Marketing in times of price transparency

As a marketer, I am fascinated by the movement toward price transparency. Then again, I don’t work in a hospital. I can’t help but wonder how hospital marketers are responding to this issue and what types of strategies they have in place to address it.

Remember the 4 P’s of the marketing mix? Product, Price, Promotion, Place. Traditionally, hospital marketing has focused on the 3 of those that hospital marketers couldcontrol – Product, Promotion, Place. The Price factor was left up to the Chargemaster Coordinators and other individuals within the hospital that are involved in the price-setting process.

The notions of consumer-driven healthcare and price transparency are going to fundamentally change how hospital marketers approach the various elements of the marketing mix. With the media reporting issues surrounding hospital charges nearly everyday, Price is an increasingly important portion of the marketing mix. Granted, it is still not something that marketers can control, but they have an obligation to understand how pricing for procedures is determined and how certain rates are negotiated with various payers. Why?

Because consumers are demanding to know.

There is much discussion among healthcare executives about price transparency, but not many are talking to consumers about it. And consumers very much want to be a part of the discussion.

Price transparency and consumer-driven healthcare will force marketers to engage with consumers of healthcare as never before. Think about it: consumer-driven healthcare. You simply cannot afford to not engage the consumer. And the longer you evade discussing these issues, the more skeptical consumers will become.

Embrace this as an opportunity to connect with consumers in a real, open dialog regarding their concerns. I know this is a lot of conceptual talk. Easier said than done, right? I certainly do not have the “right” answer for all hospitals, but here are some specific actions to get you thinking outside of the box.

- Invest in your web site. 
One of the key web marketing principles involves offering relevant content. Find out what customers want when they visit a hospital web site and then deliver it to them. Are they searching for price information? Quality measures? Service lines offered? Whether their health plan is accepted? One hospital in my market, Riverside Methodist Hospital, has an excellent section dedicated to “Health Questions and Answers”. Information about consumer health concerns is a value-added feature that many hospital web sites lack. Riverside also has a section on their site called Taking Charge of Your Healthcare. It’s somewhat buried, but what a terrific example of relevant content! Don’t bury content like this – it should be front and center on your home page because it’s timely and valuable. If you’re feeling especially daring, you can even make your web site interactive, with an “Ask the Doctor” section or a discussion board. High Point Regional Health System in North Carolina even has patient blogs.

- Prepare to talk price. 
If you haven’t done so already, collaborate with your Chargemaster team to understand your hospital’s pricing structure and how it was established. The fact of the matter is that people are going to continue to ask about it, whether they are consumers or media personnel. The hospitals that are making a visible attempt to engage in an open dialog about price transparency, the hospitals that are not afraid to discuss their pricing structure with the media, are going to gain the public’s trust and position themselves as industry thought leaders.

- Educate consumers.
Many hospitals offer classes to the community about preventative care and other health-related topics. Have you ever considered offering free sessions about the following topics? How to Understand Your Hospital Bill, What to Expect During Your Stay, How to be a More Informed Consumer of Healthcare, etc.

- Monitor satisfaction.
In 2007, CMS will begin reporting the results of a nationwide customer satisfaction survey about hospitals on its Hospital Compare web site. Consumers will be able to lookup the results online and compare various hospitals against one another. If you’re not already conducting your own patient satisfaction surveys on a regular basis, you’d better start. While every hospital will have some degree of unsatisfied patients, the important thing to focus on is the level of satisfaction of your happy patients. Therefore, work to increase the number of satisfied patients. Monitor your Net Promoter Score (how likely a consumer is to recommend your hospital to another consumer). This will help you to tie in quality measures with your marketing strategy for price transparency.

- Remember the People.
Some marketers will argue that the marketing mix really consists of 5 P’s, the fifth one being People. I happen to agree with them. That said, do not forget to engage your consumers. I cannot stress this enough. This is, after all, the era of consumer-driven healthcare.

I know that the obstacles to making medical prices available are significant. And I know that that is not part of most hospital marketers’ jobs. But hospital marketers’ jobs are to understand their customers’ needs and develop a plan that surrounds those needs. And in an era of consumer-driven healthcare, customers want to talk about price transparency. Embrace it.

I’ve used the word “consumer” continually throughout this article. Do you consider your customers to be consumers that shop around for prices and to whom you can market, or patients that you simply treat? Or both?