next generation planning: understanding consumer needs · 2018-04-01 · •total digital media use...

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CONFIDENTIAL – ©2018 Kaufman, Hall & Associates, LLC. All rights reserved.

Next Generation Planning: Understanding Consumer Needs

January 30, 2018

Louisiana Hospital Association – Winter Healthcare Leadership SymposiumMark Grube, Managing Director and National Strategy Leader, Kaufman Hall

CONFIDENTIAL – ©2018 Kaufman, Hall & Associates, LLC. All rights reserved.Louisiana Hospital Association 1

A Historical View of Healthcare Provider Strategic Planning

Evolution of Healthcare Provider Strategy

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Blackberry CEO


Jeff Bezos on Amazon’s Customer Obsession

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Pharma Has Made the Transition to a Consumer‐Focused Model

Sources: “Drugmakers again boost DTC spending, to $5.6B in 2016.” MM&M, March 03, 2017; “Pharma DTC spending jumps almost 21% in 2014.” MM&M, March 23, 2015; “Global Pharmaceutical Sales, By Region, 2013‐2015.” Knowledge Ecology International, April 15, 2016; Statista 2017


The Traditional Provider Business Model Is Under Attack

Disruptive Competition

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1. Cost‐Shifting ContinuesEmployers Are Reacting to Health Insurance Cost Pressures by Offering High Deductible Insurance Products to Employees

Note: Annual healthcare costs for a family of fourSources: CDC/NCHS, National Health Interview Study via MCOL Daily Factoid (3/27/14); EBRI Databook on Employee Benefits, Chapter 10, Updated May 2011. Notes: Enrollment includes both aged and disabled beneficiaries. Gold, M., et al.: “Medicare Advantage 2013 Spotlight: Enrollment Market Update.” Issue Brief, Kaiser Family Foundation, June 2013. 2013; Census Bureau 2016

Commercially Insured in HDHPs

Essentially, a Shift from “Defined Benefit” to “Defined Contribution”

Direct Healthcare Costs, Family2010‐2015

Out of Pocket Premium Total

2010‐2015CAGR

6.2% 8.2% 7.4%

2015 US Median Household Income = $56,516


Government and Commercial Payers Are Getting Tough on High Hospital Prices

• Anthem said it will no longer pay for ambulatory MRIs and CT scans performed in hospitals without medical necessity preauthorization

• Anthem also is denying claims for non‐emergent services provided in ERs in at least three states

• CMS is reducing payment for outpatient services provided in hospitals and off‐campus hospital outpatient departments

• CMS removed total knee replacement from the “inpatient only” list

Sources: Anthem Blue Cross Blue Shield: “Imaging Program Expands to Include Level of Care Reviews: FAQs.” Press release, 2017; Fox, M.: “Major Insurance Company’s Payment Decision Angers ER Docs.” NBC News, June 5, 2017; Dickson, V.: “CMS Dials Back Plan to Slash Payment for Off‐Campus Services by Half.” Modern Healthcare, Nov. 2, 2017; Mundy, R.: “To Knee, or Not to Knee? That Is the Question…” Becker’s ASC Review, Dec. 4, 2017.

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2. Changing Culture and Expectations

Hospitals are analog in a digital world:

• 80% of U.S. adults own a smartphone

• Almost three quarters of adults have used an on‐demand online service

• Total digital media use has nearly tripled since 2010

• Top 4 companies by market cap are all tech companies: Apple, Alphabet/Google, Microsoft, Amazon

For busy Americans, the “convenience” of the digital economy is a necessity.

Sources: comScore: Cross‐Platform Future in Focus, 2017; Poushter, J.: “Smartphone Ownership and Internet Usage Continues to Climb in Emerging Economies.” Pew Research Center, Feb. 22, 2016; Smith, A.: “Shared, Collaborative and On Demand: The New Digital Economy.” Pew Research Center, May 19, 2016; comScore: Cross‐Platform Future in Focus, 2016; Financial Times 500


3. Disruptive Competition

• 2016 revenue: $185 billion

• 150+ Optum locations, 140+ urgent care clinics, 200+ surgery centers, 30,000 physicians

• Recent major acquisitions: Surgical Care Affiliates, DaVita Medical Group

• 2016 revenue: CVS $153 billion; Aetna $63 billion

• CVS: 1,100 clinics; retail stores within 10 miles of half of Americans

• CVS: Moving into chronic care for diabetes, asthma, hypertension, depression

• Plan to transform CVS stores into health centers

Sources: Fortune 500; Optum.com/about; UnitedHealth Group: “Surgical Care Affiliates (SCA), OptumCare to Combine.” Jan. 9, 2017; UnitedHealth Group: “DaVita Medical Group to Join Optum,” Dec. 6, 2017; CVS Health at a Glance, cvs.com; Terlep, S.: “CVS Moves Deeper into Doctors’ Turf.” The Wall Street Journal, Aug. 8, 2017; Nanos, J.: “CVS Is Remaking Itself with $69 Billion Purchase of Aetna,” The Boston Globe, Dec. 4. 2017; Mathews, A.W., Mattioli, D.: “CVS Bid for Aetna Followed a Long Hunt,.” The Wall Street Journal, Oct. 27, 2017.

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Tech Giants Are Likely to Be Next

• Negotiated to buy two medical clinic companies

• CEO Tim Cook: “There’s much more in the health area. There’s a lot of stuff that I can’t tell you about that we’re working on…. I do think it’s a big area for Apple’s future.”

• Licensed wholesale pharmacy in 12 states

• Discussed acquisition of generic drug companies

• Skunkworks project focused on healthcare, including telemedicine

Sources: Farr, C.: “Apple Explored Buying a Medical‐Clinic Start‐Up as Part of a Bigger Push into Health Care.” CNBC, Oct. 16, 2017; Lashinsky, A.: “Tim Cook on How Apple Champions the Environment, Education, and Health Care.” Fortune, Sept. 112017; Liss, S.: “Amazon Gains Wholesale Pharmacy Licenses in Multiple States.” St. Louis Post Dispatch, Oct. 27, 2017; Farr, C.: “Amazon Is in Exploratory Talks with Generic‐Drug Makers.” CNBC, Nov. 30, 2017; Kim, E.: “Amazon Has a Secret HealthTech Team Called 1492...” CNBC, July 26, 2017.


4. Changing DemographicsMillennials Are Shaping the Future Landscape

NOW THE LARGEST COHORT UNIQUE ATTITUDES AND EXPECTATIONS

Growing demand for convenience and customization

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Few Organizations Are Moving Quickly

OVERALL RATING

Source: Kaufman Hall 2017 Healthcare Consumer Survey


Significant Gaps Exist Between Healthcare Provider Organizations’ Priorities and Capabilities


LEVEL OF PRIORITY LEVEL OF CAPABILITY

PRIORITY‐CAPABILITY GAP

Improving Patient ExperienceDeveloping

Facility Access Points

Offering Digital Engagement Tools

Developing Telehealth

90%73%

58% 56%

30% 25%14% 23%

60 points

48 points

44 points 33 points

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The Industry’s Self‐Perceived Differentiators Do Not Line Up with What the Industry Thinks Consumers Want


RankWhat We Think Our

Consumers WantOur Competitive Differentiators

1 Accessibility of Care Quality of Clinical Outcomes

2 Consumer ExperienceAvailability of Complex Care and Treatments

3 Quality of Clinical Outcomes Accessibility of Care

4 Value Geographic Coverage

5Availability of Complex Care and Treatments

Consumer Experience

Industry Average Ranking of Key Provider Attributes


The Opportunity: Use Consumer Understanding to Drive Growth

Adjust Pricing Strategy

• How do you maximize revenue potential with demand curve sensitive pricing?

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What Is the Provider Game Plan for 2018?

Provider strategy in 2018 must focus on establishing a

differentiated position across the relevant dimensions of customer

value

Each market is unique based upon the underlying mix of customers,

customer segments, and competition


Who Is the Relevant Customer for Healthcare Providers?

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The Value Proposition Offered by a Provider Is Different for Each Customer Group

Customer Target

Business/Service/Product

MixAccess Price/Cost Quality

Customer Experience

Consumers

Payers

Physicians

Dimensions of Value


What Are the Core Strategic Plan Components in 2017?A Combination of Traditional and New Elements

Comprehensive position assessment (traditional) supplemented by deep customer intelligence and insights (new)

Clear articulation of desired positioning of the value proposition related to each dimension of value (new)

Definition of the initiative set necessary to advance on or achieve desired positioning (traditional and new)

Quantification of the strategy and supporting financial plan (traditional)

1

2

3

4

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Comprehensive Position Assessment1


Psychographic Segmentation – Getting “Under the Hood”

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Putting Segmentation Insights into Action –Improve Health Outcomes and Reduce Costs


“Path to Purchase” Insight Identifies Where and How You Can Affect Decisions: Primary Care

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Deep Insights Capabilities –What Netflix Knows About You• When you pause, rewind, or fast forward

• What day you watch content

• The date you watch

• What time you watch content

• Where you watch (zip code)

• What device you use to watch (Do you like to use your tablet for TV shows and your Roku for movies? Do people access the Just for Kids feature more on their iPads, etc.?)

• When you pause and leave content (and if you ever come back)

• The ratings given (about 4 million per day)

• Searches (about 3 million per day)

• Browsing and scrolling behavior

Now… what does Netflix do with this information? Now… what does Netflix do with this information?

Source: Kissmetrics: “How Netflix Uses Analytics to Select Movies, Create Content, and Make Multimillion Decisions.” Accessed Oct. 6, 2016.


Core Pricing Strategy Questions

1. How do our prices compare?

2. How much is at risk?

3. What will consumers pay and how important is price compared to other factors?

4. What is our value proposition?

5. What should we do with our prices?

Developing a Data‐Driven Pricing Strategy That Aligns to the Organization’s Value Proposition Is Fundamental

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Pricing Strategy Remains a Blind Spot for Many

Source: Kaufman Hall 2017 Consumer Index.

29%

27%

3% 6%

19%

72%

Percent Description

Tier 1 3%High Priority & Early

Success

Tier 2 6%High Priority & Work

Underway

Tier 3 19%Medium or Low Priority & Moderate Activity

Tier 4 72%Medium or Low Priority

& Minimal Activity


Value Proposition Articulation – Framework2

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Value Proposition Positioning – BMW vs. Hyundai


Barriers to a Customer Orientation

Internally Focused

Fear of Change

Source: Kaufman Hall/Cadent Consulting Group: 2016 State of Consumerism in Healthcare, October 2016.

“If I say the word ‘consumer,’ people get angry. Doctors already feel their profession has been changed so much…that they are no longer in charge.”

“If I say the word ‘consumer,’ people get angry. Doctors already feel their profession has been changed so much…that they are no longer in charge.”

“Show me the data that suggests that people are shopping…wake me up when that happens.”

“Show me the data that suggests that people are shopping…wake me up when that happens.”

“I don’t see people looking at best practices from outside the industry when it comes to consumer practices…what could we learn from the retail industry, for example?”

“I don’t see people looking at best practices from outside the industry when it comes to consumer practices…what could we learn from the retail industry, for example?”

“We are used to making decisions on experience and emotion…we need to rely more on data and analysis.”

“We are used to making decisions on experience and emotion…we need to rely more on data and analysis.”

“We need a fact‐based approach. Gone are the days when we can talk to a few business leaders in the market and then walk away and say that we have the pulse of the market.”

“We need a fact‐based approach. Gone are the days when we can talk to a few business leaders in the market and then walk away and say that we have the pulse of the market.”

“This organization has valued tenure and longevity, so we have lots of people who have been here doing the same thing for many years.”

“This organization has valued tenure and longevity, so we have lots of people who have been here doing the same thing for many years.”

“We’re trying to be all things to all people.”

“We’re trying to be all things to all people.”

Legacy Mindset

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Closing Remarks: Moving from an “Expertise” Model to a “Most Valuable Resource Model”


Value Proposition Articulation – Is Your Positioning Sustainable? If Not, What Needs to Change to Make it So?

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1. Providers Must Pivot to Become More Customer‐Focused

2. The Competition for Healthcare Services Is Changing and Expanding to Meet Rising Consumer Expectations

3. A “Winning” Strategy Starts with a Well‐Defined and Differentiated Value Proposition

Three Key Take‐Aways


Questions?

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Biography – Mark E. Grube

Mark Grube, Managing Director and National Strategy Leader for Kaufman Hall, leads a broad array of strategy‐related services to regional and national healthcare systems, academic medical centers, community hospitals, and specialty providers nationwide. Mr. Grube has more than 30 years of experience in the healthcare industry, as a consultant and as a planning executive with one of the nation’s largest healthcare systems.

Mr. Grube is a frequent speaker and author on healthcare strategy topics and has published dozens of articles and white papers. He is a three‐time winner of the Helen Yerger/L. Vann Seawell Best Article Award from the Healthcare Financial Management Association (HFMA).

Mr. Grube has presented at national meetings of the American College of Healthcare Executives (ACHE), The Governance Institute, The Healthcare Roundtable, HFMA, and the Society for Healthcare Strategy and Market Development (SHSMD). He is a member of ACHE, HFMA, SHSMD, and the Leaders Board for Healthcare Strategy and Public Policy.

Mr. Grube received an M.B.A. from the University of Chicago Graduate School of Business and a B.S. in Economics, magna cum laude, from Bradley University.

Contact InformationMark E. Grube, Managing Director

847.441.8780, ext. [email protected]


Qualifications, Assumptions and Limiting Conditions (v.12.08.06):

This Report is not intended for general circulation or publication, nor is it to be used, reproduced, quoted or distributed for any purpose other than those that may be set forth herein without the prior written consent of Kaufman, Hall & Associates, LLC. (“Kaufman Hall”).

All information, analysis and conclusions contained in this Report are provided “as‐is/where‐is” and “with all faults and defects”. Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been verified by Kaufman Hall. No warranty is given as to the accuracy of such information. Public information and industry and statistical data, including without limitation, data are from sources Kaufman Hall deems to be reliable; however, neither Kaufman Hall nor any third party sourced, make any representation or warranty to you, whether express or implied, or arising by trade usage, course of dealing, or otherwise. This disclaimer includes, without limitation, any implied warranties of merchantability or fitness for a particular purpose (whether in respect of the data or the accuracy, timeliness or completeness of any information or conclusions contained in or obtained from, through, or in connection with this report), any warranties of non‐infringement or any implied indemnities.

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CONFIDENTIAL – ©2018 Kaufman, Hall & Associates, LLC. All rights reserved.

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next generation planning: understanding consumer needs · 2018-04-01 · •total digital media use...

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