Tag: Chief Outsiders

Consumer Marketing Is The Achilles Heel Of Healthcare Providers

By Joe Grace, partner, Chief Outsiders.

Joe Grace

While pharma companies have grown to become effective direct-to-consumer (DTC) marketers, hospital systems and other large providers continue to struggle with effective DTC marketing essential for growth. In fact, it’s their Achilles heel. Why?

First, providers have never needed to compete historically. With light competition and reasonable levels of reimbursement for decades, everything was fine until the cost of health care began to spiral out of control. In response, payors began to push back by negotiating lower levels of reimbursement in-network. In addition, payers, including CMS, have denied claims creating losses and cash flow issues for many providers.

There is also a rapid rise of chronic conditions ranging from arthritis to diabetes to dementia. These chronic conditions are expensive to treat for health care providers. They are an even greater challenge to treat profitably in an environment of declining reimbursements.

At the same time, advances in medical treatment and care have extended life spans and placed additional burdens on our health care system, including the extraordinary cost of heroic and end-of-life care.

To help offset rising costs and declining reimbursements, large scale providers need more new patients to cover fixed costs.  As a result, most of these providers have added DTC marketing to the mix. This usually takes the form of a website, some SEM and a little local advertising. Unfortunately, many any of these marketing tactics are often random acts of marketing without the marketing insights and strategy required to efficiently compete and effectively reach their target audience.

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Healthcare Providers Are Behind the Marketing Curve

By Joe Grace, partner, Chief Outsiders.

Joe Grace
Joe Grace

While pharma companies have grown to become effective direct-to-consumer (DTC) marketers, hospital systems and other large providers lag behind the rest of the industry when it comes to creating highly efficient, measurable and accountable DTC marketing programs. Why?

First, they have never needed to compete historically. With light competition and reasonable levels of reimbursement for decades, everything was fine until the cost of healthcare began to spiral out of control. In response, payers began to push back by negotiating lower levels of reimbursement in-network. In addition, payers, including CMS, have denied claims creating losses and cash flow issues for many providers.

There is also a rapid rise of chronic conditions ranging from arthritis to diabetes to dementia. These chronic conditions are expensive to treat for healthcare providers. They are an even greater challenge to treat profitably in an environment of declining reimbursements.

At the same time, advances in medical treatment and care have extended life spans and placed additional burdens on our healthcare system, including the extraordinary cost of heroic and end-of-life care.

To help offset rising costs and declining reimbursements, large scale providers need more new patients to cover fixed costs.  As a result, most of these providers have added DTC marketing to the mix. This usually takes the form of a website, some SEM and a little local advertising. Unfortunately, many any of these marketing tactics are often random acts of marketing without the marketing insights and strategy required to efficiently compete and effectively reach their target audience.

However, even when these marketing tactics produce a modicum of qualified leads, here is where the provider marketing model breaks down: attribution. Often, leads from marketing campaigns are funneled to the same phone number or web form. By aggregating these leads into one pool of potential new patients, it is virtually impossible to determine which marketing tactics produce the best results. It is therefore almost impossible to optimize marketing spending, which invariably persists with built in under performing media. The old advertising joke about only half of ads working no longer applies today with accountable media except in the case of healthcare provider DTC marketing. This needs to change.

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Amazon Has Permanently Disrupted Retail: Will It Disrupt Healthcare Next?

By Joe Grace, partner, Chief Outsiders.

The US healthcare system has serious systemic problems. While the cost of healthcare continues to escalate, access to care is more difficult than ever. As a country we are getting sicker, chronic conditions are on the rise and, for the first time, longevity may be on the decline.

Joe Grace

While the usual constituents grapple with these problems, Amazon has quietly put together a syndicate including Berkshire Hathaway and JP Morgan to provide better and more affordable healthcare for its combined 1.2 million workers.

The joint effort between Amazon and Berkshire is called Haven and makes sense because many companies of size today are self-insured to provide healthcare at lower costs. But this is different. Jeff Bezos, Jamie Dimon and Warren Buffett seem to be personally involved in the development of Haven. So, what could they possibility have up their sleeves?

At the same time, many Democrats running for president are promising single payer health system (Medicare for all) as the solution to controlling costs and providing quality health care for everyone. Republicans argue that this is socialism and will result in unacceptable increases in taxes that will ruin our economy.

While politicians debate, Amazon’s real objective may be to create a health payer to rival all payers with tens of millions of Amazon Prime Members as health plan members.

With Amazon’s buying power, scale and capabilities, the e-commerce giant could create a health payer offering that could render the need for a single payer system moot.

The company’s buying power and clout representing tens of millions of members allows it to negotiate the lowest prices on the planet for drugs and medical treatment. Who knows … maybe Amazon will build its own drug manufacturing laboratories?

And with its fulfillment and shipping capabilities, it could deliver prescriptions to your door (maybe by drone) almost immediately, eliminating the need to ever visit a pharmacy again.

With its rapidly evolving tech platform, including Alexis and health monitoring devices, it could monitor health conditions and contact providers before medical emergencies occur.

What’s more, Amazon could take telemedicine and concierge medicine to another level with connectivity to providers anytime, anywhere, without the red tape that makes healthcare so difficult to access today. And it might even buy large health systems and shake them up by eliminating red tape while dramatically improving access to quality care. Even identity cards from doctors can change in the future. You can expect doctors IDs and specialist ID lanyards turning into digital identifiers in the future.

Lastly, let’s not forget Amazon’s ability to harness artificial intelligence and machine learning to deliver better, smarter, more efficient health care without ever talking to a doctor.

Bernie Sanders may be right when he argues that access to quality healthcare is a basic human right. But given all the roadblocks, lobbying and politics blocking the way to a government single payer system, it just may be delivered by Jeff Bezos rather than Uncle Sam. Hold on to your seats – healthcare is about to be disrupted big time. 

Jobs in healthcare