Among provider organization executive teams, I hear the growing concerns about Medicare payment rates, and the “hassles” of managed care contracting. Inevitably, this conversation leads to the idea of doing away with third-party payers and serving consumers directly via direct private pay services.
There is good reason for the interest in the private pay market. Just a few statistics paint the picture: Over 55% of the population is covered through employer-sponsored health plans (see Income, Poverty, and Health Insurance Coverage in the United States: 2009); about 34% of workers have a health insurance deducible of $1,000 or more and 15% of workers have a deductible of $2,000 or more (see Snapshots: Premiums, Cost-Sharing and Coverage at Public, Private and Non-Profit Firms); and 11.4% of the total health care budget in 2011 was out-of-pocket consumer spending (see Consumer Out-Of-Pocket Inches UP all members). Direct payment for services by consumers is on the increase.
Why does this matter? Where the money is, so goes the power – and the more consumers spend (half the market that is private pay), the more powerful their presence (and their preference) in the market becomes. When consumers are paying more for services, they are more likely to pay attention to who is providing services, the cost of the service, the experience of the service, and more. This is the reason why succeeding in the private pay market is difficult. A big opportunity with big margin potential – but lots of competition and the need for a whole new approach to marketing.
In my previous discussion this week of the many variables in marketing plans (see Getting On The Marketing Plan Path all members and For FFS Marketing, It’s Payer Push & Consumer Pull all members), a marketing plan for private pay revenue is the most unlike other marketing plans. Private pay marketing is B2C marketing (business-to-consumer) – not traditional B2B (business-to-business) marketing. In short, your focus in now on communicating with consumers, not with payers, foundations, or government departments.
A B2B marketing plan is generally focused on a small target market of buying organizations. Buying decisions are generally based on business value. And the marketing process is personal (often one-on-one) with educational and awareness building activities to support your account management team. Typically, B2B marketing involves a long, multi-step buying process.
In a B2C marketing plan (focused on consumers), buying decisions are based on wants, status, or price. The marketing process is increasingly web-based and integrated with social media – with a focus on building brand identify through repetition of message and imagery. Typically, B2C marketing involves a single-step (often hurried) selection process by consumers. I’ve written before (see Four Essential Organizational Competencies For The Future all members) about some of the key issues for B2C consumer marketing success, which include:
The right services, with the right positioning, at the right price
Marketing materials (print and online) convey the right message to consumers
Make sure consumers in need find you – web content planning, website design, and web search optimization
Maintain brand, reputation, and relationship with referral sources and consumers – with a stakeholder engagement plan and team
Plan to build consumer web functionality that integrates with service
Tomorrow, I’ve asked my colleague Tim Snyder to expand on the issues of consumer web marketing– web content, site design, search optimization, and functionality. Except for some very narrow markets, without an on-line presence, consumer marketing won’t succeed. Bill Gates probably put it more succinctly when he said, “The Internet is becoming the town square for the global village of tomorrow.”
For another free resource, see: Best Practice Provider Marketing? Think Push & Pull (all members).