As some hospice agencies grow bigger, small & mid-size agencies, the heart & soul of hospice, need the right tools to compete. Some interesting takeaways from the LexisNexis report on the Top 100 Hospice Providers of 2019. Click here to view the report.
The top 100 hospice providers account for 41.82% of the market.
The top 10 hospice providers account for 18% of the market
There are approximately 5500 hospice agencies in the USA.
Americans Prefer Small Business
Gallup’s poll shows that Americans have a great deal of confidence in small business, more than three times the 20 +-% confidence Americans have for big business.
In industries such as retail it makes sense that while consumers prefer small businesses to national conglomerates, product availability, selection, and price <think Amazon vs local bookseller>, overcome personal preference. However, in the hospice industry, product availability & product selection aka: core services, as well as price, are regulated by CMS and are relatively flat compared to the differences between product sellers.
While it is true that large hospice providers have economies of scale, the majority of patients/caregivers choose a hospice agency because that is the only hospice provider, or one of the few agencies, their current health care provider recommended.
Big Business Blind Spots
As any consumer you probably already intuitively know some of what big business gets wrong.
- Standard Operating Procedures = Bureaucracy: Big companies are not nearly as agile as small businesses. These layers of bureaucracy though a necessity in big business as different departments must be compartmentalized in order to be manageable, often create indifference. Procedures are laid out and the staff must follow the procedures that have been laid out. When a client experience falls neatly into pre-laid out procedures, no one is the wiser. However, even a slight variation and the lack of staffs’ self-determination and decision making becomes transparent.
- Communication: Big businesses by their nature must develop a complex communication hierarchy. This complexity means situations or responses to questions or requests that could be dealt with immediately by a trained staff member, must wait while communication travels through the communication train from the bottom through a winding hierarchical top and back again.
- Inflexibility/Customer Service: When dealing with staff who are so far removed from the top level of managers, directors, and founders, whether it’s a cable company call center or a hospice agency call center, the results are the same, a void where the personal touch should exist.
- Lack of Mission: It’s hard to feel personal about something so impersonal, like a major corporation. In most big businesses staff members are far removed from the top-level company leaders. While individual leaders may feel their corporate mission, especially if they were part of the founding team years ago, the mission for most big businesses is ROI. When one of the biggest hospice agencies is owned by a plumbing company and listed on the stock exchange, it’s beggars the imagination that a personal mission is anywhere near as important as their quarterly earnings report.
Why Americans Prefer Small Business
There are good reasons why Americans prefer to deal with small businesses – and remember, your referral sources are people first!
In some ways, many of these reasons are interrelated; ‘The American Dream’ lives right down the street from ‘Owners being personally invested/accountable to customers.’ Creating jobs for the local economy & community involvement are the results of owner investment & accountability which is how one achieves The American dream.
While these responses can be parsed out for some practical reasons, such as local jobs, people do not prefer small businesses as a dry academic economic choice wherein they calculate the greatest benefit to their micro-economy. People prefer small businesses because through a combination of these issues, they feel something.
How Big Business Beats Personal Preference
As hospice is a flat market with relatively similar services & pricing is not typically an issue, how are 100 hospices out of about 5500 agencies able to capture approximately 40% market share?
Closed Network Providers: Agencies that are members of a closed healthcare network, owned by or affiliated with and therefore a ‘preferred provider’ for a hospital, healthcare system, nursing home group etc.
Economies of scale: Large agencies can afford to spend more on marketing and other services, such as opening satellite offices or pop up palliative service consultations within open healthcare networks.
Aggressive Mimicry: Similar to the wolf in sheep’s clothing strategy. You may be familiar with examples such as the large food conglomerate that buy a small organic food company and does not change the brand. Or the small craft brewer bought by a global bottling company that still pretends to be a small craft brewer. Whether it’s through mergers & acquisitions and maintaining the local agency name, or simply marketing their company where each local office appears to be a small agency merely affiliated with the national brand, the strategy remains the same, pretend to be small to get the benefits of preference.
Lack of Understanding: Consultant based big business hospice providers know the person who ultimately decides which agency to sign with, whether its the patient or caregiver, is usually relying on their local healthcare provider who made the referral. The referral confers on the agency the sense of being local as well. Further, the recipients of hospice services often don’t know much if anything about the agency itself, do not yet understand and don’t have the time or energy to pursue choices. While they may sign the consent paperwork and receive the hospice services, the referral source is the true customer.
How Small & Midsize Hospice Providers Can Compete
Check out a recent Hospice Tools Article: Tips to Generate More Hospice Referrals.
- Differentiation: Check your messaging. Is your company messaging the same or different than that of the big agencies in your area? If your agency is one of a few names given to a family, they will check out your website to get info before your consent meeting.
- Gorilla Strategy: Your agency is competing with the 800 lb gorilla. Make their weaknesses your strengths. They’re a bureaucracy, you’re agile. They take a day to respond to a Nursing Home’s D.O.N’s question, you respond within an hour. They’re inflexible, you’re message is that you’ll adjust to the facilities needs.
- Be Proud and Make Them Feel It: You’re not some consultant led plumbing owned hospice agency in it for government funds. You’re a local provider and proud of it. You’re from the community, in the community, providing for your community. You don’t have 100 locations, you have communities you’re a part of. Those feelings are true and effective for the nursing home social services director who may be a referral source as they are for the daughter who flew in to take care of her mom. Their staff can’t articulate a mission, you highlight your agency’s mission everywhere.
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