Loyalty Programs in Healthcare

I know several people working on this, and I think it will be an interesting challenge.  As I have been pushing for a while, healthcare needs to embrace ideas from outside the industry.  Loyalty is an good one.  But, healthcare has an issue.  For example, how do you reward use of pharmacy without incenting inappropriate utilization.  Or, how do you give points for using an ER without encouring “emergencies”.

The right answer is to encourage wellness, but the question is who pays for this program…the employer is the best option.  Managed care could pay for this, but the question is what is the likelihood of that patient staying covered by the same insurer.  Here is an opportunity for some universal solution where wellness costs were allocated over time to the insurers which owned the patient (e.g., like a depreciating asset where you pay for the initial years even though it may continue to hold some value).

But wellness is not loyalty.  If I am a pharmacy, I want you to continue coming back.  If I am a hospital who keeps building specialty centers, I want to get all of your healthcare dollars.  Probably (if it was possible to get), a loyalty program tied to share of wallet would be right.  For example, if 80% of your pharmacy dollars are at my store, I will give you 1,000 points.  If 90%, then 1,500 points.  Etc.  You would probably need a grid system so that those with the most Rx had the base point system multiplied otherwise someone with one Rx gets the same points as someone with 10 which doesn’t make financial sense.

As mentioned in US Today (July 24, 2007 pg. B1), membership in reward programs is significant across several industries (see the snapshot of reward membership in the US based on data from Colloquy below).

  • 254.4M in airlines
  • 238.7 in financial services
  • 137.4 in specialty retail
  • 124.3 in grocery
  • 107.9 in department stores

A reward system is needed badly in healthcare.  We have plenty of sticks but very few carrots.  Both are necessary in any environment.

As companies like Maritz which have worked in the Loyalty space within other industries increase their focus on healthcare, I think we will see some evolving models.  Stay tuned.

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Trackbacks/Pingbacks

  1. Intelligence Briefs « Corporate Intelligence - July 27, 2007

    […] Prediction: Someday loyalty rewards programs (analagous to frequent-flier miles, etc.) will come to the health care industry. But the industry will have to figure out who pays for it, and how to avoid creating incentives to overuse or abuse the health care system. — George Van Antwerp, “The Patient Advocate” […]

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