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| Dear Friend,
Airline pricing in healthcare?
I listened to a very interesting podcast called “The Soul of Enterprise.” It is a business podcast mostly aimed at accountants, but it applies to other professional service providers
as well.
The hosts were talking about the notion of “yield management,” the concept that airlines use to maximize the profitability from pricing the seats on a plane, and of course, on how they segment those seats into classes, thus segmenting the market.
In other words, they carefully segment each flight into so many first-class seats, so many “premium” coach seats or whatever they call them on the airline, and so many regular coach seats including those dreaded ones back by the lavatory at the tail of the plane.
Airlines have figured out that there’s different customers who are flying for different reasons, and at different price points. They’ve also figured out that some are willing to travel in a slightly different style. It’s not that the people who fly first class get from Dallas to Chicago any faster, and it’s not the case that anyone flying from Dallas to Chicago is any safer as a result of paying more money to fly first class as opposed to paying bottom dollar fares to sit next to the lavatory in the back of the plane.
And yes, there’s an analogy here to healthcare.
I am not about to suggest that any of you cut back on the quality of the medical service that’s being delivered to patients any more than an airline cuts back on safety when no one is seated in first class.
Instead, I suggest that you think about how the pricing model, that is, the value exchange model, on an airplane can be instructive in terms of how you provide different tiers of service to your patients.
A similar concept is certainly applicable to office practice physicians. There’s the whole notion in internal medicine and family practice of concierge medicine, which is a complete transfer of the notion of first class care, meaning first class customer care, first class human touches, as opposed to, for example, a clinic setting in which the medical care is just as good, but the surroundings in which it’s presented differs wildly.
Different patients have different expectations in terms of how soon they will be seen. Different patients have different expectations about how they’re treated. Are they shown to a separate waiting room or are they just plopped in with everyone else? And so on.
Different patients would, and do, attach different price points to the level of service
and interaction.
It is also true that payor considerations screw up a lot of this, but certainly not all of this. And, for many of you who are escaping an insurance model, it doesn’t hinder your development of a segmented care “cabin” but feeds right into it.
Think about the way business models in other industries segment customers by the level of service those customers want, and, are willing to pay for. Think about how those or similar concepts can be applied by you.
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| | | 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:
A couple miles back, I passed a church spire which made me think of the word, the Latin word, “spirare,” to breath. It is the root of the English
word “inspire”.
In turn, that caused me to think about a physician I spoke with a couple weeks ago - not
a client, just a general conversation. He was talking about the fact that his group was stagnant. It hadn’t grown in decades – the same number of physicians, the same number of facilities served.
It is sort of the same-old "same-old." Simply hanging onto their referral relationships, and simply hanging onto their facility contracts -- that’s the problem for them. Their strategy is purely defensive. They are just trying to protect what they have, in essence to build walls around their existing business, which obviously is not a very good strategy for the future.
So let’s get back to “spirare”.
You know we are said to be inspired by some idea, and to have aspirations – both of those words being related to spirare, inspiration being something like “to breathe into”; I guess we would say “to breath life into.” And what we breathe life into are our aspirations, things that we’re aiming for, things that we are creating.
But without an inspiration to become, in essence, more than we are now, and in this case, more than your medical group is now, then we are simply stuck with that game of
playing defense.
So what inspires you? What can you do to develop some inspiration for the growth of your group? To what can you aspire?
Because if you don’t do those things, then you are simply left with the other spirare word in English, one that’s very familiar to you: Expire.
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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 - Why Trying To Protect Your Group's Position Is Destroying Your Future - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Over the past five, ten or twenty years, your group has worked long and hard to develop its business. You’ve become successful.
But now, you see threats everywhere: threats from the hospital that wants to employ you, threats of forced ACO participation, threats of replacement by paraprofessionals, threats of competition from national groups and the staffing services masquerading as groups, threats of competition by breakaway partners, employees and subcontractors who think that they can do it for less (and who fear replacement more than you do), and threats of competition from those of your colleagues who see no need for you to earn a profit in return for your financial contributions and years of management work.
So, as a result, you’re circled the wagons, protecting your group from both internal and external threats.
Not a bad move in and of itself — but bad if that’s where you’ve stopped.
That’s because adopting a purely defensive position can never advance your group’s future, it can only delay something from happening to you.
In order to succeed, you need to cause the “happening,” you need to take charge of creating your own transformative future.
What if your partners won’t agree? That’s why strong leaders are required and why participatory “leadership” is in reality an absence of leadership. Get new partners. Go out on your own.
It won’t work, you say.
You’re right, it won’t work for you. Send me your resume, I may know someone who’s looking to hire, just about when you’ll be looking for a job.
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| | | Listen to the podcast here, or just keep reading for the transcript.
You’re driving with your family on an interstate highway. It’s past noon. There’s rumbling in your stomach and there’s grumbling over where to stop for lunch. You’re in the middle of freakin’ nowhere.
But then, up ahead, you spot one of those it-could-be-anywhere exits with a few gas stations a McDonald’s and two you’ve-never-heard-of-them-before fast food joints.
If you’re like most people, you’ll soon find yourself pulling into McDonald’s. In fact, the reason is the key to their success.
Why the McDonald’s? It’s not because the food is great, but because, of the choices available, you and your family know that at least McDonald’s doesn’t suck.
Herbert A. Simon, the eventual Nobel laureate, named that decision-making strategy “satisficing.” It’s the cognitive heuristic, the quick decision-making tool, that allows you to filter quickly through alternatives and then accept the one that is acceptable enough. [Satisficing is a portmanteau of “satisfy” and “suffice.”] It explains decision-making in the real world in which perfect information is unavailable and conditions are confusing
and intertwined.
That’s one of the secrets of brands like McDonald’s, Brooks Brothers, and, perhaps, your medical group or facility.
The precondition, though, is, at a minimum, not to suck in the eyes, for example, of the hospital administrator or the community from which
you draw.
Take the example of a hospital-based group, say a radiology or anesthesiology or emergency medicine group. The object is to become a brand at the facilities at which you provide service so that those consuming the brand, that is, those making the decisions to contract, and to continue to contract, with you, have a degree of familiarity with you. They know that even if you are not the best, you are acceptable. You may have warts, but you are their guy or their group with warts. With all due respect to Dr. Simon’s legacy, this concept, culturally, is hundreds if not thousands of years old. Think of the saying “better the devil you know than the devil you don’t”, which has been traced back to at least 1539.
Note that I am not speaking of cutting short your goal to provide the absolute best medical care. And I’m not telling you to cut corners.
What I am telling you is that what is key to the longevity of relationships and to being seen as someone or some entity with whom to initiate and continue a relationship, does not involve a need to optimize, which is impossible, but the need to satisfice. You have to focus on sufficiently satisfying, that is, satisficing, the needs and expectations of your customers and on reminding them of that fact.
You know this is true about McDonald’s. What’s hard to understand is that the same rule of behavioral economics applies to you.
Yes, right now, off the top of your head, can you name me 30 places where you could get a much better hamburger, but none of them sold billions and none of them is recognized around the world? Think about it. Actually, how much do you actually need to think about it?
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| | | 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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