connected-care-device

Non-Traditional Competition for Health Systems

We all know that healthcare is local.  And the backbone of the U.S. healthcare system is local physicians and hospitals. Currently, health systems are under immense pressure from non-traditional competitors: retail pharmacy chains. Times have changed and this new insurgent threat is chasing the coveted digital patient

Large retail pharmacy chains are opening hundreds of new walk-in clinics and forming broad telemedicine partnerships with the ultimate goal of becoming traditional primary care providers. They’re following the trend of consumerization in healthcare and betting that patients want speed, convenience and easy-to-understand prices over a hospital-affiliated doctor to handle all of their medical issues. Often times, these competitors are targeting the younger, healthier patients that feed health system growth for years to come. This rapid growth of non-traditional competitors suggests hospital-based health systems have a growing market relevance challenge.  As a health system, what are the different strategies to respond to this competition? How can you move not just quickly but in the right direction to compete for and capture this new digital patient?

Patient Leakage vs Patient Stealage

Patient leakage has been top of mind for healthcare providers for years.  Even more so now that health systems are taking on risk for patient populations.  Patient leakage may occur because of convenience, change in health insurance plan or old referral patterns. That’s changing now.  “Stealage” is the new reality.  The partnership between large retail pharmacy chains and major outsourced telemedicine vendors means that patients now can choose to go completely outside the traditional care network.  This has potentially profound implications, not just for the business of healthcare providers, but for patient safety and care on a long-term basis.

Although retailers may have a lot of clinics, they do not have the infrastructure or ability to properly care for patients on a long-term basis. They are betting that health systems aren’t going to be able to move quick enough to provide the ready access and convenience to care that the new healthcare consumer is demanding…so instead of patients simply leaking out of a provider’s network, they are stolen.  The result is retailers capture all the easy value and control referrals and access points.  Provider networks are saddled with expensive, high-risk patients while negotiating with retailers for patient referrals. So how do health systems respond to this threat and prevent patient “stealage” from becoming a reality?

Strategies to Prevent Stealage

There are two key strategies that allow health systems to respond immediately with their own convenient access points while building sticky experiences for patients over the long-term:

  1. Rapidly enter your market with your own convenient access point
    Health systems need to respond immediately with a virtual care service that promotes their brand and clinical services. Retailers and outsourced telemedicine vendors are betting that health systems will move too slowly to react to this threat. By responding quickly, health systems can put the foundation in place for their convenient access points where they can begin to build stickier experiences over time.
  2. Appeal to digital consumers by extending your brand digitally
    Healthcare is still local and about trusted relationships. National retailers and outsourced telemedicine vendors are pursuing the digital consumer, but will have difficulty competing with health systems who are using the power of their local brands to build sticky relationships with digital consumers. This is a long-term strategy that will take years to play out. For it to succeed, health systems need to shift their marketing dollars from internal, traditional channels to external, digital channels.

So – two strategies to help health systems respond to the “stealage” threat. If systems can compete for convenience, they will win long-term because healthcare is still local and about trust. Neither strategies are all it takes, but both are great first steps in responding to non-traditional competitors.