Gold, silver or bronze? Or simply black? Variable Service Levels in an Industry that Abhors Variability

August 26, 2016  |  Mike Eaton

Healthcare

As a Hilton Diamond Member, I earn premium level service benefits for my loyalty to the brand. From time to time, I can “buy-up” to a higher level of service not available to those who pay a standard room rate at a Hilton property. Premium service benefits in return for brand loyalty are an expectation in the hospitality industry.

But what about in health care? Within the appropriate bounds of medical triage, would it be acceptable to offer one person preferential treatment in terms of “fly-by” rights through the waiting room, facility and feature amenities and opportunities to “buy-up” to premium service levels? In short, is there value in offering “Gold, Silver or Bronze” service level options for consumers willing to pay more for enhanced service?

Any color you want, so long as it is black” (Henry Ford)

Health care “pricing” has historically been defined in terms of discounts given to insurers and premiums, as well as copays and deductibles paid by beneficiaries. “Retail” was what the uninsured were expected to pay — a price usually based on arcane calculations that had little correlation to input costs.

Product design was dictated by whatever the doctor ordered and the insurer agreed to pay. Service often ranged from uninspired to poor — though, in fairness, the care could be life-saving!  So, to an extent there was “premium service,” but it was afforded only to dignitaries. The idea of “buying-up” for convenient access, shorter waits or better hospital food, bedding and room amenities was a pipe dream.

 Premium pricing for enhanced service options

In the fall of 2015, National Research Corporation fielded a survey to better understand changing attitudes and behaviors of health care consumers. The survey was administered to a proportional national sample of 3000 adults at least 18 years of age in NRC’s proprietary national research panel. Questions were contributed by BVK. The margin of error on the survey was +/- 1.8%.

The insights from that survey found surprising changes in how people think about, choose and engage hospitals and doctors. It offered clear guidance and cautionary tales for health systems trying to navigate a market that has grown increasingly competitive and is being rapidly reshaped by new consumer behaviors.

One of the ways BVK uncovered new insights from the data was to apply a different lens — specifically, rather than a conventional segmentation of consumers based on health risk status, we applied a Diffusion of Innovation model that looks at consumer attitudes and purchasing behaviors. Among questions posed was a series that prompted people to identify physical amenities, conveniences, and digital services which were so important that they would pay more out-of-pocket for them.

What we found was that for one influential cohort of customers — “Early Adopters” — the answer is an emphatic ‘YES’ to the question of whether people would value and pay more for premium service. The research data points to an opportunity to build brand loyalty and grow business with this cohort by offering premium service choices. Is your health care organization positioned to take advantage of new revenue opportunities like this one?

To learn more about this cohort of Early Adopters that is eagerly interested in variable service levels, contact BVK for a presentation of our research findings and strategies to put it to use to drive brand and business growth in your market.

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Mike Eaton
is a Senior VP at BVK

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