Category Archives: Framework

Healthcare Trends: What Customers Want – and Don’t Want – From Insurers vs. Providers

There are three significant and interrelated trends we are seeing from our research with health insurers and their members, providers and patients, and payer-provider systems. Taken together, these trends point to specific directions for health plans and healthcare provider organizations to take in order to better engage and satisfy their customers.

Improving Health: 3 Trends in What People Want

  1. More people want personalized health advice on what’s right for them.
  2. They expect doctors to provide them advice on their physical health and medications. But for lifestyle issues like stress management, weight loss, sleep–they seek solutions elsewhere.
  3. For lifestyle changes, they are open to advice from insurers–as long as it’s tied to how to use their health plan to stay healthy.

One key driver of the differences in what people want from their health plan vs. from their providers is mindset. Generally, people take on a “patient” mindset when they are sick and actively needing care from providers. They take on a “consumer” mindset when making lifestyle choices for chronic conditions and when dealing with their insurance company. These different mindsets lead them to want, expect, and accept different things from insurers than from providers. Understanding these two mindsets is critical for insurers and providers to develop the right programs and services people want and will use.

What People Want From Providers: The Patient Mindset

When a person has an acute illness or injury, they are in patient mode. What do patients want, and from whom? Patients want advice from their provider on their condition, symptoms, medication, treatment, and prognosis. Patients believe providers have the training and expertise to help them and should have their best interest in mind. After all, that’s what doctors, nurses, and other providers are meant to do.

Patients do not want advice from their insurance company about what care is appropriate for acute illness or injury. Right or wrong, patients often see insurers as obstacles to optimal care, not enablers. In the heat of the moment, they may lose sight of the fact that their health plan provides them with significant benefits and instead they focus on what they don’t get.

For many health conditions, patients sort of have to trust. As my friend and lifetime health educator, the late Dr. Shimon Camiel, said: “Sure, if I have high blood pressure, I want to be empowered and involved. But if I have an ax in my head, I just want the ER doc to take it out and save my life!”

So in the traditional patient/provider acute care relationship, the “contract” is this: patients trust, providers fix.

What People Want From Payers: The Consumer Mindset

When a person is dealing with coverage or benefits, they are in consumer mode. They expect to go to their insurance company – not their provider – about coverage decisions, or determining what providers they can see, or where to get their prescription filled. Similarly, they are open to getting advice about how to improve their lifestyle or better manage a chronic condition from their insurance company, as long as the advice is tied to using their benefits better. Consumers are not particularly wanting or expecting health improvement advice from their insurance company if it is not tied to benefits. To consumers, it makes sense and is reasonable that their insurance company will help them do things that both improve health for the individual and save money for the payer. That’s the heart of the win-win.

Consumers do not expect advice from their providers about benefits utilization or coverage. And many don’t turn to providers for help with health habits and lifestyle management unless it is tied to particular conditions like high blood pressure, obesity, or diabetes. Note that when dealing with long-term chronic conditions, people tend to be more in a consumer mindset than a patient mindset– even when interacting with their providers. I’ll cover this complexity in a separate post.

Like sick patients do, consumers sort of have to trust in the system. What is and is not paid for is governed by what their health plan covers, or what they are willing to pay for out of pocket. So the “contract” between consumers and insurers is this: Consumers make good choices, insurers pay for them.

Acting on the Trends for Better Business

Leverage these three trends as a starting point when you think about what your organization can and should offer to your customers. Then do the research to make sure you’re solving meaningful problems that people want your organization to solve.

The result is happier and more engaged patients and consumers and a far better user experience. That translates into brand loyalty and ultimately improved health and reduced costs.

Happiness as Competitive Advantage? A Challenge for Health Companies

company_happinessYou may be familiar with the Kingdom of Bhutan’s Gross National Happiness (GNH) index. This small Himalayan nation is the only country in the world that measures and aims for national happiness as its most important objective. The intent is to build an economy and culture based on spiritual values more than on material wealth. It prioritizes GNH over GDP. Bhutan’s commitment inspired the United Nations to pass a resolution that placed “happiness” on the global development agenda.

What does this have to do with you and the success of your company that’s in the business of health?? Potentially, a lot. As you read what follows, consider the notion of balancing both profitability and happiness as guiding values and major indicators of success.

Bhutan’s young King Khesar put it this way in his coronation address: Yet we must always remember that as our country, in these changing times finds immense new challenges and opportunities, whatever work we do, whatever goals we have – and no matter how these may change in this changing world – ultimately without peace, security and happiness we have nothing. That is the essence of the philosophy of Gross National Happiness. Our most important goal is the peace and happiness of our people and the security and sovereignty of the nation.

Most companies in the health industry base major business decisions on financial metrics like ROI to shareholders, quarterly numbers, and EBIDTA. Which makes sense. You need to be successfully financially and deliver a return to investors to be a going concern.

Money matters, no matter how dedicated your company is to improving health and saving lives. “No margin, no mission,” as the late Sister Irene Kraus, former CEO of the $3 billion Daughters of Charity National Health System, is credited as saying.

And, and… maybe happiness can matter just as much as money, and measurably contribute to your company’s financial success.  Especially since you’re in the business of health. Many start with employee happiness and well-being. Kaiser, Genentech, Mayo Clinic are a few of the health companies that have a reputation for really investing in the well-being –  and thereby the happiness – of their employees.  And there’s much further to go.

Let’s do a thought experiment: What would if happiness of your employees was a measure of your organization’s well-being? What about delivering  happiness to your customers?  Can you imagine happiness as part of your brand promise? Part of your unchanging core values? A key differentiator in highly competitive market? A metric you proudly talk about to shareholders and investors?

Be happy??

Companies in Healthcare: What Could Make You Disappear??

The healthcare industry is changing at an incredible pace. That means winners and losers. New companies emerging and existing companies going away. What could make your company disappear?

To be clear, by “make your company disappear” I don’t mean some super-powered ray gun or a natural disaster that would ‘poof!’ make your company suddenly vanish, dissolve, or fade away.  I’m asking seriously what could make your products, services, or company irrelevant, obsolete, or undesirable?

And I apologize. I know disappearing can be an unpleasant thing to think about. But it’s really important to think about, especially when you’re doing well. As you know, there is a plethora of products, services, and companies that were once great, and then succumbed to forces that made them disappear.

In today’s healthcare environment, just consider the impact of Meaningful Use or the MEDTECH Act; the shift toward value-based reimbursement or growing influence of GPOs; the proliferation of wearables and monitoring devices; and the health plays of leading tech companies like Apple and Google.

Any of these forces can position a few as market leaders, necessitate radical restructuring for many, make other companies disappear, and launch countless new startups to replace them. You want to stay strong. Be proactive. Don’t be one of the disappearing companies or a victim of circumstances.

First consider your company’s relationship with the market and healthcare business environment. Start with these five questions:

  1. What change in the market can make my products or services irrelevant, obsolete, or undesirable?
  2. What technological innovation can make my products or services irrelevant, obsolete, or undesirable?
  3. What shift in consumer behavior can make my products or services irrelevant, obsolete, or undesirable?
  4. What policy or regulation can make my products or services irrelevant, obsolete, or undesirable?
  5. What competitor can make my products or services irrelevant, obsolete, or undesirable?

Your answers should help you look beyond the present, see threats to your long-term viability, and proactively make plans to preserve your company’s existence and well-being. Think big picture, not just about what might replace your offerings, but what might integrate your technology into something bigger, like smartphones have integrated the functions of MP3 players. Consider too getting input from KOLs and customers to give you a more well-rounded perspective and greater certainty in your conclusions.

Now take a look at your own internal practices and beliefs, that if unchecked, can prevent you from being agile and responsive, and ultimately make you disappear. But don’t do this assessment unilaterally, get feedback from your team. Drawing on the innovation work of Dartmouth professor Vijay Govindarajan, think about these three traps that can make even highly successful companies flop. Do any apply to you?

  1. Major investments in systems or technologies can make it prohibitively expensive for you to move to newer and better tools. But the longer you stay with what you have, the harder it is to switch. Some call this the “sunk costs” fallacy.
  2. Fixation on what brought you success blinds you to new things that can threaten or displace you. You don’t see it until it’s too late. Then you respond with desperation. Sometimes “if it ain’t broken, don’t fix it” just does not apply.
  3. Hyperfocus on today’s marketplace can lead you to ignore new trends and market forces, and future opportunities and threats. You may be too wrapped up in the business to focus on the business. You’re all about today, and lose out on forward thinking.

Combine your answers to the first set of questions about your company’s relationship with the market and external environment, with your assessment of traps based on internal practices and beliefs. Be honest.

Stay strong. Don’t disappear!

Hot at HIMSS 2016: Interoperability, Population Health, Telehealth, Patient Engagement

I just got back from a jam-packed few days in Vegas for HIMSS 2016. Just me and 40,000 of my closest HIT friends.himss16

The mix was 2/3 vendors, 1/3 healthcare systems, I heard. Lots of excitement, lots of energy, lots of promise. Lots of walking.

As I step back, I see four main themes jump out: Interoperability, population health, telehealth, patient engagement. Here’s my quick take on each.

Interoperability: Getting devices to talk to each other, share data, and play nicely together for the higher good- better care, better outcomes. Along with improving mediating outcomes like workflow and reducing errors. Kudos to device and IT companies for sharing and letting go of turf. It’s certainly time.

Population health: All about prediction to figure out whom to provide what services to. Seems to be a modern version of managed care in terms of bottom line purpose, but driven by predictive analytics and with far more tailoring of care. The key piece still under-estimated is how hard it can be to get people to change health behaviors.

Telehealth: Keeps evolving to let more and more care and monitoring happen remotely (or “out-of-person” vs. “in-person”). Now it’s not just connecting provider and patient, it covers connecting providers and providers, providers, payers, and patients, etc. This will challenge our paradigm about what monitoring, diagnosing, and treating can only be done in-person. I think the litmus test for clinical care is empathy – to what extent can a provider truly empathize and thereby deeply understand a patient through mediating technology.

Patient engagement: Though it’s been around since the earliest days of healthcare, it now means all kinds of things and is catalyzing a wide variety of new products and services. Key issues here are about defining what it is and isn’t, developing objective metrics, and making it not a separate “thing,” but an integral and unavoidable part of every healthcare interaction.

Better interoperability behind the scenes, plus telehealth to enhance and extend relationships, combined with population health to focus resources, improves patient engagement to make it all matter.

Let’s Stop Confusing Strategy and Tactics in Healthcare

strategyI can’t tell you how many times we’ve seen very smart healthcare companies – med tech companies, payers, provider organizations, etc., confuse strategy and tactics. And it reduces their effectiveness every time.

Why do strategy and tactics get confused? First, sometimes there is not clarity about what the real objective is and why. This subjects companies to the paradox Lewis Carroll described this way: “If you don’t know where you’re going, any road will get you there.”  Without a clear end point in mind, develop meaningful strategy to get there is very difficult.

Second, there is so much pressure to get new things to market, it makes it hard to carve out time and think strategically. There’s only time to “do” — even if what is being done doesn’t make good sense.

So what’s the difference? Strategy determines how you will achieve your goal. It represents which map you will use to get where you are going. Tactics are the map details and are all about the doing.

Let’s start with a couple military examples: 1) Divide and conquer is a strategy. Sending half the troops in a frontal assault and half on flanking maneuvers are the tactics that executes on the strategy. 2) Go big, go long, or go home, were the three strategies being considered in the Iraq war. How many troops would be where and when were the tactics, and that’s what got all the media coverage.

Marketing examples: 1) Be first to market is a strategy. Be a fast follower is an alternative strategy. The specific products or services you take to market, the resources you allocate, and the timing are all tactics. 2) First get prospects in the door with a low barrier to entry, then engage them to be customers is a strategy. How you will go about getting them in the door and converting them into customers are the tactics.

 

Don’t be one of the many companies that spend millions of dollars and years of effort on something only because their competitors are doing it. Have a good compelling reason. That way you know where you’re going and why.

Next be clear about what your strategy is, and why. Make sure your strategy is really strategy — and not tactics with the word  strategy attached. Then get into the tactics that execute on the strategy.

Lastly, make sure your team knows the difference between strategy and tactics and why it matters.

Brains, Brawn, or Beauty: What’s Your Value Prop?

brain-brawn-beautyIn today’s hyper-competitive healthcare marketplace, getting your value prop right is critical to position your product to win. To open your thinking about the myriad of value prop possibilities, consider the triad popularized in popular entertainment: Brains, brawn, and beauty.

Yup, brains, brawn, and beauty. Like it or not, there’s lots that we in healthcare marketing can learn from what sells in popular entertainment.

For example, the long-running competitive reality TV show Survivor groups its castaways into tribes, like this:

The members of the “Brains” tribe use their intellect to get by in life; while the members of the “Beauty” tribe use their looks and social skills, and the members of the “Brawn” tribe use their brute strength. When put all three traits together, they actually make up the Survivor motto: Outwit (“Brains”), Outplay (“Beauty”), Outlast (“Brawn”).

Now apply the “brains, brawn, beauty” trope to see if it usefully expands your thinking about value proposition possibilities. Of course, do the customer and competitive research to both generate ideas to explore and verify what works.

As a starting point, recognize that most med tech value props emphasize “brains” in terms of smarter technology of some sort. Instead, consider winning at “brawn.” That would center your value prop on the idea of being the workhorse device or the most powerful technology, not necessarily the one that deals with the most complex situations.

Alternatively, you might win at “beauty” by having the most aesthetically pleasing and user-friendly product. This requires being able to score “cool” points and might mean you don’t provide advanced functionalities.

That said, in both cases, you still need to demonstrate parity in “brains” – or at least sufficient table stakes, to be considered a serious contender. However, it may lead to a value prop that stands out based on a meaningful and distinctive strength, and that doesn’t get lost with a “me too” claim with no emotional resonance.

Bottom line, think outside the box about what makes your offering unique and valuable. Will you win with brains, brawn, or beauty??

Understanding How Customers “Anchor” on Prices: An Opportunity to Increase Sales

Imagine your boss just surprised you with a $10,000 bonus. Would you be happy? Probably so. What if you now found out your boss gave your co-workers a $20,000 bonus. Still happy? Probably not.

Next, imagine you’re at an electronics store ready to buy a new high-end computer for $1,995. You use your phone to do a quick price check online and find the same computer at a competing store down the street for a bit less, $1,985. Would you go to the other store for the lower price? Probably not.

Now instead, imagine you’re at the same electronics store ready to buy a new calculator for $19.95. You check online and find the same calculator at the competing store down the street for less, $9.95. Would you go to the other store for the lower price? Probably so.

What’s going on??

What’s going on is that your frame of reference or “anchor” is changing. In the first bonus example, you compare $10,000 to $0 so of course you’ll be happy. You just gained $10,000. In the second bonus example, you compare your $10,000 to the $20,000 your co-workers got. Now you feel like you’re down $10,000 and you’re unhappy. However, from a rational perspective, it shouldn’t matter because in both scenarios you have $10,000 more than you did before.

In the electronics examples, the decision is about saving $10. However when you can save $10 on an almost $2,000 purchase, you feel it’s not worth the trouble of going to a different store. It’s only half of 1%. But when you can save $10 on a $20 purchase, you feel compelled to go to the other store. After all it’s saving 50%! But logically, it’s still $10 in both scenarios. And $10 is $10.

Anchoring is just one example from the rich field of behavioral economics that demonstrates how our mental accounting is not always logical or rational. It’s not necessarily a bad thing; it’s simply how most people operate. Knowing and understanding the powerful principles of behavioral economics and how to apply them in med tech marketing can help you appeal to customers in ways that better fit how they process information and make decisions.

Please share your examples of taking the anchoring principle into consideration (or not!) and tell us what resulted.

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Read about the status quo bias and how to overcome it: Why Selling New Technology into Hospitals is Hard: Overcoming the Status Quo Bias

Better ROI from Your Marketing Research Investments: The Deep-Wide-Long Approach

Med device and health IT companies are constantly investing in new ideas, hoping to discover and bring to market the next game-changing product or service. That requires lots of market intelligence and customer research to get it right and avoid relying on risky guesswork and hunches.

A problem we see, especially with the larger companies that sell hundreds of products into numerous care areas in hospitals, is fragmentation. Even within a care unit, many research projects involving the same target audience and addressing similar needs are not coordinated and not taking advantage of cross-investigation.

For example, a company offering a range of cardiology products may have one business unit doing discovery research for new product ideas for stents and catheters, another BU validating value propositions for their special ECG monitor, and yet another BU getting reactions to messaging for a groundbreaking ultrasound device. Or all three BUs may be simultaneously doing research to answer the same business question, e.g. how to position their particular line of new cardiology products for launch. In either case, it’s likely – unfortunately – that none of the BUs are talking to one another.

The good news is that there are good strategic opportunities for collaboration that would benefit all the BUs, the company, and the customers they serve. Here is a framework we developed to help med tech companies leverage their investment in any and every customer research project for a better ROI. We call it Deep-Wide-Long.

Typically, a customer research project will go deep on the main topic, whether it’s understanding a specific set of problems customers are facing, getting reactions to new product concepts, or shaping marketing messages. With careful planning, the project can also go wide by investigating adjacent areas. And it can go long, by strategically reinforcing within the company the benefit of taking a customer-centric approach to product innovation and marketing. The incremental cost of doing so is small compared to the knowledge gain and its value.

For example, if we’re interviewing cardiologists to mainly gain insights into what they want ultrasound devices to do for them (deep), we can secondarily allow time to also investigate their use of ECG monitors as well as their reactions to new ideas for device integration (wide). Plus we can engage the other relevant BUs to understand their information needs as we shape the project, and then facilitate integration of the results across BUs (long).

The bottom line of Deep-Wide-Long is improving the bottom line by getting as much mileage as possible from every marketing research project, in a way that strengthens the company’s commitment to put the customer first.

The Promise & Challenge of Customer Intimacy for Med Tech Companies

No, it’s not about low lights, mood music or negligees. Customer intimacy is a business philosophy that commits you to deeply connecting with your customers. The deeper you connect, the more you sell.

Fundamentally, there are two main aspects to customer intimacy: One is really understanding what customers want. The other is giving them what they want. And that makes for very loyal and profitable customers.

When you are customer intimate, you focus on specific customers and let go of others. You precisely tailor your offerings to what your customers want and need, and do (almost) whatever it takes to make them happy. That requires really tuning to customer desires, both stated and unstated. And it may mean using big data analytics to make optimal recommendations to customers – like Amazon does with products, Pandora does with songs, and LinkedIn does with business contacts.

As a result, your customers are thinking “How do they know me so well?!” And of course, if you are practicing customer intimacy, you also genuinely care about your customers.

Sounds good, right? Here’s the rub: Most every med tech executive will say they are committed to connecting with their customers. In thought, they are. But in practice, it’s often a different story. Customer intimacy is hard to achieve. It’s a long-term strategy that requires organizational commitment, a relentless “tuning-in” to customer problems and desires, and both responsiveness and creativity to solve those problems and fulfill those desires.

Customer intimacy also challenges and turns traditional revenue goals right-side up. How? Customer intimacy is about maximizing the lifetime value of a customer. It is absolutely not about about lowering prices to hit quarterly or end-of-year numbers. In terms of KPIs, long-term relationships trump short-term profit. This can be a tough sell in solely numbers-driven organizations.

On the other hand, because it is challenging for med tech companies to practice customer intimacy, those that do will: 1) gain a significant competitive advantage in a very tough market, 2) build a barrier to commodization of their products and services, and 3) create a unique and powerful brand promise that can be core to their very identity. And as Zappos, Southwest Airlines, and Nordtrom all attest, bottom line, customer intimacy can be highly lucrative.

The first step is to decide if you have what it takes to be customer intimate over the long run. Consider: Money aside, how deeply do you care about your customers? Do you commit resources to really understand them? How far will you go to satisfy them?

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Resources:

The HBR classic by Michael Treacy & Fred Wiersema: Customer Intimacy and Other Value Disciplines

Interesting Forbes magazine article by business technology expert Joe Weinman on how digital and big data is transforming customer intimacy into “collective intimacy”

Developing Your New Market Entry Strategy: The 3Cs Framework

Imagine you’re a large medical technology company carrying a wide range of healthcare products. You see huge opportunity in a new market. How do you decide what innovation to lead with, what products to offer, and what your market entry strategy should be?three_c_V2

Here’s a framework that can help you narrow the universe of possibilities. We call it the 3 Cs, which stands for Company, Customer, and Competition. All three are critical factors that converge to reveal the sweet spot for market entry.

Company: This is often the starting point for med tech companies. They see a lucrative market, want a piece of it, and figure they have something good that will sell there. The driver is the company’s desire for growth and their belief in the solutions they offer. The “company” factor narrows the universe by identifying three things: 1) Core competencies and existing assets that can be leveraged for entry into a new market, 2) New competencies the company wants to develop, and 3) New care areas they want to expand into.

Customer: This is about identifying and understanding unmet needs and meaningful problems customers care about, as well as needs and problems they may not be aware of yet. The driver is what customers desire and will pay for. Determining these things requires being really tuned in to your customers. The “customer” factors narrow the universe by revealing 1) what customers want and need and will buy, 2) what their hidden desires and aspirations are and  what better state they envision, and 3) what customers don’t want, don’t value, and won’t pay for.

Competition: The competition factor focuses on identifying what customer needs are and are not adequately met by competitors, and what solutions you have that are already provided by others in the market you want to enter. The driver is finding an open niche of sufficient size for your innovation to take hold. Generally, companies will stay away from markets where there is domination by one or two competitors – unless they are willing to make a huge investment to unseat market leaders. The “competition” factors narrows the universe by specifying 1) where there is space for innovation, 2) what solutions exist and which are still needed, and 3) where there is good growth potential.

The danger is that the company’s hunger to enter a new market can lead to rash decisions and action without a guiding strategy. To mitigate that risk, give serious consideration to customer desire and to the competitive space. That way you avoid being driven by company solutions and wishes, rather than customer problems and desires.

What’s your experience developing new market entry strategy? What were your decision drivers? What lessons did you learn?

More resources:

How to Grow Your Business with Customer-Centric Innovation

How to Get to Breakthrough Innovation: Desirability First!

New Product Innovation: How to Determine the Winners