Crowd Sourced, Connected and Streamed
Finding Future Insight in Changing Customer Behaviors
Joel English, BVK Managing Director for Health Care and Mike Eaton Brand+Lever Senior Vice President
We often are invited to work with hospitals and doctors as they think about the future. The charge we are given is to help them find the answer to “what comes next” in care delivery.
Through the course of those conversations we have found that health system leaders frequently struggle with their future vision because they are looking in the wrong place for answers. Many teams search for insight in the rapid advances in clinical technology, personalized medicine and artificial intelligence that are reshaping the science behind detection, diagnosis and treatment of disease. And, they do a deep dive on the analytics and economics behind population health business models.
Those are important matters that must be understood. In the past, knowing the direction, rate and scale of these clinical advances and supply-side variables was highly predictive of the future of care delivery.
But today, to answer the question “what comes next”, we must first look closely at the demand side of the equation, and specifically at changing consumer behaviors. We must take our eyes off the question of “what we do” and focus instead on how people today think differently about consuming health services.
It’s the Questions, Not the Answers
Consider Hilton and Ford.
Hilton was founded in 1919 and has built a portfolio of successful hotels properties and brands. They spend millions every year thinking about the future of hospitality and have built a company with a $21 billion market capitalization based on their success building quality hotels and resorts.
Ford Motor Company was founded in 1903 and has decades of investment in and experience building some of the world’s best cars and light-duty trucks. Today Ford has a $36 billion market capitalization.
Yet, both Ford and Hilton have been surpassed in terms of market capitalization by relative newcomers which build neither cars nor hotels. Airbnb was founded in 2008 and has an estimated market cap of over $55 billion! Uber was founded in 2009. Its market capitalization is estimated to be about $70 billion.
How do Hilton and Ford, with their staggering investments in hotels and passenger vehicles, respectively, end up with lower capitalizations than Airbnb and Uber, which couldn’t rustle up a hotel and parking lot full of owned cars between them? The answer is in the question each company asked. Airbnb did not question how to build a better hotel. Instead, they focused on what people want to experience when they travel. Uber did not research futuristic cars. They thought about how people get where they are going.
Five Future Projections
The proper question when thinking about the future of health care is not how to build a better hospital or physician enterprise. Those are important tactical questions, but the far more strategic inquiry focuses on how people think about their health and to follow where they lead in terms of purchase behaviors. Applying that lens to health care generates what we believe are five intriguing possibilities.
1. Market Forces (Finally) Shutter Low-Performing Hospitals
Over the next decade the market is likely, finally, to do what health executives have long-delayed – culling the field of low-performing, high-cost hospitals. Critical factors underpinning this trend include:
- Declining operating cash flow margins that threaten the viability of low-performing hospitals
- Physician recruitment and staffing challenges, especially in rural hospitals
- An increasing mix of government payor contracts with flat inpatient reimbursement rates
- High-deductible plans and consumer preference for more convenient ambulatory services.
The forward-looking questions that these trends raise for health care leaders include the following:
- Do we need / have an exit strategy for our acute inpatient business line?
- Can we be a sub-regional hub to bridge between critical access hospitals and regional centers?
- Especially in rural areas, how do we fill gaps in needed sub-acute medical care?
2. Consumer Demand Creates a New, More Efficient Primary Care Front Door
While we’ve been worrying about the primary care shortage, innovators motivated by mission and margin are closing the gap building a more efficient primary care front door. Innovations include:
- Proliferation of for-profit urgent and walk-in care sites creates new capacity to meet demand
- Asynchronous virtual care (using advanced practice professionals) reduces office-based demand
- AI-assisted diagnostic platforms (with virtual care) spur radically greater efficiency
- Regulatory and payment model reforms to enable new, profitable models for primary care
The forward-looking questions that these trends raise for health care leaders include:
- What is the front door to our health system services, and does it align with consumer demand?
- How fast should we be shifting office-based resources into convenient care service suites?
- Whose “crowd and campus” might we borrow as a platform to deliver primary care services?
- Do virtual, asynchronous options enable our entry into non-contiguous geographic markets?
3. On-Demand Insurers and Providers Create Seamless, Guided Customer Experiences
Consumer-facing technology is reshaping countless industries, including airline travel, personal investing, ride-hailing, home mortgages, auto sales and insurance and personal loans. Companies like Travelocity, Schwab, Uber, Carvana and others have created seamless, guided applications that allow consumers to search, compare, shop and purchase goods and services from mobile devices.
Innovators like Bind and Oscar are bringing similar seamless guided experiences to health insurance, in co-branded partnerships with well-known provider systems that deliver simple navigation from getting coverage to getting care. Among developments of note:
- Growth in on-demand insurance platforms (including mobile) that streamline purchases
- Proliferation of provider-insurer narrow network options with direct access and low/no co-pays
- Growing consumer demand for seamless, self-guided (and mobile) purchase experiences
Critical questions that these on-demand insurance options should generate for leaders include:
- Should we explore a partnership with an on-demand insurance product in our market?
- What are the consequences if a competitor enters into such a partnership in our market?
- Could we deliver a seamless, guided consumer interface and access model as a partner?
4. Housing and Health Care Converge for Healthy Active Seniors
The “built environment” is the man-made surroundings in which people live, including homes and neighborhoods, and community assets including parks and venues to interact socially. Research shows that these built dimensions greatly impact people’s physical and mental well-being. Knowing that, health systems are proactively seeking out broad opportunities to integrate housing and health care in purposeful designs to enhance individual wellbeing. Early indicators of this trend include:
- ProMedica and ManorCare combining to build out an integrated senior living and clinical model
- Health systems leading and participating in Blue Zone’s projects in communities across the U.S.
- Holy Redeemer Health Care’s multi-level housing ministry which integrates housing and health
Critical questions that this trend should raise for health system leaders include:
- What is our appetite to organize efforts to enhance the built environment in our market?
- Do we have an aligned housing platform that integrates our clinical care and living options?
- Can we leverage the built environment to build brand loyalty with high-value customers?
- Can investments in the built environment help to reduce total medical expenditures?
5. Empowered Consumers Crowd Source and Network to Create New Experiences
For most people, health care continues to be a lonely experience, shrouded in the rules of privacy and conducted behind closed exam room doors, in private hospital rooms and intimate 1:1 conversations.
Consumers are shattering that conventional model as they use the internet to crowd source information, join online communities to share experiences, and stream custom care plans. Key trends are:
- 77% of people use online reviews as the first step in finding a new physician
- Social networking applications convene online communities to learn and heal together
- Online second opinion programs allow people to stream national top brand care resources
Critical questions that this trend should raise for health system leaders include:
- Are patient social networks convening on our platform, or our competitors’?
- Do we know, and how do we influence what people are saying about us online?
- Which national or regional brands are drilling “digital holes” in our patient panel buckets?
- Will our culture accommodate these empowered customers, or do we force them to conform?
These five projections reflect what has already happened in multiple other industries that have been reshaped by consumer demands for control, choice and convenience, and a preference for seamless, guided self-service options.
Using the questions laid out in this article (or some variant thereof) will stimulate the critical strategic conversations leaders need to have and force some level of decision-making about future direction and the sequence and pace of change.
To succeed, those conversations will require peripheral strategic vision to see new competitors emerging from outside the industry segment. It will also require leaders to think not only in terms of symmetrical threats from other health systems, but asymmetrical challenges from organizations that have different competencies and assets.