For today’s health systems, profitable expansion is of the utmost importance. Health organisations, particularly big systems like Kaiser and Ascension, reported huge losses in the first quarter of 2022.
According to the Washington State Hospital Association, hospitals in my home state of Washington alone experienced a net loss of approximately $929 million. Long-term recovery from COVID-19, higher operational expenses, and shifting service demand are also factors.
There are three main ways that the digital revolution of healthcare might spur growth.
Digital innovation is the most important and beneficial strategy to address the need for expansion in health systems. But the goal goes much beyond merely updating the infrastructure. From a consumer standpoint, digital innovation must aim to radically alter the health care business model.
1. It bolsters both customer acquisition and loyalty.
Nearly all growth pathways revolve around digital. It is crucial for demand generation, aggregation, and capture, but it is also helpful for increasing lifetime or long-term customer value capture, which changes the CAC vs. LTV equation.
We’ve seen the results of a digitally-driven paradigm in the banking and travel industries. The way individuals look for and book travel has altered as a result of aggregators like Expedia and Travelocity, which also provided hitherto untapped industry insights. Banks were able to increase the lifetime value of their customers by learning more about them and using that knowledge to create customised offers.
These same concepts must begin to guide and be adopted by health systems. Customers now have mission-critical needs that must be met if they are to be able to easily access, explore, and book services and care alternatives across all channels. Consumer expectations have altered across almost all other industries, including financial services, dining, travel, and retail. No longer can healthcare remain the exception.
A deeper awareness of consumers in the market across different lines of care is delivered through insights from customer data platforms and identity-driven engagement, enabling marketing to be much more efficient and tailored.
Platforms like DexCare optimise resources while streamlining the experience for patients and clinicians. They aggregate and match digital demand with health system capacity across all lines of care.
DexCare has really made it possible for service lines at my own company, Providence, to consolidate customer acquisition efforts into a single service, collect a larger share of downstream income, and produce significant per-patient encounter cost savings.
Health systems must improve their ability to measure effectiveness in order to implement this digitally driven strategy. The number of patient/customer accounts, also known as Digitally Registered Users (DRU), and metrics like Monthly Active Users (MAU) and DRU give insight into how the consumer funnel actually functions. Additionally, the creation of Return on Marketing Investment (ROMI) models aids in the transformation of marketing from an expense to an investment that supports expansion and may be linked to particular campaigns.
2. It makes it possible to enable new products.
In recent years, funding for health technology businesses has been aggressive and record-breaking. Health systems have a huge chance to take advantage of the innovation market and funding by collaborating in ways that enable the development of new products and services, which will open up completely new revenue streams.
The healthcare industry in the United States is highly specialised and complex. Products and solutions that have the flexibility to support the ecosystem have an edge. Imagine a streamlined and uniform platform that provides a comprehensive perspective of a patient, streamlines interactions with patients in terms of transactions, communications, and engagement, while also making the best use of limited resources and preventing caregiver fatigue.
These platforms give health systems the ability to fully capitalise on market investment and speed to drive transformation. Businesses that focus on being true platform companies—taking into account the diverse spectrum of operational and business logic of various constituents without pressuring organisations into a particular operating model—will succeed in this market.
That subtle method of producing commercial goods has the potential to revolutionise the game. It’s also the reason why digital advances created within a health system may end up being the most beneficial overall.
3. It makes new business models possible.
Beyond encouraging client acquisition and retention, digital transformation has the potential to alter the health system’s economics in order to support brand-new business models that foster expansion. Digital not only makes it possible for solutions to be scaled up, but it also makes it possible for more meaningful, direct, and direct consumer engagements that can have a bigger influence on businesses.
Think about how health institutions can divide up their clientele based on patient groups, diseases, and needs while still providing upscale services that could assist patients while and in between treatment periods. This is a whole different operating paradigm, and the $4 billion purchase of OneMedical by Amazon shows that there is a large market opportunity.
Tech-enabled Other examples of how digital opens up new operating models are Medicare Advantage models that integrate care management with consumer-facing technology tools to enable high-value care delivery at scale.
With approximately 67,000 MA members, Devoted Health has raised more than $1 billion and more than doubled anticipated 2021 membership. In the meantime, Clover Health has teamed up with Walmart to broaden its consumer base.
There are numerous opportunities, including brand-new business models, direct-to-consumer or direct-to-employer products, and even new varieties of insurance firms. All of these digitally centred models have the potential to significantly alter the way healthcare systems operate.
Growth strategy and digital strategy cannot be discussed independently.
According to a recent study by Accenture, hospitals who provide “excellent” customer service to their customers enjoy a 50% improvement in net margins over “average” hospitals. Digital will continue to be the primary force behind and provider of those experiences.
Digital cannot be seen as an addition to current healthcare systems like a veneer. To generate self-disruption of our whole business model—as well as to promote sustainable long-term growth and recovery for our organizations—it is essential to formally recognise digital as an organisational value driver.