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[Podcast] The Ultimate Healthcare Brand Metric: Measuring Lifetime Value

By Stewart Gandolf, Chief Executive Officer
Photo of Ed Rafalski

Ed Rafalski, Chief Strategy and Marketing Officer, Baycare Health System

One of my favorite conferences to attend each year is HCIC, the Healthcare Internet Conference, where I get to catch up with people and organizations that are doing incredible things in the digital healthcare space.

Recently, I spoke with Ed Rafalski, the Chief Strategy and Marketing Officer at Baycare Health System, about his HCIC talk, “Marketing Trends and Benchmarks for Health Systems.” Specifically, we focused on the convergence of insurers and health systems, as Baycare just entered the Medicare Advantage space in October.

Listen to our podcast below or read on for my insights.

“The Healthcare Industry Is in Evolution”

Rafalski acknowledges that “the healthcare industry is in evolution.” This is true for many reasons, of course, like the shifts towards consumerism and the retailization of healthcare. But one new shift, according to Rafalski, could change the way we plan for and measure objectives.

“There's another shift occurring, and that's all the merging of the insurance and provider spaces. There are a lot of systems that are contemplating or offering provider expense-sponsored health plans, and health plans are buying providers. And so there's this convergence, if you will, of those two areas of the healthcare space.“

The shift, Rafalski notes, makes a lot of sense. After all, “Why wouldn't you want your physician and your insurer to be working together to help you meet your objectives?” he says. This is particularly true as Baby Boomers age into Medicare.

This convergence, he says, means marketers will have to shift their metrics and KPIs when measuring success.

“Knowing how you're succeeding and specifically which metrics you look at becomes much more important. So in my view, gone are the days of general brand awareness building. It's still important, it's one of those core disciplines—you have to know how to do it—but to me the evolution is in the metric side of engagement and creating lifetime value around the customer. Whether you're an insurer or provider.”

Brand Metrics Shift Towards a Lifetime Value Model

Creating lifetime value around the customer means a shift in the way we measure our marketing success, says Rafalski.

“Traditional metrics like awareness, both aided and unaided brand equity, those measures are all still important. But as we transition this notion of creating lifetime value with the consumer and understanding how they view you over the course of their lifetime, I think is becoming a new area of opportunity for healthcare executives as they think about the relationship with the consumer.”

So, he says, the convergence of insurances and providers means a move from a fee-for-service model to a value structure in the way organizations are reimbursed. As a result, rather than simply looking at the cost to acquire a patient, providers should look at the lifetime value of that cost of acquisition.

This value-based model helps shift the focus towards a patient’s overall health and time spent with the provider.

“In the value world, we're focused on creating the most efficient healthcare offering while maintaining the health of the member. That may not be more clicks and more touches. So it's a different paradigm. What's important is you need a new set of metrics to be able to talk about that new paradigm. And that's where lifetime value and behavior over the course of the life of the consumer becomes even more important.”

Challenges to Lifetime Value Based Metrics

While it may sound difficult to calculate metrics based on the lifetime value of a member or patient, Rafalski says it’s really not.

“What's beautiful about the Medicare Advantage space is it's kind of straightforward. It's your monthly premium times members times 12 months. Your value calculation is pretty straightforward math.”

But there is one notable challenge for many health systems as they switch towards a lifetime value-based measurement method: getting executives to sign on. Starting with that straightforward calculation, Rafalski says, makes this task a lot easier. From there, you can do a deeper dive to gain insights on thinks like cost per acquisition and the most effective marketing media.

Rafalski points out that using a service line like obstetrics makes using this lifetime value-based measurement even easier to see.

"Think about the mom who has her first baby delivered in your organization. So traditionally marketers have said, ‘Well what's the value of that delivery? What's my contribution margin? And how many deliveries am I doing?’… Lifetime value says, ‘But what about the parents choosing a pediatrician aligned with your organization? And did we care for them for 18 years? And then after that 18-year period did they pick an adult family practice or internal medicine physician and continue using us? And as they aged in, did they continue using us for their more chronic diseases like hypertension, obesity and diabetes?’”

Always Adjust Your Strategy

Rafalski’s biggest piece of advice from our podcast is something I think anyone can benefit from. When you’re entering into the Medicare Advantage space (and anytime you’re launching a new marketing strategy), it’s important to continue to rethink and readjust. Rafalski uses a football analogy to demonstrate this:

“The advice I would give is have your game plan sketched out, know exactly what you're going to do, but also be aware that what you think might happen may not actually occur and you need to make some halftime adjustments. That's important.

You make some assumptions about what the broker community would deliver for you in the enrollment period. What digital will deliver. What direct mail will deliver. What traditional media will deliver. And then you learn from that and then you make adjustments. So on the metric side having really clean lead generation data that can tie back to how the member made the choice is critical.”

He leaves readers and listeners with a final piece of advice and a reminder that the shift towards a merging of healthcare providers and insurance is happening. It’s best to get ahead while you can.

“Stay hungry in terms of your understanding of metrics and what's going on in the marketing space in general. Because of all the evolution and merging of verticals… insurance and providers coming together, whether it's on the insurance side acquiring providers or providers getting into the insurance space. If you're not familiar with provider data, get familiar quickly. And if you're not familiar with insurance data, do the same. Because I think over time we're going to see a blending of those two industries.”

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