How do traditional health and human service provider organizations compete with the new “packaged” services developed for sale either direct-to-consumer or to health plans? Learning to “productize” (which involves digitizing) is the key. That was the focus of Ravi Ganesan, President and Chief Executive Officer at Core Solutions, Inc., in his session, Exploring New Business Models In Digital Healthcare: A Strategic Planning Guide For The C-Suite at The 2018 OPEN MINDS Technology & Informatics Institute.
What do those “packaged” services look like? Mr. Ganesan gave some interesting examples. The $97 per month subscription to the Peloton bike and exercise services. I was also thinking of Talkspace’s $49 a week, unlimited messaging therapy, and the growing number of community-based medication assisted addiction treatment programs charging $6,000 for a course of treatment.
Both consumers and health plans are looking for new services in new packages. This change in customer preference and available market opportunities is something I addressed in my plenary presentation, Reinventing Health & Human Service Organizations For A Value-Based World: Transformational Leadership Required!, at The 2018 OPEN MINDS Executive Leadership Retreat. But the big question is: How to get from here to there?
Mr. Ganesan’s recommendation is approaching service development with a new slant—digitized product packages. He described three elements to this process. First, understand your own core competencies and how the value chain is morphing in the market (see The ‘Melting’ Value Chain and The Primary Care Reinvention). Second, design the product packages leveraging digital technology. Third, build strong partnership with service delivery partners, payers, and consumers.
A key construct in this process is digital transformation, the “transformation of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies … in a strategic and prioritized way” (see Digital Transformation: the Journey of TVH Group to an Innovative Future). So how to accomplish this? There are three key steps—find the potential “products” in your current services line, digitize those products by embedding technologies to improve their performance, and develop a business plan that takes this digitized product from service to profitable business model.
Discover potential products that can improve your organization’s value proposition—First, what are your organization’s core competencies? What do you do that solves a problem either for consumers or for health plans—or preferably both? Then, how do you re-envision what your organization does using a tech-enabled model? How can you make those competencies and services a tech-enabled package product?
Developing scalable, technology-driven programs—The next step is to take those product concepts and creatively redesign services using technologies to either improve performance or reduce costs. Think of our previous advice to “automate everything possible” and “make the consumer part of the delivery process” (see How Do We Automate Population Health Management?). These are keys to developing services that create tech-enabled competitive advantage. (For additional tips on how provider organizations can successfully integrate new technology into their organization, check out The Digital Decision Crossroads and Failure To Launch.)
Profitable revenue model—A great service is not the same as a sustainable business model. The last step in the process is developing a business plan based on offering the new digitized products. The business plan needs to address market segmentation and positioning, competitive offerings, pricing structure and price points, marketing plan, volume and breakeven points, cash flow needs, and margins.
Over 60% of health care organizations executives expect their organizations to be disrupted by digital technology (see 83% of Life Science Execs Expect Healthcare Blockchain in 5 Years). I think this assessment by executives in the field is a rosy one. “Digitization” has affected almost every aspect of our lives. Just this week, I participated in a web meeting, ordered lunch from Grubhub, used Google Maps to walk to my on-site meeting, purchased something for delivery to my office from Amazon, deposited money electronically in my bank account, made a dinner reservation on OpenTable, searched for a VRBO apartment for my January vacation, scheduled my annual physical on my physician’s consumer portal…I could go on. Why do we think that continued digitization of health and human services won’t be part of this new world?
Remaking current health care services in this new tech-enabled world is how to compete with new (and disruptive) health care service offerings. Technology is already driving key changes in the health and human service delivery system (for more, see my plenary presentation from last week, How & When New Technology Will Drive Disruption & Create New Strategic Advantage. And we’re only seeing the tip of the iceberg, so to speak, at this point.
For more on incorporating technology in your strategies and product development plans, check out these resources from the OPEN MINDS Industry Library:
- From Strategic Planning To Tech Strategy
- Assuring The Promise Of Technology Is The Reality Of Technology – Keys To Best Practice Tech Implementation
- Tech Best Practice: Planning, Budgeting & Change Management
- Innovation Success In Three Steps
- 5 Tech Best Practices
- Consumer Engagement = Performance
- What Should Your Organization Be Spending On Tech?
- Workforce Problems? Technology As Strategy
- Virtual Care Comes To Complex Consumers
- What Will Mental Health Treatment Look Like In The Years Ahead?
And for even more, join OPEN MINDS Senior Associate Joseph P. Naughton-Travers, Ed.M. for his Executive Seminar, Making The Right Tech Investments For Your Organization: An Executive Seminar On Technology Budgeting & Planning, on February 13 in Clearwater, Florida.
Note: This article was updated on October 30, 2018. The article originally stated incorrectly that Iora Health has a $150 monthly fee for primary care.