More people are turning to private healthcare and deciding to pay for themselves (out of choice or necessity). Yet, many private hospitals are failing to seize these self-pay opportunities. In our four-part series we outline how private hospitals can optimize self-pay services for their patients through a better offering, as well as effective pricing, quoting, and change management strategies.
The number of patients seeking private healthcare has grown exponentially in recent years. This is due to several factors. For instance, waiting lists for public treatments have hit new highs. This is partly due to backlogs caused by COVID.
Moreover, there are now more patients who are becoming actively involved in healthcare decision-making and are able and willing to pay for their own private healthcare without medical insurance (self-pay).
At the same time, healthcare in many markets is becoming more privatized. The result is that private hospitals use one arm to support public health, while offering self-pay care directly to patients with the other. This second, direct to patient approach is seen as a key lever for growth, but private hospitals lack clear strategies when it comes to optimally capturing these self-pay opportunities.
In this four-part series we will address:
- How a better healthcare service offering can meet patient demands and requirements in line with the institution’s expertise and resources
- How the right self-pay pricing strategy can capture the true value of the offering
- How standardization and digitalization can improve pricing and quoting effectiveness
- How effective change management can help realize identified growth opportunities
Healthcare service offering: What opportunities are there for private hospitals to grow their self-pay business?
As patients become more actively involved in healthcare decision-making, private hospitals must clearly position themselves in the market. Patients who consider paying for healthcare out-of-pocket won’t just go to the hospital nearest to them. In fact, they look for the healthcare provider that offers the service and experience that is most optimally tailored to their needs. Private hospitals that understand patients’ needs and develop a corresponding value proposition will stand out from competition and have the opportunity to expand their patient base.
Moreover, private hospitals often work under resource constraints. Therefore, they need to ask themselves what therapeutic areas and procedures fit their capabilities and positioning strategy and optimize their business value. This must consider the entire patient lifetime – not just the short term.
As such, diagnostic services, while capital-intensive, are a great opportunity to build patient relationships at the beginning of the treatment journey. A clever offering strategy gives private hospitals the chance to position themselves as a long-life healthcare partner to patients.
A recent study conducted by the Personalised Care Institute found that almost half of the respondents want more involvement in healthcare decisions. This not only alludes to the treatment they receive but also how they receive it. Increasingly, patients are demanding a tailored service where they can customize their experience. For example, some may want to upgrade to a private bedroom, while others may request to be treated on a specific weekday or by a specific physician.
Customization offers private hospitals the chance to differentiate their offerings, and, in so doing, better capture patients’ needs and extract the fair value of their services. However, the challenge here for private hospitals is to understand how best to balance standardization and customization. The right balance will maintain clear positioning from the patients’ perspective, as well as efficiency and effectiveness in daily operations.
Three steps to set up the optimal self-pay offering
- Identify and prioritize relevant therapeutic areas and procedures
Identify which therapeutic areas and procedures patients demand most and fit your organization’s positioning and strengths.
To do this, you’ll need to assess the attractiveness of each area/procedure along a systematic framework. Make sure to consider factors like growth, profitability, competitive intensity, internal capabilities, and relevance for the patient funnel.
- Assess and understand your patients’ journeys
Stop leaks in the patient funnel by maintaining the patient relationship after entry level procedures. A successful offering is one that carefully considers all the different touchpoints in a patient’s journey. Think holistically about relevant precedent and subsequent procedures of your focus areas.
Moreover, optimizing patient lifetime value goes far beyond the offer strategy. For example, private hospitals need to avoid losing patients due to external referrals or patients exiting the funnel due to poor experience.
- Design packages and tiers based on patient segments and their needs
To ensure that your offering consists of packages that patients will adopt, you need to understand the value of each service and item.
To develop a clear land and expand strategy you should design different packages for different patient segments in a tiered system. Make sure to include a basic tier with must-haves (such as X-rays or standard prosthetics) that directly address your patients’ core needs. From there, you can upsell to higher tiers that include premium add-ons (e.g., extra follow-up visits).
Remember, only after you’ve optimized your packaging can you optimize your prices (a topic we’ll discuss in further detail in Part 2 of this series). This will ensure that product structure and content align with customer needs and value perception.
All these steps will help you set up the optimal self-pay offering to drive patient acquisition, extend patient lifetime value, and differentiate your organization from competitors.
If you would like more information on how to provide optimal self-pay services, reach out to our experts!
Read more from our series: