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Hospital Competition: The Unusual Suspects

August 28th, 2006

I was telling one of my friends about my new hospital job, and he was surprised, "hospitals have competition??"

I tried explaining all the usual suspects - those physicians who open up their own shops, other hospitals trying to woo patients away from us, all of these new stand-alone quickie-surgery & diagnostic chains popping up left and right. When hospital execs across the country present to their boards, these are fierce competitors we show in the presentation appendices.

Then, our conversation got more interesting. I told him that because healthcare is changing so rapidly, hospitals have competitors we've never dreamed of until now. Here are 10 competitors that aren't traditionally considered, but shouldn't they be?

1. Hotels - Consumerism in healthcare creates patients who ask, "why can't I be treated in the hospital the same way I'm treated at a hotel?" And truly, many hospitals are starting to implement hotel-like amenities to drive satisfaction and loyalty.
2. US Preventive Medicine - they are planning on building 150 "Centers for Preventive Medicine" in the next 5 years. They will be partnering with hospitals, but if they don't partner with yours, then guess what - they're competitors. Their emphasis on preventive health and executive physicals (for everyone) is right on target. We hospitals suck at taking care of healthy people. And even if we are superb at it, people don't think of hospitals as a place for healthy people to go.
3. Insurance Companies - they have patient data - A LOT of it. Where there is data, there is the potential to build relationship. And that's what they are doing right now. If they own the patient record, who knows how else their reach into the hospital can be furthered?
4. Pharmaceutical Companies - If your hospital has a research institute, then you know what I'm talking about. Part of attracting the best doctors to our health system is to give them the latitude to conduct the best research in their field. So, big (and small) pharma are competing for the same brilliant docs.
5. Walgreen's / Target / Retail - The Mini-Clinic Revolution is imminent. Folks are still learning a lot about how it should exactly be done, but the money and the demand is pouring in. Expect 1,000+ mini-clinic locations without 3 years. All those millions of people who don't have a PCP and will realize they need one after a Target Clinic check-up - which hospital will they be referred to? Yours or your competitor?
6. Revolution Healthcare - This new healthcare VC led by Steve Case (founder of AOL) is a black box. They've got money, and they've hired some big guns. And they're marketing genuises. What in the world are they up to? What disruptive healthcare idea are they brewing up?
7. Coca-cola - Coke is an example of one the world's most powerful brands. We compete with Coke in the sense that we are competing for mindshare in people's brains. There is only room for so many brands, and the ones who spend the most $$ on brand-building (and then follow through with the experience / service / product) enjoy the most loyal customers. Sure, Coke isn't in direct competition with us in healthcare (in fact, Coke probably indirectly brings in patient volume!), we must understand that consumer's brains are getting more and more fragmented, trying to remember more and more brands. We are thought of less and less, and thus, we are less and less relevant.
8. Resorts - More and more resorts are combining the best of the resort experience with sophisticated medical equipment. Lots of "self-payers" are putting up big bucks for what amounts to an executive physical.
9&10. CNN & Google - I'm mentioning CNN & Google as examples of prominent information outlets. Just as we are competing for mindshare for our brand, we are competing for mindshare in terms of providing health information. Where do people turn to when they want to look for good health and medical information? Is it your doctors, your website, WebMD, or CNN? While information like this doesn't generate direct profit, those hospitals who know how to get into people's heads with credible, relevant information are the winners.

I'm sure someone will argue that the line between competitors and collaborators is essentially non-existent in healthcare, and I would agree. But I think you see where I'm headed with this - If insurance companies own a large part of the patient relationship, if media companies own the consumer's mindshare through their brand, if the retails get all the easy stuff, if the resorts and medical spas get all the high-end stuff, if VC money finds a model to motivate healthy living, and if this preventive medicine chain really does prevent... what's left for hospitals?

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