I’ve been working on a business model for a new initiative for some time now, and as part of the process I have looked at other business models that are already in place. As I was reviewing the health care model, the idea came to me that it may be almost perfect. I look at a few aspects of this model below, then pause to ask another question or two. I hope this is a very light read, but I also hope it gets you to pause and think about some of the questions.
If you don’t have customers, you don’t have a business. In the health care system, literally EVERYONE is a customer. Everyone wants to retain their health, or get assistance recovering from health related issues. There is no sales and marketing required because you already have a strong customer base. You may not see many of your customers very often if they are healthy, but as soon as a health incident arises the customer is on their way to the doctor. Perfect!
One of the key elements for a business model is to establish the appropriate pricing for your product or services. In most health care systems, these prices are set by a governing body. Even better, the customer has no idea what the costs are, they don’t have to worry about how much it’s going to cost because, for the most part, the costs are handled by the health care system. To the consumer, the costs are virtually free. Since there is no reason for the customer to worry about costs, there is also no reason not to be a consumer. Perfect!
The health care system has many partners, though it probably doesn’t look at them that way. Here are a few:
There is competition for the health care system, some practices provide alternative solutions, others offer complementary solutions. Each of these is shown to be successful for various health issues, but for the competitors the key distinction is that the customer pays out of his/her own pocket. The services are not covered by the health care system. So while there is competition, it is highly minimized. Perfect!
While I could continue, the question that starts to come to mind is “what happens when a system is too good?” What if it has too many customers? What if more and more people need to use the system, creating far more demand than can be covered by the system? Do people have to wait too long for services? Do they get sicker as they wait to receive the services? Is the “free” model sustainable, after all it’s not really free – it’s covered by tax dollars? If the system becomes unsustainable, do services start to be removed from the system? If services are removed, do people end up even sicker?
What’s the Answer?
In every business model, a key to success is to generate as many customers as possible, as long as you have the ability to service the needs of the customer. When the “funnel” is too big, the model is no longer sustainable. The business can either find a way to service its customers better such that they do not return to increase the funnel too quickly, or customers will start finding other options.
This is where most health care systems are today. They are focused on treatment of conditions and are not focused on the prevention of illness and the retention of health. The health care system has a choice. It knows how to reduce the funnel, does it have the courage to do so?
I’d love to hear your thoughts in the comments below.
P.S. Oh yeah, what’s the business model we’re working on? The model is to use a community-based approach to help people retain their health and/or return to health. We are connecting Thought Leaders and engaging community members to uncover root causes of health and social issues and drive community led solutions.