Price as a Marketing
Strategy
by Anthony Cirillo, FACHE, ABC
The
whole issue of price transparency
has become a public relations issue.
“What’s the price?” consumers may
ask. “Can you publish the price?
Tell me how much I am going to pay.”
There is of course a need to drive
the industry to transparency, but
frankly the issue is much too
complex to expect that people will
eventually have a menu of prices and
will literally be able to shop
around.
Hospitals’ attempts at
transparency are in part aimed to
calm a confused public while warding
off class action lawsuits for
inequitable charges. Most hospitals
are not actively looking to market
that they can make pricing
information available but mainly to
say they have prices when called
upon.
Stop giving and start
earning
In looking at price from a strategic
marketing standpoint, hospitals have
been giving away millions of dollars
in screening services as a marketing
tool in the hopes that there is some
payback in patient volume down the
road. Often these screenings are
conducted at fairs where everyone is
taken and very little data is
collected for future marketing. So
the tool becomes meaningless in that
regard. Maybe there is some
community benefit effort, but when
you calculate bad debt and care for
the uninsured, these screenings are
just a blip on the community benefit
justification radar. Package these
services and start generating
revenue and marketing data.
Craft defined preventive
packages
Putting a price on inpatient and
outpatient acute services is hard if
not impossible. The biggest
challenge is providing an
all-inclusive price for a package of
services. Without that, the consumer
really doesn’t know what they are
paying for or what they are getting,
so it is difficult to make a value
judgment. To provide a true
all-inclusive price, you need to
rein in the entire organization,
including physician charges. There
are some hospitals overseas that are
doing it—such as Bumrungrad Hospital
in Thailand, which is Joint
Commission accredited. They
successfully market all-in packages
for cardiac, obstetric, and cosmetic
surgery directly to foreigners.
Just as you market around service
lines, put a package of very
specifically defined services
together as entrees into each
service and market to the
out-of-pocket cash paying public.
Vary the packages and pricing to
attract different segments. Defined
in scope, they have the added
advantage of creating a logical
entry point into the healthcare
system.
For example, we have worked with
hospitals whose heart programs
offers $25 cardiac assessments to
$250 cardiac scoring. Package and
market two sets of services aimed at
people conscious about their heart
health. When people respond, they
are responding to a specific need
that they have. It is not a
haphazard approach such as hoping
they find you at a health fair. And,
since they have come to you, they
are more willing to pay for what
they want.
Deliver an exceptional
experience on the first encounter
Price is just part of the success of
medical tourism leaders. The level
of service offered, including
personal concierge service before
you enter the country, sets them
apart as well. Price packages give
you an opportunity to create
relationships with patients before
they have a major medical need. If
they have a great experience, they
will come back and they will tell
others.
Use the first experience
to collect data
Data collection is one of the main
benefits of customer relationship
management and customer experience
management. Use the first encounter
to collect meaningful data about the
person seeking care. Move beyond
demographic information to collect
data about influence behavior (do
people seek them out for
recommendations and in what areas?)
or interests (how can you intersect
their non-healthcare priorities
after they leave?). Have them
specifically opt in so you can
market to them later. Provide a
great experience and people will be
willing to share information.
Marketing must become
more strategic
In most industries outside
healthcare, marketers help set price
and use price as a marketing tool.
The chief finance officer and the
chief marketing officer could not be
farther apart than they are in
healthcare. And yet they could be
working together to produce value.
The key is value and not price,
and value is defined by the needs
and desires of consumers. People
will be willing to pay more for a
package of services that meets their
needs just as they will pay more for
Starbucks coffee than for making it
at home. Starbucks can do that
because they offer a range of
products and an experience based on
asking customers what they want and
delivering it. Combining a marketing
mindset and financial savvy and you
are bound to produce value packages
for which people will gladly pay.
Healthcare marketers need to be
more strategic. If U.S. hospitals
want to compete on the basis of low
price and exceptional service, they
will have to pay more attention to
what drives consumer purchasing
decisions and develop service
packages that deliver value.
