I just received a new bill from AT&T – and get this – it was a personalized video of my charges. Yes, that is correct, a video. It was my actual bill, with my actual charges explained. And it was cool. I watched it three times and then recorded it and made a video to share. Here is the short video I made of my experience:
An Old Dog with Some Cool New Tricks
To be sure, I am not a raving fan of AT&T but I respect their product offering, and they seem to be getting much better at customer service. In truth, their coverage where I live at the beach in Florida is terrible. But, for the most part, they are pretty spectacular anywhere else I travel for work. I pay around $130 to $150 every month for their services. I know and trust and rely on their product. But, historically speaking I have had two issues with their product – at least from the arena of understanding my bill charges and getting someone one the phone to help me get answers. I can sympathize as they have a lot of customers to deal with daily. However, I am still the customer, and I pay them close to $1500 per year. I have the right to expect better. Such is life.
I have upgraded my phone and service several times in the life of my relationship with AT&T. Invariably, I am always confused at the one-off charges I see on the bill and in many cases, I have had the need to call and clarify what they were. I dread this scenario because I know it will be several trips through their telephone prompt system, then saying the same thing to at least three reps that have a somewhat less than mastery of English. One month ago, I upgraded my iPhone to the new 5 (my relationship with Apple is a story in itself, and someday I may let you know about it).
So imagine my surprise when I received an email from AT&T with a link asking me to watch a video about my new bill. The call to action was clear and the broadcast email was well done, so I obliged. It took me to a page at the AT&T site where I saw a video that explained my most recent bill, in clear detail – even the one off charge. It was very well done, and it was tailored just for me. I can still get access to the regular online or printed bill as well – but I feel no need to now.
How did they do it? I am not so naïve to think AT&T chose to invest resources in the AV department to create a video just for me – so I have to assume this was done by some smart new vendor that can tie into their systems and use list data to create custom videos. Whatever the reason, the result was that I understood the bill, and I did not feel a need to call AT&T – this saving them the transaction cost. I have to assume the economics are for the mass/custom video versus the support line. Furthermore, they saved me aggravation and got me talking in a positive light about AT&T. Nice work.
One other thing, because this is new technology and a new experience (I am sure they tested it quite a bit), AT&T was smart enough to ask me some survey questions at the end to see what I thought about it. Thus, validating their efforts. Again, nice work.
If My Phone Provider Can Do It, Why Can’t My Healthcare?
As I said, I spend approximately $130 with my phone provider each month. By contrast, I spend $400 with my health insurance provider. As bad as my old phone bill was, by contrast, it is like a new Harry Potter novel (FYI I love Harry Potter books) compared to the bill I get from my insurance company. Or should I say, the “THIS IS NOT A BILL” I get from my health plan. Take a look at a sample Explanation of Benefits (EOB) below.
Firstly, I find it somewhat ironic that it is called an Explanation of Benefits – as it is neither a benefit nor a good explanation of what I owe. I am not picking on any one plan – I just happened to be able to find a sample EOB for them online. And not wanting to post my own, I had to have something to speak to, so they are the lucky winners. In truth, from what I know and what I have heard, all if not almost all insurance companies are this bad.
Here is what drives me crazy about this document. It gives me more than I need in a poorly laid out manner, so it guarantees my confusion. Thus, resulting in my need to call them. Thus, having to deal with the call center for the insurance company. Thus, ensuring I add anger to my confusion. This repeat cycle is a never-ending loop for million of customers across the country.
When will the health insurance companies get it right? If AT&T can do it, I now expect them can as well.
After reading my 3 earlier posts, I hope we have you convinced that this is a worthwhile effort and that you should join us. By joining the forum – you join the movement to create a better healthcare system.
The solutions for transforming healthcare will come from harnessing diverse ideas from across the ecosystem of healthcare stakeholders. We are inviting individuals inside and outside of the healthcare industry to join us on one platform to ignite conversations and build solutions for new business models within US healthcare.
That means you – yes, you are invited!
When you sign up, you will join other passionate healthcare and innovation professionals to create meaningful change in the US healthcare industry. You will also cultivate new professional relationships, elevate your personal brands and identities, and receive direct attribution in my forthcoming book as permanent proof of the important co-creative role you played.
Please know this is not a marketing scam – we are sincere in our work and care deeply about our goals. Our end result will be a book published in 2014 that you will get to share in the credits for creating.
After that, there will be three Phases to the modelH project, which will last through at least March of 2014.
The three Phases are:
1. CoCreate a healthcare business model generator, called modelH. We will draw from the work of Alexander Osterwalder and Yves Pigneur in their book, “Business Model Generation: A Handbook For Visionaries, Game Changers, and Challengers” to create a new framework for developing health model innovation throughout the remainder of the project. Building the modelH engine is the most critical part of the project, and we’ll be devoting most of our time – 4-5 months – on this module.
2. Generate and evaluate ideas through the modelH engine. Next, we’ll gather your inspiration, insights, and research to develop ideas that can be tested in the modelH engine. These ideas will address our three main areas of concern for healthcare: creating positive consumption experiences, improving the care delivery mechanism, and aligning payments and incentives. If we’ve built modelH correctly, we will be able to produce innovative business models that reflect a new direction for US healthcare. We expect to spend 2-3 months on this module of the project.
3. Validate the health model innovation solutions. The final step is to review our modelH solutions to ensure they are fair, reasonable, and feasible. Once validated, Kevin Riley will be compiling the work into a visual playbook to be published later in 2014. We expect to spend 1-2 months on this module.
This project is a labor of love for all of us and the modelH team is fronting the cost to put all of this together. Our reward is the same as your reward: pride in creating a new path forward for US healthcare. It’s an opportunity to do something meaningful that has the potential to effect change on a system that is in dire need of change and to positively impact the lives of millions of Americans. We’ll also provide attribution to all contributors in the book as proof of the important role you play.
Keep in mind that this is an experimental project, and we expect some bumps along the way. If you encounter troubles, inconsistencies, or simply need clarity on how it all works, kindly let us know so we can improve the process. Also, we will have a firm “no jerks” policy in place within the modelH forum. We want disruptive thinkers, not disruptive individuals. If you are serious about making something that will help all of us create the healthcare system we so desperately need, please join in with a heart and mind for that task. If not, please sit this one out.
What is a business model canvas? Wikipedia defines it as “a strategic management template for developing new or documenting existing business models”. It is not a business plan, but rather a visual language designed to align business activities that produce value by illustrating potential trade-offs. The idea was initially proposed by Alexander Osterwalder.
A business model canvas for the American healthcare system
Phase 1 of the modelH CoCreation Forum aims to create a business model canvas specifically for healthcare. To do so we must first agree on what defines value within the American healthcare ecosystem. Our definition of value is based on Michael Porter’s work in What is Value in Health Care? – “the patient health outcome achieved per healthcare dollar spent”. Therefore, a value-based healthcare business model must result in:
Increased access to necessary care through an engaged delivery system;
Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model; and
Improved consumer experience yielding an informed decision maker aligned to their risk and reward.
Our healthcare business model canvas, which we are calling modelH, must also work in a market-driven system. Better ideas can then be generated and evaluated using that engine because they 1) create shared value and 2) can succeed in the marketplace. Likewise, current models and trends can be evaluated through this engine to see if they are effective.
The basis for modelH is Alex Osterwalder’s work on business model generation but modified to fit the uniqueness of the American healthcare domain. Our community will participate in modifying the Osterwalder model as needed to create the modelH Healthcare Business Model Canvas.
Our work on Phase 1 of for modelH will take on two distinct conversation types.
The 1st conversation type will be to look at the core Building Blocks of Osterwalder’s model and debate their nuances in regards to healthcare business models. Wikipedia defines these core elements as:
Customer Segments – the customer groupings a business model serves.
Value Propositions – the collection of products and services a business offers to its customers.
Channels – the way a company brings its value proposition (product) to its customer segments.
Customer Relationships – the type of connection a company wants to create with their customer.
Key Activities – the most important tasks in the execution of a company’s value proposition.
Key Resources – the internal assets required to create value propositions for customer segments.
Key Partners – the external relationships needed so a company can focus on their Key Activities.
Costs – the most important financial concerns of a company’s business model.
Revenue – the way a company makes income from each customer segment.
The 2nd conversation type will be to define the new Building Blocks needed for healthcare and how they should be incorporated into the canvas. The additions to be discussed are:
Externalities – the external forces (regulations) imposed on healthcare business models.
Jobs-to-be-Done – the customer’s JTBDs, which may not adhere to a company’s value proposition.
Intermediaries – the influencers/intermediaries between the healthcare customer and the product.
Experiences – due to multiple intermediaries, customer experience bears a greater look.
Cost Drivers – for healthcare to exists, the cost drivers must come under control.
Payments Sources – in healthcare, customers are separated from payment sources in many cases.
Platform – the healthcare ecosystem is interdependent, requiring an infrastructure to work.
We will do this in the order of importance to a business model – starting with the Customer and ending with the Platform. The result will look something like this:
Hello again. I wanted to give you all another update on the big project I am calling modelH. This project is a dynamic collaboration between Innovation Excellence, Batterii, and a bunch of great healthcare thinkers including me.
Last week I told you about what we were trying to solve. This week I aim to tell you how.
I need your help to make this work. But before we ask you to get involved, let’s talk more about how we can solve this problem – together.
How do we solve the problem?
The American healthcare system is not so much broken as made up of working parts not working together.
The modelH team believes the ecosystem can be fixed! The answer lies in aligning the business model, so all stakeholders share an understanding of “value” across the themes of consumption, delivery, and financing. Our definition of value is based on that of Michael Porter, put forth in his paper entitled What is Value in Health Care?. Value in healthcare is measured as the patient health outcome achieved per healthcare dollar spent. A better healthcare business model must then result in:
Improved consumer experience yielding an informed decision maker aligned to their risk and reward,
Increased access to necessary care through an engaged delivery system, and
Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model.
Our goal of Health Model Innovation is lofty, but achievable. We believe modelH will result in a practical guide to fixing the healthcare system that all stakeholders can use to create better aligned and market-sustaining business models.
But our goal is too big and too important to try and solve alone. This cannot be done without the actual stakeholders co-creating the solution together, outside of an over-focus on any particular theme, or an over-influence from any stakeholder group.
Phase 1 is to agree on the framework and tenants of a healthcare business model canvas. This will create a structured means for business model generation, similar to the one developed by Alexander Osterwalder and team, but designed to work in the American healthcare system.
Phase 2 will use the healthcare business model generator to develop and evaluate innovative market models and business ideas with the hope that some party within the ecosystem, or even outside of it, takes them to market.
Phase 3 will take our findings and publish them in a visual playbook for all healthcare innovators to use.
Stay tuned – next week we will discuss how to build a business model canvas for the American healthcare system.
Any healthcare company that builds products or talks with customers ought to have an “Innovation Center”. The idea is to create a physical facility that is part consumer lab, part living laboratory, and part workplace- aimed at designing and delivering the healthcare models of the future. It will be an environment where all organizational and community stakeholders can experience your company’s view of the future of healthcare and be inspired to help create it. An Innovation Center can incorporate the brand promise within a physical setting. An Innovation Center shows true commitment to practice innovation in healthcare. It is time for all healthcare companies embrace the future the way the Mayo Clinic has done for years.
To get started on what I am about to talk about, watch this virtual walk-through of the Mayo Clinic Center for Innovation.
What is an Innovation Center and Why Would You Need One?
The main objectives for an Innovation Center are:
1. Designing
2. Prototyping
3. Collaborating
4. Simulating
5. Validating
6. Envisioning
Lets discus them in some detail.
1. Designing.
Job # 1 of an Innovation Center should be to create (and improve upon) intentional experiences for your customers. You cannot have a good experience without good design. The Customer lab can serve as the place to visualize and practice Design Thinking. Wikipedia defines Design Thinking as “a style of thinking [designed with] the ability to combine empathy for the context of a problem, creativity in the generation of insights and solutions, and rationality to analyze and fit solutions to the context. “
An Innovation Center lets you teach the process and the methods of Design Thinking. These are the tools and techniques that great designers use to generate ideas and solve problems. Your aim should be to create an employee base trained in the arts of creative problem-solving.
Source: Design Thinking for Developing Innovative Communication Strategies By Don Bulmer
2. Prototyping.
Job # 2 of an Innovation Center should be to create faster paths to market for new products and models. One such method to do this is referred to as rapid prototyping and uses the discipline of Minimum Viable Product (MVP). MVP enables designers to validate assumptions about their “product” in two important aspects: its value and the demand for it.
By definition, MVP is the version of a product that gets built through one cycle of a build, measure, and learn loop – as fast as possible. Once the MVP is confirmed (keep in mind it may take a few iterations), other lean methodologies can be employed to build upon it. An Innovation Center allows this rapid prototyping to occur outside the traction of the legacy product and technology build systems at your company. MVP delivered through an Innovation Center enables product developers, system designers, and business analysts to determine whether people want what they are building – in a manner that gauges acceptance and demand – yet preserves capital and time for your company.
3. Collaborating.
Job # 3 of an Innovation Center should be to create a physical place designed to facilitate adult learning and team collaboration. As discussed in the book Where Good Ideas Come From: The Natural History of Innovation, big ideas are a series of smaller ideas coming together to form something that is meaningful to the market. The Innovation Center should be a co-laboratory that brings multi-disciplinary thinkers together on a common problem. Think of it as a modern version of a Library, except you are allowed to talk, experiment, and interact on topics of importance to your customers and your company.
You cannot ask people to collaborate on work if there has been no historical support for collaboration at your company – they simply just do not know how. They remember when they were kids but were programmed out of that model through a progression of educational settings and work scenarios where individual work product was the mode of operation. Asking people to change their work models without giving a realistic means to do so is merely rhetoric. An Innovation Center is designed to force interaction between co-workers. When combined with modern adult learning techniques like teaching collaboration, an Innovation Center can be the breakthrough that your company needs to re-educate its employees on how to work together.
4. Simulating.
Job # 4 of an Innovation Center should be to create a place to simulate customer interactions. Simulation is another great tool for adult education. While classroom learning and computer-based training still have their (small) place in the arsenal of training tools, nothing substitutes simulating a real life scenario to embed the training into the mind, and actions, of the trainee.
If your current training facilities do not invoke/inspire interest and a spirit of learning about how the customer feels in response to your customer-facing interactions – consider extending the facilities into an Innovation Center. Use the space as a simulation center to teach how to deliver the best results to a member and video it to review in private.
I had the opportunity to a take tour of the CAMLS — Center For Advanced Medical Learning And Simulation in Tampa, FL. I was highly impressed with this innovation facility and what it will accomplish for the future of medicine and healthcare. You can see some images from my time there in this short video.
5. Validating.
Job # 5 of an Innovation Center should be to create a place to have customers provide feedback on your company’s products and services. Part of the MVP concept mentioned above requires feedback. Healthcare is not like software – it is harder to have Beta users and not create tenuous or even dangerous situations. Proper validation through customer feedback is essential to great product design.
An Innovation Center as a customer lab allows this to happen with the control and confines of your company and reduces the need to pay outside parties to accomplish this oft-repeated task. To be a great consumer company, your company should foster its ability to do firsthand consumer research.
6. Working.
Job # 6 of an Innovation Center should be to your workplace of the future. Unless your company offers workspace like Google (and there are many of these, especially in Austin!) – consider using your space to transform your company’s cube farm into a dynamic workplace. Even if you are doing the best work on Earth, if you are sitting in a cube farm only lit by artificial overhead lighting, chances are you are miserable. Employers are obligated to make great environments for all people to work in, not just the executives. But convincing leaders about what this space should look like is hard to do.
An Innovation Center is supposed to look different – so make it your staging ground for your transforming workplace. Build it with the most modern yet simple furniture. Give it the technology bells and whistles that are fun to use and make people happier when using them. Keep it open and well lit. Provide couches and comfortable chairs to think in. Make it like everybody’s favorite thinking place – Starbuck’s. This will greatly enhance the employee experience and value proposition – and as a result, create a more productive workforce.
7. Envisioning.
Job #7 of an Innovation Center should be to create a fluid understanding of what the future of healthcare might look like. According to Microsoft, their “Microsoft Innovation Centers (MICs ) are state of the art technology facilities for collaboration on innovative research, technology or software solutions, involving a combination of government, academic and industry participants.” Apparently there are now more than 100 Microsoft Innovation Centers worldwide. IBM has several IBM Innovation Centers as well. The concept used at Microsoft’s Innovation Center is “Behind this door lies the future – not a vision of what we want, but a vision of what will be.” Your company should adopt this philosophy as well.
Telling is greatly improved by showing. Teaching a man to fish is how the old adage goes – try putting the pole in his hand near the water, and you are off to the races. Showing removes the need for employees to try and interpret what your leaders are envisioning. Instead, it evokes people to quickly debate on what they see or come up with ideas on how best to implement them. This should be a focus for your company.
Justifying the Cost
In Summary, an Innovation Center can be easily justified as both a capital expenditure and a resource development tool. To compete in a consumer economy, a company needs the capacity to think, react, and dream at the speed of the customer. The natural functioning of business units is contrary to this need. A customer lab opens up the ability for consumer thinking for the whole company, without jeopardizing the current operations.
So the question is not, how can an insurance plan justify an innovation center on an ongoing basis? – but how can they not if they want to become great consumer healthcare companies?
But a word of caution on this idea – companies and the people that work for them change – what is needed today will be old hat tomorrow. If you are going to build your own innovation center – don’t pour it in concrete. Meaning, save room for new ideas and build it modularly so sections that are no longer relevant can be removed.
Hello to all. I am working on a new project I am calling modelH. This project is a dynamic collaboration between me, Innovation Excellence, Batterii, and a bunch of great healthcare thinkers.
Our goal is to create a business model canvas specifically designed to generate and evaluate healthcare business models that can create positive consumption experiences, improve care delivery, and align and control costs. We then want to use our framework to co-create and test some innovative healthcare business models. The results will be compiled in a book to be released in 2014.
modelH – Health Model Co-Creation Forum
What is the problem we are trying to solve?
The American healthcare “ecosystem” in its basic form operates along 3 themes: care consumption, care delivery, and care financing. These domains are interdependent points of interaction along a value chain of healthcare. To impact one point, you really impact them all. Make no mistake – healthcare is a business! The problem is that very few people create business models that are considerate of all three points of view – and certainly no one has come up with a framework to make this easier.
Also, across the value chain of healthcare, there are four key stakeholders: patients, providers, payers, and purveyors. To put it in simple terms, the party who consumes the product of healthcare (the “patient”) is usually not the one who pays for it, or at least not most of it. The party that pays for it (the “payer”) is best served when it is not used, and is therefore motivated to push for less of it. Furthermore, the parties that deliver it (the “provider”), and the parties that support its delivery (the “purveyor”), are not aligned to place realistic boundaries on its cost, thus forcing the system into bankruptcy. Due to its divided nature, the ecosystem is overrun with inefficiencies and creates dis-incentives across themes and between stakeholders so that each maximizes their own value, often at the expense of the others.
But the system is not so much broken as made up of working parts not working together. Our diagnosis of the problem is a misalignment of the ecosystem’s building blocks. Our prescription is to reset these building blocks into a better working order. The outcome will be a healthy and aligned ecosystem that is both market-driven and cost conscious.
There is no better time to try and fix the healthcare system than amidst the current environment of reform. The team behind the modelH CoCreation Forum feels that a collaborative and systematic approach is the only means to overcome the interconnectivity barriers that exist to get past where others have failed. We have the means to accomplish this collaboration though Batterii’s CoCreation® Platform. We have the right approach for how to systemically validate a healthcare-specific business model through Kevin Riley’s Business Model Method for Collaborative Healthcare Innovation. And through Innovation Excellence and our own networks, we have access to a community of radical innovators with representation across all key stakeholders, as well as business model experts, ready to engage with us in this year-long project.
This is where you come in! But before we ask you to get involved, let’s talk more about how we can solve this problem – together.
Can a traditional, low risk corporate culture stimulate innovation to stay ahead of the curve? I believe they can. If culture eats strategy for breakfast, innovation has to be part of the digestif at the very least.
But how can health insurers innovate and become more flexible in a heavily regulated market? They need to develop an organizational culture that prioritizes innovation and ties it to the organization’s strategic direction.
Creating a Culture of Innovation for Health Plans
The intent of innovation within an organization is to transform the core models and marketplaces (incremental innovation) as well as disrupt the core model (disruptive innovation).
You can see an extended version of the talk I will be giving in the Slideshare below.
Retail health— from convenient care clinics in drugstores to the emerging insurance exchanges mandated by healthcare reform—has the potential to reshape the provider and payer markets. Health plans are taking a position by investing in technology, assisting members with price and quality transparency, and developing innovative care networks that broaden member access. This webinar in brief is about how consumer-directed healthcare empowers “shoppers” by providing them with information about price and treatment options so that they can pursue cost-saving opportunities. As a result, a growing number of managed care organizations are adding retail health stores and clinics within their networks. Consumers want convenience in their health care options, which is right in line with retail channels offer.
PANEL DISCUSSION: Power to the Patient: Technology and Networks that Support Consumerism
I will be giving a talk on Tuesday, February 26, 2013, at 1:30 – 2:45 in Arlington, VA at the 6th Annual Consumer-Directed Healthcare Forum.
Here we will discuss how consumer-directed healthcare (at its best) empowers consumer-providing information about price, quality and treatment options; offering network options and incentives, including access to low-cost self-care and retail healthcare; and providing tools, technology and interventions that help consumers make the best choices possible. I will provide insights on the evolution of retail healthcare and learn what’s coming next.
You can see an extended version of the talk I will be giving in the Slideshare below.
I believe that Innovation Takes Excitement and Collaboration, and Should Be Fun too. I made this decision based on a visit to a very innovative medical facility in Tampa, Florida.
In 2012, I had an opportunity to visit the Center For Advanced Medical Learning And Simulation (CAMLS). It was a rewarding experience and I was highly impressed at how much had been invested in innovation around both medical practices and collaboration. More than just a cutting edge surgery training facility, CAMLS the physical place – is designed to facilitate adult learning and team collaboration. The idea stemmed from coupling the USF medical department with the innovation department to create something new that allows for a disruptive way to teach new doctors about care, as well as help other healthcare partners to think differently about building medical devices.
According to their website, CAMLS is “a 90,000 square foot, state-of-the-art, three-story facility with every possible form of health professional education and training, for individuals and teams, under one roof. CAMLS integrates simulation technology, aviation science, team training, and evidence-based best practice into innovative programs with measurable outcomes.”
What Did I Learn?
The lessons I took about innovation from visiting this wonderful new facility are three fold.
1. Innovation takes (and creates) excitement,
2. Innovation takes collaboration, and
3. Innovation should be fun.
1. Innovation Takes Excitement
What struck me right off the bat was the level of excitement among the faculty at CAMLS – about the building itself, and the enterprise that they were engaged in. Seeing that much focused excitement and commitment by the leaders of the organization gave me great hope that this enterprise was going to have sufficient staying power.
This is not always so with many of the innovation efforts I have seen. Often times, innovation is an afterthought to what is considered most important to a company’s core strategy. In as much, the work is assigned to existing team members who are led by the classic big company manager. This model almost always ensures that you will get mediocre results. It takes a lot of effort to sustain a disruptive innovation practice and most legacy managers do not have it. They are too concerned about their status, and do not want to rock the boat and truly push the envelope. This translates into a fear to take chances and a reluctance to push for innovation’s needs over and above the rest of the company’s wants.
2. Innovation Takes Collaboration
Next, innovation takes collaboration. The notion of the lone scientist thinking up how to change the world is really a fallacy. As discussed in the book Where Good Ideas Come From: The Natural History of Innovation, big ideas are really a series of smaller ideas coming together to form something that is meaningful to the market. Edison had a team of professionals working with him to determine the right size filament for his light bulb. CAMLS itself is a co-laboratory that brings multi-disciplinary thinkers together on a common problem. True to the concept of The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures, I was glad to see that CAMLS was designed to bring together scientists, doctors, academics, business people, and students to work on innovative medical ideas.I advocate that every company should have its own innovation space – a place to think and train on new methods like rapid prototyping. A place to have customers provide feedback on our products and services and a place that will fuel an organization’s movement to a more innovative system.If your current training facilities do not invoke/inspire interest and a spirit of learning – consider extending them to be part of the imagination space.
Think of it as a Library where you are allowed to talk, experiment, and interact on topics of importance to your company. At CAMLS they treat their training as a means to have doctors and care providers walk thru the life of their patients. They use their simulation centers to teach how to deliver both good and bad results to a patient and video it to review in private. Here they extend what the doctor is learning beyond just medicine; they are teaching connectivity to humans in need.
But a word of caution on this idea – companies and the people that work for them change – what is needed today will be old hat tomorrow. If you are going to build your own innovation center – don’t pour it in concrete. Meaning, save room for new ideas and build it modularly so sections that are no longer relevant can be removed.
3. Innovation Should Be Fun
One last point I want to make is that innovation should have a strong dose of fun in its’ application. After all, what’s the point of changing things if you not changing them for the better. Nothing to add here specifically other than when you find yourself taking your innovation efforts too seriously – you may want to find something else to do.
In Summary
I believe CAMLS is set-up for success and I will be following them and watching their progress throughout the next couple of years. I invite you to do the same. Here is a quick video that I put together of what I saw.
In the mid-2000s, I was part of a disruptive movement in healthcare to build nurse practitioner run clinics within grocery store settings. These clinics, called convenient care clinics (CCCs), in essence, are limited in scope (acute care, minor illnesses, and preventative healthcare services) and located in retail stores, supermarkets, and pharmacies. The idea was that the market needed to expand distribution of these types of services to meet demand and that by building them in locations close to where people live and work, and not require an appointment for medical care. This movement was dubbed Retail Health at the time and led by Minute Clinic, Take Care Health, and others. I helped three of these CCCs – two were quite successful, one not so much.
Retail Health disrupted again when insurance companies started building retail stores to attract consumers and sell their insurance products. To my knowledge, the first of these was done with the largest insurer in Florida. I was at Florida during the expansion of these stores and saw them grow in both usage and size. They started out in the 800sq. feet range and now are free standing 5000 sq. feet buildings. The idea here is that a company that is facing a shift to a retail market as a means to establish positive brand awareness directly with consumers by creating a retail location where customers can buy and receive service for their insurance products.
Source: Minute Clinic
Selling Insurance to the Consumer Market
Since the first store was created, many have followed suit, albeit with differing store footprints and models. Some of these are UnitedHealthcare, WellPoint (Anthem), Highmark, many of the blue plans, and Humana. Humana actually started with a partnership with Max-Wellness stores and opted to try a different approach.
Could this be the equivalent of the beginning of the “burger wars”? What is also telling is the number of large and regional insurers that are in a “wait and see” approach – not yet ready to commit the resources to a direct retail footprint. I would expect to see others follow suit in the coming years, but with a mix of smaller and kiosk-related storefronts. GuideWell has also innovated even more by creating one of its retail centers as a member clinic under the blue umbrella. Early signs look like this idea is getting a good reception by members.
These retail “centers” are designed to sell to individual consumers. Companies that are pursuing this channel as a key element of their consumer strategy feel this model provides three competitive differentiators:
Reduce Sales Cycle
1. It shortens the sales cycle – Buying insurance is confusing, and even frightening to many. It is an expensive product with little consumer understanding, and poor “user documentation.” Having a high-touch sales rep there to explain all of the options and implications will create a better sales experience for the consumer and in all likelihood shorten the sales cycle.
Reduce Post Sales Service
2. It cuts down on post-sales service – because consumers are in theory more informed about the product they have just purchased, post sales service should correspondingly be less. Ask any insurer and they will tell you – it is expensive to provide customer service for their products. The current model is equivalent to a doctor treating the symptoms as opposed to the source of a sickness. Regardless of industry, most service issues are a result of poor consumer information leading to lost expectations.
Increase Consumer Trust
3. It creates a high level of trust – Health insurance is not a high margin business, and new regulations are greatly restricting how much insurers can make and spend on non-medical related costs. For insurers to make the revenues they need to survive, they must sell additional, or “ancillary” products. Upselling directly correlates to consumer trust. No consumer will buy more from a vendor that has given him or her a poor product or poor experiences. If the high touch environment is better at informing the consumer about the product, which leads to better satisfaction and usage of the product, it stands to reason that trust will be increased as well. With more trust comes the opportunity to upsell. This is true in any retail market.
Useful for Small Employers
These retail stores also make a great outlet to serve small business. With the implementation of the Reform Act, it is highly anticipated that most small employers will send their employees to find insurance on the exchanges. In this environment, retail centers can be a real benefit to individuals who in many cases have never had the advantage of a fully dedicated HR manager or benefits advisor helping them with their healthcare decisions. The centers in effect can become an outsourced human resources department, wellness center, and benefits advisor all in one.
Source: GuideWell
Disrupting the Disrupters
So where is this trend headed? I had the opportunity to give some market advice to an interesting retail health startup out of Tennessee called Bernard Health. The basic gist of their model is to sell insurance directly to consumers via retail outlets through salaried sales reps, not commissioned sales and service reps. They are concentrating on the Medicare Market.
These retail locations are similar to ones created by the insurance companies but different in two major factors. First, they are not selling their own product. Second, is their store footprint.
Source Bernard Health
The Best Insurance Product for Each Customer
On point one, because they are selling the best product available for the customer they are working with, and not their best product, they, in theory, have a higher trust factor with the consumer. Couple this with the fact that their reps are salaried and not commissioned, and you have an interesting model. When last I spoke with Bernard Health, they were tracking 50 appointments per month, which was on par with traffic seen by benchmarking against similar retail settings, like a Jackson Hewitt store. It would be interesting to see the close ratio per appointment of their sales team versus a branded store by one of the big insurers. Do shoppers at the branded insurance stores purchase the product available because they like Trane, or do they go to get information and then comparatively shop it elsewhere?
Built to Be Profitable
The second difference is the store footprint. I know some of the blue retail stores in Florida are in the 5000 square foot range. They are quite nice. And their experience is a good one. Compare this against Bernard Health’s much smaller retail location. I am not certain you can even sell enough individual plans to pay for the large, or every medium sized store but perhaps they offer a better channel for customer service. Most insurance companies rate in the 70% satisfaction range for the call centers. These retail settings are much, much higher.
Are These a Good Idea?
Will they have any success? This profitability is yet to be seen. They do not have the marketing budgets that the majors have, but they have the “trust” advantage on their side. Insurance is one of the least trusted industries in the country. Having a non-biased advocate to help you make sense of the system may be just what the doctor ordered. I wish Bernard Health, and all of these retail health efforts the best of luck and a prosperous 2013.
