RFP for Physician Services: Really Foolish Proposition

March 9, 2015

Hospitals that use RFPs and others fool’s tools in respect of physician relationships will surely suffer as fools in the end.

Patients, as they are increasingly empowered by technology, may not seek as many human service touch points. But when they do, they will expect high value experiences. And, they will not suffer fools gladly.

But, for the most part, hospitals are dead. They just don’t yet know it.

The problem lies in the mistaken belief that services are commodities that are fungible and that can be purchased based on the lowest price.

The problem isn’t unique to hospitals. In retail banking, traditionally a service business, it’s led to the ATM replacing the teller inside the branch, long lines, and endless waits on automated phone systems (press 1 for a commercial about how much we value you; press 2 for accidental disconnection), and the death of real loyalty among customers.

Customers didn’t only want interest rates and safety for their money. It was more than that. They wanted personal interaction. They wanted to be treated courteously. They wanted the tellers and the manager to know them by name and not to treat them as thieves attempting to pull off identity theft. In exchange, customers gave their loyalty.

But now, there being little value inside the bank, most bank customers get their $300 from the ATM machine outside the bank’s walls and get out of there. They have little traditional loyalty to their banks. They are all the same.

Banks cut costs. They treated customers as commodities. And now customers have returned the favor.

You, Mr. or Ms. Hospital CEO, can shout at me until you’re blue, but no two physicians or other healthcare service providers are the same. Their professional degrees might be the same. But their professional skills and, even more importantly, the experience that they provide to their patients and other customers isn’t.

If you, Dr. Jones, believe that your medical group’s skills are the same as your competitors and that the practice of X-ology is a commodity, then you’ve imprisoned yourselves within the future that the fool running the hospital has imagined for you.

But if you understand that your services can never actually be a commodity, if you understand that by adding creativity and focusing on the customer’s experience, all customers’ experience, even the hospital’s, and you actually deliver on that, then you’ll occupy a unique position when valued through the customer’s eyes. The more transformative that experience for the customer, the more value.

Starbucks took a 50 cent cup of coffee and wrapped it into an experience selling for far over a dollar. And that was just to start. See what a dollar gets you at Starbucks today.

Fresh Express and ReadyPac took what may be in many minds the ultimate commodity, 70-cents per pound lettuce, and “servicized” it into $12 per pound bagged salads, some complete with croutons and packs of dressing.

Hospitals that believe that an anesthesia group can be selected by how low the stipend request is (like zero) and how many physicians and CRNAs will work as many ORs as possible starting at 7:00 a.m. even if some rooms run only until 8:00 a.m., will get the “commodity” level service that they seek. If you as a medical group leader want to do business with that hospital, believing it’s your only option, then your business model is broken. But soon, too, will be the hospital’s.

Don’t agree about experience? Think all you want is the lowest price, quality and experience be damned?

Then please send me the price of a week’s stay at any U.S. Ritz-Carlton and I’ll swap you for the price of a week at the closest Motel 6. Both are clean. Both have beds. Just like a hospital.

Oh, now you get it.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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