Healthcare Consumers Vs Other Consumers | Healthcare

Healthcare is quite an unique industry, as are it’s consumers. Healthcare consumers share similarities with consumers within other industries, but also considerable differences that healthcare marketers must acknowledge.SimilaritiesAlthough healthcare consumers have various unique characteristics from those within other industries, healthcare consumers also share various similarities.DiscretionMany healthcare services are elective (i.e. laser eye surgery). Thus, consumers have the option to consider wants vs. needs and decide whether to pursue a service or not.DemandHealthcare consumers’ demand can be influenced by many factors such as price or type of treatment. For example, in retail, if the price of a high end product is cut by half, its demand would increase significantly as the lower price would attract buyers. This is considered as elastic demand.Elasticity of demand is the measure of the change in demand of a product or service in relativity to the change in its price. If demand for a product or service increases or decreases based off of the increase or decrease in its price, then the product s considered to have an elastic demand. If the demand for a product or service is unaffected by the change in price, then the product is considered to be inelastic.
Payment for Services

Although in many cases when medical services are paid by third parties, many are paid out of pocket by the consumer. Whether a consumer has an insurance policy that includes a high deductible or co-insurance responsibility, or a consumer is self pay and is solely responsible the payment of services, consumers’ ability to pay for services greatly influences their demand for them, even if they are medically necessary.For elective services that are not considered medical necessary, consumers usually have to pay for the service mostly out of pocket, which will certainly affect its demand. In a booming economy, demand for such services would increase, as in a slumping economy demand would decrease.DifferencesLack of Buyer DiscretionConsumers in healthcare rarely determine their need for services, as consumers within other industries usually determine their need for products and services. Healthcare services, which are consumed by the patient, are usually ordered by a physician. This is unlike any other industry, as the patient is prescribed a service that they must comply with.Knowledge of PriceOne of the most prevalent differences between healthcare consumers and other consumers is that healthcare consumers’ costs are usually covered by third parties (insurance). Because third party payers pay for most of a patient’s medical services, patients themselves are not usually involved in or even aware of the price of service. Patients rarely even have access to pricing information for services.Evaluating Quality of ServiceMost healthcare consumers do not experience the healthcare system until they have a need for services. Thus, when consumers evaluate services they receive, they form their opinions through subjective observations such customer service and the cleanliness of the facility. This is considerably different for consumers within other industries as they form their opinions about products through objective observations such as the quality of the product and the ease and effectiveness of its use.

Knowledge of ServicesHealthcare consumers typically have limited knowledge regarding the services they are to receive, as other consumers are usually well informed about the products and services they are pursuing. Most consumers in other industries seek as much information about products to compare one from another.Because of this, healthcare consumers usually lack the ability to evaluate the quality of service they receive, as other consumers very well can evaluate the quality of the product or service they receive.MarketingHealthcare services are usually NOT marketed directly to healthcare consumers as they are not the ones that choose which services to receive in most cases. This is unlike other products and services which ARE directly marketed to the consumer.

Why Healthcare Marketing Is Different | Healthcare

Power Structure of Healthcare OrganizationsThe most prevalent difference of healthcare organizations from others is that in healthcare, head administrators and such DO not make most of the decisions that affect patients (customers), but physicians do. There is a unique dynamic in healthcare organizations in the relationship between its business and administrative leaders and the providers of medical services.Payment of ServicesUnlike most businesses in other industries, healthcare organizations do not get paid until after services have been rendered because, as also different in other industries, the consumer receiving services is NOT who is fully responsible for paying for them.Healthcare organizations receive most of their reimbursements through third party payers (insurance companies, Medicare), which can take up to a month or longer to process.The End UserUnlike many industries, like retail for example where goods are marketed directly to potential customers, most marketing efforts of healthcare organizations do NOT target end users (patients, customers).Healthcare organizations, especially those that provide specialty care, rely on the referrals of other physicians (primary care physicians) to build their patient base. Thus, specialty practices will focus their marketing efforts towards building relationships with other providers.Seller DiscretionIn most industries, potential customers that cannot afford a service or product can be denied service.

However, in healthcare, organizations (especially non-profit organizations) have obligations to accept patients regardless of their ability to pay. In emergency rooms, patients with emergency care MUST be seen at least until they are stabilized. Physician practices may require payment to be made before the visit, however, the practice must consider ethical and liability concerns before they decide to turn away a symptomatic patient based on their lack of means to pay.Profitable ServicesIn most industries, business will generally not provide unprofitable services.Healthcare organizations, like any other business, must turn a profit in order to keep its doors open. However, unlike other industries, healthcare organizations often provide services that are not profitable. As in situations explained above regarding emergency rooms, healthcare organizations have ethical and legal considerations that do not affect businesses within other industries.Healthcare services are provided within a course of patients care. If a service is necessary to progress a patient’s course of care, it should still be provided even if it is not profitable.
Example:A patient’s chemotherapy regimen may include a drug that is not profitable to give, but is necessary to complete the regimen.Supply and DemandTypical laws of supply and demand generally do not apply within healthcare, as an increase in supply does not necessarily lead to a decrease in prices, and an increase in demand does not necessarily lead to an increase in prices.Although healthcare organizations set the prices for the services they provide, their reimbursement is usually dictated by their managed care contracts, and an organization will be reimbursed a set fee regardless of what the price they charged. Prices for services mostly apply to self pay patients.Demand for healthcare services is usually not dictated by the consumer, as they do not choose what services would be necessary to continue their care. Such decisions are made by physicians.Although demand in any industry is unpredictable, it is considerably more so in healthcare as consumers do not choose when they need service and the need is realized unexpectedly.Products and ServicesHealthcare mostly markets services rather than tangible goods. Therefore, in most cases, marketers are not marketing a specific product but a service and who is providing the service and how it is performed to attract consumers. A consumer of a tangible product will base their level of satisfaction on the product on its use and performance. The consumer of a service will base their opinions on factors such as customer services, wait times, condition of the facility, the demeanor of those providing the service, and the processes used to provide the service amongst many other factors.

Healthcare products and services can be so complex that they are rarely understood by the end user. Unlike the retail industry for example, where a consumer identifies a need for a product and will fulfill that need by purchasing the product, healthcare consumers rarely choose the services they will receive. Consumers of healthcare services seek the services of physician who will then choose what further services are necessary to treat the their condition.Even in cases where services are marketed directly to a patient, for example robotic surgery for a particular condition, the service can be so complex that it must be marketed in a way that are understandable to patients.Undesirable ConsumersMost businesses would welcome any consumer to purchase their products or services as the CONSUMER would be responsible for paying for such products and services when they receive them. Because consumers of healthcare services are usually not responsible for the payment of services at the time they are provided, as this responsibility is of third party payers, healthcare organizations must attract consumers that are not potential financial liabilities.Although physicians are obligated to treat patients regardless of if they have insurance or means to pay, marketers must attract consumers with insurance policies whose reimbursement rates will cover the costs of the services provided.