By Matt Leach
It seems a week doesn’t go by that we don’t see one or more healthcare companies in the news touting their latest partnership or M&A activity.
Digital disruption is moving from theory to reality and healthcare executives are taking the steps necessary to create or maintain competitive advantage as business models evolve. Here's a quote from the CEO of Independence Health, whose company recently announced a partnership with fellow Philadelphian, Comcast:
Quest Imaging Solutions provides all major brands of surgical c-arms (new and refurbished) and carries a large inventory for purchase or rent. With over 20 years in the medical equipment business we can help you fulfill your equipment needs
"Rapid technological advances in recent years have changed the expectations consumers have about accessing and using goods and services. Healthcare is no exception.”
I could not have said it better myself.
Like approximately two-thirds of Americans, I didn’t choose my health plan. I receive my health insurance coverage through work. The interesting thing about this arrangement and the healthcare economy is that it is a restricted market for an inelastic good. Said another way, consumers have few choices, but also must participate in the market, regardless of price. If we get sick, we go to the doctor.
In this healthcare economy, your health insurance company acts as an intermediary, responsible for facilitating care and payment for their members. This is a great position to be in when you have a closed market and are providing an inelastic good. Your customers have little, if any, choice in whether they do business with you, so building a superior customer experience is simply not a priority. However, in a digital world, this is not a sustainable position. Introduce disruptive forces and intermediaries only survive if they add value. As soon as technological, economic, or societal changes make an intermediary’s role less valuable they will either be removed or replaced. In the digital economy, value needs to be evaluated through the eyes of the customer.
The healthcare industry is notorious for ignoring the customer experience. But that is changing, as industry shifts require health plans to rethink consumer experience to meet expectations of today’s consumers, who seek convenience, quality, and speed from their healthcare organizations. Customer expectations are now set by the likes of Apple, Amazon, and Uber. To make things worse, these companies are making inroads into the healthcare industry.
Intermediaries are not unique to healthcare. There are many examples across several industries ranging from travel to real estate. In each case, market participants have avoided disintermediation by delivering a superior customer experience, turning that experience into a competitive advantage.