Three years ago, I wrote about the dissatisfaction of patients toward their doctors in the post “Can Doctors Be Patient Centric?” on my blog, and “Does Your Doctor Really Care About You?” in the Nov 10, 2017 issue of Inquirer. In this 2-part article series, I will discuss how understanding business models can help doctors improve patient satisfaction and increase recommendations by delivering value or benefits that matter to them. Let me start with the five elements of the offering model, and end with the six elements in the operating model in part 2 of this article. Together, these comprise the eleven building blocks of a business model. I will try to explain the why and why not along with examples. The offering model is composed of target market, value proposition, channel, customer bonding strategy and revenue model.
1. Target Market – Traditional doctors look at patients as their target market, while progressive ones include the patient’s family representative in inpatient’s situation. The implication to value proposition is tremendous as they not only treat a patient but proactively communicate with the designated family representative progress of the patient. When my mom was hospitalized in early 2021, the family decided to move her from the hospital nearest to our house to Cardinal Santos Hospital, part of the MVP group, a few traffic stops after the original hospital. This family decision-making unit already defined the difference between the user (patient) and the buyer (family representative) in the choice of hospital and doctors, hence, the need to include them in the target market for inpatients market segment as well.
2. Value Proposition – Composed of service or product, coupled with price, these two elements are interrelated and inseparable. The service aspect for patients is to make them well at the soonest possible time and at the least cost, done through effective problem solving, while that for family representatives is convenience and peace of mind. Doctors need to reframe their understanding that service is the act of inconveniencing the self for the convenience of customers if they are to be truly service-oriented.
2b. Pricing – In a free market, highly experienced and specialized doctors should be allowed to charge as high as what their market can bear to determine their fair market value, but professional fees are typically advised to inpatients only upon checkout. Unless in an emergency situation, this practice in the Philippines should ideally be in the beginning instead. This prior acceptance rule will protect patients without much savings and without HMO cards from surprise medical bills. Let me cite a recent personal experience in my mom’s original hospital to illustrate. I met a rehab doctor recommended by her peers, but I personally disagreed with her on the commencement of rehab when my mom was in so much pain. My disagreement was validated by a more senior ortho surgeon of the same hospital who instructed that no rehab should be done when a patient is in high pain. However, without my prior acceptance, I was billed P7,000 for that brief visit to my mom’s room. While I have enough discretionary income and believe in patients’ financial responsibility, I felt the doctor should not have billed since there was no benefit given. When mom felt better, I was requested to listen to another rehab doctor because the original did not explain what exact rehab treatment would be done, too focused on obtaining a signed consent which I did not give. I reluctantly accepted the meeting on the condition it was purely exploratory since we were planning to move to another hospital. I wasn’t persuaded. For one, paying P4,000 a day for physical therapists, plus the new doctor’s own professional fee, for unlimited months, which he claimed was based on room rate, was not cost-effective. And that was only for him, among 16 other doctors treating mom. He was also unable to show me data about the gadget he was pushing for rehab, which forced me to Google, where what I saw convinced me to decline. I wonder what the link between a doctor’s professional fee and the price of room chosen by patients is, because some people are simply forced to accept a higher priced room due to unavailability of their preferred room. That doctor billed me P3,500 for an exploratory meeting. When I protested the billing of both doctors, I was told they already spent time with me, never mind I did not get value out of it, never mind the patient did not get any benefit. The hospital cashier finally requested I accept their billing so they can at least collect from PhilHealth. I paid the hospital everything, but refused the billing of these two.
Doctors should be mindful they are not silos, and that there is a more important bigger picture. Profiting from customer dissatisfaction does not just give them a bad name, but affects the perceived integrity of their department, as well as the hospital they represent. Wouldn’t it be more relevant for doctors to bill based on delivered benefits?
3. Distribution Channel – The main way doctors make themselves available are through medical clinics for outpatients, and recommendations for inpatients. Nowadays, it includes videoconference for outpatients. The biggest pain point of patients in the outpatient channel, and surprisingly, even in the videoconference channel, is doctors not being prompt during their published or agreed consultation time, while that of inpatients is not having a fixed schedule to engage with the patient and their family rep. The biggest request by patients and their family rep is to allow appointments and to respect the appointed time, as most will have gone on vacation leaves from work to wait for doctors for several hours just to consult for a limited amount of time. (Case in point: If doctors want to know more about dislikes and wish list perspectives of patients, just visit the “Best of the Best Manila” Facebook group and do social listening of over 500 comments to my question posted on January 25, 2021)
The pandemic forced many doctors to pivot to zoom calls, but many went back to their old ways after ECQ, making patients wait in their clinics. An online seller of an appointment app shared most doctors were not interested to use this inexpensive app since seeing many people waiting for them is a de facto medical marketing strategy that reinforces they are in demand. Unfortunately, they do it at the expense of patients’ time.
A former student of mine shared how drained her grandfather would be each time she accompanied him to travel from Pampanga to Manila to have a few minutes of talk with the doctor.
4. Customer Bonding Strategy – Awareness and brand association of non-HMO doctors come from two main sources: referrals from peer doctors, and recommendations from consumers. The latter is the key driving force of social media. Doctors should be extra careful of their personal branding — think about an x and y axis, their word association may be “competent” in one axis, such as the likes of Dr. Jaime Galvez Tan, who employed holistic healing to include praying with patients, sleep, diet, forgiveness, acupuncture, aside from Western medicines; and on another axis, being patient-centric. Competent and patient-centric doctors can expect higher Customer Lifetime Value (CLTV), including the effect of referrals, so doctors want to avoid being purely transactional by looking at potential long-term relationships.
5. Revenue Model – Except for surgeons and the like, doctors’ revenue is generally time-based, meaning, the price they charge multiplied by the number of days they personally render the service to inpatients. This revenue model is very profitable, which is why they need to take care of their reputation. Patients and family rep surprised at medical bills when doctors charge for excessive days will be remorseful.
A second and controversial issue about this revenue model is leveraging by using the visit of resident doctors under training as a substitute for their personal visit. The Code of Ethics of the Philippine Medical Association encourages doctors to be honorable as a “friend of mankind.” Doctors with integrity will never abuse their power nor game the system.
If doctors insist on being unethical, Congress may want to enact a “Medical Bill Law” to protect consumers, similar to what the Congress in the USA agreed in December 2020 in order to lower healthcare costs. Philhealth may also want to audit if they are subsidizing doctor’s fees that patients did not acknowledge.
Summary (Part 1):
Hospitals and Doctors can no longer expect to be the center of healthcare, if this high margin, low transparency orientation continues to result in customer dissatisfaction. It is time to put consumers at the center of healthcare. Some hospitals and doctors are more customer-centric than others, but many are still expecting consumers to tolerate some questionable practices, even if detrimental to themselves. I am not intending to shame doctors and hospitals, but the system needs improvement.
In the next part, we deal with the operating model – – value chain, key processes, key resources, complementors, cost and finally, reconfiguring for an innovative medical practice.
Josiah Go is the Chairman of Mansmith and Fielders, Inc. He is the course creator of the 55-video Business Model Course, first in the Philippines and in Asia and available through www.continuum-edu.com. Follow his “Business Model Channel” on YouTube.