Originally published in Healthcare Data Management

Consumerism in healthcare is not yet at tsunami-level force, but it clearly represents an imminent and undeniable disruption in healthcare’s traditional business models.

It is only natural that this trend is putting tremendous pressure on heads of marketing. It is also challenging CIOs to bring their expertise to bear, and to clearly articulate the role IT can play as healthcare organizations seek to transform the way they engage with their customers.

Today, only 48 percent of healthcare payer customers get their insurance from their employer. As the employer-sponsored model gives way to direct purchasing by consumers, both payers and providers must pivot from a B2B to a B2C orientation. Health organizations, used to vying for the long-term loyalty of large organizations, must not only shift marketing dollars to focus on individuals, but also rethink the ways in which they gather, analyze and use information.

Other industries have gone through similar shifts that have forced tighter alignment between marketing and IT. The telecommunications, media and entertainment (TME) industry, which is still working its way through the turmoil of a major disruption, offers useful lessons for healthcare leadership.

Like healthcare, TME was somewhat complacent after a long stretch in which competition was relatively mild, demand inelastic and regulation supportive of the status quo. As technology changed and other industries set new standards for customer care, the operational and customer service shortcomings of the TME industry left them vulnerable to services like Netflix, Hulu and HBOGo that threatened to not only disintermediate them, but to expose their lack of compelling consumer experience and innovation.

TME companies quickly realized that leveraging a marketing-technology collaboration at the CMO-CIO level for new technology-driven, consumer-focused applications was essential to their ability to survive and thrive.

Healthcare has similarly entered a time when decades of B2B insurance models, fee-for-service (FFS) reimbursement models and relatively captive customer populations are giving way to a much more B2C world, where attracting and retaining customers is just as important as quality, safety and outcomes. Healthcare and TME share overlap among the disruptive forces creating chaos on their markets and producing pressure to transform, including:

Differentiation: Healthcare consumers have a growing number of choices on both the payer and the provider side. Increasing transparency is making it much easier for them to effectively comparison shop. Relatively undifferentiated product offerings for newly empowered customers will be forced to compete primarily on price and face very low barriers to customer turnover.

Technology-driven disruption: Healthcare is facing massive technology disruptions and tectonic customer shifts that upend stability and threaten their competitive positions. New technologies like insurance exchanges, EMRs, patient portals, smartphones and big data analytics are fundamentally changing the way we understand risk, care quality, patient engagement and consumer experience in healthcare. Facing similar disruptions, TME CIOs focused on supporting data-driven marketing, becoming expert in combining and analyzing data from diverse sources (set-top boxes, billing, credit scores, etc.) to engage and retain consumers with relevant content and renewal offers.

Disruptive policy and new competition: Even prior to Patient Protection Affordable Care Act (PPACA), healthcare was an industry ripe for disruption. Healthcare spending consistently outpaced GDP, productivity improvements severely lag every other sector, and customer satisfaction and quality are consistently low. The Affordable Care Act (ACA) has been a catalyst for change that is long overdue, and has spurred innovation, enabled comparison shopping, and sped up the competitive landscape. TME has faced similar challenges as the federal government changes regulatory policy, mergers disrupt the status quo, and new competitors enter the market.

Rise of consumerism: Consumers are now directly paying for more of their healthcare costs, both for the care itself and insurance coverage. As out-of-pocket costs rise, consumers expect an experience that is comparable to what they get in other sectors. Health plans and providers understand that they cannot afford to ignore this trend and must embrace it or be left behind.

Critical and costly technology upgrades: For years health insurers have sold their plans almost exclusively to employers. Re-engineering legacy systems to be consumer-centric and flexible enough to support rapid innovation will not be cheap or easy. Adapting to new mobile and web-based systems for conducting business and engaging members will also be difficult, but necessary.

The nexus of the solution to these challenges for TME is the strategic and tactical fusion of the Chief marketing officer (CMO) and the CIO. To attract and retain customers, healthcare organizations need the CMO to develop a deep understanding of the consumer and what moves them. To use technology to increase customer service, satisfaction and loyalty effectively, they need smart CIOs who are willing to innovate and cast aside old models.

CMOs understand changing customer needs and the opportunity that creates to boost sales, but the CIO is the only one who can bring those new solutions and modes of commerce and customer interaction to market for the company.

Neither technology nor marketing changes alone can effectively address these challenges.

Following is the advice from the trenches for healthcare CMOs and CIOs from their TME counterparts:

• Build a roadmap around the key features customers are craving—transparency, ease of use, quality customer service and a mobile experience that they are used to receiving from other vendors.
• The simpler the process, the more likely the customer will buy and repurchase.
• Cost and coverage may be driving retention today, but technology will be the catalyst for true differentiation and brand loyalty.
• Prioritize an Internet of Things (IoT) strategy. Linking wearables, in-home devices and the like will create stickiness, connect you with customers in new ways and bring in rich behavioral data.
• Consumers expect to interact with their institutions, make purchases, and consume information all in a seamless, mobile and secure environment.
• Be willing to embrace new technologies and techniques that increase business agility. Consumers are used to fast, easy, frequent and high-quality updates, and you will need to leverage the cloud, agile development techniques and new types of vendor/partner relationships to meet expectations.
• Make uncovering and acting on data insights a top priority. Have data analysts work directly within marketing teams, while CIOs help access and analyze bigger and better data sets across the organization to deliver insights for marketing to act upon as well as to measure.

CIOs have a lot of experience leading organizational change driven by new technology, whether it involves EMRs in healthcare or set-top boxes in TME. Marketing may be used to rolling out new ideas and campaigns across the organization, but supporting cross-functional technical change is an area of leadership for CIOs who are accustomed to building new skills across geographic areas and technical processes. Experience with this type of organizational development will be extremely valuable to the marketing department.

For its part, marketing will know the customer experience outcomes they seek. The CIO partner will be invaluable in providing the technical knowledge, experience and advisory to make the best technical decisions for the organization.

Creating effective, high-performing and well-governed outsourcing deals was one of the key services Capto offered at our launch in 2009. SYNAPTIC Outsourcing is still a key service we offer our clients. The fundamentals remain solid, but how we help make these deals successful has evolved dramatically. I’ll explain how we’ve applied our SYNAPTIC Sourcing methodology differently over time.

SYNAPTIC Outsourcing was born out of our personal experience supported by extensive research that confirmed our hypothesis at the time: IT outsourcing was broken. Deals were under-performing economically and operationally when compared to other broad business trends such as supply chain management.

 “54% of IT Executives report challenges in managing vendors and improving this situation is crucial, because failure to manage vendor relationships effectively can destroy up to 90% of the value expected from the contract” - CIO Executive Board Survey, 2009

Suppliers and their clients complained that most outsourcing relationships failed to meet objectives for many reasons, but we found a few key reasons that profoundly impact outsourcing relationships that are still true today:

• Buyers tend to be over-prescriptive, dictating not just the what, but the how. Resulting in diminished ability of the supplier to innovate – or, as some call it, “outsourcing my mess for less”.
• Suppliers and buyers engage in a zero-sum game where what is good for the buyer must be bad for the supplier rather than invest up front in mutually beneficial, outcomes-based relationships.
• Buyers fail to solicit the ecosystem to properly harvest the best ideas as part of their procurement process through the over-use of RFPs rather than more open-ended RFI’s to refine their requirements prior to formally entering a procurement cycle.

In 2010, we reviewed and found tremendous merit in research done by the University of Tennessee for the US Air Force that resulted in a progressive outcomes-based outsourcing arrangement as initially described by Kate Vitasek, Mike Ledyard, and Karl Manrodt, in the book “Vested Outsourcing: Five Rules That Will Transform Outsourcing”.  The guiding principles of Vested Outsourcing are[1]:

1. Reciprocity – commitment to fair and balanced exchanges.
    
2. Autonomy – the party with more power will not use that power unfairly to promote a narrow self-interest.
    
3. Honesty – each party must be honest about their intentions and the facts of the relationship.
    
4. Loyalty – being loyal to the relationship and not act in a self-serving way.  Through acts and deeds you support and promote the partnership.
    
5. Equity – understand and look critically at the distribution of the rewards in the relationship.  This is not always a 50:50 split, for example, one party may be given a reward for taking on additional risk.
    
6. Integrity – acting in a consistent trustworthy fashion.

We agree, and still believe, that these six guidelines provide the fundamental underpinnings of a high-performing, collaborative sourcing relationship.  The ways in which we have gotten our clients and their sourcing partners to embody these principles, the sustainment of long term deal performance, and the types of disruptive technology projects we have done are what has evolved over the past seven years.

The Business Environment - What Has Changed and How Capto Has Responded

The technology executives we talk with initially try to convince us that they have “been doing outsourcing for a long time; we know how it is done”. However, when we do an evaluation, we typically find that the deal is underperforming and sometimes is actually failing. Usually for the same reasons found seven years ago.

If the past seven years of putting progressive, outcomes-based sourcing deals together has taught us anything, it is that this approach isn’t just theory. It works. And it works really well for those open-minded enough to try a new approach to outsourcing. It requires a shift from short-term tactical thinking to using outsourcing as a longer-term strategic tool focused on outcomes and innovations[2].

Disruptive technologies such as robotics, Internet of Things (IoT), and cognitive process automation continue to unsettle existing businesses. We believe outsourcing can assist forward-thinking enterprises to more quickly and successfully harness these technologies and processes.

The workforce skills deficit in fields such as healthcare informatics[3] , data scientists[4], and technical staffing in general provides a strong rationale for the use of outsourcing and “as-a-service” models to meet staffing requirements.  Getting the most from your partner relationships takes on new urgency with these new challenges.

Initially, we focused more on the strength of the client/partner relationship and the partner’s ability to bring a strong staffing mix to the deal. While these two areas continue to be of importance, over the last seven years we have had additional focus on the following areas as the rate of business innovation and change has escalated:

• New Technologies, Business Disrupters and Innovation – Use of outsourcing to harness new technologies and processes with a focus on time to market, that affect the foundation of our client’s business enterprise.  Outsourcing can be used to boot strap implementations of Internet of Things (IoT), advanced analytics and big data, and cognitive process automaton efforts.
   
• Governance - Instituting a well-focused governance process has been shown in practice and research[5] to facilitate a successful win:win relationship – we have therefore focused significant efforts on implementing a strong governance process for all our deals.
   
• Organizational Change Management (OCM) – Spending more time and effort on OCM has become a priority.  Additional training is needed so both parties understand the deal and don’t revert to old habits.  We provide training in the tools included with the deal to influence behavior, for example: new metrics, dashboards, governance, as well as contractual items like hold backs and the use of incentives.
   
• eSCM (eSourcing Capability Model) – We have integrated the sourcing framework – eSCM - created by Carnegie Mellon University, into the Capto methodology.  We do not require that our clients adhere to eSCM as it a relatively complicated framework. However, it provides a strong industry standard methodology, which ensures we cover all avenues in our analysis and implementations. 
   
• Business Case Focused– Our background in M&A (merger and acquisition) work makes us more financial and business case focused.  Building and using a business case is occasionally something clients have to be trained to do so it becomes integral to our OCM efforts.

Having now implemented and governed numerous deals using SYNAPTIC Outsourcing the importance of -- strong governance, implementing and adhering to a transition strategy that is phased and based on success metrics, and putting in place a comprehensive OCM program – is clear.  We continue to be optimistic about the future of outcomes-based outsourcing to meet the innovation goals and objectives required for business success.

[1] http://www.vestedway.com/step-3-establishing-the-six-essential-relationship-principles/

[2] “Global Outsourcing Survey 2016” http://www2.deloitte.com/us/en/pages/operations/articles/global-outsourcing-survey.html

[3] “Missed Opportunities?  The Labor Market in Health Informatics, 2014” http://burning-glass.com/research/health-informatics-2014/

[4] “Help Wanted: Black Belts in Data” http://www.bloomberg.com/news/articles/2015-06-04/help-wanted-black-belts-in-data

[5] “Theorizing the IT Governance Role in IT Sourcing Research” Association for Information Systems 2016:  http://aisel.aisnet.org/amcis2016/SCU/Presentations/15/

Last week I attended the Accountable Care and Health IT Summit in Chicago focused on Accountable Care Organizations (ACOs). The general belief that CMS’ MACRA and MIPS payment models are changing too fast for health organizations to adapt was common. And while there are great examples of companies using data and telehealth to impact population health and new technologies and patient processes that are both improving outcomes and costs, everyone is really figuring it out as they go.

A key issue is that of reimbursement. As ACOs coordinate and/or buy up physician practices, the missing piece is making sure they understand how to negotiate reimbursements with the payers, including private payers. As ACOs step into the role of ‘payvider’, as it’s been coined, a level of sophistication around contracting and risk analysis is required.

Private payers focus on commercial populations within their portfolio versus the general population health. Their populations can also come and go as companies move their health plans to other payers, which increases their investment risk.  Understanding where ACO and payers can come together to effectively delivery care at a lower price point is key to managing an effective ACO, for example: Medicare Advantage’s higher PMPM cost and disease burden could present an opportunity for a savvy ACO in this market.

Bottom line is that to optimize revenue opportunities ACOs need to have payer insight, contract negotiating skills, an understanding of federal legislation, and risk/reward analysis skills on their team when negotiating reimbursement contracts with payers.  Doing so will help ACOs better leverage their investments and reach the benchmarks of both the federal government and private payers.

Originally published in: Health Management Technology

Healthcare organizations have a painful history of investing in expensive information technology solutions, only to end up disappointed. This often stems from a disconnect between the IT department’s role in the organization and the overall business goals of the enterprise. A number of factors can cause this misalignment, the first of which is that IT is historically a service-oriented, back-office function. IT sees their internal counterparts as clients rather than colleagues, and IT tends to focus first on complying with requests from other departments rather than contributing to, and prioritizing the overall goals and strategy of, the business as a whole.

Additionally, like many business units, IT departments often have a tendency toward empire building. They strive to grow the department through bigger projects, driving the need for more staff and more budget, elevating the influence of the department within the organization. This mentality can create a bias toward building, versus buying and/or outsourcing, regardless of what might be best for the company in the long-term.

In healthcare, we see this phenomenon most recently and most dramatically in the population health push. Read the rest of the article.

Journey mapping is a disciplined approach to understanding how your customers experience your organization so that organizations can make necessary adjustments to improve the overall experience. No journey map is the same from organization to organization or even from service to service within a single organization. An organization may have a “master” customer experience map with many subset experience maps for an online purchasing experience, or the service journey or the post-service journey.

Capto specifically works with the telecom, media and entertainment (TME) and healthcare industries on mapping customer journeys. While the industries vary greatly, the same process can be used to guide our client organizations through a journey mapping process.

Telecom, Media and Entertainment Journey Mapping
The TME industry is currently amid massive disruption to how people are consuming their media services. Content is no longer the domain of network or cable television. Now everyone from YouTube to Amazon to Netflix is generating content with wild success. This turns the customer journey on its head in many cases and telecoms are using journey maps to understand how the shift is happening currently and anticipating where it heads in the future.

Healthcare Journey Mapping
It is increasingly important for both payers and providers to understand their customers’ journey before they ever have a health issue. Consumers are at the beginning stages of shopping for both health plans and subsequent healthcare services the way they comparison shop for books, mechanics, and travel. How best for health care providers and payers to proceed in this new environment?  The first step is to understand the customer at this very early stage of interaction – who are they, what do they care about, what friction points are they encountering, what do they want, and how do they want to receive care and information?

Overlay this analysis with your company’s current processes, procedures, and methods, or often lack of processes.  The most efficient and comprehensive way to determine this information and gap analysis is through customer journey mapping.

While every map will look different, the steps to assess and improve a customer experience are largely the same.

1. Candidate Journey Selection
   Define the business goal the journey map will support. Journey maps can quickly get cumbersome and overly complex. Having a laser focus on the experience being defined as it supports the business goal is essential.
   
   Are you trying to generally understand your customer experience stages and identify all touchpoints?
   Are you optimizing the customer experience for a high-value customer specifically?
    
2. Develop Hypothesis Map
   Using your internal teams, identify what you think the customer journey map looks like. Identify points of friction, get input from the cross-functional team. An effective tool in journey mapping is customer focus groups, be patient and hold off showing your hypothesis journey map to customers at this step. There’s still a bit more internal work to be done.
    
3. Research
   With the hypothesis journey map in hand, start to validate and update the map using data and analytics tools and observation of customers going through the journey.
    
4. Journey Map Development
   Building on the hypothesis map and subsequent data from research, build the initial journey map in the format using the design tools to layout each step.
    
5. Journey Workshops
   Now it’s time to get the map in front of customers. Typically, steps four and five get iterated a couple of times. Feedback and new data or pain points are uncovered in focus groups are given consideration by the journey map cross-functional team to remap accordingly.
    
6. Implementation Plan
   With the journey map identified and vetted it is time to operationalize the customer experience. It’s important that implementation steps are mapped and sequenced properly and appropriate change management communications are wrapped around the new journey map to facilitate its implementation.

The most important aspect of customer experience journey mapping is creating a map that is both informative to the internal implementation team—and actionable. This comes from creating a common understanding of the data that goes into creating the journey map and creating a common customer experience language and mindset within your organization.