With the ascendancy of the consumer empowered by choice in healthcare, customer relationship management (CRM) is beginning to play at healthcare delivery organizations.
The combined impact of increased enrollment in deeply discounted managed care plans, skyrocketing labor and pharmaceutical costs and the Balanced Budget Act of 1997 have
created unprecedented financial pressures on healthcare organizations, according to West Springfield, Mass.-based Jennings Ryan and Kolb healthcare management consultant Kathleen
Henchey. As a result, many organizations are turning their attention to customers, along with focusing on cost control and revenue enhancement.
"An important aspect of this strategy is long-term customer relationship management,'' she says. "In our strategic engagements, we have been emphasizing the importance of
winning and retaining customers."
There is high payback potential in CRM: healthcare providers have generated returns as high as $4 for every $1spent on CRM efforts, says Lisa Simovic, a marketing consultant
with the Evanston, Ill.-based firm HCIA-Sachs.
For CRM programs to be successful, Henchey contends, providers must thoroughly understand customers--which she defines in the broadest possible terms: current and prospective
patients, physicians, employers, and employees. She notes that keeping employees satisfied is one of the most powerful tools for ensuring customer satisfaction.
The focus on the customer is relatively new for healthcare organizations. Traditionally, "healthcare has been behind other industries in CRM,'' maintains HCIA-Sachs' Simovic.
She predicts a 20% growth in CRM activity within the next five years. "Providers still want to see their names in public places, but as consumer expectations are being shaped by
non-healthcare experiences, we see CRM as a good strategy that will set top-notch hospitals apart from the rest."
Although hospitals and health plans always have recognized the value of developing a relationship with their customer base, implementing CRM requires understanding where the
customer is coming from in terms of needs, wants, values and priorities," says Stephen Wilkins, principal of San Diego-based PATH (Profiles of Attitudes Towards Good Health)
Organization.
PATH's approach for segmenting and profiling consumers, based on a 15-question profile delivered either through the mail or the Internet, looks at behavioral traits, intentions
and attitudes of consumers. By linking this information with utilization data and incidence of disease, PATH's model can predict--without extensive data mining--patients'
likelihood of using certain services. The firm's research has found that individuals within the same PATH Group share the same pattern of healthcare values and priorities,
regardless of age, gender, race, income, education, or place of residence.
For example, a number of consumers gravitate towards alternative medicine. Some of them are happy using this [service] in a traditional white-coat medical setting because they
have a high level of trust. But a large number who distrust medical authority will seek holistic services in an off-campus setting. "If organizations didn't know this, they could
build the service, but the right people would not come,'' Wilkins notes.
Consulting firm HCIA-Sachs uses PATH as it conducts syndicated market research. "We build a master customer information file, looking at clients' past behavior and life
stages,'' says Simovic. She adds that it's important for hospitals to focus on developing relationships in one or two customer areas to start. "Once hospitals get good results
from starter efforts, they can often justify a larger investment in CRM strategy.''
(Stephen Wilkins, PATH Organization, 408/448-1537; Lisa Simovic, HCIA-Sachs, 847/475-7526; Kathleen Henchey, Jennings Ryan and Kolb, 413/732-3355)
Key
Attitudinal and Behavioral Dimensions of Healthcare Consumers
- Involvement in Family Health
- Trust in Medical Professionals
- Level of Health Information-Seeking
- Propensity to Avoid Healthcare
- Involvement in Healthcare Decision-Making
- Level of Proactive Health Behavior
- Level of Receptivity to Healthcare Advertising
- Concern for Price
- Quality Consciousness
- Level of Health Emphasis and Involvement
Source: PATH Organization