July 14, 2016
health forum education 
David W. Johnson
Consumerism Market Corner Commentaries Outcomes
Insight PDF 

Great Consumer Expectations: Data-Enabled Healthcare Outcomes and Service

Health companies experience excessive variation in clinical outcomes, quality metrics, procedure pricing and customer satisfaction. This frustrates providers, payors, employers and patients alike. All Americans want the healthcare system to perform better.

Many believe Big Data’s capabilities will transform healthcare and they’re probably right. Big Data’s ability to remake industries is awe-inspiring. Uber is the world’s largest transportation company without owning any cars. Airbnb has turned the hospitality industry on its head without owning any hotels.

Big Data’s enthusiasts, however, often lose sight of this basic truth: data analytics are nothing more than a performance improvement tool. All data has noise. Big Data generates sonic booms. Big Data cannot transform healthcare until health companies get “Little Data” right.

Data systems contribute when they help clinical outcomes improve, operations run more efficiently and companies service customers more effectively. By contrast, ineffective application of data systems is counter-productive and wasteful. Getting data right means aligning its application with well-developed strategic objectives and functional metrics.

It is clear that healthcare’s improvement journey requires systematic delivery of more reliable, lower-priced healthcare services. It is also clear that health companies must deliver a superior customer experience to differentiate their products and services. One cannot come at the expense of the other. Outcomes Matter. Customers Count. Value Rules!

Data is as Data Does

The best way to picture data is as the middle layer of a three-part success hierarchy.  Data flows to and from this middle tier to inform value-based operations (the bottom tier) and fully engaged customers (the top tier). The chart below captures these flows.

Society’s expansive ability to collect, store, search and analyze data is the sources of the information revolution’s power and potential. The Internet of Things means everything from appliances to pacemakers will transmit information into an ever-expanding data universe. Interfacing describes how technology companies like Uber operate between suppliers (where the costs are) and customers (where the revenues are) to create more efficient (and valuable) transactions.

Big Data, the Internet of Things and Interfacing are components of an information technology revolution that is transforming human existence with remarkable speed. In healthcare, these information technologies will drive value-based care delivery and patient/customer engagement.

In post-reform healthcare, winning health companies will employ data to generate consistent high-quality outcomes, reduce performance variation and improve operational efficiency. Data inputs flow to and from operations to improve care design and execution.

At the individual level, all relevant data from all sources flows into algorithms that optimize diagnosis and treatment. Pricing and outcomes data will be transparent and available.

At the disease-specific level, all relevant information from all sources flows into data systems advancing medical research and protocol development. As data proliferates and analytics advance, individual genetic and environmental characteristics will lead to more personalized and less population-based therapies; more precision and less trial-and-error care. Pricing and outcomes data will be transparent and available.

Beyond Data to Customer Engagement

Unfortunately, getting the medical treatments right will not be sufficient to win in post-reform healthcare. Health companies also must engage customers to gain their confidence and loyalty. They must listen, understand customer needs and respond to customer preferences. Winning health companies will offer unique, personalized, seamless, thoughtful and caring services.

None of this should be a surprise. Consumer purchasing drives 70 percent of the U.S. economy. Companies succeed and fail based on their ability to read and respond to consumers’ sentiments. Consumer-oriented companies spend billions of dollars on polling, focus groups and test marketing to enhance their product offerings.

Consumer companies don’t tell customers what to buy, they persuade. Leading through persuasion is antithetical to the cultures at most health companies where physicians make medical decisions on behalf of their patients. A “doctor-knows-best” approach doesn’t work for market-savvy American consumers.

Big data analytics are essential for understanding consumer preferences. Collecting, measuring and evaluating consumer data drive strategic growth and customer acquisition. All successful retail companies use data systems to design appealing products and services.

Great retail companies do more. They connect with customers in fundamental ways, earn their trust and exceed their expectations. The Ritz Carlton mantra is “Ladies and Gentlemen serving ladies and gentlemen.” They work tirelessly to instill this ethos into their culture. This differentiates their product. There are many hotels. There is only one Ritz Carlton.

The Briggs and Riley Difference

The luggage business is brutal. There are dozens of luggage manufacturers and thousands of luggage retailers. There is abundant choice and easy availability. Value brands often add premium features at no extra costs to attract buyers. Margins are thin.

Luggage is a commodity business. How can brands distinguish themselves? The answer is often through better service.

I travel with Briggs and Riley luggage. Their products are spacious and sturdy. Their prices are lower than Tumi, Hartman and other premium brands. I never thought about their warranty until I left my roller-board’s garment bag in a hotel.

Stupid move. Entirely my fault. Even though my roller-board was several years old, it was still in good condition. I called Briggs and Riley’s customer service to order a new garment bag, expecting a very high replacement price.

Imagine my pleasant surprise when the Briggs and Riley representative indicated their warranty covered my lost garment bag. I reiterated that it was my fault, not theirs, that I needed a replacement. Not to worry. They shipped the new garment bag overnight at no cost. Consider me a Briggs and Riley customer for life: great products; unbelievable service; dependable in a pinch.

Great Healthcare Service: The Geisinger Difference

Last fall, Geisinger Health System rolled-out a no-questions-asked refund program for customers that experience bad service. They even have an app that processes refunds in three-to-five business days. CEO David Feinberg describes his motivation for launching the program as following:

We want to make sure that we not only have the right care that is high-quality and safe, be we also want to make sure our care is compassionate, dignified and delivered with a lot of kindness.
The refund program asks patients to determine the level of refund requested based on their assessment of Geisinger’s bad service. The program limits refunds to a patient’s co-payments and deductibles.

Patients appear to be fair. Of the thousands of patients Geisinger treated between October and mid-March, only 74 requested refunds and most requests were for partial refunds. One was for $20. During that six-month period, refunds cost Geisinger less than $80,000, a flyspeck for the $4.6 billion-revenue system.

More importantly, the refund program gives Geisinger professionals invaluable, real-time feedback regarding their customer service. It’s also raised Geisinger’s customer satisfaction scores. Feinberg observes,

We have a built-in “secret-shopper” program, and the patient is telling us when we get it right. Most of the feedback has been positive. [Refunds go to] families who had to wait in the emergency room for too long, or were treated by a doctor in an arbitrary manner, or the nurse got too caught up in what she was doing and forgot to hold someone’s hand.

Great customer service takes time, effort and investment, but it pays enormous dividends. While Geisinger is the first health system to offer service refunds, they shouldn’t be the last. Health companies must develop the metrics, training and experiential learning to create customer-driven operations. Expect Ritz Carlton’s and Disney’s healthcare consulting practices to boom.

Great Expectations

It is the worst and best of times for American healthcare. Today, U.S. healthcare is expensive, fragmented and underperforms relative to other advanced health systems on almost all health status measures.

At the same time, U.S. health companies are developing new business models and capabilities that will enable American healthcare to leapfrog other systems through superior technology, consumerism and more efficient resource utilization. Disruption of existing business models is a necessary feature of this evolutionary process.

Healthcare has lagged other industries in applying technology to improve operations and customer experience. That means healthcare must move faster and farther to adapt to the information technology revolution sweeping across all industries.

In the headlong rush toward healthcare’s future, health companies must resist the temptation to embrace data solutions as ends unto themselves. American healthcare will realize data’s potential when outcomes improve, prices plummet and patient experience becomes more satisfying.

Great expectations for American healthcare abound. Incredible data technology will fuel remarkable progress in healthcare delivery. Winning health companies will harness data to deliver better health services to their patient customers. Many, perhaps most, will give refunds for bad service.

About the Authors

David W. Johnson

Dave powers 4sight Health with an unflinching determination to create status-quo busting dialogue and action in healthcare reform. His innate desire to bring about change, coupled with his tremendous proficiency across health policy, academic medicine, economics, statistics, behavioral finance, disruptive innovation, organizational change and complexity theory, has led to his recognition as an insightful, incisive globally acknowledged authority on market-driven reform. Dave is a prolific writer on healthcare’s pro-market transformation. He is the author-in-residence at MATTER, the Chicago-based healthcare incubator, and published the critically acclaimed book Market vs. Medicine: America’s Epic Fight for Better, Affordable Healthcare in 2016. McGraw-Hill published Dave’s book The Customer Revolution in Healthcare: Delivering Smarter, Kinder, Affordable Care for All in September 2019. Dave left a 28-year career in investment banking to create 4sight Health. As an investment banker, he managed over $30 billion in healthcare revenue bonds, led significant strategic advisory engagements for health systems. He specialized in capital formation, asset-liability management, enterprise risk analytics and new business-model development. Dave is also currently an investor and/or advisor for several early- or mid-stage healthcare companies including Curate Health, GaussSoft, HealthiPass, Link Capital, Medspeed and MultiScale Health Networks. Dave holds a Bachelors of Arts degree in English Literature from Colgate University and a Master’s degree in Public Policy from Harvard University. Dave was drawn to service at a young age as a Peace Corps Volunteer in Liberia, West Africa and a United States Presidential Management Intern. His civic and professional affiliations have included Harvard Medical School (Visiting Committee); the Chicago Council on Global Affairs (Board, Executive and Finance Committees); the University of Chicago (Harris School of Public Policy’s Visiting Committee, Student Engagement Sub-Committee Chair and the Urban Health Lab); the Health Management Academy; Harvard School of Public Health; CHRISTUS Health (Audit Committee); the British-American Project (U.S. Chair); and Terence Cardinal Cooke Health Center (Finance Committee Chair). Dave is a consummate thought leader who enjoys reading and writing. He is no health slouch as a vegan who often bikes to meetings, who’s run ten marathons. He also loves traveling.

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