Why CIOs must work with marketing execs as consumerism takes hold
As patients take on responsibility for their bills, providers can look to the entertainment industry’s adaptation to market transformation.
Consumerism in healthcare is not yet at tsunami-level force, but it clearly represents an imminent and undeniable disruption in healthcare’s traditional business models.
It is only natural that this trend is putting tremendous pressure on heads of marketing. It is also challenging CIOs to bring their expertise to bear, and to clearly articulate the role IT can play as healthcare organizations seek to transform the way they engage with their customers.
Today, only 48 percent of healthcare payer customers get their insurance from their employer. As the employer-sponsored model gives way to direct purchasing by consumers, both payers and providers must pivot from a B2B to a B2C orientation. Health organizations, used to vying for the long-term loyalty of large organizations, must not only shift marketing dollars to focus on individuals, but also rethink the ways in which they gather, analyze and use information.
Other industries have gone through similar shifts that have forced tighter alignment between marketing and IT. The telecommunications, media and entertainment (TME) industry, which is still working its way through the turmoil of a major disruption, offers useful lessons for healthcare leadership.
Like healthcare, TME was somewhat complacent after a long stretch in which competition was relatively mild, demand inelastic and regulation supportive of the status quo. As technology changed and other industries set new standards for customer care, the operational and customer service shortcomings of the TME industry left them vulnerable to services like Netflix, Hulu and HBOGo that threatened to not only disintermediate them, but to expose their lack of compelling consumer experience and innovation.
TME companies quickly realized that leveraging a marketing-technology collaboration at the CMO-CIO level for new technology-driven, consumer-focused applications was essential to their ability to survive and thrive.
Healthcare has similarly entered a time when decades of B2B insurance models, fee-for-service (FFS) reimbursement models and relatively captive customer populations are giving way to a much more B2C world, where attracting and retaining customers is just as important as quality, safety and outcomes. Healthcare and TME share overlap among the disruptive forces creating chaos on their markets and producing pressure to transform, including:
Differentiation: Healthcare consumers have a growing number of choices on both the payer and the provider side. Increasing transparency is making it much easier for them to effectively comparison shop. Relatively undifferentiated product offerings for newly empowered customers will be forced to compete primarily on price and face very low barriers to customer turnover.
Technology-driven disruption: Healthcare is facing massive technology disruptions and tectonic customer shifts that upend stability and threaten their competitive positions. New technologies like insurance exchanges, EMRs, patient portals, smartphones and big data analytics are fundamentally changing the way we understand risk, care quality, patient engagement and consumer experience in healthcare. Facing similar disruptions, TME CIOs focused on supporting data-driven marketing, becoming expert in combining and analyzing data from diverse sources (set-top boxes, billing, credit scores, etc.) to engage and retain consumers with relevant content and renewal offers.
Disruptive policy and new competition: Even prior to Patient Protection Affordable Care Act (PPACA), healthcare was an industry ripe for disruption. Healthcare spending consistently outpaced GDP, productivity improvements severely lag every other sector, and customer satisfaction and quality are consistently low. The Affordable Care Act (ACA) has been a catalyst for change that is long overdue, and has spurred innovation, enabled comparison shopping, and sped up the competitive landscape. TME has faced similar challenges as the federal government changes regulatory policy, mergers disrupt the status quo, and new competitors enter the market.
Rise of consumerism: Consumers are now directly paying for more of their healthcare costs, both for the care itself and insurance coverage. As out-of-pocket costs rise, consumers expect an experience that is comparable to what they get in other sectors. Health plans and providers understand that they cannot afford to ignore this trend and must embrace it or be left behind.
Critical and costly technology upgrades: For years health insurers have sold their plans almost exclusively to employers. Re-engineering legacy systems to be consumer-centric and flexible enough to support rapid innovation will not be cheap or easy. Adapting to new mobile and web-based systems for conducting business and engaging members will also be difficult, but necessary.
The nexus of the solution to these challenges for TME is the strategic and tactical fusion of the Chief marketing officer (CMO) and the CIO. To attract and retain customers, healthcare organizations need the CMO to develop a deep understanding of the consumer and what moves them. To use technology to increase customer service, satisfaction and loyalty effectively, they need smart CIOs who are willing to innovate and cast aside old models.
CMOs understand changing customer needs and the opportunity that creates to boost sales, but the CIO is the only one who can bring those new solutions and modes of commerce and customer interaction to market for the company.
Neither technology nor marketing changes alone can effectively address these challenges.
Following is the advice from the trenches for healthcare CMOs and CIOs from their TME counterparts:
CIOs have a lot of experience leading organizational change driven by new technology, whether it involves EMRs in healthcare or set-top boxes in TME. Marketing may be used to rolling out new ideas and campaigns across the organization, but supporting cross-functional technical change is an area of leadership for CIOs who are accustomed to building new skills across geographic areas and technical processes. Experience with this type of organizational development will be extremely valuable to the marketing department.
For its part, marketing will know the customer experience outcomes they seek. The CIO partner will be invaluable in providing the technical knowledge, experience and advisory to make the best technical decisions for the organization.
It is only natural that this trend is putting tremendous pressure on heads of marketing. It is also challenging CIOs to bring their expertise to bear, and to clearly articulate the role IT can play as healthcare organizations seek to transform the way they engage with their customers.
Today, only 48 percent of healthcare payer customers get their insurance from their employer. As the employer-sponsored model gives way to direct purchasing by consumers, both payers and providers must pivot from a B2B to a B2C orientation. Health organizations, used to vying for the long-term loyalty of large organizations, must not only shift marketing dollars to focus on individuals, but also rethink the ways in which they gather, analyze and use information.
Other industries have gone through similar shifts that have forced tighter alignment between marketing and IT. The telecommunications, media and entertainment (TME) industry, which is still working its way through the turmoil of a major disruption, offers useful lessons for healthcare leadership.Like healthcare, TME was somewhat complacent after a long stretch in which competition was relatively mild, demand inelastic and regulation supportive of the status quo. As technology changed and other industries set new standards for customer care, the operational and customer service shortcomings of the TME industry left them vulnerable to services like Netflix, Hulu and HBOGo that threatened to not only disintermediate them, but to expose their lack of compelling consumer experience and innovation.
TME companies quickly realized that leveraging a marketing-technology collaboration at the CMO-CIO level for new technology-driven, consumer-focused applications was essential to their ability to survive and thrive.
Healthcare has similarly entered a time when decades of B2B insurance models, fee-for-service (FFS) reimbursement models and relatively captive customer populations are giving way to a much more B2C world, where attracting and retaining customers is just as important as quality, safety and outcomes. Healthcare and TME share overlap among the disruptive forces creating chaos on their markets and producing pressure to transform, including:
Differentiation: Healthcare consumers have a growing number of choices on both the payer and the provider side. Increasing transparency is making it much easier for them to effectively comparison shop. Relatively undifferentiated product offerings for newly empowered customers will be forced to compete primarily on price and face very low barriers to customer turnover.
Technology-driven disruption: Healthcare is facing massive technology disruptions and tectonic customer shifts that upend stability and threaten their competitive positions. New technologies like insurance exchanges, EMRs, patient portals, smartphones and big data analytics are fundamentally changing the way we understand risk, care quality, patient engagement and consumer experience in healthcare. Facing similar disruptions, TME CIOs focused on supporting data-driven marketing, becoming expert in combining and analyzing data from diverse sources (set-top boxes, billing, credit scores, etc.) to engage and retain consumers with relevant content and renewal offers.
Disruptive policy and new competition: Even prior to Patient Protection Affordable Care Act (PPACA), healthcare was an industry ripe for disruption. Healthcare spending consistently outpaced GDP, productivity improvements severely lag every other sector, and customer satisfaction and quality are consistently low. The Affordable Care Act (ACA) has been a catalyst for change that is long overdue, and has spurred innovation, enabled comparison shopping, and sped up the competitive landscape. TME has faced similar challenges as the federal government changes regulatory policy, mergers disrupt the status quo, and new competitors enter the market.
Rise of consumerism: Consumers are now directly paying for more of their healthcare costs, both for the care itself and insurance coverage. As out-of-pocket costs rise, consumers expect an experience that is comparable to what they get in other sectors. Health plans and providers understand that they cannot afford to ignore this trend and must embrace it or be left behind.
Critical and costly technology upgrades: For years health insurers have sold their plans almost exclusively to employers. Re-engineering legacy systems to be consumer-centric and flexible enough to support rapid innovation will not be cheap or easy. Adapting to new mobile and web-based systems for conducting business and engaging members will also be difficult, but necessary.
The nexus of the solution to these challenges for TME is the strategic and tactical fusion of the Chief marketing officer (CMO) and the CIO. To attract and retain customers, healthcare organizations need the CMO to develop a deep understanding of the consumer and what moves them. To use technology to increase customer service, satisfaction and loyalty effectively, they need smart CIOs who are willing to innovate and cast aside old models.
CMOs understand changing customer needs and the opportunity that creates to boost sales, but the CIO is the only one who can bring those new solutions and modes of commerce and customer interaction to market for the company.
Neither technology nor marketing changes alone can effectively address these challenges.
Following is the advice from the trenches for healthcare CMOs and CIOs from their TME counterparts:
- Build a roadmap around the key features customers are craving—transparency, ease of use, quality customer service and a mobile experience that they are used to receiving from other vendors.
- The simpler the process, the more likely the customer will buy and repurchase.
- Cost and coverage may be driving retention today, but technology will be the catalyst for true differentiation and brand loyalty.
- Prioritize an Internet of Things (IoT) strategy. Linking wearables, in-home devices and the like will create stickiness, connect you with customers in new ways and bring in rich behavioral data.
- Consumers expect to interact with their institutions, make purchases, and consume information all in a seamless, mobile and secure environment.
- Be willing to embrace new technologies and techniques that increase business agility. Consumers are used to fast, easy, frequent and high-quality updates, and you will need to leverage the cloud, agile development techniques and new types of vendor/partner relationships to meet expectations.
- Make uncovering and acting on data insights a top priority. Have data analysts work directly within marketing teams, while CIOs help access and analyze bigger and better data sets across the organization to deliver insights for marketing to act upon as well as to measure.
CIOs have a lot of experience leading organizational change driven by new technology, whether it involves EMRs in healthcare or set-top boxes in TME. Marketing may be used to rolling out new ideas and campaigns across the organization, but supporting cross-functional technical change is an area of leadership for CIOs who are accustomed to building new skills across geographic areas and technical processes. Experience with this type of organizational development will be extremely valuable to the marketing department.
For its part, marketing will know the customer experience outcomes they seek. The CIO partner will be invaluable in providing the technical knowledge, experience and advisory to make the best technical decisions for the organization.
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