Price positioning possibilities
Last week we profiled a new healthcare pricing web site, the Healthcare Blue Book. This week I had a great conversation with the company’s CEO, Dr. Jeffrey Rice. Dr. Rice has extensive experience in the healthcare industry, on both the provider and payer side of the equation, and his company has some very interesting ideas on how to make pricing relevant in healthcare. Beyond the consumer-oriented web site, the firm is working on offerings for providers and employers, with the goal of using IT tools to help companies guide employees to better value, and help providers demonstrate price advantages on various medical offerings. We had a nice back-and-forth on whether providers would want to be seen as the low-cost provider in the market. But there are so many arbitrary disparities in prices that exist today, exclusive of quality or convenience. For example, the ranges on prices charged for an MRI scan can range from $500 to $2,500 in many markets, based solely on reimbursement contracts. The idea is that transparency would help drive consumers to better priced options, which would drive down prices across the board, improve value, weed out the weak players, etc. (One can dream, right?)
As a healthcare marketer, how is your organization exploring the possibility of price-based positioning? If prices were transparent, how would you stack up against your competition? If you’re the lowest priced option in town, is that a good or a bad thing? And if you’re the highest, can you support higher prices with value in other areas, or is it all driven by reimbursement disparities? Wonder how – or if – these discussions are progressing at hospitals across the country.
Potentially-related posts:
- Price shopping from Pittsburgh to Portland
- Healthcare pricing: the Wild West
- Looking under the rug – what insurers pay providers now public in Minnesota
This article was posted by Chris Bevolo on Thursday, June 25th, 2009 at 10:33 am, and was filed under Branding, Pricing, Strategy, Trends.
June 29th, 2009 at 10:31 am
Chris, this is an interesting concept – price positioning vs. value positioning. Currently, while there is a tremendous trend in consumerism in healthcare, it’s been focused more on the transparency of quality and access.
Although there is a strong role for price-based consumerism (particularly as more and more consumers are starting to assume more of the costs of their healthcare), the current managed-care model forces the consumer to be more focused on the insurance provider (i.e. which plan has a lower co-pay, while still providing me access to to the best doctors).
I still suspect consumers will misunderstand a hospital’s price-positioning strategy to be a reflection of value. I mean, is it the right message to promote “we offer the cheapest MRI’s in town”?
June 29th, 2009 at 12:15 pm
I think that’s definitely a critical question, Chris. As a hospital, even if you can identify that you have the lowest costs, and can demonstrate it doesn’t relate to lower quality, there will always be a perception for many that “you get what you pay for.” In many industries, low-price positioning makes perfect sense (retailing, automotive, food, etc.). But it could be argued that if there’s one place people would put aside cost savings to ensure even the perception of quality (let alone the reality), it would be with their health.