The following is the final installment of a detailed five-part series focused on the drivers behind the branding transformations taking place in the healthcare service providers market.
Author of this series, Todd Lunsford, served as chief marketing officer and held substantial roles in strategy and change management for Envision Healthcare, and its predecessor AMSURG, for over thirteen years.
In the first four parts of this series, Todd covered transformational market forces such as the accelerating consolidation of the healthcare services provider market driven by private equity M&A investments, the long-term shift away from pricing and compensation based on procedure volume toward a value-based system, the looming physician supply shortage, and opportunities for brand differentiation created by increasing transparency. If you’re so inclined, please read Parts I, II, III and IV first.
In Part V, Todd examines the rise of national retail branding that appears to be accelerating in some segments of the provider market.
The Old Paradigm
The old paradigm that healthcare is inherently only local or regional in nature, and that broader branding strategies will inevitably crash against a barrier of local market consumer resistance, is unravelling on a number of fronts. Even in the hospital sector, with its history of cautionary tales about failed attempts to consolidate branding across markets, there are successes emerging such as Cleveland Clinic’s branded expansion into Florida and other markets. And even if the hospital sector evolves slowly in terms of brand consolidation, its business will continue to be directly impacted by aggressive upstarts targeting some of their specific service offerings.
The core belief in the local branding paradigm stems from the fact that doctors, and the practices and hospitals they represent, have historically been pillars of local communities woven into the fabric of daily life. Combined with the fact that healthcare can be such a personal and emotional experience, it’s no wonder that there might be strong attachments to what is familiar and skepticism or resistance to an outsider introducing an unfamiliar brand identity.
But markets and consumer tastes evolve as pressures mount and new offerings emerge. As consumers increasingly struggle with the rising burden of out-of-pocket healthcare spending, and the digital world offers more and better tools for comparing providers and re-configuring how they access services (see Parts II and IV), audiences will gravitate toward compelling new solutions. An aggressive national branding strategy can be a very effective means for helping those new solutions proliferate and gain market acceptance faster, which is also attractive to the investors pouring money into healthcare (see Part I.)
Emerging Models and Brands
As has historically been the case in many fragmented industries national branding often starts with the “focused factory” model. This is a pattern in which a disruptive innovator enters with a better product or service offering to serve relatively simple, narrow consumer needs, and is able to execute more efficiently and consistently.
Here are three examples emerging in healthcare:
Smile Direct Club
“Get a Doctor’s Expertise, Not a Doctor’s Costs”
Direct attack on traditional braces and Invisalign
Lower Cost: 60% lower on clear aligners
Convenience: Tele-consultations, fast home delivery, impressions taken at home
“Kick the Tires” – brick and mortar “Smile Shops” if desired / required
Results to Date:
Founded in 2014 and already grown to $600M+ in revenues and 300+ locations
Price drop after recent IPO but most analysts still love the stock
Addresses narrow but emotional range of needs: sexual health, hair loss, smoking
Moderate pricing, lower than branded versions of ED drugs, but not lowest generic
Convenience: online consultations, fast home delivery
Discretion: eliminates embarrassment of doctor visit for ED or hair loss
Results to Date:
Private company that to date has pulled in $91.1M in funding
One very similar competitor in Hims
Anecdotal evidence shows that it is appealing to millennials not just older men
Has detractors, definitely upending traditional doctor-patient dynamics
Urgent Care (with primary care overlap)
Lower Cost, as much as 10x lower than emergency room expenses for same service
Convenience: Nearer to your home, easy parking, shorter wait times than ER
Expansion of relationship from triage into primary care
Results to Date:
252 sites in 22 states, one of several chains expanding across multiple regions
Acquired in 2015 by Optum, a division of United Healthcare
Similar competitors include: American Family Care, US Healthworks, and NextCare
Sector growing at over 5% per year and expected to reach $26B by 2023
I’m not highlighting these particular examples to predict winners—these companies remain either start-ups or early stage consolidators that are fraught with risk—I’m simply demonstrating that market dynamics in healthcare are changing faster than ever before. There are tantalizing strategic pathways opening to savvy marketers to build national brands and take share using basic patient experience and technology.
Takeaways for Brand Strategy
None of the companies referenced above have actually discovered anything new from a clinical standpoint—they are simply reconfiguring the patient experience, branding it, and using that core branded experience as a platform for future relationship expansion. But that’s no small thing. Look at what Amazon has become after entering the market in the narrow realm of home book delivery.
Of course, Amazon is a dramatic example, but the highly regulated U.S. healthcare market is a dramatic situation in terms of its fragmentation and its history of poor customer experience. Once trusted brand relationships begin to be established, there’s no reason a company like Smile Direct can’t find a way to expand its offering into wire braces, Roman or Hims can’t address other men’s health issues, and MedExpress can’t make further inroads into primary care. According to Business Insider Intelligence, nearly half of millennials do not have a primary care physician, largely due to providers’ failure to create a consumer-oriented healthcare experience.
National retail branding in healthcare will continue to accelerate, with concentrated activity in cash-pay services that avoid the complexity of individualized insurance coverage-driven pricing. It will also accelerate in services where the price differential between traditional delivery methods and innovative new models is so large that the value proposition is crystal clear despite industry pricing complexity (e.g., urgent care.)
Strong local and regional brands, and providers with outstanding clinical reputations, aren’t going away by any means. But they will be faced with an increasing array of focused competitors who understand how to leverage their ability to differentiate on patient experience. Ongoing improvements in transparency, with regards to customer service, pricing, and comparison engines for clinical quality (Part IV), will only serve to accelerate this phenomenon. Healthcare is absolutely ripe for the use of aggressive retail branding strategy as a key lever in gaining market share and driving growth.
This series of articles ends with a focus on retail branding to consumers, but the forces discussed throughout the series will also influence the branding requirements and opportunities available to healthcare provider services firms more focused on B2B growth strategies. Look for future articles covering this ground here on this blog.
If this article struck a chord, it may be time for a branding Health Check from a third-party expert. At TopRight, we have partner-level resources who know healthcare, both from a marketing and clinical leadership (MD) perspective. So, let’s have a conversation. Otherwise, feel free to connect with me on LinkedIn, follow TopRight CEO Dave Sutton @toprightpartner, or if you want to go deep on transformative branding, grab a copy of Dave’s new book, Marketing, Interrupted.