Many hospitals and health providers are failing to meet consumers’ needs and expectations in healthcare—and it’s a key reason why they’re losing market share to non-hospital competitors, including patient-empowerment company Devoted Health, retail guru Amazon and industry behemoths United Health Group/Optum.
These organizations have mastered using technology to reach patients but that’s not the primary reason 88% of hospitals struggle to compete around the consumer experience.
What’s holding hospitals and health systems back from achieving true transformation is something far more basic: lack of actionable insight, according to a recent consumerism report.
Healthcare organizations are drowning in data, but when it comes to improving the consumer experience, they often measure the wrong things or fail to analyze their data to uncover meaningful insights. They also scramble to secure timely data that pinpoints declines in performance, revenue or market share at an early stage—when swift action can make a powerful difference.
As a result, while more than half of hospitals have crafted consumer-centric missions and strategies, most do not have the right data needed to achieve their objectives. This puts healthcare leaders in reactive mode: responding to the disruption that is reshaping the healthcare consumer experience instead of breaking the mold on their own terms in response to market needs.
Breakthrough Performance Needed
Competition in healthcare is nothing new, but the nature of this competition is changing. No longer are hospitals and health systems vying for inpatient business with the health system across town. Today, they battle new entrants to the industry, whose high-touch, highly personalized innovations threaten to take critical shares of outpatient business away from traditional healthcare organizations.
What we’re seeing among traditional organizations is a mismatch between consumer-centric priorities and capabilities. For example, the ability to estimate patients’ out-of-pocket costs is critical at a time when most patients face out-of-pocket costs of $501 to $1,000 during a healthcare visit. Yet two-in-three healthcare organizations are unable to provide cost estimates for outpatient procedures or have limited ability to do so. This is a glaring problem, given patients’ out-of-pocket costs rose 12% from 2017 to 2018 alone—and it’s a problem healthcare leaders need to fix to maintain market share and consumer trust.
Consumer-Centric Priorities vs. Capabilities Among Hospitals and Health Systems
Hospitals and health systems lack insight into what consumers want—and this is reflected in their emphasis on brick-and-mortar facilities over virtual care, home monitoring services, or direct-to-consumer telephone visits. These innovations are critical not just in meeting the healthcare needs of tech-savvy Millennials and Generation Y consumers, but also Baby Boomers, who are rapidly aging into Medicare and desire to age in place.
Survey results show:
- Nearly one-in-four hospitals and health systems have no in-house personnel with experience in consumer research and analytics, while just under half have such personnel on a limited basis.
- Two-thirds of organizations offer limited-to-no opportunities for real-time patient feedback.
- Most organizations don’t incentivize consumer performance at the top: 64% have limited-to-no incentives for executives that are based on consumer-centric metrics.
Consumer Convenience Initiatives at Hospitals Are Sparse—Despite Strategies
The bar chart demonstrates how few hospitals and health systems have adapted to consumer demands for virtual health services. These are critical signs of the need for data-driven insights that propel hospitals’ consumer efforts from strategies in theory to strategies in action.
Building Momentum for a Better Experience
How can healthcare organizations more effectively access, analyze and leverage data to supercharge the consumer experience? Here are four strategies leaders should consider.
Reevaluate how your organization measures success related to consumerism initiatives. Most senior executives measure unique patient growth (64%) and the average time patients wait between scheduling and completing an appointment (57%) to determine how well their hospital or health system is tracking on consumer-centric performance, according to a recent consumerism report. Yet just 14% assess the share of patient healthcare spending that they garner—a sign of patient loyalty.
Competing on the consumer experience in healthcare starts with tracking the right metrics. Consider tracking new patient acquisition trends, net promoter scores, new patient retention rates and the share of patient healthcare spending your organization captures. Adopt mechanisms to capture patient feedback in real time and invest in data analysts with experience in consumer research and analytics to assess the data to deliver meaningful, actionable insight.
Ensure access to timely, robust benchmark data. Hospitals can’t compete on the consumer experience when their enterprise-level data are 9 months to 24 months old—typical for most hospitals. Look for ways to capture data from internal and external sources monthly—not just quarterly or annually. Acquire the ability to compare performance around consumerism with your peers across the system—by service line, department, physician practice, treatment type and more. These data will give you the context with which to assess your consumer-centric offerings and approach against those of your competitors. It will also point to the need for new investments that support a more consumer-friendly experience.
For health systems in general, there is so much we really don’t understand about how people experience us, one senior executive observed in the consumerism report.
Incentivize performance around consumer-based metrics. To build a consumer-centric foundation, organizations must have support from the top down. Yet two-in-three hospital organizations either do not have consumer-centric performance scorecards or use them only on a limited basis. Meanwhile, 64% of hospital executives are not incentivized around consumer performance and 69% have limited-to-no provider incentives for reshaping the consumer experience.
To gain ground in developing an outstanding consumer experience, healthcare leaders must not only capture the organization’s performance but also highlight areas of opportunity and incentivize leaders and staff at every level to do more.
Without an everybody-in mentality, hospitals and health systems will remain vulnerable to the consumer-friendly offerings of competitors.
Develop the infrastructure for a consumer-friendly pricing strategy. Pressures for increased price transparency are intensifying at a national level, yet few healthcare organizations do an effective job of sharing out-of-pocket cost information with consumers. Only half of the organizations surveyed respond to price quote requests within a defined period of time. Worse, just 18% of hospitals provide staff with the tools to respond on-the-spot to patient questions regarding costs of care.
In an era of consumerism, hospitals must do better.
Given that more than one-third of consumers shop for healthcare services based in part on price, it is critical that hospital leaders revamp their approach to price transparency. Consider the following best practices:
- Quantify your margin risk for shoppable outpatient services vs. the offerings of market competitors
- Benchmark your prices against market payment levels, not just charges
- Consider variables such as consumer elasticity, the organization’s brand premium and the pace of change in your market in determining charges per service
Investing in the right approach to consumer data capture, analysis and sharing—both with staff and patients—will better position hospitals and health systems to compete on consumerism and improve the quality and transparency of the services they provide.
Kermit S. Randa is a senior executive at Kaufman Hall.