentation? When you do that, then 80 percent of the presentation is about you, and only 20 percent about your audience. Think they really want to hear how great you think you are?

Employees satisfaction is one part of the puzzle to breaking the tie
Still think employee satisfaction isn't important or is only relegated to a bi-annual survey? Think again. The healthcare industry is built for a tie and if you want passionate committed employees and physicians, then you really need to treat them better. Otherwise, its a tie.

And ties aren't a lot of fun.

>>> Heathcare is Bulit for a Tie >>>