I frequently am in a position to tell young companies that our firm is not ready to invest in them because their business model is, at least in the current world, overly dependent on consumers paying for the product or service being offered. While there are a few examples of successful consumer-pay healthcare companies, they are so far exactly that: few and far between. While there is much in flux in the U.S. healthcare system that will likely change this dynamic greatly over the next 5-20 years, it is an almost-certainty today that consumers will open their wallets to pay for healthcare services only at gunpoint.
Healthcare, by which I mean doctor and hospital visits, diagnostic tests, medicines, preventive care services, you name it, is “supposed to be” paid for by insurance or the government or anyone except the individual, according to most individuals. People will shell out $5-10 for a pack of cigarettes or a triple grande caramel frappuccino with a muffin without a second thought, but balk at paying similarly-sized copayments for necessary prescriptions or office visits that could significantly improve their health. This is not an irony limited to people of lesser means, by the way. The phenomenon of not thinking one should pay for ones own “insurable” healthcare services is shared by rich and poor alike, just as is foregoing essential healthcare services because one doesn’t want to pay for them.
The above set of thoughts came roaring back at me while I was fortunate enough to be spending part of last week in Sedona, AZ at the Enchantment Resort. This place is pretty plush and one of its key attributes, amid the Vortexes and crystal power trips and Native American mystical traditions, is its spa, called Mii Amo (which is probably Native American for “welcome one percenters”). I spent one of my days in the spa, where I was hanging around soaking up the mystical power of not working, and I started to take a good look at the spa’s marketing materials, because I am a nerd who does things like that. What jumped out at me was how much time and space the spa spends marketing not just feel-good stuff, but what they tout as honest-to-God health and wellness services, FDA approval be damned. In fact, the spa brochure specifically says, that at Mii Amo “whether you are in good health or have nutritional challenges, learn tools to establish or maintain a healthy lifestyle.”
So why did this strike me so vividly? Well, here’s why: in a brochure replete with services that are more of the pampering or tree-hugging variety (flower essence bath or vision board creation anyone?), there are an abundance of services for which consumers drive a billion miles through the Arizona desert and pay handsomely, specifically to improve their health and prevent chronic illness, pain, and other medical miseries. These services include weight management counseling, exercise physiology, sleep therapy, nutritional therapy and associated healthy foods, menopause therapies, even one treatment, called Abhyanga Shirodhara, which purports to “stimulate the pituitary gland, help balance the endocrine system, and relax the nervous system.” In case you are wondering, this last one works by pouring oil on your head and draining all the money out of your wallet–$370 for 90 minutes and not a doctor in sight.
What I noticed was that the listing of the many health and wellness services that are offered at Mii Amo and many similar places around the world could just as easily been lifted from an Aetna or United Health or Blue Cross Blue Shield or Kaiser member booklet of covered services as from a spa’s marketing materials. And yet, when they are in the realm of health insurance, the carriers often have to beg and bribe to get people to use programs like these for the benefit of their own health. Not only are covered members unwilling to pay for most health and wellness services in the context of the medical system, but they typically must be paid to use them, sometimes at a rate higher than they would actually cost. In contrast, I had to jockey for position in the Mii Amo spa waiting room because people were lining up to pay $150-$400 an hour for this stuff; it was so crowded they had stopped adding people to the waiting list.
The irony was amplified for me during the actual facial I received (yes, it was good but they would not take my insurance card, go figure). The funniest moment was when the aesthetician told me she was going to put iPads on my face, to which I responded, “wow, getting pretty high tech here at the spa…..I didn’t know there was a facial app.” She told me that eye pads were aromatherapy-infused cotton pads (implying I was an idiot, which is accurate) that go over the eyes. Um, duh.
Anyway, the actually ironic thing was the description of the skin products she was using as they were applied to my face. If you have ever had a facial, you know they give kind of a running commentary about the amazing qualities of the products as they apply them. Just like movie theaters make their real money from concessions, spas make the big bucks when you purchase for home use the products they use on you (note: average spa line skin care regimen could easily set you back $1000 retail). So in the dulcet tones of marketing set to Yanni-like spa music, I was regaled about the aesthetic and medicinal qualities of the Lucrece Physicians Aesthetic Research brand of products, which relies heavily on the use of nano-peptides and stem cells for its efficacy. Granted, they are apple and lilac and grape stem cells, not fetal ones, but it was a huge part of the story.
I am in possession of the Lucrece Physicians catalog (tag line: Inspired by Nature, Realized by Science) and let me tell you, Pfizer and Merck wish they could produce materials this appealing and medically informative that would result in such big ticket purchases. If there were a medical clinic somewhere in the US that so blithely offered stem cell therapy, you know there would be protestors standing outside holding pictures on placards that we would not want our children to see. Because this stuff is packaged for the world of anti-aging and beauty, and because the apples and grapes have a hard time organizing a political rally, there is no controversy here, just a lot of credit card usage.
In fact, this particular product line is also distributed through physician offices, primarily dermatologists, that would get to bill insurance for the consultation on acne or rosacea that some of the Lucrece line is targeted to treat. I bet you that if a patient bought these products through their doctor they would no sooner pay for the doctor visit than they would pay to have their fingernails pulled out. And yet my facial and most of the other skin care services offered at Mii Amo were $150-300, plus tip. I wonder if there is a dermatologist out there who ever got a tip other than, “it would be better if you waived my copay.”
After my facial I was handed a “Personalized Rx Form” torn from a Lucrece Physicians “prescription pad” which provided me a handy dandy list of products I should buy if I wanted to keep the stem cells and peptides going. If I had purchased all of them it would have cost about $500 (a bargain!) but I couldn’t get my Medco card to cover it. And therefore I was a non-compliant patient and didn’t fill my prescription.
Anyway, the whole experience made me think about how the healthcare system needs to rethink the way it markets to and communicates with consumers. As I have written several times before, we are entering an age where consumers will be expected to pay for and be more accountable for, more and more of their healthcare decisions. This will occur concomitantly with the requirement that health insurers learn how to sell directly to consumers to survive in a world where a majority of individuals will likely be purchasing their health benefit policies directly through health insurance exchanges. (see HERE for more on that topic).
By catering to the side of us that wants to be nurtured and pampered, spas have figured out how to separate people from their money in the name of health and wellness. If health insurers and physicians can tap into that vein, the system may have a chance of fostering the preventive health models it so desperately needs to proliferate for the good of our nation’s health and the health of our national economy. Actuarial science and newly engineered payment structures and modern-day operational models will undoubtedly be key to the solvent healthcare system of the future, but old-fashioned advertising and marketing acumen may well be the secret sauce that makes it work. If you can get someone in Sedona to pay $480 to “Explore the energetic realm beyond the physical…by tuning into the helping energy of your natural intuition,” there’s got to be a way to increase grandma’s desire to pay $4 to fill her Lipitor prescription.
Author Peter Nivio Zarlenga has been attributed with saying, “In our factory, we make lipstick. In our advertising, we sell hope.” We are going to need a little bit of that orientation in healthcare to move to the next level of consumer engagement. Or as they say in the musical Chicago, “Razzle dazzle ’em and they’ll beg you for more!”