The blurring lines between consumer retail and healthcare: the case of Mt. Siani

This winter, while perusing the subway marketing — which offers the longest impression a marketer can hope to achieve with New Yorkers these days — I noticed something new on the train walls. It wasn’t an ad for a one-year-old startup offering suitcases for your wanderlust or bed linens for the affordable luxury metropolitan market. It was something else positioned as cutting edge and innovative — the kind of place you’d want to work for or buy from. It wasn’t an ad from a snazzy millennial-run company, but from a hundred-and-seventy-year-old, massive hospital. As large companies are being disrupted by innovative start-ups, large hospitals are finding themselves in the same boat, fighting for market share as their primary path to growth. Now even the old hospital guard has decided to try out some new tricks.

Healthcare companies, primarily in the startup space, have been behaving more and more like CPG start-ups over the past few years. If tracked by subway ads alone*, one could say it started with Capsule, the prescription delivery service. Capsule has helped lead the direct-to-consumer movement in healthcare products. Followers in their footsteps include Hims, Inc. a “health and preventative self-care” company providing an erectile dysfunction product, and Hers, Inc., a birth control provider which advertises “without accessibility, there are no solutions.” Their ads are now plastered on the walls of West 4th St. station and the turnstiles of Times Square.

It appears that large hospitals like Mt. Sinai are feeling just as exposed to and inspired by competing startups as large CPG companies have been over the last decade. Taking a page from the consumer marketing playbook, Mt. Sinai is working to capture mindshare with subway ads. Notably, their ad featured services for the blind — in black-and-white print. You could guess a pragmatic motive, marketing to caretakers of the visually impaired. But with their other patient attraction efforts, it’s more likely they are trying to tap a new market – the millennial. Mt. Sinai is also partnering with a strong brand to win in another market segment: the male market. Through its recent partnership with Man Cave Health, Mt. Sinai is leveraging their unique market positioning – a sports theme – to attract men to it’s healthcare services – in this case prostate health education and care.

There’s another market local practitioners have noted Mt. Sinai’s active sales and marketing efforts in – the elderly poor, with Medicare and Medicaid benefits. And according to independent doctor’s, rather than posters and upgraded, sports-themed waiting rooms, they have used their own nurses and doctors to drive patient conversion. Several private specialists in Harlem have noticed a number of patients leaving for Mt. Sinai, sometimes at their front door. “St. Jude’s, a Mt. Sinai affiliate, used to park its van in front of our entrance,” one doctor noted, “and offered services to my patients.” Another doctor commented, “My patient was surprised when I was no longer covered by their insurance. It turned out on her last hospital visit, her doctor recommended switching from one Healthfirst insurance to the Mt. Sinai Healthfirst insurance. Now only Mt. Sinai services are in-network for her. She didn’t realize that was happening.” Mt. Sinai, it seems, is behaving like any large, mature company. To grow, it must reduce costs and take on new markets. Unfortunately, that means healthcare continues to become more of a business, where hospitals may focus on bringing in patients more than quality of care.

The business of health today increasingly resembles consumer retail, with a growing focus on consumer appeal and patient attraction and retention. But not all aspects of healthcare delivery benefit from business thinking. Perhaps consumers have come to expect slick marketing campaigns in other realms, but personally, I don’t want to be marketed to; I want quality care delivered.

*The measure of New York famous. Includes Dr. Zizmor, but also fast growth startups like FIGS scrubs.

Will hospital costs go the way of CEO pay?

Clearly legislators have been reading my blog and were touched by the story of my healthcare emergency this past 4th of July. My experience embodied the every-man and moved our government to action. The result? Mandated price transparency for hospital services. Yes, hospitals nationwide are now required by federal law to reveal their once-secret master price lists. However, while I know our Senators were trying to help a millennial out with out-of-pocket costs, there’s a real risk of unintended consequences. In fact, prices might just go up.

As a parallel, let’s take the case study of CEO pay in the 1990s. In 1993, the Democratic Congress under Bill Clinton passed a change to tax law that capped companies’ tax deductions for executives’ compensation to $1 million per executive per year. Concurrently, starting in 1992, The SEC began requiring standardized disclosure of compensation in proxy statements in hopes of making it more difficult to disguise pay that didn’t incentivize managers, or was excessive. Yet this move to transparency and incentives alignment backfired; by 2000, the average CEO pay had nearly quintupled to $19 million.

What explains this massive increase? In short, the practice of benchmarking CEO pay. CEO base pay was never cut, because CEO pay became increasingly based on benchmarked lists limited to top-paid CEOs in that field. This selection bias in comparison sets resulted in a rising tide for all CEO packages. At the same time, because the tax amendment did not penalize performance-based pay, compensation committees started offering a growing number of stock options as an incentive to CEOs. Options could only become valuable as the companies performed well. And in the late 90s, as the stock market rose and pushed all options “in the money”, total compensation rose in lockstep.

Will a similar comparison bias happen for medical costs? Or will payors temper rising costs with their buying power? Only time will tell.

The existential threat to drug store pharmacies: the battle of price and quality

CVS recently announced its Pharmacy Savings Finder, a tool that promises to identify the cheapest version of a medication that a patient can buy. Essentially, they are promising to do comparison shopping for you. It seems to be a long awaited counter to a four front battle. Not only is CVS competing with other pharmacies, but also online Rx websites, startups and, more recently, large corporations.

Long before CVS’s Pharmacy Savings Finder, there was Walgreens’ Prescription Savings Club, Walmart’s generic prescription program, and various other brick-and-mortar players offering to find savings for consumers. So why the sudden urgency to take action and join the price wars? The rising cost of healthcare is not new news, and remains a chief concern for the poorest and the sickest. One possible catalyst appears to be the proactive industry invasion by mega-companies that are starting to feel the exposure to healthcare cost risk. I’m referring to the largest titan team-up in history, announced in January, with Amazon, Berkshire Hathaway and JPMorgan Chase. The three promised to form an independent healthcare company that will provide, among other things, cheaper drugs. Amazon’s acquisition of PillPack, a startup that mails prescriptions to people who take multiple medications, has further signaled that competitive pricing and industry-leading speed may be on the way to a historically manual and expensive service.

Up until this year drug store pharmacies had clear competition for each vector, quality of service and price. Launched in 2016, Capsule Pharmacy’s value proposition included consistent inventory, shortened wait times, and better access to medication information. And for years vertical search offerings online, such as WellRx or, offered a quick scan by drug, category, or discount program to find the best price. These are classical positionings in the business world; low price, high volume, and basic service means thin margins but leads to larger market share. Distinctive services can allow companies to justify a higher price and be profitable but with fewer customers. Now, with mega corporate partnerships, traditional drug stores most compete more effectively on both service and price.

 Businesses are typically well positioned to succeed if they are in the bottom left (think Walmart) or the top right (think One Medical). In pharma there appears to be a shift towards the value-for-money segment, the bottom right.
Businesses are typically well positioned to succeed if they are in the bottom left (think Walmart) or the top right (think One Medical). In pharma there appears to be a shift towards the value-for-money segment, the bottom right.

Perhaps this is the shakeup that the Pharmaceutical industry has needed. Operating health services with a profit motive as the primary impetus can only lead to worse health outcomes for patients. With nontraditional industry actors motivated by the health of their employees shaking up the status quo, we can more easily hold traditional industry players to account.

I was in stitches: the most American 4th of July

As I was bleeding out on the pavement, I reached for my iPhone to check my insurance app. Maybe someone was having a sale on stitches this week, ideally someone close by. However, because it was the 4th of July (a typically injury fraught holiday), it seemed like surge pricing was in full effect. $75 just to have a look. Thus began the mental calculus many Americans are all too familiar with. Do I really need stitches anyway? I mean maybe I could get by with a bandaid… a really big bandaid.

At this point, I’m usually tempted to open Tinder and start swiping until I match with a doctor (or at least a medical student). I’m in no position to fight temptation. Even at $16 for a cocktail, it’s cheaper than urgent care.

Now I’m not going to say I was biking while intoxicated, but I just started this new starvation diet where you don’t eat anything for the first 36 hours, then you’re allowed 6 almonds for the next 72. Perhaps I was a little light headed, but definitely still in control. I can handle my almonds!

Just my luck, I matched with Dr. McDreamy, sitting right in the closest urgent care center.

Me: Hey, you busy?
Doctor: I am at work right now, but this guy isn’t getting any better no matter what I do. Sup with you?
Me: I’m having the most American of 4th of Julys. You really a doctor?
Doctor: Yep
Me: Pop quiz! How would you treat minor abrasions and multiple epidermal lacerations on the left leg?
Doctor: Umm…I usually start with drinks
Me: Great! What kind of alcohol ya got? Rubbing? 😉
Doctor: Wow, it’s like you know me.
Me: Well, I’d love to get to know you more. In fact, I am heading over to you right now.

I hobbled my way over, credit card in hand. In the end I wound up with a rather large bandage. I’m sure it will be fine. Happy 4th!