In Indonesia there’s an interesting development going on right now in health care. A nationwide health insurance is being rolled out. For everyone. Until now health care has been paid for privately or via private health insurances, but with the advent of BPJS (that it’s called) everyone can now afford to go to the hospital… or at least there’s fixed tariffs.
Before we continue, imagine the effort to roll this out in the world 5th biggest population… 250-270 million people. Most of which is very poor. I think this is such a great thing and I applaud the Indonesian government for doing it.
However… I work for hospitals in Indonesia. On the “other” side of things. For us this is also an opportunity since this will bring more patients to our hospitals and we get to serve those in need. But there’s another side of the story that have very interesting implications around service quality, of all things.
In this post I will tell you a little about that, quote a great book and then ask myself some tricky questions that I cannot answer. It will be a blast - tag along! So, there’s a set tariff for all treatments, operations and drugs from BPJS. Everything costs the same if you’re a BPJS-patients - regardless of where you go.
Let’s say it differently; if you go to the best hospital in town, with state-of-the-art equipment and nurses (and other staff) trained and certified according to all known levels and rules… you pay the same amount as if you where to go to the worst hospital in town.
Those are the rules of BPJS. They’ve take price out of the equation.
Oh, by the way, 3-5 years from now there will be no hospitals not supporting BPJS. There are now, because not everyone has implemented it yet. But it’s something you’ll have to do, according to law, if you want to continue to run a hospital in the future.
New rules - new strategy
Now, if you where a director of a hospital and this happened, there’s an interesting question that you could and probably should ask yourself here:
If the price is the same at all hospitals, even the very best in the game, why should the patients come to my hospital?
Because it’s relatively easy to say; well, at least we are very cheap and most people cannot afford to go to SILOAM hospital (best in breed in Indonesia), so they come to us.
But there’s a new rule book now. Price is not a factor. You have to compete with something else. What? Why should people come to your hospital?
To me there’s only one answer: quality. They come to us because some aspect of quality is better in our hospital than anywhere else. Better nursing, friendlier, better doctors, better equipment, better in area X or what have you.
And all of a sudden we are competing with the parameters that matter most, not taking the easy way out and competing with lower pricing (and worse quality).
Let’s leave the hospitals here and step back a couple of steps. Did you see what happened there? One basic presumption, or aspect was taken out of the picture and that made us rethink the basis of our existence. Once we had done that we came out with a strategy that actually was sharper and more relevant for our customers than we first had.
Competing with prices might be one way but it’s not really the best thing to do since that often comes with a sacrifice. Often in quality.
Yeah, the things I buy at [low price hardware store name here] breaks, but look at the prices
Starting in quality also start to address and handle the real need of our customers. If high quality is our over-arching goal the other parameters (like price, resource and time for example) falls naturally out from that goal.
If we're going to be best in nursing in our town we need salaries like this, to train them like this, to staff like this... now - what does that cost? How many patients per day do we need to serve to keep this running? Is there a business case here? What, in our processes, do we need to change to get this to work?
The reasoning is turned around from how it’s normally done. This is our goal (quality in this case). Now, what do we need to change in the way we work to get there?
Challenge our assumptions
Let’s step even further back and see if there’s something more we can learn here.
A couple of months ago I read Decisive by the Heath Brothers. Yeah, I’m a big fan and you should read Switch and Made to stick. Decisive is about making better decisions. It’s not the best book I’ve read by them but it’s good. Lot’s of good anecdotes in it. Let me tell you one of them.
This is under the heading “Reality - test your assumptions” and “Consider the opposite”. The argument is that in order to make a better decisions we have to vet it against reality and one way to do that is to consider what happens if we did the opposite.
The authors tell a story (because that’s one good way to make it stick) about a company called DSI - Decision Strategies International. Their CEO came up with a very controversial way of testing their assumptions - he asked his staff to make mistakes on purpose. Not only that - make the biggest mistakes possible!
They listed all their strongest held beliefs about their line of business and started to see how they could come up with ways to test if this was actually true or not.
For example, at the top of their list was: “We need experienced consultants on the team”. Sounds very reasonable in their line of business, but also very easy to test; take in an intern (or freshly baked analyst) and see how it alters the team and quality.
Once again we see that by eliminating one factor, or assumption (“we have to compete with pricing”, “we need lots of experience in the team”) we are given the freedom to analyze the problem anew, with a fresh perspective.
What good can come out of that? Have we, in fact, missed the real reason people choses others over us?
What are the assumptions that I am building my way of behaving, acting and consulting? How can I challenge them?
If X (price, quality, knowledge) was not a factor - why would someone come to me? Would I want to do business with those customers? Why? Why not?
If our business did the opposite from what we are doing today - what would be the consequences?
I once worked for one of the really big insurance companies in Sweden. A friend of mine did some consultancy there for their top management group. We often had coffee together (me and my friend that is…) and I found that very interesting to listen in on what was discuss many many levels above me.
One day he said:
Today I asked them who, of their competitors, they feared the most and why.
The answer? Well, it took a couple of minutes to get to but:
No one. There's no threat to us. We could most likely mess up ourselves before anyone around us causes any problem.
That made me so sad. And scared. Because they are wrong. Maybe not one single player will run them over fast, but in selected areas they can never compete with someone that move fast.
Is there a “what if we take X out of the picture” in your business? Try it and see if any new goodness comes out.