The Five Key Elements to a Hospital’s Value Proposition

Google announced recently it would begin competing with Amazon as a grocery-delivery service. On the same day, Amazon announced it was offering free, one-hour delivery of restaurant orders to Seattle Amazon Prime customers. The Internet economy has ushered in an arms race for compelling consumer value. For companies like Amazon and Google, that means continually finding quicker and smoother ways for people to get the things they want the most. For hospitals, it means taking a hard look at their own value proposition in an environment of heightened competition and consumer expectations.

In the past, the health care business model made hospitals largely immune from the need to address consumer needs with a compelling value proposition. Today, however, all that has changed. Like any other company, hospitals face demands from all their customers for more convenient services and lower prices, while such nontraditional competitors as retail clinics, urgent care centers and telehealth companies are entering the fray with value propositions that attempt to distinguish their services from those of legacy providers.

<h2>

Building a Value Proposition</h2>

To develop a compelling value proposition, a company must identify five key elements:

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; an important customer segment;

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a customer need, usually something that is highly desired and problematic to achieve;

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the pain associated with pursuing, or with not fulfilling, the need;

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the benefit of fulfilling the need;

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (the most difficult) a product or service that helps the customer avoid the pain and fulfill the need in a manner that is better than what any other product or service provides.

Let&rsquo;s apply this concept to just one Amazon service. The Amazon Dash Button is a physical button that Amazon Prime members can mount near household essentials like laundry detergent, pet food and toilet paper. When you notice your supply running low, you simply press the Dash Button, and an order for the item is placed.

For the Dash Button, the customer segment is fairly broad &mdash; Amazon Prime members. As described in an April 2, 2015, blog post on the Strategyzer website, the need customers are trying to fulfill is keeping their household supplied with essential items. The pain points are determining when supplies are running out, making the trek to the local store to restock and running out of an item when it&rsquo;s most needed. The benefits of accomplishing this task are having supplies on hand when they are needed and having time available for more valuable pursuits. The distinguishing value is the ease with which the Dash Button helps people to achieve these benefits &mdash; an ease that no other service can match.

<h2>

The Traditional Hospital Value Proposition</h2>

In the past, hospitals have articulated their value proposition in terms of high quality and patient satisfaction. Quality typically has been determined by adherence to best practices, achievement of desired outcomes and avoidance of undesirable outcomes. Patient satisfaction typically has been measured by such factors as caregiver communication, staff responsiveness, adequacy of pain management and acceptability of the environment.

Another key to a hospital&rsquo;s traditional value has been its relationship with the people in the community. Hospitals have long been a trusted community partner and asset not only as care providers, but also as large employers.

For hospitals&rsquo; nontraditional competitors, the value proposition is very different. Telehealth company Doctor On Demand uses the motto, &ldquo;See a doctor now &mdash; without leaving home.&rdquo; Primary care chain One Medical Group employs the statement, &ldquo;We&rsquo;ve redesigned the primary care experience around you, combining clinical excellence with a modern approach.&rdquo; CVS MinuteClinics offer &ldquo;convenient, affordable, high-quality care.&rdquo; Upstart lab company Theranos seeks to &ldquo;make actionable information accessible to everyone at the time it matters.&rdquo;

Unlike the traditional hospital value proposition, those of nontraditional competitors are tightly aligned with the Internet economy. They focus intently on the consumer&rsquo;s perspective. They promise to alleviate traditional pain points such as inconvenience and high cost. They promise benefits ranging from the immediate (prompt access to high-quality care) to the aspirational (control over your health and health care). And they promise to deliver this value in a way that traditional providers cannot.

<h2>

Serving Multiple Wants and Needs</h2>

To remain relevant in the Internet economy, hospitals must rethink their value proposition. The new value proposition will need to meld the traditional attributes of community relationship and quality with attributes that meet the new consumer-focused demands of the Internet economy. The new value proposition needs to provide what people want, rather than solely what is good for them. It also needs to distinguish hospitals from the nontraditional competitors that are pouring into the market.

Rethinking the value proposition begins by looking at health care from the multiple perspectives of the people a hospital serves.

People who are acutely ill or injured want to be in the hands of capable and caring providers. For this segment of the community, the traditional hospital role will continue to have compelling value. However, for the segments of the community that have different wants and needs &mdash; and those segments are getting larger and larger &mdash; hospitals will have to demonstrate a different value:

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; People who are generally well but require a specific service &mdash; for example, a prescription refill &mdash; want an efficient transaction.

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; People who have a discomfort that stops short of an emergency want convenient access to a caregiver for quick diagnosis and treatment.

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; People who have chronic conditions that require ongoing management and that put them at risk of hospitalization or emergency department visits may need assistance with living conditions, transportation or nutrition &mdash; services that may previously have been called &ldquo;public health.&rdquo;

&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; People who are healthy and want to stay that way want resources to help them learn, practice, track and reward healthy behaviors.

And the entire community needs care that is coordinated among multiple settings and providers and is far easier to navigate than what they have now.

<h2>

A New Value Proposition for Hospitals</h2>

For most hospitals, the traditional operating vision focuses on caring for people &mdash; ensuring that patients are accurately diagnosed and effectively treated. For organizations with a strong culture, that operating vision informs the perspectives and actions of staff. So, when a patient shows up with an illness or injury, an organization whose operating vision is caring will devote itself to treating the condition, but it may stop short of fully understanding the underlying social or behavioral causes of the condition. It also likely will stop short of providing the kind of support that could address those causes and, thereby, avoid the condition.

A focus on caring is important, but it is inherently narrow. The new hospital value proposition requires a much broader perspective. This value proposition needs to expand from caring to helping.

The value proposition of helping will take different forms to meet the needs of different population segments. For certain segments, helping will mean identifying factors that put people at risk for poor health or hospitalization and helping people address those factors, from medication management to family issues. For other segments, helpingmay mean providing expanded care options &mdash; home visits, nurse practitioner visits, group visits, virtual visits, health coaching. And for other segments, it may mean assistance in navigating the health care system and community resources. Helping may take place in a hospital, clinic, home, school or community center, or it may take place on the phone or online.

As the core of a hospital&rsquo;s operating vision, helping should become part of the culture, perspective and behaviors that permeate the organization. Every facet of planning, every operational decision and every infrastructure consideration should seek to improve the hospital&rsquo;s ability to help people stay healthy. Every patient encounter and every interaction in the community should put those capabilities into action.

Health is the most valuable part of people&rsquo;s lives. Health care is the most personal service. People want convenience, access and ease of use. But, people also want the confidence and comfort that one organization will be by their side for the long term, helping them as their health statuses and health needs change.

Like any compelling value proposition, this one will be difficult to achieve. It also will be difficult for any nontraditional competitor to match. Most importantly, it will meet the deepest needs of the people hospitals serve. In today&rsquo;s environment, helping is the value proposition that America&rsquo;s hospitals need to embrace and deliver.

<a href="http://www.healthforum-edu.com/speakers-express/speaker-bio.dhtml?dcrPath=/templatedata/HF_Common/Speaker/data/KennethKaufman245000621">Kenneth Kaufman</a> is chair of Kaufman, Hall &amp; Associates LLC, in Skokie, Ill., and a member of <a href="http://www.healthforum-edu.com/speakers-express/speaker-news-and-topics.dhtml">Speakers Express</a>.

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Building a Value Proposition

To develop a compelling value proposition, a company must identify five key elements:

· an important customer segment;

· a customer need, usually something that is highly desired and problematic to achieve;

· the pain associated with pursuing, or with not fulfilling, the need;

· the benefit of fulfilling the need;

· (the most difficult) a product or service that helps the customer avoid the pain and fulfill the need in a manner that is better than what any other product or service provides.

Let’s apply this concept to just one Amazon service. The Amazon Dash Button is a physical button that Amazon Prime members can mount near household essentials like laundry detergent, pet food and toilet paper. When you notice your supply running low, you simply press the Dash Button, and an order for the item is placed.

For the Dash Button, the customer segment is fairly broad — Amazon Prime members. As described in an April 2, 2015, blog post on the Strategyzer website, the need customers are trying to fulfill is keeping their household supplied with essential items. The pain points are determining when supplies are running out, making the trek to the local store to restock and running out of an item when it’s most needed. The benefits of accomplishing this task are having supplies on hand when they are needed and having time available for more valuable pursuits. The distinguishing value is the ease with which the Dash Button helps people to achieve these benefits — an ease that no other service can match.

The Traditional Hospital Value Proposition

Another key to a hospital’s traditional value has been its relationship with the people in the community. Hospitals have long been a trusted community partner and asset not only as care providers, but also as large employers.

For hospitals’ nontraditional competitors, the value proposition is very different. Telehealth company Doctor On Demand uses the motto, “See a doctor now — without leaving home.” Primary care chain One Medical Group employs the statement, “We’ve redesigned the primary care experience around you, combining clinical excellence with a modern approach.” CVS MinuteClinics offer “convenient, affordable, high-quality care.” Upstart lab company Theranos seeks to “make actionable information accessible to everyone at the time it matters.”

Unlike the traditional hospital value proposition, those of nontraditional competitors are tightly aligned with the Internet economy. They focus intently on the consumer’s perspective. They promise to alleviate traditional pain points such as inconvenience and high cost. They promise benefits ranging from the immediate (prompt access to high-quality care) to the aspirational (control over your health and health care). And they promise to deliver this value in a way that traditional providers cannot.