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11/26/2012

Branding in the health care industry: a whole new ball game


I love college sports: men’s and women’s, any season, any sport, you name it and I love it. And right now, it’s a special time—my Buckeyes finished 12-0, my Commodores 8-4 and Bowl eligible, and hoops are around the corner.

But I am also a little confused these days: how can the “Southeastern Conference” include Texas A&M and Missouri—are they “southeastern”? How is the “Big Ten” actually 12 teams, or possibly 14 if Maryland and Rutgers join? And how can the Big East include USF and Notre Dame in basketball, but only USF in football—last I checked, Notre Dame was having a pretty good year on the gridiron too!

It probably boils down to two simple things: brands matter, and teams go where brands lead to more money. College sports, after all, is a business, and institutions like Ohio State, Vanderbilt, and Notre Dame guard jealously their brands. It’s understandable.

Health care is no different. It’s about patient care and complex science, but it’s also about dollars and cents. It’s a $2.8 trillion industry in the U.S. alone, and every sector in the industry needs revenue growth because demand for health goods and services is increasing exponentially and medical inflation and labor costs add 3% per year to costs of operation. And in health care, a strong brand can often lead to more revenue.

But branding in health care can be just as puzzling as college athletic conference affiliations. Our surveys indicate consumers, for the most part, are confused about the U.S. system’s performance and seemingly lost in our branding wars. Consider, there are 700 “Top 100 U.S. Hospitals,” Blue Cross plans that don’t have Blue Cross in their names, and “medical centers” that have fewer than 100 beds. We call lots of folks in health care “doctor” these days, including many without formal training, and the name game in prescription drugs requires a thesaurus embedded in a mobile app to stay abreast.

Seems to me everything about the future of health care points to the importance of branding, but with a substantially different twist. Historically, our brands were built on impressions by first-hand users (patients, members, clinical trial subjects, et al) or word of mouth. In some sectors, advertising helped bolster brands—hospitals, drug companies, and insurance plans invested strategically to win hearts and minds of their customers, and differentiate to the extent possible from competitors. But that’s changing.

Consumers have more skin in the game now than ever before. They’re able to compare prices and outcomes for simple medical treatments. And they can access their own medical records to compare their signs, symptoms, risk factors, and co-morbidities to clinical algorithms and better understand where to get the appropriate care, and how much that care will cost.

They’re able to log on to independent websites and compare insurance plans head-to-head, download applications that let them know about a generic substitute in lieu of the prescribed drug, and search for a clinician who uses diagnostic techniques they prefer.

And all this while the industry is consolidating and integrating: going big or getting out is table stakes in most sectors as consolidation takes on many shapes and sizes—plans and plans, hospitals and hospitals, hospitals and physicians, plans and physicians, pharma and biotech, bio-pharma and companion diagnostics, device and pharma, over-the-counter and prescription, and so on.

No industry is as pervasive in its impact financially and personally as health care, and none has been as insulated from consumerism as this one. Branding matters in most industries because a trusted brand conveys quality and value to its customers. Branding in health care has not kept pace. Little wonder most consumers are not convinced of our value. By two to one, most U.S. adults think the U.S. health care system is expensive, wasteful, and often ineffective. But it will change. The forces of the market lead to two simple facts: consumerism in health care is not a fad. Consumers’ increased role as the direct purchasers of goods and services is certain, and their appetite for demonstrated value from the health system just as real.

The value proposition for our industry must be re-thought: does Joe Six Pack associate what’s expected with what’s delivered, or what’s paid vs. what costs truly are? Do non-traditional competitors pose big threats to incumbents sometimes prone to focus on traditional competitors only? Is the issue for-profit or not-for-profit ownership status, or how profit is made and operating surpluses used? I don’t suspect retail pharmacy primary care clinics needed permission to enter markets. Dramatic adoption of distance medicine, alternative health, self-care diagnostics, online social networks, probiotics, substitutionary medicine, and many others validate that the pursuit for value is now impacting our industry.

Our customers are consumers, not just patients; employers, not just group accounts; government professionals, not just bureaucrats. In some ways, they see the future better than we do, they’re pursuing brands that bring value and they’ve long since slain our sacred cows…

  • All health care is local.
  • Everything that’s done is necessary.
  • Quality can’t be measured.
  • And costs don’t matter.

So I plan to watch the Big Ten even though it’s actually 12, and the Southeastern Conference even though it’s now also southwest. I am able to live with the branding of these conferences because their value propositions to their customers—advertisers, fans, players, and coaches—seems solid.

Branding in our industry is a whole new ball game.

Read the entire Health Reform Monday Memo here and subscribe at:www.deloitte.com/centerforhealthsolutions/subscribe  

by Paul H. Keckley, PhD, Executive Director

Deloitte Center for Health Solutions

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