Price and Service Signals: Challenge and Opportunity
22 September 2014
Chat to a GP practice manager about missed appointments, patient complaints and crowded waiting rooms. Pop into an A&E somewhere near you on most nights: just sit and watch. Listen to nurses’ tales of patient reactions in the wards and along the corridors.
There are two common threads: rising service expectations and the complete absence of any cost-benchmark.
Expectations first. Ours is an advanced western economy. It is, today, dominated by services. They constitute as much as 80% of GDP, according to some estimates. Service orientation is, by extension, tangible everywhere. From holidays to restaurants, and chic boutiques to (yes) smiling, service-trained lawyers. The benchmark of acceptability is relative and rising. It is a tide which leads us all to expect ever higher standards in most scenarios. So, the patient in the surgery or ward arrives with pre-set consumer-society expectations of how s/he will be treated. Like it or no, that’s the way it is.
Except in most contexts, the service layer and brand align typically with a price signal. McDonalds vs. The Ritz, Aldi vs. Waitrose, Kia vs. Mercedes – in all cases our expectations software is engaged and runs. And most consumer marketing assumes that this model (solidly founded on extensive social psychology literature) will function.
But at the surgery or A&E? A little gentle research among your non-medical friends will rapidly expose great uncertainty about true costs. (I.e. salaries plus fixed overheads plus variable treatment costs plus contribution). In my experience even best guesses are often only 10-20%.
Now imagine. A patient exiting A&E patched up at 4AM. Or leaving hospital after major surgery and a few nights’ stay. At reception s/he receives a comprehensive invoice – over-stamped ‘Paid by H M Government’.
Price-signalling theory would predict a serious and beneficial reaction in the way people demand, consume and respond to our healthcare services.
Politically impossible of course. But worth a reflection?