Category Archives: Core Competencies

Health systems risk being reduced to their core

Posted on by • Posted in Competition, Competition on Price, Core Business, Core Competencies, Core Services, Cost Management, Cost Structure, Cost Variation, Cost-Effective, Disruption, Financial Stewardship, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Operating Income, Operating Margin, Operating Margin Drivers, Operating Performance, Strategic Alignment, Strategic Imperative, Strategic Leadership, Strategy, Strategy and Transformation, Streamlining Operations • Leave a comment

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This week’s graphic features our assessment of the many emerging competitive challenges to traditional health systems.

Beyond inflation and high labor costs, health systems are struggling because competitors—ranging from vertically integrated payers to PE-backed physician groups—are effectively stripping away profitable services and moving them to lower-cost care sites. The tandem forces of technological advancement, policy changes, and capital investment have unlocked the ability of disruptors to enter market segments once considered safely within health system control. 

While health systems’ most-exposed services, like telemedicine and primary care, were never key revenue sources (although they are key referral drivers), there are now more competitors than ever providing diagnostics and ambulatory surgery, which health systems have relied on to maintain their margins. 

Moving forward, traditional systems run the risk of being “crammed down” into a smaller portfolio of (largely unprofitable) services: the emergency department, intensive care unit, and labor and delivery. 

Health systems cannot support their operations by solely providing these core services, yet this is the future many will face if they don’t emulate the strategies of disruptors by embracing the site-of-care shift, prioritizing high-margin procedures, rethinking care delivery within the hospital, and implementing lower-cost care models that enable them to compete on price.

In need of more nuanced consumer segmentation

Posted on by • Posted in Consumer Care Consumption Patterns, Consumer Engagement, Consumer Preferences, Consumer Segmentation, Consumerism, Core Competencies, Health System, Hospital, Hospital Industry, Market Segmentation, Marketing, Strategy • Leave a comment

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Image result for Healthcare In need of more nuanced consumer segmentation

As “consumerism” becomes an ever-greater focus of health system strategy, we’ve begun to field a number of questions from leaders looking to develop a better understanding of consumers in their market.

In particular, there’s a growing desire for more sophistication around consumer segmentation—understanding how preferences and behavior differ among various kinds of patients. 

Traditional segmentation has largely been marketing-driven, helping to target advertising and patient recruitment messages to key groups. For that, the old-school marketing segments were good enough: busy professionals, the worried well, the growing family, and so forth.

But as systems begin to develop product offerings (telemedicine or home-based services, for example) for target populations, those advertising-based segments need to be supplemented with a more advanced understanding of care consumption patterns over time. Segmentation needs to be dynamic, not static—how does a person move through life stages, and across care events, over time?

A single consumer might be in different segments depending on the type of care they need: if I have a new cancer diagnosis, that matters more than whether I’m a “busy professional”, and my relevant segment might be different still if I’m just looking for a quick virtual visit.

Layered on top of demographic and clinical segments is the additional complexity of payer category—am I a Medicare Advantage enrollee or do I have a high-deductible exchange plan? 

With consumers exercising ever greater choice over where, when, and how much care to receive, understanding the interplay of these different kinds of segments is fast becoming a key skill for health systems—one that many don’t currently have.