Those were the headlines in the New York Times News Service yesterday, which I found syndicated in my local newspaper.  I couldn’t agree more.

As many are aware, Google is sponsoring a $20 million “race to the moon” for a commercial grade spacecraft that holds potential as a feasible vehicle for use by human passengers.  The premise of course, is that despite the great body of knowledge we’ve developed throughout the world, a little competition lights the fire that will ultimately catapult innovation from mere concept to proven reality.

I feel the same way about healthcare.  Now, it’s not too novel a concept to understand that innovation in the development and manufacturing of cardiac stents, hip prostheses, and endovascular coils is important…from all angles it clearly is.  What’s a bit less understood is how innovation in the delivery of healthcare is of significant importance as well.  Creating business models that place the incentives in such a way as to benefit the payer, the provider, and the patient - well that’s innovation too. 

The great thing about innovation is that it is a product of competition, something that we’re all built to foster, breed, and execute.  I worked for a hospital organization whose primary focus was fear of future competition.  Strategies revolved around how to prevent competitive entry in lieu of a focus on how to remain competitive in the face of it.  It’s not that barriers to entry aren’t important - they are.  But recognizing that competition isn’t easy, and that from it comes adaptation, change, and improvement allows one’s focus to expand toward innovation which benefits all, rather than protection which benefits few.

The new models of healthcare that we’re seeing develop that are the outcome of increased competition for a shrinking dollar (the medical home, concierge medical services, conglomerate specialty practices, cash pay physical therapy services) aren’t all going to hit the nail on the head.  Some are even going to fail miserably.  I say, kudos for trying though, as it’s only when innovation is conceptualized and executed that our healthcare system and private practice have the chance to develop something that sticks…hopefully like commercial airlines to the moon.

There’s a lot to be learned from the cross pollination of marketing and business techniques between industries.  Our company provides marketing services to medical, dental, physical therapy, and other types of healthcare practices, and we’re always a bit quizzical when competing medical marketing companies approach the topic in a way much different than is found in retail or entertainment.  No matter what the industry, you’ve got a customer (we call them patients), you’ve got a product (we call it healthcare), and you’ve got a price (we’d like to call it cash, but usually agree to “reimbursement.”).

By overcomplicating the marketing of healthcare practices I think we’re doing more damage than good.  Remember that the principles of marketing are not too terribly complex, and are almost completely transferrable between industries.  What made you choose to buy Coke over Pepsi just might have more to do with getting patients in your door than you think.  You need to see a product or service (impressions), you need to recognize the value a product or service (the value proposition), and you need to have access to a product or service (distribution).  In a nutshell, that’s it.

This article from Medical Economics does a good job at speaking to many of the most common marketing techniques used in the marketing of medical practices, and you might be surprised to know that the same techniques also work for selling cars.

For many practices, marketing is a survival tool. But with so many ways to approach it—public speaking, print media, radio ads, the Web—it’s a tool that doctors often use haphazardly, or not at all. “One of the biggest mistakes physicians make is that they don’t develop a marketing plan,” says Keith Borglum, of Professional Management and Marketing in Santa Rosa, CA. “In medical terms, it’s like doing treatment without a diagnosis.”

In marketing, as in medicine, you’re much more likely to achieve your goals if you take the time to determine what they are. Begin by setting quantifiable parameters. How many additional patients do you want to attract? Can your practice’s staff and internal systems handle that number of new patients? How much time and money can you invest in marketing? Are you seeking a particular type of patient? If you’re hoping to attract 20-and 30-somethings, say, you’ll probably need to develop a website and fashion an ad campaign aimed at luring that cohort to the site.

Business schools teach of the importance of knowing one’s competition: the strengths, weaknesses, marketing techniques, customer sources, and on and on.  Knowing one’s competition when running a medical practice uses much the same theory, and knowing about the practice across the street is just as important as knowing your own practice if you’re going to effectively spread the word about why your practice is different, if not better.

As healthcare reimbursement has evolved over the years, we’ve seen medical practice revenue models morph from primarily 3rd party payment to a mix between insurance payments and out-of-pocket cash from patients.  Many practices have moved to a completely cash based model, and you’ve seen examples of this through the development of cash pay retail clinics as well as in the rise of cash only concierge medical practices.

With this shift in revenue stream comes a whole new complexity as pertains to the “sale” of healthcare services to the public.  If a practice is now going to ask a patient to pay out-of-pocket for a greater share of their healthcare expenses (and in many cases, 100% of the payment), the service-based competition between that practice and the practice across the street becomes less relevant.  The bigger issue becomes how to compete for the dollars that patient might like to spend in the retail, automotive, or entertainment industries.

One part of the marketing equation has to do with differentiation; the how-to of making my practice look different from the one across the street.  This part of the equation is fairly easy in the case of cash based practice models.  By charging cash, service quality can increase dramatically through a smaller per-provider patient base, and often times the environment of care will be highly differentiated through more of a personalized, perhaps even spa-esque facility.

The tough part about cash pay medical practices is not competing against the neighboring practice though.  The tough part is competing against the purchase of discretionary items such as new cars, vacations, and flat panel televisions.  Unfortunately, (or fortunately, depending on which side of the coin you’re looking at), Americans view out of pocket expenditure for healthcare services to be discretionary.  For the most part, I believe this to be true, as when given the option between paying 100% cash for healthcare versus using a traditional healthcare practice that bills to 3rd party insurance, we do have a choice to keep more money in our pocket by using the traditional medical practice that will both delay and reduce our out-of-pocket responsibility.  Convincing the public to pay for healthcare, which can often be covered by insurance (or worse, not provided at all), when there is no alternative payment system that will put a flat panel TV in the home, is a challenging proposition.  To do this requires significant differentiation of the entire healthcare experience, such that patients are not merely buying an EKG or physical exam.  They need to be buying convenience, experience, and perhaps even status, when paying for concierge medical services or physical therapy sessions from a cash pay PT clinic.

Many have tried to integrate cash pay models into their medical practices.  While many have found a market and niche that works perfectly to support such models, others have come up against some of the issues discussed above.  This article from Medical Economics tells the story of a physician practice that wasn’t so fortunate, and I feel there are many lessons to be learned about how, when, and where to choose a cash pay model, and how to limit your risk along the way.

Our policy of trying to save patients money—combined with our patients’ reluctance to file claims because of the hassle—had backfired. And so, while we had more than a thousand patients, with many new ones coming in every day, few came for follow-up visits. And with receipts stagnant, the prospect that the business would somehow grow in the future was unlikely. I held on a little longer, but, five years after opening my cash-only practice, I finally sold it—lock, stock, and barrel—to our local hospital system. I’m now an employed physician, seeing many of the same patients I saw as a private practitioner. When I ask, they tell me they preferred the level of care they were getting before.

Looking back, the reality of what happened still stings. Despite our best intentions, sound financing, and perseverance, we couldn’t make our model work. That’s the message I deliver to any physician who asks me about my experience. Not only must patients value your service, but you must realize your own worth as a physician and act accordingly.

RN Central has identified 20 ways in which Wal-Mart will affect healthcare throughout the US (…and I thought 7 ways was a lot).  Wal-Mart has had a significant impact on a few other industries (retail, pharmaceuticals, to name a couple) so why would we expect their impact on healthcare through retail health clinics to be any different?

Big-box behemoth Wal-Mart has ventured into the healthcare realm, offering low-cost, walk-in clinics in more and more of its stores every day. Although Wal-Mart medicine may not sound like a great idea at first, these clinics can bring good changes to the health care industry, like insurance-free care, eased emergency rooms, and more widespread treatments. Of course, the plan is not without its drawbacks, creating a “Wal-Mart effect” on small practitioners, as well as a race to the bottom. Here, we’ll take a good look at some of the implications you might not have thought about.

As a Sprint customer and a consultant to healthcare practices, this blog post from White Coat Rants strikes a chord with me.  There is a fine line between understanding that private practice is a business and should be operated as such (good) and placing profit motives above the needs of the patients to which we are entrusted to care (bad).  This delicate balance requires vision, planning, intelligent systems, and qualified practitioners…not simply running our practices like call centers.

I read an article on Business Week’s web site about how Sprint is getting a “wake up call” after so many customers and employees have left due to poor working conditions and poor customer service. I couldn’t help thinking about the eerie similarities between Sprint’s former philosophy and the philosophy that some in the medical industry currently hold.

Knowing the competition that exists in private practice is important.  The challenges posed by competition makes practices stronger, competition can provide valuable ideas, and competition requires healthcare clinics to differentiate themselves, adding to the diversity of services that exist within a community.

Knowing your competition can be a challenging exercise, but it doesn’t have to be expensive.  This article from StartupNation describes how competition analysis can be performed on a tight budget in any industry.

No matter how much you think you know about your competition, no matter how much experience you have in your chosen field, without a clear understanding of the market for your business you might as well be driving blind. Big companies spend thousands of dollars to conduct competitive market analysis, but fortunately for those of you on a tight budget, you can do quite a bit of this yourself, without spending much at all.

I love analyzing markets.  Taking what everyone else sees, and drilling down to a level of understanding that no one else sees is an exciting and insightful exercise, and I believe it to be a key to good business strategy. 

If you look at the stock market like most (myself included), you might see endless patterns, fluctuations, and variables that make little or no sense to you.  Sector analysts however, that truly understand the patterns, fluctuations, and variables, might see vast opportunity in the same.  Of course, it is the analyst who will then be able to capitalize on the opportunity, as they are the only ones to have recognized it.

The same applies to knowing your local healthcare market through sound market analysis.  Now, the techniques are a bit different than in the stock market, but this is actually a good thing.  You don’t have to get super-technical in order to spot opportunity in your market, and some techniques can be done on the back of an envelope while yielding enough accuracy for sound decision making.

Here are 3 techniques that can be used to elicit information about your market and your competition that can be helpful for decision making around business startup, program development, or practice expansion.

• Estimate the size of your market: This can be done a number of different ways, but a good starting point is to research a utilization rate for your service, and multiply this by the population within driving distance from your practice.  Using this number, you can get a gross idea of how many patient visits take place in your market, which can be valuable in determining whether or not to start a specialty practice, or launch a new service or program.
• Estimate your market share: If you’ve already estimated the size of your market, this part is easy (as long as you have good, average volume numbers for your practice).  Just take your current volumes and divide by your estimated market size, and voila!  You’ve got an estimated market share for your service.
• Estimate your competition’s volume: This can get tricky, but any number of techniques can be used to get these numbers.  One way is to use industry benchmarks for patient throughput or patient volume per square foot, and multiply by an estimated square footage for competitor practices.  Another way, and perhaps a bit less reliable, is to use publicly available market research that will provide gross revenues based on credit information.  One can “back into” volume by using industry available pricing information on the services provided.

These techniques aren’t terribly scientific, but they can yield good information about your market, at a cost far less than that required for more sophisticated analysis.  Now, these “down and dirty” techniques will not drill into sufficient detail for decisions that require large investments, or big swings in overall business strategy.  For projects where significant money or reputation are at risk, more refined techniques should be solicited in order to yield a higher level of confidence with the results.

Whether in medical practice, physical therapy, dental, or somewhere altogether different in healthcare, treating your practice like a business is important for long term success.  Using good techniques and ethically obtained information about your market and competition is a sound business practice and will do good by your clinic and your community.

Another good post from the Independent Urologist - some simple ways to develop a competitive advantage in your local market. 

It doesn’t have to be rocket science; just find a way to do something that your competitors are not (or do it better).  If you provide a quality service, and you’re willing to put in the effort, you CAN differentiate yourself and communicate your unique value to your patients and referral sources, no matter how big you are or deep your pockets.

What makes you so special? Why would patients go to you over someone else? While it may be difficult to compete with an established group or a large group, you can try to level the playing field–or perhaps tilt it a bit in your own favor–by developing a competitive advantage the amplifies your strengths and exploits your competitors weaknesses. Having Saturday hours when others do not may represent one such competitive advantage. Here are some others:

I love to hear about ways that innovation and technology make things possible that once were not.  In fact, I scour the internet learning from others who do this very thing in healthcare, leading to newfound improvements in care, diagnostics, and efficiencies.

Here is an example of a small practice that really gets it.  So much of the technology that already exists will help practices keep the doors open and wheels turning, and I love to see it in action.  This isn’t a crazy example of the latest and greatest EMR saving a hospital organization millions of dollars in efficiency and reduced waste - just a small practice that is using many of the available technologies and services in order to keep things going on a snow day in New York State.

Despite global warming, the weather brought snow today to Suffolk County Long Island, where I have my urology practice. Fortunately I had a slow day in the office and was not really disrupted much by the snow. My biller however, was unable to get into the office. No biggy. Here’s what we did:

Improved patient care, lower mortality, and cost reduction are among the benefits cited in a study by BMC Medical Informatics and Decision Making, following a retrospective study which included analysis of 4,000 patient years of data collected on dialysis patients.

George Rovegno, CEO of MIQS, Inc, the EMR developer, said:

“For some years we have all believed that computers can provide the information tool needed to improve the quality of care, reduce costs and avoid serious errors. At last, in this landmark study, is the proof of the hypothesis.

Jonathan Lorch, MD, of The Rogosin Institute and Weill Cornell Medical College, said:

“The improved mortality rates we saw in our patients who were tracked using MIQS are striking.”