Because They Can Calculate Your Value
By Tannus Quatre, PT, MBA
Value is a funny word. We use it all the time: “We need to show our customers value,” “Physical therapy brings value to the health care system,” etc., but we often misunderstand how it works.
Most of the time, our use of the word is not inaccurate. We certainly need to show customers value, and physical therapy is definitely a high-value piece of the health care puzzle, but what does value really mean?
Does value mean we are good at what we do? That our services are cheaper than surgery? That we go above and beyond with our customer service?
Yes, kind of. But mostly, no.
Value is often misunderstood as a concept that is loosely defined and broadly applicable. Used in this way, the concept becomes a misused and slightly reckless version of itself, and dangerous to those who truly desire to compete successfully using value as the litmus test.
Value is defined as costs divided by benefits. The math is simple but the iterations infinite. Value can be calculated by a customer in milliseconds or over weeks—and even months.
As business owners, we should calculate value before our customers do, so that we can eke out every last bit of value that may be on the table for our clientele.
Let’s dissect the equation: What are the costs associated with the care we deliver? Copays, coinsurance, and deductibles? Sure, but that is the “C,” the average answer, the one you should hope your competitor uses.
What about the amount of time it takes out of your patients’ day to come see you? Is it the frustration of dealing with traffic on the way to your clinic? Is it the mental anguish of dealing with insurance explanation of benefits (EOBs)? These are all costs of care that enter the value equation and must be considered.
Now look at the benefits: What are the benefits we offer our clients through physical therapy?
Functional outcome? Yes, sure, but this is also the “C” answer. Functional outcomes are critical, but guess what: Patients assume they will get better when they see us. And they also assume they will get better when they see your competitor. The benefits of your care can, and should, span far beyond the outcomes achieved.
How about the feeling patients get when greeted by your friendly staff? The flexibility you provide with your financial policy? The convenient parking that is designated specifically for your patients? These are all benefits that enter the value equation.
One exercise I recommend for private practice owners is to gather your staff together in front of a whiteboard and draw a horizontal line, splitting the board into upper and lower halves.
Ask your team to make a list of the costs of your care, and place this in the top half. Then repeat the exercise by listing the benefits you offer in the lower half. A good list may include dozens of costs and benefits, all of which drive value for your customers.
Next, narrow each list to the top three drivers of costs and benefits, and draft three or four strategies you can employ that will maximize value for your customers by reducing their costs and increasing their benefits. You will be surprised at how engaging and insightful this exercise will be, finding myriad possibilities for exposing your clients to new sources of value.Tannus Quatre, PT, MBA, lives at the intersection of physical therapy and entrepreneurship, spending his time helping physical therapists build and operate successful practices through his company, Vantage Clinical Solutions. He specializes in marketing, finance, and business planning, and authors and speaks regularly for the APTA and PPS. He can be reached at firstname.lastname@example.org.
I am always looking for hidden costs and benefits. If you have had a good whiteboard session, shoot me a photo @tannusquatre or by email at email@example.com. I would love to see your value in action. In fact, I will choose the most valuable contributions, with your permission, to feature in a future Why They Buy: Value in Action.