How providers can zero in on an organizational identity to meet demands for value

Globally, healthcare has a cost problem that is jeopardizing the long-term sustainability of many private providers.

During the past 30 years, healthcare costs have outpaced wage growth across OECD countries, making consumers increasingly aware of healthcare costs and very price conscious. Some are even forgoing care for fear of high and hidden fees.

Predictably, this pressure is being felt most acutely by private healthcare providers who operate in predominantly public health markets. Since private providers are seen as providing “added benefits,” in the event a global recession starts—and there are strong economic signals it might—these providers might face even greater margin pressures.

Australia offers a window into what those dynamics might look like in the real world. With their significant out-of-pocket spend (at 18 percent, compared with the U.S.’ 10 percent), Australian patients’ price exposure is painful and real.


Australia also has a large private healthcare market. Among the Australian population, 43 percent have private insurance coverage, which is among the highest in OECD countries. But that number is slipping, with more than 310,000 lives dropping private coverage in the past six years. Suffice it to say, many Australian private providers are preparing for an uncertain future.

This market upheaval could also be an opportunity for real transformation for private hospitals if they are willing to take a take a hard look in the mirror and ask themselves what they can do to provide “better value” to continue to draw consumers. While some hospitals may try to be everything to everyone when the going is good, tough times force choices around what to do and how to do it efficiently.

As we have seen in industry after industry, the answer is more productivity—doing things better or at lower cost. Providers can achieve this by ruthlessly self-evaluating to understand what they truly do better and by making choices about what services they want to retain, specialize in and, sometimes, what they should stop doing.

The best place to start involves healthcare providers deepening their understanding of their consumers to see what activities they are involved in add to greater value in terms of perceived quality, convenience and lower cost.

Through this analysis, healthcare providers may find that they can adopt distinct positions in the market or identities that reflect their collective assets and expertise. There are three major archetypical identities that health systems and providers have gravitated toward and are worth considering:

The Price-Transparent Provider: “I do my best to make the bill and estimates as easy, transparent and comprehensive as possible.”
The price-transparent provider emphasizes consumers’ visibility into cost for a quality of service. This may work well for a provider with a higher proportion of elective services as well as other relatively less acute, non-emergency services. But this approach also runs the risk of using cost as a signal for quality. There are already great examples of this in individual consumer-focused services such as imaging, elective procedures like bariatric surgery, freestanding birthing centers and the like. Developing this identity would mean extending this successful strategy to all services across the entire health system level and building a brand around it.

End-to-End Provider: “We take care of everything for you. Care is convenient, connected and proactive.”
This identity works well for conditions that require complex care with multiple specialties, settings and services that need to be woven together to achieve the best outcomes. The challenges here are maintaining connectivity, continuity and uniform standards of services, which are perennial problems in healthcare. We see great examples of this strategy and identity already around some services, such as comprehensive cancer care services extending from imaging to surgery and post-chemo support. Another example is focus on a segment of the population, such as in the case of comprehensive services for middle-aged women as pioneered by Privia in the U.S.

Best-in-Class Provider: “We only do one thing but you can expect that it’s world class and worth the money.”
The emphasis with this identity is on perceived quality and sometimes convenience. This identity may enable a provider to charge a significantly higher price. The overarching risk here is that healthcare providers and consumers have different ways of measuring quality. For this identity, you really need to understand what consumers are measuring when they shop based on quality. Often, specialization is seen as a proxy for quality, as in the case of LASIK surgery providers or, for instance, in the case of Narayana Health from India for specific services such as cardiac bypass or for joint replacement.

These three identities are just a few of the most common ones I’ve seen through my work. The truth is most providers are going to have to create a mix of these (and others) within their portfolio. The process for picking an identity starts with understanding the organization’s unique strengths, understanding what the consumer truly values, and starting to engage facility and business leaders in the organization on defining the vision of the future.

It is difficult work that doesn’t benefit from being rushed. So if you’re a private provider, start early: develop an identity now and avoid even tougher decisions later.