Health care is increasingly driven by patients who are behaving more like consumers and customers as they seek the best care at the most affordable price.
As the industry evolves—due to fierce cost pressures, the Affordable Care Act, advances in technology, a new emphasis on preventative care, health-system mergers, and a host of other factors—one area of clarity is that success depends in part on strategies focused on customer acquisition and customer satisfaction that have long been prevalent in other industries. This is true whether the goal is getting millions of uninsured people to sign up for government-run exchanges or keeping the lights on at a neighborhood health clinic.
Doing so requires “a strategy which places the interests and needs of the customer in the center of the decision making,” according to John Quelch, professor of health policy and management at Harvard T.H. Chan School of Public Health and Charles Edward Wilson Professor of Business Administration at Harvard Business School.
Customer-driven strategies have, in the health care industry, remained elusive, even though they’re central to other sectors of the economy – think online retail or, increasingly, higher education.
“Health care is playing catch-up in terms of putting the customer first,” said Quelch. “In most industries it would be common parlance to say that the customer is our boss, but you don’t find too many doctors or hospital administrators taking that point of view.”
How to attract and maintain customers is a vital question for today’s health care industry.
Not without reason. Institutions that treat cancer, run neonatal intensive care units, and handle patients’ most private data face unique challenges when it comes to instituting customer-driven strategies.
That said, strategies long embraced by other industries – targeted messaging, for instance – could yield important results in the health care industry. Imagine the benefits and savings derived from helping a chronic diabetic manage his diet through targeted messaging and incentives, said Quelch.
Quelch spoke with the Executive and Continuing Professional Education program to discuss the importance of customer-driven strategies in health care – and some of the obstacles.
Based on that conversation, here are eight things health care professionals should consider – both challenges and areas where innovation and leadership could provide solutions – when formulating customer-driven strategies.
1) Data Collection and Data Privacy
“If you want to develop a customer-driven strategy, you have to have data on the customer,” Quelch said.
He continued: “The data could be, for example, insurance claim data. It could be clinical data in terms of what hospital treatments and services and blood tests you received. It could also be non-health care data that enables us, for example, if we know your shopping history, your zip code and your income … [to] determine how you behave as a consumer and what sort of messages you respond to.”
Health care organizations could target patients with messages and incentives to change behavior, to comply with exercise and diet routines, and to sign up for beneficial services.
“It’s clear that if we have perfect information on each individual, then the messaging and the incentives can be tailored very precisely,” Quelch said.
But – and this is a big but – such data-mining “can come into conflict with privacy-related concerns,” he said.
One way to respect those concerns is to make data anonymous, he said, so that customers are clustered into sub-groups, allowing organizations to craft messages to smaller groups of people without knowing specifically who they are.
However, there’s a certain “measure of efficacy that is being left on the table” by not being able to synthesize all data in a manner truly tailored to the individual, he said.
2) Fragmented Data
Toss aside valid and important concerns about privacy, just for the sake of argument. Collecting health-related data for a given patient would still be an arduous task because the data is fragmented, stored on different computer systems, and in paper files, at different hospitals and insurance companies.
“The health care industry is way behind other industries in terms of its user friendliness and its ability to provide joined-up data,” Quelch said. “There has not been enough of a driving force behind pulling all of the data together on an individual. That means I cannot go online to find all my health care records in one place.”
3) Convincing Consumers There’s a Choice
If you go to the grocery store to buy breakfast cereal, you’re spoiled for choice. You understand the choices, have preferences, and make judgments based on taste and cost. You may actually enjoy the process.
Even though health care consumers “do have a considerable level of choice,” said Quelch, many consumers “are skittish or confused or simply don’t know and don’t invest the time.”
“Not all consumers are created equal,” he said, and he suggested “there is far too much emphasis on economics and not enough on sociology and psychology” when it comes to marketing health care.
Consumers need to be persuaded and educated about their choices. Also, health care products “should be heavily informed by customer analysis and an understanding of what different customer segments want in terms of mixing of pricing and product.”
4) Health Care Is a ‘Grudge Purchase’
“People do not get excited or entertained by the prospect of engaging in the health care system,” Quelch said, adding, “It’s a much more difficult thing to motivate consumers to engage in understanding and choosing an insurance policy for health care than it is to buy groceries.”
“This is not like Field of Dreams, where if you build it they will come.”
He elaborated in an article posted by the Harvard Business School: “People don’t like buying or paying for it. Therefore it takes skillful marketing to attract the attention of people and motivate the desired purchase behavior you are looking for.”
“Perhaps,” he told the Executive and Continuing Professional Education program, “the health care system could learn something, a little bit at least, from the likes of Disney in terms of how to present themselves in a manner that is less threatening and more welcoming.”
5) Health Care Is an ‘Experience Good’
Along similar lines, customers can’t fully assess their health care choices until they use them.
“You only really can appreciate the detailed features, the pros and cons, and ups and downs, once you have experienced the service,” Quelch said. “You obviously aren’t going to go and get your second leg amputated at another hospital to check whether or not they do a better job than the first hospital did on your first leg. Sort of a crude example, but it conveys the point.”
You can forgive customers for shying away from the system.
6) Lagging Behind in Consumer Technology
Quelch pondered how today’s 30- to 35-year-old consumer is different than the equivalent consumer from 20 years ago.
If you’re in that age group, “The number one is that you are much more IT savvy,” he said. “You are probably used to a high degree of reliability and completeness in the information you receive when you are dealing with suppliers and online retailers. Those are very customer friendly [and customer] facing service providers.”
For consumers accustomed to making one-click Amazon purchases from smartphones, health care falls short. Improving customer-facing technology could improve health care results.
7) Consumers Are Like Snowflakes; They’re All Different
Health care leaders need to consider the diversity of consumers when they formulate strategies for products, procedures, and services.
When shopping for insurance, for instance, some people may want a high deductible and low co-payment, whereas others want the opposite, Quelch said. Some belong to a “pro private-sector group that want to maximize freedom of choice for everyone,” others belong to a “pro-public group that want a single-payer solution for everyone with a lot less wiggle room for consumers.” Both points of view are valid.
Quelch teaches a case study involving Connecticut’s health care exchange – Access Health CT – and the state’s effort to sign up uninsured people. By conducting market research, organizers were able to divide uninsured consumers into sub-groups: uninsured young men who felt they didn’t need insurance, skeptical older consumers, people who were too overwhelmed to think about it, and those who were cautiously optimistic. Organizers were able to tailor separate messages and sign-up strategies for each of those sub-groups.
“There are clusters of consumers who share attitudes, behaviors, and opinions,” he said, “but there is no homogeneity either in the way consumers approach health care decision-making or in the way that companies or the public sector should approach the delivery of health care.”
“The pressure on doctors’ time is very severe,” said Quelch. It means less face time with patients.
Meanwhile, “Most consumers these days are used to being able to call up their broker or financial advisor at any time of day, within reason, to talk about what’s going on in the market, but you cannot call up your health care provider any time of day and talk about what’s happening with your health.”
“Customer-driven strategies have, in the health care industry, remained elusive.”
“There’s this continuing rationing of communication time,” he said, “and the problem here is that the infrequency of interaction between the consumer and the provider results in the consumer not following through on what has been recommended.”
“There has to be more frequency of contact for the consumer to be able to play their full role,” he said. Doing so will demand new ideas for staying in touch with customers.
Dr. Quelch directs Customer-Driven Strategies for Health Care Professionals at Harvard T.H. Chan School of Public Health.