Rebuilding Pricing Strategy Through Competitive Data

— Identifying the “Right Price” That Is Chosen in the Market —

Pricing is one of the most challenging issues in healthcare management.

Many medical institutions struggle with questions such as:

• Should we lower our prices to attract more patients?

• Can we raise prices to improve revenue without losing demand?

• How do our prices compare with those of other facilities?

In the absence of clear answers, some organizations end up making pricing decisions based on momentum rather than evidence.

In this article, we explore how pricing strategies can be rebuilt using competitive data.

The key principle we would like to emphasize from the outset is this:

Pricing should not be determined in isolation.

Start by Defining Your Primary Catchment Area

Through customer data analysis discussed in our previous columns, many medical institutions have already gained a clearer understanding of their primary catchment area.

When considering pricing strategies, it is not necessary—or helpful—to compare yourself with medical institutions across the entire country or with facilities that are not realistic alternatives for your patients.

What truly matters is identifying:

• Which facilities patients are actually likely to compare you with

• Which competitors offer similar human dock services (or comparable programs) within your catchment area

If this step is overlooked, pricing strategies can quickly become misaligned with the real market.

Decide Which Criteria to Use When Evaluating Competitors

One of the most difficult—and most important—steps in competitive analysis is deciding which criteria to use for comparison.

Using human dock services as an example, the following axes may be helpful (these will vary by facility and should be adapted accordingly):

• Price

  List price as well as the effective price after adding optional tests

• Degree of customization or personalization

  How flexibly services can be tailored to individual patient needs

• Size and brand of the medical institution

  Hospital versus clinic, name recognition, and perceived reliability

• Added value

  Quality of explanations, follow-up processes, and overall patient experience

It is neither necessary nor realistic to compete on all axes simultaneously.

What matters most is clearly defining which axes your institution intends to compete on.

Visualize Both Your Facility and Competitors Using a Matrix

As with the “profitability map” discussed in the previous column, competitive analysis becomes far more effective when visualized in a matrix format.

For example, consider creating a matrix with:

• Horizontal axis: Price

• Vertical axis: Degree of personalization (or service flexibility)

Plot the following on this matrix:

• Your own institution

• Major competitors within your catchment area

This visualization allows you to immediately see your position within the market.

Clearly Understanding “Where You Stand” in the Market

Once the matrix is created, questions that were previously vague become concrete:

• Are our prices high relative to the value we provide?

• Are we being pulled into price competition unnecessarily?

• Are our strengths appropriately reflected in our pricing?

In many cases, this is the first time that the appropriate price range in the current market becomes visible.

The key point is not whether you are the cheapest option, but rather

where and why your institution is chosen within the competitive landscape.

Pricing Strategy Can Only Be Discussed After Understanding the Market

Prices cannot be determined solely by costs and profit targets.

A price that is accepted by patients exists at the intersection of:

• The market and competitors

• Patient perception and expectations

• Your institution’s unique strengths

By reviewing prices based on competitive data, management can clearly explain:

• The rationale for a price increase

• The decision to avoid unnecessary price reductions

• The strategic meaning of maintaining current prices

When decisions are supported by data, they gain depth, credibility, and internal alignment.

Conclusion

Competitive analysis is not about simply comparing yourself with other facilities.

Its true purpose is to ensure that your institution’s value is accurately reflected in its pricing.

By:

• Defining competitors based on your catchment area

• Selecting appropriate evaluation criteria

• Visualizing positions using a matrix

you can begin to see a pricing strategy that is uniquely suited to your institution within the market.

We hope this article provides useful guidance for healthcare leaders who are grappling with pricing decisions.

If you have questions or would like to discuss challenges specific to your facility, please feel free to contact us through the inquiry form.

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