Segmenting Healthcare: What's Your Customer's Currency?

Over the past few years, I've spent a lot of time speculating about the emergence of consumer segmentation in the US healthcare market. As background, here are the three main conclusions drawn from previous posts:

1. In Budget Boutique Hospitals?  Will The Search for Value Lead to Market-Segmentation in American Healthcare I suggested that we are seeing signs that the US healthcare market has begun to segment itself on the basis of consumer expectations. It's possible that we will begin to see the emergence of "skinny" low cost systems and full-frill centers with deep (if not broad) expertise.

2) In a followup post, Segmenting Healthcare into “Luxury” and “Value” Brands… Thoughts On Not Getting Stuck in the Middle I speculated that this segmentation is (much like the US economy as a whole) leading growth in demand for cervices catering to high-income and low-income segments of the population.  This "middle squeeze" (Sears effect) exposes high cost/ low service systems.

3) Finally, in More Thoughts on Segmenting Healthcare: Who’ll Serve the “High End” of the Market? I wondered who would own the "full-frills" healthcare market.

Today, I'm going to make the observation that responding to the needs of a consumer segment

will likely be harder than it looks

. Consumers are fickle, and their willingness to make trade-offs changes fast.

I look with some interest to health insurance companies

 which have jumped on the market segmentation bandwagon well in advance of health-delivery companies.  The road has been bumpy for some of these folks: Whether it's Oscar or any number of new consumer-facing plans, getting the benefits and network design right is challenging.  It's easy to assume that you know what consumers want, yet companies are finding it hard to find the right blend of network/ access/ customer service etc. My thinking got a boost this week as

I reflected on the Ritz-Carlton hotel chain

. Most people recognize the Ritz as a global leader in luxury hotel services.  They have developed a powerful brand, culture and service level. What I didn't know was that, in the 1990's, the Ritz had begun to lose its way.  The company assumed that it knew what buyers wanted, but it eventually became evident that

the customers had changed even while the company hadn't.

The story is detailed in  The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of the Ritz-Carlton Hotel Company.  (The book has been on a short-list of important business books for some time and I'm always inspired when I re-read it). In a chapter titled "Be Revevant" the book's author, Joseph Michelli, writes that the Ritz began to find that stodgy luxury offerings weren't what a new generation of empowered consumers were looking for. A customer noted:

An employee noted that the traditional Ritz offering had become staid:

What had happened was that the Ritz's original customer segment was being replaced by an emerging customer segment who found their needs unmet.  The hotel's original customers had been a group demographers referred to as “classic status-seekers.”  Unexpectedly, a larger group of customers were coming to the Ritz with different expectations than the traditionalists: these were the “discerning affluents.” Research further identified three insights related to discerning affluents.

This observation led to the Ritz restructuring their offerings to emphasize the individuality of locations and the availability of local "experiences" such as hikes and cooking demonstrations.

The offering migrated from gild to "experience"

In other words, consumer tastes, touchstones and values--

their currency

-- had changed and the company hadn't.

If you run a healthcare system, and believe (as I do) that segmentation is inevitable, it's time to start considering your brand's offering.  How does it resonate with consumers?  Most important:

what's your customer's currency?

For some consumers cost drives all decisions.  

But I think that we are also beginning to find that consumers are multi-faceted and that, most important, currency differs between consumer demographics.  

It seems to me that, in healthcare, we have been pretty broad when it comes to describing consumer's healthcare expectations.  We haven't done much better than to wave broadly to the IHI's triple aim as an aspirational goal for all. And, while there is much to say about the merits of the triple aim, in this new era I'd offer that 

understanding your customers and

 their currency

 should be the first order of business for the successful healthcare delivery company.  

Photo: 

Timothy Neesam

, Flikr, cc license