Building a successful business doesn’t always go in a straight line. Even in failure, hopefully there are some positive outcomes. Perhaps the best of these are “lessons learned”!
Case in point: A couple of years ago, I wrote an article in Becker’s Hospital Review entitled, “Sometimes You are Ahead of the Curve: 4 lessons from a Failed Price Transparency Venture” that I’d like to expand upon here.
Even with the best of intentions, great ideas often fail
In 2012, I agreed to supply some sweat equity to a venture that provided bundled healthcare pricing. With the increasing consolidation of healthcare, it made perfect sense to gather all of the various elements of a medical procedure together into one package, allowing the consumer to make an informed decision on a hospital and a doctor based upon pricing, hospital reviews and the physician’s experience.
To me, it was a pretty easy concept to understand. Perhaps even a Blue Ocean®! We all know that consumers go online more and more each day for their healthcare needs, researching procedures, medical facilities and physicians. Then they compare pricing and voilà, they’ve decided where and by whom they’re getting their procedure done, without ever setting foot in a hospital or meeting the doctor.
Our bundled concept seemed just the ticket.
Yet the venture failed. And it failed essentially for 4 reasons:
- First, while hospitals understood the bundled healthcare pricing concept, we couldn’t get them to sign up for it. I am still not sure this was because we couldn’t find an early adapter in the marketplace, or because there was so much noise around the Affordable Care Act at the time, or because of the consolidation of healthcare systems. Whichever of these was the case (maybe all of them), we were stopped by another big hurdle: There was no trailblazer…no bold leader on the institutional side who said, “We’re in. This is the way we are going to do things in the future.” Consequently, without this buy-in from the top, there was nothing to drive the change-averse worker bees forward. And trust me, healthcare is very slow to adapt to changing times.
- Second, the year we were trying to get our idea off the ground (2012), hospitals were being required to take on new tasks and responsibilities which came with associated costs that were unclear and unknown. At Simon Associates Management Consultants, we actually met with CFOs of healthcare institutions who admitted that they did not know what their costs were on a micro level. Perhaps this has gotten a lot better over the last five years but I was amazed by what that statement revealed (unthinkable to me because I was used to working in an industry where one-tenthth of a percent was important). I guess during the fee-for-services era, precise costs didn’t matter — just pass everything on to the end user, or more accurately, his/her insurance company.
- New concepts require a new belief structure, a new understanding. And a willingness to change. First, you need to introduce this new concept to the consumer in a compelling way, which requires both outbound and inbound marketing efforts. For this change to happen long term (not just for a week), the education process must take hold.
- Frankly, our venture was underfunded. We spent so much time working out the technology end of it that the sales and marketing activities were severely underfinanced.
Were there some significant lessons learned? You bet!
In order to become real, great ideas require commitment. Consider the example of Post-it® Notes. 3M believed in their product but it still took 10 years to gain acceptance with consumers. Sometimes great ideas just require a pile of money thrown behind them. In the case of our bundled healthcare pricing concept, it required marketing and sales funding, which didn’t happen.
Again, why did we fail? Perhaps the timing was bad. Perhaps the marketplace was not ready for it. Perhaps massive upheavals in the healthcare sector made it difficult to focus. Perhaps a combination of all three.
But if I am reading the tea leaves correctly, seeing the changes driven by CMS as well as industry consolidation, I would say that we missed our opportunity. The pundits are now predicting bundled pricing over the next half decade. And it is already starting in a big way!
So where did this leave us? In a perfect storm of “no.” NO monies to gain distribution, and certainly NO monies to affect consumer behavior. A real chicken and egg issue. There are very few businesses that you can simply “will” to grow from nothing into something.
Try as you might, underfunding is a recipe for failure.
I don’t know if ultimately this venture would have been successful but I do know that trying to launch an innovative product without a well-thought-out and well-funded plan is most likely not going to work.
Moral of the story: Take my advice and don’t make my mistakes!
Could we help you implement your great idea?
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Andy Simon, Partner
Simon Associates Management Consultants