This morning I cleaned out our spice cabinet. There were a few spices I was inclined to send to the Smithsonian believing that they may have been labeled extinct between the time I purchased them and today.
Thirty years ago, after talking with a GP about my testicular cancer symptoms, I decided where I would purchase treatment. I spoke with oncologists at MD Anderson, Johns Hopkins, and Texas Presbyterian, and I chose TP because they were a mile from my apartment.
Eleven years ago, staring at the ceiling of the ambulance, the ambulance driver decided where I would receive care for my heart attack. As an aside, to this day that hospital does not know whether I am alive or dead because they never reached out to me after I was discharged. This hospital was an order taker. I was dropped off, got great care, and left.
They had not marketed me directly. Oh, I am sure there were marketing cluster bombs like billboards and ads on NPR, but those had no affect on me as I had no choice. Truth be told, they would have had no affect on me had I had a choice.
Yesterday I took my children out to celebrate their first day of school. Fats food—a Freudian slip—fast food—an oxymoron. Anyway, at the four-way intersection were a McDonald’s, a Burger King, and a Wendy’s. Three children. Three competing interests. It came down to choosing between a Frosty versus char-broiled—sorry McDonalds.
Drive throughs. Drive-through fast food. Drive-through health care. Going from being an order taker to a provider of choice. Can an argument be made that in excess of fifty percent of a hospital’s revenues come from taking orders? I think it can and I think the number is well above fifty percent.
Doctors refer. Payers accept. Patients admit.
What then is the effect of the billboards and NPR ads and Facebook ‘likes’ and telemarketing?
The numbers are changing, and the hospital business model is ill-equipped to benefit from the change—there’s a news flash. By the way, neither is the payer business model.
Fast forward three years from today. People—patients and prospective patients; people—the insured and the prospective insured—are issuing virtual RFPs for both healthcare and insurance. They are buying. They are not being sold.
And they are churning; in droves.
The problem is that both providers and payers have a business model that assumes they know how to sell.
There are two takeaways for this missive.
- Neither providers nor payers know how to sell.
- Even if they did, people are not being sold, they are buying. And providers and payers do not understand the difference.
- The real bad news is that they are dumping providers (hospitals and insurance companies) faster than they are buying.
For those unfamiliar with “churn” it is a term that will rule your lives for the next decade. Churn 101: customers drop you and buy services from another firm.
If your annual churn rate is ten percent, and you want to grow your number of customers by five percent, you actually need to grow it by fifteen percent to make your goal.
Now, when was the last time either a payer or provider grew its customer base by fifteen percent in a single year. Therein lays the problem.