Henri Cattier

Wal-Mart’s stock had a really bad day yesterday. The retail behemoth’s shares cratered 10% as the company updated financial analysts on their business and forecasted results. The combination of higher labor costs, stiffening competition from the online juggernaut Amazon, a difficult entry into the “small box”, urban markets and the high investment expense of expanding its grocery business were all cited as factors. What is surprising to me is that people were surprised. eCommerce and Amazon? Are you kidding me? You didn’t see that coming?

download-1One of the popular metaphors used to illustrate the opaque US healthcare system is the difficulty American consumers have “shopping” for healthcare and how this is juxtaposed to their retail experience, especially with vendors like Amazon. In an increasingly high deductible, patient-centric cost model, where consumers assume a greater share for out of pocket expenses, the US healthcare buyer is struggling. They desperately want more transparency, more price competition, more innovation in the delivery of services, more personalized recommendations and more compelling incentives and rewards to engender loyalty. When I think about Wal-Mart’s woes, I can’t help but think about the similar disruptive effects occurring in the US healthcare landscape.

Competition facing the formerly omnipotent hospital is coming from all quarters: urgent care centers, clinics inside big box drug stores, dialysis centers, and ambulatory surgical facilities now doing more complex orthopedic procedures, etc. The patient has more choice than ever and the big brick and mortar community hospital no longer has a monopolistic grip on care delivery. Hospitals and large provider groups are not yet in an existential battle for survival, but they need to quickly figure out how to drive patient loyalty if they are going to thrive. This doesn’t just mean going out and acquiring those community physicians who are steady patient referral sources to their hospital’s labs, imaging centers and operating rooms to de-risk their revenue sources; it increasingly will mean cultivating the loyalty of the ever more discriminating patients themselves.

This is where it gets back to what Amazon seems to be doing right and where Wal-Mart may be struggling. Consumers like rewards and expect their preferred brands to know them personally. Why are hospitals, managed care organizations, providers underestimating the power of rewards and incentives? Why are US banks and HSA-issuers not connecting the dots? I think we are about to see a golden age of innovation at the nexus of payments, wellness and healthcare, and the winners will be firms that get it right and push the boundaries.

Can you imagine a major network-branded, hospital/health system-logo’d credit card that drives statement credits and discounts for medical care back to the Cardmembers or better yet, can be designated by the consumer to help a hospital deliver more charitable care?

Can you imagine enrolling in an everyday spend shopping program so that when you shop via your health insurance carrier’s ecommerce portal, a monthly credit is deposited into your healthcare savings account that is a % of that spend?

Can you imagine providers using rewards to make sure that their patients share in the financial benefits of quality outcomes and bundled payments?

Get ready it’s coming.