How to Compete Against Commoditycare

by Arlen Meyers

How to Compete Against Commoditycare

There are large variations in US sickcare. Surgery rates for a given condition vary depending on where you live and the costs are all over the map too. When it comes to outcomes, the numbers are hard to come by for any given doctor, so who knows? But, with advances in data acquistion and analytics, treatment metrics will, at least theoretically, regress towards the mean and medical quality will become become less variable and more and more commoditized. That’s good news for patients but an increasing challenge for physicians and surgeons.

For many low acuity and preventive services, like immunizations or prescribing drugs for easily diagnosed or common conditions, alternative care delivery channels like retail based clinics and other non-traditional points of care have accelerated commoditized care.

There are several main drivers of Commoditycare:

1. The internationalization of care. People, money, doctors, and technologies, be they drugs, devices, digital health products, or innovative business processes, are seamlessly moving around the world, facilitated by cheap, inexpensive information and communications technologies and cheap transportation.

2. Global innovation. Entrepreneurs are creating products and services in the smallest places to the biggest clusters, driven by community-based innovation networks. The results are commoditized healthcare products.

3. Transparency. Data creates value and making that data transparent drives commoditization and revenues to the winners. Package pricing, EMR information sharing, and outcomes repositories are 3 examples of how international patients and payers can find those who are separating themselves from the crowd.

4. Consumerization. The power has shifted from the caregivers to the patients. Shared decision-making, particularly for preference-sensitive conditions, has replaced the paternalistic, doctor-driven care model.

5. DIY (Do-It-Yourself) medicine. Patients now have access to information, products, and services affording them the ability to diagnose and treat themselves. Examples include more and more over the counter medicine, online and home based diagnostic tests, and digital health products that have disintermediated care providers and replaced high-priced, difficult-to-access products with cheap, easy-to-use ones.

6. Standardization of care and outcomes driven by value. Variations in care inputs that result in little or no difference in outputs results in waste, complications, side effects, and cost. Evidence-based protocols and care models are increasingly addressing those variations in an effort to minimize unacceptable deviations from the norm.

7. Cheap startup costs. It has never been easier or cheaper to start a company, particularly in digital health. As a result, we are seeing a plethora of startup companies plying their wares to an international market of patients seeking access to high quality care at an affordable price.

8. The death of loyalty. Patients are becoming increasingly satisfied with “good enough” when it comes to quality and are willing to sacrifice loyalty to a doctor or product to get it. They are placing increasing importance on non-quality value factors like access, speed, experience, service, and price.

9. Competition. Hospitals are turning into systems and consolidating to take advantage of economies of scale and the reduced cost of streamlined back end business processes. Care channel substitutes, like retail-based clinics, are creating the “retailization” of healthcare, further threatening the office-based primary care model. Telemedicine platforms can deliver iCare at the push of a button or the click of a mouse.

10. The failure of companies and doctors to innovate. Few doctors or hospitals have an entrepreneurial mindset. Instead of innovating, they tinker. Oren Hariri, in his book, Break from the Pack, cited 10 reasons why companies create mediocre, me-too, commoditized products. They have a compulsion to cut costs, to cut prices, to make incremental improvements, to increase sales and marketing budgets, to grow from quarter to quarter, to control growth, to rely on unreliable market research and focus groups, to join the crowd and embrace fads, to protect their businesses with legal and accounting gimmicks, and to give the impression that they are generating progress, not value.

11. The Amedzon effect

12. Resistance to change in sick care and retail pharmacy.

13. Brand maturation Are you still paying $3.00 for a cup of coffee at Starbucks instead of .65 for a senior coffee at McDonalds? Maybe Starbucks should run their stores like your university hospital system. Even then, it’s hard to find a place to charge your phone.

So, what should be your strategy to separate yourself and be the best of the rest?

1. Innovate by creating new delivery channels that meet or exceed the expectations of patients based on the value factors they prioritize like speed, experience,convenience, personalized service and timeliness.

2. Get better at patient/customer/consumer segmentation and focus on those who are willing and able to pay and get access to the value differentiators you offer.

3. Measure everything and promote how you are better. Drive out waste.

4. Focus on service and experience. Eliminate waiting.

5. Migrate from high tech to high touch in every practice touch point, starting with your website, social media or patient communications portals

6. Practice state of the art medicine, avoiding Type 1 and Type 2 technology adoption errors.

7. Practice digical care.

8. Lead innovators, don’t manage innovation in your practice

9. Focus on cash flow and value pricingCustomers are paying for convenience.

10. Retake control and restore the joy to medicine. Happy doctors make happy patients. Smile more.

In the world of commoditycare, the keys to the kingdom belong to the low cost provider. Large, consolidated integrated networks, like the Walmeds or Amedzons of the world, might be able to win at that game, but, I suspect, it is not where most docs want to be. Most patients don’t either.

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Arlen MyersArlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs at www.sopenet.org

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