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| Dear Friend,
Price is what you pay. Value is what you get.
That's the subject of this past Monday's blog post, A Refresher on Price Versus Value. Follow that link to the blog or just keep reading for the rest of the story:
If value, to you, exceeds the price you pay, you got a good deal.
For the seller in that same transaction, if value (the price you, the buyer, paid) exceeds the seller’s price (what it cost the seller to provide the item or service), the seller got a good deal, too.
Both the buyer and the seller are better off. Magic!
So, what’s the practical application of this for you?
In order to capture more business, you either have to reduce your price (not my favorite) or increase the value you provide (my favorite).
Unless you’re selling a true, physical commodity, staplers or stethoscopes, for example, in which mass production leads to lower per-unit cost, competing on the basis of price is a fool’s game. Your competitor will simply lower its price by a few cents, a few dollars or a few thousand dollars, depending on the scale, and the downward spiral begins.
Instead, focus on how to increase the value you provide. While price is easy to see (Botox treatment, this week only, $199!) value is far more slippery, amorphous, individual, and particular. Heck, you’ve probably seen my picture on the videos on my website but there’s no way I’m going to buy Botox even if it were $99. A Ferrari, though, that’s another issue. “But why, when a Toyota would do?”, some might ask. Well, that’s what makes price and value interesting.
Accordingly, price and value can be used to attract and they can be used to repel. Repel? Absolutely! The plastic surgeon whose fee for some procedure is $4X is not competing with the plastic surgeon down the block whose price is $X. The value message sent by the low price attracts some, even many, but it repels those who evaluate value differently. Our first plastic surgeon doesn’t want those folks coming in the door. The second one welcomes them in.
If you’re running your own practice or business, or if you’re the leader of a group, you can use these principles multiple ways.
Although many believe that healthcare pricing, at least on the payor side, is relatively fixed, it’s not. Some providers and some facilities have created value, or the perception of value which is really the same thing (all value is perceptual), which leads to increased levels of reimbursement.
In the hospital-based world, some groups have lost contracts to groups which competed on the basis of lower or no stipend support, while other groups have maintained, or increased, the value proposition such that the hospital sees far lesser value in a competitor’s “free”.
And, for all groups, the value proposition, from prestige to the so-called “soft” factors such as group culture, can trump compensation in attracting sterling recruits.
To Oscar Wilde, a cynic was someone who knew the price of everything but the value of nothing. So don’t be a cynic: understand both price and value and how they are inextricably linked. |
| | | Business Life in the Time of Coronavirus Mini-Series
The coronavirus crisis caused a short term economic crisis for many medical groups. Our mini-series shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
[If you haven't already seen them, follow this link to watch our entire series.] |
| | Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript:
I just passed a Starbucks, which led me to think about the problems that Starbucks created for itself when it thought that it was solving its problems.
In the past few years, there have been ongoing situations, but in the instance I best recall, there was a group of African-American guys who were in a Starbucks and - I don’t remember the exact story, they hadn’t made a purchase but they were waiting around, or they wanted to use the bathroom while waiting around – which blows up into the Starbucks manager trying to get them to leave, and calling the cops and having them arrested because they were “loitering”.
In today’s climate, this becomes a racial incident. Whether it was or wasn’t, I don’t know, but beyond that, this became a problem for Starbucks in general as opposed to a problem just for that particular Starbucks or just for that particular manager. So Starbucks’ solution was to open Starbucks to anybody who wants to come in to “hang out” or to use the restroom, purchase or no purchase.
Within weeks this became an actual loitering problem for Starbucks, with homeless people camped out in Starbucks. The solution that Starbucks thought it was implementing created a situation that doesn’t mesh with trying to sell three-dollar cups of coffee and five-dollar fancy coffee drinks.
It’s become such a problem that apparently some people now avoid going into Starbucks because they don’t like what they’re finding inside. On my last trip to a location in Houston, a woman covered in newspaper and rags sat a few tables away.
The take-home for you isn’t how to run a coffee shop, it's the importance of second-order thinking. The importance of understanding that the solution to a problem may itself create more problems than it’s worth.
We see this, for example, in healthcare, where people enter into deals that are seemingly tremendous, only to find out later that the deal created a significant compliance problem for them. But it’s not just a compliance issue.
Remember the Starbucks situation when you’re crafting a solution to a problem. Think what new problems may result from the initial solution.
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| | How to Deploy the Secret Sauce of Opportunistic Strategy
Webinar On Demand
They say that COVID-19 has changed the world, creating the "new normal." Many of your colleagues and many hospital administrators are running scared.
Others, leaders like you, know that crisis means opportunity.
Let me provide you with the strategic tools and insights that you need in order to seize opportunities, whether they’re in the context of your current business relationships, the expansion of your business activities, or the creation of new ventures.
You will learn:
•Defense as a defective default: It’s necessary, but not sufficient.
•Exploiting weakness: Drop the guilt and identify opportunity.
•Flat line negotiation is fatal: Understand its myths and limitations.
•Negotiation reality: Learn to identify and deploy on multiple planes to affect the outcome.
•Maneuver: Harness the power of maneuver, both in overall strategy and in specific negotiation strategy.
Others see a crisis and freeze in fear. Learn how to see the opportunities and obtain the tools to increase your odds of obtaining them.
The price to attend is $479. The cost of not attending is astronomical. |
| | | Wednesday - Group Therapy Needed to Protect Hospital-Based Physician Income? - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Whether you are an anesthesiologist, radiologist, pathologist or emergency medicine physician, picture a meeting of your national specialty association. Chances are great that you'd hear voluminous hallway chatter bemoaning more work and lower collections, what I call an increasing Workload-Reimbursement Gap™.
Chances are also great that you would hear next to nothing in the symposium presentations of any practical value in terms of bettering your economic circumstances.
There are two tragedies at play here, both of which scream the need for, at least on a metaphorical level if not actually, some type of group therapy:
First, the situation is symptomatic of incredibly low self-esteem: "They are doing it to us and we have no power to change."
Second, the complaining is a self reinforcing loop: everyone is complaining to everyone else who then complains to everyone else. Everyone being equally miserable means that it must be all right that we ourselves are miserable.
It would be far healthier and more profitable to question the basis of the system itself: Why are physicians working much harder for less money? Why is it proper that there are so many regulatory burdens interfering with physicians' abilities to own and refer to facilities? Why is it improper to benefit from the provision of care (e.g., self referral) but not from the denial of care (e.g., leading to insurance company profits)?
Why, simply because you are in a so-called personal service business do you believe that service -- actually, the expropriation of your services -- takes precedence over your business? Why should the fact that you practice at a not-for-profit hospital mean that you are required to provide charity care? I'm not saying that you can't choose to donate your services, but we're talking about being required to make the "donation."
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| | | Listen to the podcast here, or just keep reading for the transcript.
Do you know this key to negotiation? The key that will open the door to a done deal, a deal that delivers on your wants?
I'll tell you, but you have to promise not to tell anyone else. Just kidding.
Here is it: Make sure that the other party gets what it wants.
No, I'm not telling you that if, for example, the seller puts a $3 million asking price on the home that you should just wire him the funds. Or, that you should sign the contract that your employer puts in front of you.
What I mean is that you'll cut right through to the heart of the deal by focusing on and figuring out how to deliver what the other party actually wants. I've put actually in italics to highlight it, to stress that what the other party actually wants is usually not what he initially says he wants.
The trick, of course, is finding out what the other party wants. That takes practice, experience and intuition.
You've identified the Jones Medical Group as a potential acquisition target. Its owner, Jennifer Jones, says she wants $X. Does she really? Is it the purchase price that is driving the deal or is it that she simply wants to shift some of the risk to you? Does she want the "safety" of a salary (no salary is ever safe, just safe to a certain point)? Does she want to escape the obligation to manage?
The fact is that once you discover what Jennifer really wants, it might be perfectly fine to deliver what she wants - it may be no skin off your back at all.
But if all you thought was at issue was the purchase price, you might never be able to make a deal, or the best deal. |
| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short-term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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