Healthcare Customer Retention through Digital Transformation
Healthcare consumerism is here to stay and doctors are commodities, whether they like it or not.
I don't make these statements comfortably. However, speak with most doctors these days, and the majority will confirm the reality that Physicians as noble, trusted professionals is no longer the status quo.
Whether this is simply a consequence of the 'Amazonification' of society, or due to a growing mistrust in Big Pharma and Health Insurers, patients are no longer automatically. loyal to their family or specialist physician.
Hospitals are consequently finding themselves in very competitive arenas, constantly seeking operational efficiencies and novel offerings to ensure healthier bottom lines. There has been significant consolidation with recently increased M&A activity, as operators seek to find economies of scale.
$151 billion of private equity capital surged into healthcare globally in 2021, more than double the previous year, and the number of deals soared 36% to 515. There has also been significant investment in the healthcare IT (HCIT) market - disclosed value surged from $15.1 billion to $38.1 billion with deal count rising from 48 to 75 in 2021 with the main aims of:
• redefining care delivery through digital health tools;
• using technology and big data to accelerate drug development;
• optimising payer and provider operations; and
• supporting value-based care.
The peri-pandemic shift to digital has been accompanied by an increase in private market funding. IPOs and SPACs have not been as successful as perhaps was hoped for, and there has been growth in infrastructure funds, growth-equity funds, sovereign wealth funds, hedge funds, and crossover funds expanding their healthcare investments.
However, for these 'investments in digital' to make sense, companies will need to demonstrate compelling return-on-investment and superior clinical outcomes, be able to reach a diverse patient population and integrate with existing brick-and-mortar health systems to deliver coordinated care and a superior patient experience.
This latter point is most pertinent. The rise in healthcare consumerism demands more patient-centric models of care. Healthcare IT trends that are likely to continue to have an impact, both clinically and for investors, will be those that focus on 'digital front-door' care models, including digital triage and telemedicine.
This applies equally to digital payments. Solutions that simplify and unify payments as well as take fraud, waste, and abuse out of the system will draw increasing focus. Fintech successes must now converge with Healthcare in order to enhance the consumer experience.
Accenture recently determined that when hospitals deliver “superior” customer service, in their patients’ estimation, they see a 50% increase in net margins compared to “average” hospitals. It is evident that 'digital' can contribute in driving and delivering those experiences. To do that, however, it needs to not only be used in demand generation and customer acquisition, but most importantly focus on LTV (lifetime value) for those patients.
Platform 'stickiness' generally relies on deepening relationships with customers over time. In normal consumer markets, this encourages increased use of products and repeat purchases.
Healthcare purchases are, however, not generally construed as luxury goods. For the most part, purchases are reactionary and paid for reluctantly or in desperation.
The perceived value from the purchase is usually measured by the transformation to previous health-level or an enhancement in life quality. And even though prevention is perhaps better than cure, intangible future health benefits are not seen as investments or necessities by the majority of patients. Comparing this with a Netflix subscription or new desirable gadget is counterproductive. It's a different product, and a complex one at that.
For this reason, Healthcare IT investments that are used to improve the customer experience must provide value beyond the necessary. Hospitals wanting to create a competitive advantage need to focus on creating sustainable relationships that go beyond simply providing efficient transactions.
Yes, quality care, measuring outcomes and responding to feedback is important. Multichannel support, 24/7 chat services and accessibility to health records also add value. But community engagement and membership needs bigger incentives than those.
The Deloitte Center for Health Solutions surveyed large, nationally representative groups of consumers in the United States to learn more about their personal experiences and preferences related to health, health insurance, and health care. The analysis categorised individuals into four groups that reflect their preferences for managing their health and interacting with various health care stakeholders:
Trailblazers (tech-savvy, self-directed, engaged in wellness, willing to share data)
Prospectors (rely on recommendation from friends/families, use providers as trusted advisors, willing to use technology)
Homesteaders (reserved, cautious, traditionalists)
Bystanders (complacent, tech-reluctant, resistant to change, unengaged)
Each of these four groups navigates the health care system differently and has different needs and expectations. Understanding these segments within a catchment community can help target communications in a way that encourages further engagement.
Additionally, patients are increasingly looking at alternatives to traditional medicine. The global complementary and alternative medicine market reached a value of US$ 100.04 billion in 2021. Looking forward, the market is projected to reach US$ 315.5 billion by 2027, exhibiting a CAGR of 20.8% during 2022-2027. There is also significant vaccine hesitancy and mistrust in pharmaceutical firms adding fuel to this fire, reaffirming that understanding the needs of local patients is critical to relationship building and long-term engagement.
Network effects seen in platform businesses can be transformative. Online communities can be incredibly powerful.
The crypto ICO boom saw a significant rise in healthcare startups raise staggering amounts of money from such communities, with the promise of data ownership, self-sovereignty and in-network utility tokens. It is extremely difficult to separate out the extent to which the inflow of capital was speculator-driven, or whether participants were enamoured by the opportunities of inclusiveness and data monetisation. But assuming even a fraction were captivated by the ideological offering, it might be possible that patients as consumers are looking for a different type of healthcare delivery.
Decentralised Autonomous Organisations (DAOs) are blockchain-based internet communities with shared ownership and governance responsibilities. While we are yet to see significant entities emerge in this form in healthcare, they do offer a unique mechanism for communities to coordinate towards a common goal. For example, VitaDAO is collectively funding, and advancing longevity research in an open and democratic manner. HPEC DAO is a physician community that aspires to help empower physicians to serve patients better.
Whatever digital transformation your hospital is considering, one thing is for certain: Community and Relationships are at the heart of healthcare delivery. Finding ways to build and retain trust is vital to sustainable business. Companies that engage with patients on their terms are more likely to succeed.
Catena.MBA is a healthcare and circular economy digital strategy firm. If you found this article interesting, please subscribe to our blog at catena.mba or get in touch by email: info@catena.mba.