The “thin value” of healthcare

By: Neil Pithadia

Moe, the 2-star hotel, repairman

I arrive at my hotel on a palm tree-infested road, aptly named Hotel Circle in San Diego.  As I approach my accommodation in my rental car, a man in a blue shirt that looks of Persian descent greets me.  As he approaches me, I see his name, “Moe” sewn into his shirt likely shortened for Mohamed.  His sleeves are rolled up with a paint bucket in his hand, his pants are well worn with paint stains.  I quickly deduce that Moe is the hotel’s repairman.   He asks my name and we make small talk.  We depart as I park my car and gather my briefcase to check in.

I enter the small front office,

“Good afternoon, Mr. Pithadia.  I hope your journey from Texas was well.”

Perplexed, I ask the front desk person how he knew my name and furthermore how did he know I was coming from Texas.  “Well, Mr. Pithadia I would like to say I have special powers, but you see Moe, our repairman, let me know that you had arrived and as per Texas, when booking with our agent, she made a note in our system that you were coming on business from Texas.  So would you like to see my next trick?”  Astonished, I nodded in a child-like fashion.  “Very good, you see this contraption to my right, I will now press this button and it will produce a document.  This document is very important, so please focus.”  He pulled the document from the laser printer and flipped it so that I could read it, “you see that line, I need you to sign it should you incur any incremental charges.”  I chuckled as I signed and left the front office.  I booked the hotel online two months ago getting a 15% discount.  I thoroughly read the reviews online which noted an average of 2-stars and most recent reviews were positive so I already knew I was getting good value as I was looking for an adequate no-frills budget hotel to sleep for the night.

You expect this type of welcoming at a four or five-star hotel, but not the $58-a-night Vagabond hotel.  The check-in service was not expected and I wanted to know why Moe did what he did.  I caught up with Moe working on some fencing and asked him if he did this for all customers.  He chuckled with a genuine smile.  He mentioned that even though this was a budget hotel chain, the manager of the hotel was a really good guy.  “My family went through a rough patch with illness and the manager and owner helped me financially and allowed me to keep my job after being away for an extended time.  It is the least I can do for them.” In the scheme of things, any capable and competent handy person could do Moe’s job.  He, however, approached his job from a different angle.  Moe was generating value for this hotel all because Moe had a sense of purpose.  His loyalty to the hotel and manager was genuine.  In his book, Drive, Daniel points out, employees like Moe outperform once they are given two things: financial security and a sense of purpose.

All afternoon, I thought about Moe’s situation.  I was not asked nor given a survey to fill out, but instead I had a genuine desire to find a way to rave about what had just happened.  I ended up spending two hours writing reviews on various websites.  Whether the hotel realized it or not, they had just generated “thick value.”  In his book, The New Capitalist Manifesto, author Umair Haque defines “thick value” as value, which is authentic, not created at someone else’s expense, and is meaningful on human terms.  According to Haque, organizations in the 21^st century need to generate “thick value” to remain viable and that the era of “thin value” where organizations are shifting societal benefits to shareholder benefits is not viable.

This post is geared towards healthcare leadership with the simple question, “Are you adding value, if so, what kind?”  We will navigate the following: 1.) Treat the employee right in order to treat the patient right. 2.) The powerless healthcare customer. 3.) The “thin” value of healthcare.

Treat the employee right in order to treat the patient right.

In healthcare we often discuss the importance of customer service and patient satisfaction.  Yet, I truly believe we are focusing on the outcome and not the means to get there.  Moe is a perfect example of this.  If the Vagabond used most of our processes, the front desk would have handed me a survey and left it at that.  Here is the problem, that process is not genuine.  These were genuine good people that struck me in human terms so much so that I spent two hours going to each and every review site I could find raving about this small budget hotel.  They had created customer value.  Creating customer value is still in its infancy in healthcare and must replace concepts like patient and customer satisfaction, which have long been part of our lexicon.

If we treat our employees with the same level of care, we get those outcomes we so badly desire.  A great example of a large organization that has embedded this mantra is the Ritz-Carlton.  This hotel group is synonymous with the best customer experience and they are upfront about it; their motto: “We are ladies and gentleman serving ladies and gentlemen.”  Every employee carries around a pocket-sized card that describes the hotel group’s motto

(Source: http://corporate.ritzcarlton.com/en/About/GoldStandards.htm).

Be warned, having a flashy motto and forming a policy that all employees carry a card displaying it on their ID badge does not automatically translate into each and every employee indoctrinating the motto.  This is where many of us in healthcare fail.

We want to be sexy in healthcare: “Patient-first,” “Top Tier,” “World leaders,” yet this falls short when it comes to translation.  Why is that?

Ritz-Carlton knows that in order to translate its motto to a meaningful purpose, they must first empower their employees to do so.  Each employee has the ability to spend upwards of a mind-staggering, $2000 a day per guest[1].  This level of trust allows this organization to translate and deliver on their motto.  What is Ritz-Carlton in essence?

It is an experience, where luxury and desire intersect.  They have developed a structure capable of providing this and have equipped their employees to deliver this experience.  Accountability of delivering this experience lies solely on the employee.

What is healthcare at essence?  Delivery of good patient care.  These days we see zoom-creep in Doctors’ offices, where we focus too much on an add-on service rather than the essence, itself.  Things such as elaborate buildings, “diamond” or “medallion” services and free valet parking do not replace the fundamentals of good patient care.

Lack of empowerment.  How many front desk employees in Providers’ offices do you know that are as empowered to deliver good patient care?  Most have become robotic “I apologize” machines.  I have been short-changed every time when it comes to my time vs. their time to which I hear, “I apologize for your wait.”  Never once has a front-desk employee said, “Mr. Pithadia, Dr. X is running 20 minutes late, I’m going to tell him that you are waiting and he will be here in 5 minutes.”  These individuals are not empowered to make decisions that are best for the patient.  The sexy motto of “Patient-first,” can never translate into fruition because we have neutered our front-line employees from making these decisions.

Who is accountable?  This is where it gets even more uncertain.  The realm of care delivery even at the unit level (Doctor’s office) is fractionated and no one body is responsible for the care package–results and experience.  So to tee it up, we have sexy mottos, zoom-creep of our essence, lack of accountability, and lack empowering our employees.

The powerless healthcare customer.

I knew exactly what I was getting into during my stay at the Vagabond hotel.  I was going to get a two-star hotel for $58 a night.  I had power as a consumer of this hotel room.  By deciding to buy or not buy, consumers have created and decimated businesses—from hotels, banking, travel to cellphones, pressure from consumers drive innovation and ultimately shift competition, prices, quality, and value.  Here is where healthcare is unique.  Healthcare has little price sensitivity and things such as market forces and consumer pressure do not affect price elasticity, quality or value.

We can open the discussion of how we got in this mess and how the larger issue is that millions of Americans are insulated from the true cost of healthcare.  The point remains, that we are at a critical juncture where the purchasing power of the healthcare customer is becoming more relevant with advances in technology, pressure from government, and increasing transparency into our operations.  The customers are asking, “Where is the value?”

I recently wrote a piece regarding my personal experience as a consumer (What Negotiating Power?).  The piece concluded that there is no price transparency. Healthcare, to the consumer represents “thin” value.

The “thin” value of healthcare

Healthcare in America represents “thin” value.  There are numerous articles getting lots of publicity regarding this.  Steven Brill’s Time’s article, “The Bitter Pill: Why Medical Bills are Killing Us”[2] comes to mind which has stirred much attention.  Brill mentions that large healthcare systems are thriving in this market, especially non-profits, terming them “non-profit profitmakers.”  Yet, it is these profits that are divorced from people being better off.  So I ask you, healthcare leaders, what type of value are you creating for your patients?

I suspect the masses are generating “thin” value.  We are creating value by limiting how much better people are off by shifting societal benefits to profits and shareholder benefits.  So what can we do about it?  Most service-based industries measure value as perceived benefits / perceived costs.  Sticking with the hotel industry, we can value map customer value by comparing three different options:

Here we see different perceived benefits compared to perceived costs.  The customer that is looking for a budget hotel will obviously find most value in the Motel 6, whereas the customer looking for a 5-star experience will find the most value in Hotel B.

We caregivers have very little influence over perceived costs.  We do, however, have great influence over perceived benefits and this is the salient point.  If we stick to the fundamentals of delivering good patient care while instilling a sense of purpose and empowering our employees to make the best decisions for the patient, we start to increase perceived benefits of the customer and this generates “thick value.”  We need a paradigm shift where we change the public’s perspective of us.  Not as “profit makers,” but instead contributors to society, after all this is our distinct advantage.

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