The Empowered Consumer

Today’s presentation was from Wayne Sensor, CEO, Alegent Health, who gave what he calls: A Marketer’s Call to Action.

Mixing metaphors, Wayne says our industry is “at a crossroads” and “facing a gathering storm:” rising cost of healthcare, number of uninsured and questions about whether not-for-profit hospitals are keeping up their end of the bargain. He says this will be the age of the consumer.

Consumerism isn’t new in America, but it is for health care…and it has reached its zenith in TiVo, iPods, consumer-generated Super Bowl ads and you/me being the Time Person of the Year.

He says our choice is whether we embrace or deny consumerism. We need to have Tools to empower consumers, Access Points (e.g. clinics in grocery stores) and Incentives for good behavior.

He discussed some of the drivers of rising costs, including pharmaceutical costs, defensive medicine, aging population, lifestyle choices and failure to practice evidence-based medicine.

He outlined solutions in three categories:

Tools – Reporting meaningful quality data, with composite scores based on CMS data. Alegent’s first set of quality ads showed performance data that were below the regional average. Now the scores have gone up because they focus on what creates the scores at monthly clinical practice meetings. They publish their scores on the web site, and report that they not only have surpassed regional competition but also national levels of some elite centers.

Another tool they are developing is a personal cost estimating tool. “Instead of a list price we provide the consumer with the ability to find out how much tests and procedures cost and how much they will actually pay.” The program asks the consumer to enter their insurance plan and checks the co-pays to give a bottom line estimate. This is another big blue button that says “My Cost” on the site.
Access — studies said consumers generally like the care they get (but can’t afford it), but it doesn’t look anything like what they would really want: quick, convenient, with easy-to-understand costs. They developed Alegent Health Quick Care to give care in grocery stores, for everyday illnesses such as sore throats, sinus infections, etc. Nurse practitioners provide the service for $24-$52.

Incentives: As more employers offer Consumer Driven Health Care, we will see consumerism take control. More premiums and co-pays are being pushed to employees, which makes them unhappy but doesn’t necessarily really engage them. Wayne says we need more than that to be truly effective. We need to have programs to encourage preventive care and lifestyle modification.

For Alegent Health’s 8,500 employees, 88 percent chose consumer-driven options. Here are some of the plan elements:
If it’s preventive care, it’s free. Use of preventive care among employees is now 40 percent above the national average.
Healthy Rewards: All employees get an opportunity to do a health risk appraisal, which kicks out a list of risk factors. They get $100 in their health savings account just for doing the HRA (although this may be only for those at higher risk), and if they have significant risks they get lifestyle coaching. If they get to within 10 percent of the healthy level on that risk factor, they get another $400 in their HSA.

Early results: those participating in the weight loss program have averaged 15 pounds lost, the workforce is healthier, and Alegent spent less on health care than the previous year. They also gave a $750,000 rebate of premiums to their employees because the goal was health improvement, not saving money. Sort of a “profit sharing” plan for health.

These are some interesting thoughts, especially in an environment in which we’re seeing double-digit cost increases. The quick clinic and employee health plan perspectives are particulary relevant for the Health Policy/Health Reform debate.

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Robyn Waters Keynote

The keynote this afternoon at the Forum on Customer Based Marketing Strategies was given by Robyn Waters, formerly of Target and now on her own as a hired-gun trendmaster. Her presentation was entitled “Navigating the Contradictions of the New Trend Landscape” and was both informative and entertaining. Unfortunately it was in the basement of the Omni, so instead of liveblogging I’m having to reconstruct from my notes.

Robyn spoke of the power of paradox, and how it explains apparent contradictions of the young guy who shops at Costco yet is a golf enthusiast who uses Callaway clubs. She said the days when marketers could judge people’s buying propensities by their zip codes are gone. And the power of paradoz is why Target became known as the Upscale Discounter with a slogan of: “Expect More. Pay Less.”

Robyn says the schizophrenia of the Hummer and the Mini Cooper both being popular trends (and health conscious-women being injected with botox, which is botulism) arises in a sense from two basic human desires that are contradictory: to “fit in” to the group, and to stand out from the crowd.

Here were her five main points (which I understand are chapters from her new book, The Hummer and the Mini:

Everything Old is New Again – e.g. the Vespa scooter, which you buy in a boutique, not in a dealership, and is aimed at urban hipsters. Other examples include the Mini Cooper, “star of the retro road,” Mont Blanc pens “New since 1924” and Prada perfume with a new crystal bottle but an old-fashioned atomizer.

Mass Customization – “Me, myself and iPod” and TiVo letting you watch or listen to what you want when you want it, Starbucks customized coffee in 19,000 varieties (and to think I thought it was a big deal when I worked at Wendy’s and made hamburgers 256 different ways!), Jones soda which started by being marketed at extreme sports events and also offers custom packs with your photo on the bottle, and Mini Cooper’s YOUNIQUE ads. It seems 90 percent of them are customized, and they take 8-12 weeks for delivery, so the company came up with the “Where’s my baby?” program so customers could use the web to track the progress of their car being built. Toyota, as it is prone to do, improved on that process by letting people customize their Scions , but Toyota sent partially built vehicles to customization centers where the customization could happen much more rapidly. They had positioned this as “a cheap car with audacious accessories for the discriminating body piercer” in an effort to reach a younger demographic, but they found a much broader market. Finally, you can even get personalized postage stamps that feature a photo of you or a loved one. And to think that formerly you had to be dead to get on a postage stamp.

Luxurious CommoditiesCaldrea, an all natural, aromatherapeutic dishwashing liquid, made some women stop using dishwashers; the Starck Reality sippy cup (PDF) offered parents and elegant-looking but fully functional spill-preventing cup for their crumb crunchers. Other examples included Haute chocolate and Starbucks, Kleenex ovals, and gourmet ice cubes made from spring water. Who would have thought people would pay three bucks for bottled water when they can get it free from the tap? (And in my hotel room tonight it’s $5, although I’m not buying.)

Extreme Relaxation – We work 350 hours longer per year than our international counterparts, which has led to the Oct 24 Take Back Your Time initiative. OCD (online-compulsive disorder) and the always-on world of Crackberrys leads to adult ADD. What’s the solution? 1-800-CALL WOOD to “power unplug” by calling and listening to the sounds of a mountaintop, and salutes to slowness.

Social Capitalism – Doing well by doing good. Examples included Amazon Rainforest Vodka giving purchasers a certificate that tells them they have protected 5,000 square feet of — you guessed it — Amazon rainforest, and CEO Brad Anderson at Best Buy giving his stock options to front-line employees.

To sum up, Robyn says the keys to current trends are these paradoxes:

The old and the new
Customization for everyone
Commodities made into luxuries
Extreme stress offset with extreme relaxation
Doing good and making money
Expense control and creativity

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Strategic Marketing Session

I’m at the Forum for Healthcare Strategists’ 12th annual Forum on Customer Based Marketing Strategies at the Omni Orlando Hotel at Championsgate. I plan to live blog as many of the presentations as I can.
Geoffrey Crabtree of Methodist Healthcare Systems in San Antonio is talking about “Branding at the Bedside” vs. relying on paid advertising. Health care is one of the most intense experiences anyone has, and they talk about it. Therefore, his main point to us as health care marketing and communications professionals is:

“Change what you do from Marketing to Market Services and take ownership over customer relationships.”

CRM – “the idea that organizations should build meaningful long-term relationships with their customers, such that information obtained from these relationships deliver better products, more responsive service and more relevant information”

Methodist’s CRM platform includes four Affinity Programs with 496,000 members, Employer Relationship Building, Call-a-Nurse afor Children, Commmunity Events, Permission-based Publications, Collateral Programs, Family Health Centers (free pregnancy testing), a Call Center, three HealthB uses and several International Services.

Physician CRM Strategies include Sales, Recruitment, PHO, MOB Leasing, and Referral Services. Unlike Mayo Clinic, Methodist doesn’t really employ physicians (only about 34 in their Transplant program), so their needs are someone different from ours (or rather, ours are probably much different from most of the rest of the U.S., because all of our 1,500+ physicians are on salary.)

Affinity Groups include: WomenPlus, 55Plus, Young Heroes Club (for kids under 12), and Viva

For Methodist, advertising is very limited and service-line driven. They believe proactive PR is much more effective than paid advertising.

The CRM Bottom line: Become a “must carry” for payors, help employers choose the right health care plan, physicians and consumers.

Mr. Crabtree closed with a diagram that contrasted the “Then” way of marketing focused on Mass Media, vs. the “Now & Future” relationship management approach. I think it’s good that he listed proactive PR as part of both worlds, because he had earlier contrasted $1 million in advertising vs. $1 million in PR value. One thing he didn’t mention is that while the $1 million in advertising costs $1 million, the cost of the same level of PR is much less.

Methodist is spending about $3 million on CRM and $750,000 on advertising. Their PR budget is $900,000 but that includes $300,000 or so in community contributions (e.g. Chamber of Commerce.) They use a 3x multiplier to get their dollar value of media, which seems to be an industry standard that makes sense, since editorial has much more credibility than paid placements.

In fact, I think that in the age of TiVo the multiplier should be even higher, because people skip interruptive commercials but focus on the content. Being part of the content instead of paying to interrupt and be skipped is a better strategy.

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