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How Consumerism Is Driving Behavior and Redesigning Healthcare

Warren Buffett said, “The ballooning costs of healthcare act as a hungry tapeworm on the American economy.” Relative to other developed economies, health outcomes do not appear to be any better. Those are facts. And the cost problem is only going to get worse. 

But I’m convinced the problem is solvable and financial officers will play an absolutely critical role in solving the problem. In fact, it’s our civic duty, our moral responsibility. A healthy future for our communities depends on it. Instead of reacting to financial pressures with operational improvements, we must be willing to take a consumer-driven approach to innovating the healthcare financial experience.

Along Comes an Upstart

Given the inevitable tsunami that’s on the horizon for healthcare over the next 20 years, will our organizations, as we say, “Shoot the curl” or “Wipeout”? In the world of innovation and strategy, we have what’s called a perfect storm. 

It starts where consumers have a serious problem. But the industry’s incumbents, the folks who have been around the industry for decades, choose to respond slowly to critical trends that both exacerbate the problem for consumers as well as have the potential to solve those problems because the solution flies in the face of conventional wisdom.

Inevitably, along comes an outsider, an upstart, somebody who’s not even in the business, who asks a very simple question: “Under what circumstances would these beliefs, would this conventional wisdom not be true? If it wasn’t true, how might we capitalize on those trends, break the rules, and solve those consumer problems?”

These perfect storms are both incredible opportunities as well as threats. Take Blockbuster. These folks were blinded by the belief that all customers wanted was a convenient location with tons of inventory, which meant getting your video was really inconvenient. You had to drive to the store, do an uninformed search, have the video back by 6:00 p.m. the next day, and if you didn’t, you’d have very expensive late fees. 

It actually took a computer geek, Reed Hastings, to capitalize on overlooked technology trends to reinvent the business, improve convenience, and dramatically lower costs.

What’s most impressive about Netflix, unlike a lot of companies, is that they’re not a one-trick wonder. They kept looking for those inflection points. When they saw broadband growing, they became the leader in streaming. They looked at artificial intelligence and big data, and used them to provide great advice to consumers and to reinvent the original programming business.

Healthcare: Ripe for Innovation

If ever an industry was due and ripe for this kind of innovation, it’s healthcare, which has become absolutely unaffordable for the average American household despite Americans being more unhealthy than ever. I’m not saying your hospitals don’t do a good job when you’re asked to cure them; what I’m saying is that the outcome that people get is bad.

Healthcare is a complicated business. There are lots of competing stakeholders, regulations, lawsuits, noncompliant patients. These are not immutable facts and will be toxic to healthcare’s future where endless possibilities are opened up by big data, artificial intelligence, virtual reality, augmented reality, customer-centered design, agile innovation, and the barbarians are at the gate. But the key to surfing the wave rather than drowning in the perfect storm is customer-centered design.

Outside-in: Customer-centered Design

One of the fundamentals behind customer-centered design is being able to move from an inside-out focus on what we do, to an outside-in focus on more efficiently and effectively helping customers solve pressing problems to profoundly change their lives for the better. Now I know this sounds kind of like motherhood and apple pie, but it’s a lot easier said than done. 

Most companies define themselves in terms of the products and services they sell, such as a knee surgery. They work really hard to improve the operational features they offer. “We’re going to get the latest in robotics. We’re going to send our physicians to charm school. And we’re going to have this wonderful, beautiful, hi-tech, state-of-the-art rehab center.” 

The relatively rare customer-driven enterprise doesn’t start with the product or the features but rather with what we call the customer’s job to be done. As Ted Levitt, the father of modern marketing once said, “People don’t want a quarter-inch drill, they want a quarter-inch hole.” 

Improve the Patient’s Journey, Improve Their Lives

The customer-driven company’s process starts with the outcomes the customer seeks and how they seek to improve their life. 

To start, examine every single step in the customer’s journey for how to not only help them do the job better, but far more efficiently. Few industries have more pain points — functional, emotional, and social — in the customer experience than healthcare, or spend more money that actually increases that pain rather than decreases that pain.

As you diagnose patient journeys, act like your mom, your husband, your daughter is actually the customer. Ladder up to what we can do to improve their lives, rather than just perform a procedure. 

When spending money to deliver this experience, act like it’s your money, as if your mom, your husband, your daughter had to actually pay the bill. After all, the visit and the subsequent billing experience aren’t separate. The two are linked, and critically, that financial experience can make or break the long-term healthcare relationship.

Challenge Everything

If you’ve been in the healthcare business for at least 10 years, you’ve probably learned from your experience. You know what that means? There’s a good chance that 70% of what you’ve learned is going to point you in the right direction. The other 30%, though, is toxic to your future, which means you’ve got to challenge everything.

I urge you to take a look at your assumptions about patient behavior, policies and procedures, staff and equipment utilization, and how you work with insurers. Ask yourself under what circumstances would this not be true and if not, how could you deliver a significantly better outcome to these families with far less costs? In part, it’s by capitalizing on trends that are transforming other industries. 

Next, be bold. Our economy’s future depends on your success. I’m convinced that information and technology hold the key to the goldmine of better service and lower costs. Do not be afraid of it, be bold in how we use it. For example, the kind of insights gained from data can help support patients in unique and specific ways that go outside of a one-size-fits-all approach. 

Learn quickly from the upstarts before the upstarts destroy what you see as your existing business — and constantly experiment. You should be running hundreds of experiments on how you’re going to reinvent healthcare. Many of you hear: “You need to cut costs by 10%.” So you try to figure out what to cut. What I’m saying is no, the first priority is to dramatically improve customer experiences in ways that cut costs in half. 

The last thing is don’t fear the change. Change in healthcare, at this point in time, is your friend and it’s inevitable. 

As Dave Barry said, “Never be afraid to try something new. Remember, a lone amateur built the ark and a large group of professionals built the Titanic.”

Learn more about how healthcare is being redesigned by consumers.

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Rick Kolsky

Richard I. Kolsky has spent the past 28 years helping clients take marketing to the bottom line. Dr. Kolsky’s clients have used action-learning to convert many of today's fads -- such as strategy innovation, market-focus, channel management, and brand synergy-- from simple buzzwords to bottom-line reality in markets as diverse as accounting, infant formula, life insurance, cream cheese, hip-hop, and earth moving equipment.

Dr. Kolsky is a Lecturer at Northwestern University’s Kellogg School of Management and holds a Ph.D. from Yale in Economics and a BA-MA in Engineering and Economics from Brown.

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