Most post-acute healthcare business, including home medical equipment, grew up as a physician-centric business model. The physician, or another party who is essentially an extension of the doc, is at the center, the decision maker. The doc, or designee(s), chooses the therapy, the supplier, and, often the specific item. That model still controls over half the market and that market segment will experience strong unit growth over the next two decades, in virtually every category. This model requires winning at the doctor level, through relationships, convenience to the doc, speed, clinical competence or service.
Another major segment is the payer-centric model. This model has the payer as the primary decision-maker. The payer selects, sometimes through rules and sometimes indirectly, the therapy, the supplier and the price. This area is growing more rapidly as payers seek solutions to the problems they face. Pricing is always a priority issue with the payer, but they also care about performance outcomes, IT security, coverage capacity and data. Most suppliers are aware of the growth of this model, but don’t like it and are not doing much to play in this space.
The third broad segment is the patient-centric model. The patient is the decision maker, electing to do, or not do, based on their own perspectives and well-being. This is also a significant market segment and it has a high growth rate. Succeeding in a direct-to-patient model requires messaging directly to the consumer as well as crafting the offering around the things that matter to him or her. Some suppliers are “all-in” in this space, most others only have their toe in the water. The patient-centric model in HME was really born by Scooter Store 25 years ago. Inogen, cpap.com, Zyppah and CPAP Mini are some of the most aggressive patient-centric players today. If you have not noticed the ad spending by these folks you’re living in a cave. Google ad-words, talk radio and satellite radio are three spots where these suppliers are spending millions to reach the consumer directly, circumventing traditional physician control and payer control. Pharmaceuticals are another area where direct-to-consumer has come into prominence over the past decade. Drug companies spend $7 billion a year in the US on direct-to-consumer advertising for prescription drugs. Be clear – the direct-to-consumer model is working extremely well in healthcare. The consumer wants a better quality of life. They want to feel better or feel less pain. They want comfort. They want better options. And they want an easy and convenient way to access the product. None of these things are important to the physician – and as a result many providers who were built on physician-centric model are really not meeting the wants of the consumer.
Each of these three models present tremendous opportunities, but growth rates vary. Each requires a distinct approach to be successful. Healthcare providers must understand and then meet the needs of the particular decision maker at the center. Resources must be aligned in a way that optimizes your ability to succeed in the channel in which you are seeking to compete. Recognize that those things that are most important to each of the three decision makers – doctor, payer, and patient – are often different and your approach must be focused on the priorities of your target.