When we think of "delivering value" to customers and clients, many things may come to mind depending on the industry and market of a selected company.  For an auto dealership with an auto service and repair operation, service may be at the forefront of the value equation.  An IT firm such as Apple may pride itself on the unmatched premium quality of their products whereas a retail distributor such as Wal-Mart drive most of their value through their unbeatable low prices on everything from flat screen TV's to paper towels.  And then there are firms such as Netflix that make renting thousands of movies on demand as easy as a couple of clicks on your lap top computer while you're microwaving pop corn in your kitchen.  But where does the value proposition lie within a healthcare firm and more specifically a rehab / therapy service oriented firm?  Is it the service, the product, the price or the ease of delivery?  The answer may very well depend on what the customer deems valuable.  The value proposition of the rehab firm will depend on several factors but identifying key value drivers that make customers walk into your door and keep them coming is an essential component of defining a "customer value" oriented business strategy.

There is much talk about value these days and it is important to define it.  Value is the final product of the firm - the combination of internal systems, processes, supply chain, logistics, compensation, organizational structure, culture, mission and resources that produce an output that satisfies the need of a particular market.  Again, the focus here is on the external and not the internal - what comes out of the blender that will make your customers try your service and products and keep coming back for more.  A "value proposition" is an analysis and quantified review of the benefits, costs and value that an organization can deliver to customers and other constituent groups within and outside of the organization. It is also a positioning of value, where Value = Benefits - Cost (1,2).  Why is this important?  Because this is the essence of making a difference in the life of consumers and a good value strategy is at the core of increasing the sales and growth of any organization no matter what industry it's in.  There are four components of value: 1) Product; 2) Service; 3) Accessibility (convenience); and 4) Price.  Any firm should realize that in order to compete they must greatly excel and be a market leader in at least one of these value components while being good and in some cases even average at the other three.  Companies tend to fail when they try to execute all four components at a very high level.  Conversely, firms that relentlessly focus on one or two components tend to differentiate from the competition and thrive.

The first value component to analyze is product.  Companies that deliver exceptional products tend to deliver premium prices - think of Apple with the i-phone and Mac computers; Starbucks and their premium coffee; and Prada and their shoe and bag collection.  However, it might not be too easy to get an i-phone for example (i-phones are only distributed through selected vendors and service carriers) and it costs way more than let's say a Blackberry or Motorola phone but in this case Apple has sacrificed price and accessibility for a product that is truly remarkable.  The product in any therapy service firm whereas it's an LTAC hospital, a home health agency, an in - patient rehab department or an out patient clinic is simple - the therapists.   At the end of the day patients, physicians and hospitals and long term care facility owners outsourcing rehab therapy services to contract agencies, first and foremost pay for one thing - patient care that delivers quality clinical outcomes.  Without therapists and the necessary resources that they might need to generate a positive clinical outcome there is no real value to a customer no matter how convenient, cheap and service oriented the people in the rehab company are.  In our industry, this is a value component that CANNOT be sacrificed if any firm is to prosper.  Unlike the automotive market in where a consumer can opt to sacrifice price for quality (i.e. Mercedes vs. Hyundai for example), a therapy oriented rehab firm cannot sacrifice Product for any other value component if they are to truly succeed in the market place.  Perhaps a therapy firm that scores great in all the other value components might get by but the company runs the risk of being mediocre.  Moreover, if a company is to score highly on this value component, it must truly invest in it.  Apple puts millions of dollars every year in research and development to come up with great products.  Similarly, therapy companies must invest in therapists to deliver great outcomes.  The investment off course will be in the form of education, training and research for better treatments, techniques and evidenced based practice to name a few.  But at the same time, it is important that a company invests in the resources needed by therapists to produce great outcomes - medical technology; software; and clinical program development and implementation.  Unfortunately this is a component that it's often overlooked by many executive teams.  Advancements in technology in our field are dramatically improving and companies that capitalize on the benefits of these technologies will certainly have an edge.  Hence, those companies that seriously recruit highly skilled and qualified therapists and invest heavily in clinical education, training, program development and validated technology that drives clinical value will stand out from the competition and excel through the creation of superior product value.

Service is a key value component of the therapy business.  Have you ever shopped at Wal-Mart and then stopped by your local deli or grocery store for vegetables or perhaps a specialty item such as wine or cheese?  For the most part you will notice a dramatic difference.  Although shopping at Wal-Mart is not necessarily a negative shopping experience, it is indeed not a "pleasant" one either.  The stores are huge and impersonal which makes it hard to find items; isles and shelves are messy and cluttered; getting help means walking approximately two miles to find a customer service rep and walking in there on a Saturday afternoon is comparable to a trip to the zoo on the 4^th of July weekend.  In your local grocery store on the other hand, the cashier or butcher may know you by the same name; isles are well organized, cleaned and fresh; and there is a service rep in pretty much every isle.  Nevertheless, millions of people flock to Wal-Mart on a daily basis because of their unbeatable prices.  Wal-Mart has sacrificed Service for Price (a highly valued value component for mass consumers).  Contrary, in order to survive, the local retailer must differentiate in service and "shopping experience" since it's got no chance to compete head to head with Wal-Mart on price.  Similarly, therapy services can sacrifice a little more on Accessibility or Price to invest more in Service, and Product through research & development, education and customer service.  There are many opportunities in where therapy firms can also differentiate on service.  Outpatient clinics can develop better systems for scheduling patients and getting appointments immediately following a surgical procedure.  There is always room for improvement when it comes to reminding patients of follow up appointments or being flexible with appointment rescheduling.  I've seen therapy gyms that are truly a "therapy experience".  Aides help patients with towels or hand out glasses of water to those patients who are exercising.  Therapists are courteous and very responsive.  Front desk managers and personnel greet every patient by name.  The therapy area is always neat and clean despite the business of the day.  Again, technology can also help in this area - i.e. personalized on line home exercise programs with detailed instructions, picture and video for example are now available; insurance billing and verification can all be done on line now and patients and customers can get more accurate and faster records of payments and bills outstanding.  There is documentation software that can very accurately track clinical progress for the review of patients and physicians.  Furthermore, a lot of times, these programs can automate the report generation and be sent to physicians who would like to see these reports on a regular basis.  And the list goes on an on.  For service to become a differentiator it is important for the leaders of a company to have service ingrained in the culture of the organization.  Only then will service become of paramount value to the therapy experience of the patient and other customers.

The value component of accessibility is often overlooked in the therapy realm.  If you have been to New York City or downtown Chicago you have probably wondered why you see a Starbucks in every other street corner.  This is a company that has put the value component of Accessibility / convenience (besides product) at the forefront of their value strategy.  You just walked out of your hair appointment and voila, you suddenly need to have a $5 cup of coffee.  Similarly, if you're like me, there are times in where you simply don't want to walk into a grocery chain store (or God forbid Wal-Mart) to quickly pick up some toothpaste and milk while coming back from work.  You will pay three extra bucks for that milk at the 7 & 11 or the Quick Stop just because it's on your way home and it will take you less than two minutes to get in and out.  Customers love convenience - have you ever wondered why there are so many Blockbusters going out of business?  Like buying milk on your way home from work, less people now want to walk into the store, walk around and pick a movie - they much rather open their mail box and see a movie from Netflix that they ordered on - line just sitting there waiting to be played - how convenient!  Accessibility is an important value component that is often overlooked by the rehab industry.  Firms that have various locations (given that they have systems in place that deliver consistent clinical outcomes) have an advantage over the competition.  Customers and patients don't like surprises (this is why franchises are good business models) and they like to go to places that deliver consistent value.  For a physician as part of your customer base, this is definitely very valuable.  The doctor knows that he / she can send patients to a trusted location that will deliver good outcomes no matter where in the city their patient lives.  This is not to say that a single location therapy center cannot deliver on accessibility also.  There are many other ways to offer accessibility other than ubiquity of location.  Patients rather go to centers in where there is less red tape to get an appointment.  Taking a look at the patient admission process is a good way to start.  How much paper work is required from your patient on initial visit?  Can you decrease the burden by having patients fill out forms on - line?  How many insurances carriers do you accept (or don't accept)?  If you don't accept a patient's insurance, do you have other forms of payment?  How easy is it to get a patient scheduled following a doctor's referral?  If you're a SNF within a continuum care retirement community with AL and IL campuses, do you provide out patient services to the community?  In home health, how fast can you get to a patient's home following a referral?  These are questions that if analyzed properly can lead to the development of proper systems to improve upon your Accessibility value component.

Last but no least many companies compete on price as their main value driver.  We mentioned some companies such as Wal-Mart in this article but there are many others like Southwest Airline and The Dollar Store.  These companies have set up systems and processes that allow them to aggressively discount price in order to establish Price as their main value component.  It is hard to compete in Price when it comes to therapy services since most settings will depend on private insurance payments and Medicare and they are not directly billing the consumer (unless you are a rehab contract agency).  There are companies however such as HealthSouth that played this game in the past by aggressively cutting contract rates with numerous insurance providers and health management organizations.  They did this for two reasons: 1) they had the volume of clinics to make up for the decrease in profit margin and 2) it made it more accessible for consumers to go to a HealthSouth clinic since they took pretty much all insurances.  As we know, this strategy did not work for HealthSouth because it offered very little product or service value to the consumer / patient and physicians (one can argue however that this improved their accessibility value component).  There are times however that therapy clinics can offer Price value by accepting various forms of payment plans for those patients that are paying out of pocket.  In the rehab contract world particularly in long term care (SNF, AL, IL) various rehab contract agencies try to offer lower price points to their clients for their therapy management services.  Unfortunately, many players have forgotten about the other three main value drivers described above and this business has become highly commoditized with aggressive price competition - not a good place to be in from a business standpoint.

It is imperative that every company realizes what their value proposition is and more importantly what their value strategy is in order to succeed in the market place.  Not all of the value components described in this article 1) Product; 2) Service; 3) Accessibility; and 4) Price are necessary to be present at a high level for a company to thrive.  In fact, companies tend to do better when they focus their value strategy in one or two areas while maintaining a fair or average rating on the remaining value components.  When companies try to be the best in all four, they loose focus and efficiency generating average value for their customers.  In the rehab / therapy business, the product element is paramount for success and cannot be sacrificed by any other value component.  The therapist should be the primary asset of every rehab company no matter what business they are in (contract rehab, out-patient, home health, etc) and the development of that therapist as well as the resources necessary for them to generate optimal patient outcomes should be an area of intense focus and investment for any therapy company to be successful.  As such, rehab companies should try to also focus on developing a high level of execution when it comes to another area of value component whereas it is service, accessibility or price as suggested in this article.  Again, it is not necessary that you focus on all (except for Product) but finding another key area of excellence can make you vastly different from the competition and most importantly generate customer and keep them walking in the other.  The creation of value is the oxygen of any organization.  The famous management expert Peter Drucker once stated that "The purpose of any organization is to create and maintain customers".  Value creation is the core of that purpose.

References

1. Barnes, Cindy; Blake, Helen; Pinder, David. Creating and Delivering Your Value Proposition: Managing Customer Experience for Profit, Kogan Page, 2009. ISBN 978-0-7494-5512-5
2. http://futurecurve.com/services/value-proposition/