How do you market to the cost sensitive healthcare consumer?

There is a subtle but important market shift developing healthcare. And it's really a result of the growing healthcare consumerism movement I wrote about last week. That is the "patient" who is evolving into the healthcare consumer is making healthcare choices based on cost.

Look, I get that we don't sell widgets. And as much as we decry and bemoan anybody that dares to bring up the subject of price, consumerism and patient dominated decision-making and choice in healthcare spawns from the devil himself, the fact remains that the "patient" is becoming a healthcare consumer and making choices based on cost. You can't ignore it, or hide your head in the sand anymore because it's not going away.

Here's some of the evidence:
(I receive no payment, nor have any contractual of relationships with the following aforementioned companies.)

Aetna's easy-to-use, out-of-pocket payment estimator. Simple really, know the cost of a test, visit or procedure; know what it will cost you out-of-pocket. But it doesn't stop there, it allows the healthcare consumer to compare the cost across multiple in-network providers. You can compare costs across 10 different hospitals and doctors. Choose the one that is the lowest cost and has the lowest out-of-pocket expense.

WellPoint through its AIM subsidiary has shown where it was possible to incentivize physicians and plan members to shop for radiology services and choose the lowest cost provider. It's reducing healthcare costs; while maintaining quality.

United HealthCare, though its Innovation Center, is empowering its clients and 70 million members across a broad array of data driven products and services, for the healthcare consumer to better understand their healthcare utilization, and make cost effective choices.

In the Wall Street Journal article on Friday, March 1, 2013, "Another Big Step in Reshaping Healthcare", research is showing the consumer buying insurance will accept a narrower network of hospital and physicians, if the cost differential is at least 10 percent lower than the cost of the broader and larger healthcare network with more choices. Models are showing that price and cost will be a big driver in consumers choices of plans.

Forget the quality argument.

Just because you charge more doesn't mean you have higher quality. Saying you have high quality with high cost when you are unable to differentiate yourself in the market because you won't use outcomes data, is a claim that falls on deaf ears. Quality is now a given. It's a prerequisite of the business.

So now cost rears its head in the healthcare consumer's decision-making process. And when all other things are equal in the mind of the consumers, cost is king. Quality is assumed. Caring is assumed. It's what you do.

Most healthcare organizations aka hospitals, have never really had to deal with the cost equation on a competitive basis. For insurance, medical device, pharma and other suppliers to healthcare, price and cost competition has been a requirement in their markets since the beginning of time. Now, doctors, hospitals, and others will need to change their marketing operations and begin to deal on cost. Your brand and quality take on new meaning when cost is influencing choice and is a critical component in the healthcare consumer decision-making process. High cost, undifferentiated quality won't sell.

What to do?

Value marketing and measurable quality outcomes marketing together not separately, can influence the cost-conscience healthcare consumers choices.

Value marketing really, is making the case to your healthcare consumer how you are solving a problem, offering a solution, giving results and even making them happy. Value marketing is a creative exchange between people and organizations in the marketplace. It is a dynamic transaction that constantly changes based on the needs of the individual vies a vie what the healthcare organization has to offer. You are answering the consumers value equation by answer their question, what is my ROI for using you. Answer that successfully and cost becomes a lesser issue.

In quality outcomes marketing, you become the transparent healthcare organization. You differentiate from other high-cost providers along this important dimension of choice. It doesn't hurt either if you can show how higher quality actually reduces the cost of healthcare. This of course assumes that your outcomes justify the cost of your services. And oh by the way, it's not just throwing out a third party logo on an advertisements and saying we have high quality.

Healthcare consumer cost will be coming to the forefront in 2014 and will greatly influence a healthcare consumers choices of where to purchase care. Your answer is value and outcomes marketing. But for you, value and outcomes marketing starts today not in 2014. By then the horse is already out of the barn and it's too late for getting them back in.

Michael Krivich is  an internationally followed healthcare marketing blogger with over 5,000 monthly pages views in over 52 countries worldwide on Healthcare Marketing Matters. He is founder of  the michael J group, a Fellow, American College of Healthcare Executives and a Professional Certified Marketer, American Marketing Association.  Like me on  facebook at the michael J group, and connect with me on LinkedIn, Twitter and Pheed.

How is the consumerization of healthcare changing your marketing?

As it stacks up in 2013, we will see monumental shifts in the healthcare landscape as healthcare organizations of all types seek ways to not only survive, but thrive. Technological and care delivery innovations, specialty pharmaceuticals, healthcare consumerism and reform are coming together to create the perfect storm. Hospitals who were once at the top of the food chain are now are the bottom swimming upstream to regain top position. Some will make and some won't.

My bet is with those healthcare organizations that recognize the role of the healthcare consumer in all of this and changes their marketing operation, message and resource allocation to engage the healthcare consumer will succeed.

It's a tough balancing act when you have never really had to market too or communicate with the healthcare consumer, aka the patient in meaningful human terms. Terms that grow your brand, build stronger customer connections and answers the question, what's in it for them to use you?

So why should this be on leaderships radar screen, as if they didn't have enough to worry about already?

I can give you five reason why:

1. Retail medicine; 2. Price competition; 3. Healthcare reform; 4.Consumer choice; 5. Social media

I am not going to go into the detail of these five reason, that's a post for another day. And you are all bright people who get it. But these five market shifts are changing how healthcare organizations will do business. And if your marketing is not changing, then what follows are the critical steps you need to take too leverage and move ahead to survive and thrive.

1. Market Research

Do the research on healthcare consumer behavior, what motivates them, how to communicate with them, how they make purchase decisions and price points they are willing to accept. Healthcare consumerism screams for market research. It's about the healthcare consumer, their needs, expectations, experience and engagement. And thinking you know about them is not the same as having the quantitative date that knows them.

2. Business Savvy

Make you healthcare marketing department business savvy. Out with the marketing communications focus, though you still need the marcom talent, in with an understanding of finance, project management, and operations so that the marketing leader can be transformational. Going from saying "we care and provide world-class care" to building brand, engagement and experience as well as measuring that change in real terms requires a deep understanding of the organization on many levels in order to be successful in the market.

3. Resource Commitment

Resource marketing appropriately. Marketing is not free in capital and human terms. And to compete with retail medicine and pricing competition, you are going to have to spend money. Money to engage the healthcare consumer in a meaningful way. Money to improve their experience. Money to build your brand. Money to increase awareness. Presence builds preference.

4. Agility

Be nimble. Be agile. Be quick. Keep repeating that over and over again. Healthcare marketing needs to move from the tried and true to the exceptional, the innovative, the engaged and the motivational. You can't reach the healthcare consumer on an emotional level to make the right choices, treatment and lifestyle decisions as well as purchase decisions in your favor unless you are sufficiently engaged. And purchase decisions in this case can mean not going out of your network for care.

5. Integration

Integrate your marketing plans deeply within the organization. The healthcare consumer is at the center of all that you do. Pay special attention to social media. Social media is not a billboard but an efficient and effective engagement strategy that enhances all the other marketing channels you use.

6. The multiplicity of markets

Remember that not everyone will be in an ACO or a patient medical home. Not everyone will have employer sponsored insurance. Some won't have health insurance of any kind. Not everyone will be in expanded Medicaid programs. Small business will decrease employees hours to not have too provide health insurance. Large employers will create the own exchanges or go to defined contributions and tell employees to go shopping. Oh, and Baby Boomers will demand the healthcare experience be delivered their way, on their terms, at their price. And retail medicine is here to stay and will expand. Tailor you marketing accordingly. One size does not fit all.

That light at the end of the tunnel is healthcare consumerism and a Walgreens ACO may be coming soon to a location near you.

Michael Krivich is an internationally followed healthcare marketing blogger with over 5,000 monthly pages views in over 52 countries worldwide on Healthcare Marketing Matters. He is founder of the michael J group, a healthcare marketing consultancy dedicated to creating value through strategic marketing for hospitals and health system regardless of payment mechanism, either fee-for-service or value-based to increase market-share, revenue , brand and demonstrate actual return on marketing investment. Michael is a Fellow, American College of Healthcare Executives and a Professional Certified Marketer, American Marketing Association. Like us on facebook at the michael J group.