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I’ve Been There Before: Is the NHS Offering Patients a Failed Channel Management Strategy?

Special Reports

Mr Gordon Miles, the chief executive officer of the Royal College of Emergency Medicine spent a significant part of his previous career with the NatWest Bank. It became obvious to us that some of the urgent care plans proposed by NHS agencies were already familiar to him in a different guise. Consequently, we asked him to write this piece……


As CEO of RCEM, I spend quite a bit of my time in meetings with the great and the good of UK healthcare discussing the challenges facing emergency medicine and, alongside our president and other officers of the College, advocating our STEP Campaign. We often find ourselves rehearsing arguments that I am very at home with because of my financial background, especially the strategy of channel management. This is the concept of delivering services to customers through specific “channels”, such as face to face, by telephone, via the internet etc.

As some of you may know, I spent many years working for NatWest, before I joined the world of healthcare. I started in the days when bankers were more popular than double glazing salesmen and fortunately, left just before it all went wrong! My time included being a corporate financier for small and large businesses as well as some years in the strategy team. “So what?” I hear you physicians saying! Well, I think that, in many ways, the dilemmas facing retail banking in the 1990s have echoes in the NHS of today. Let me explain…….

In the 1990s, it became clear that the retail banking network was over-supplied with branches. There were more than 1700 of them owned by NatWest alone. These branches were essential in the past as the places where the processing of financial transactions occurred, where deposits were kept and where business was done. However, the centralisation of back office procedures and phone calls (telephony) into “centres” gave economies of scale and improvements in processing consistency. This reduced the branches to cashiers with a small team whose primary task was to sell products and deal with customer enquiries.

The branches were a financial drain - expensive to maintain and run - and the staff there didn't generally generate much income by way of sales. Moreover, the buildings were often situated in the wrong part of town because the NatWest network had been created
by the merger of the Westminster Bank and the National Provincial Bank and often dated back over 50 years. So what was to be done?

The banking gurus of the time needed a way to discourage customers from coming in to the local branches. (Is this starting to sound familiar?) So they thought that telephone banking would be the answer. A one-stop phone service in call centres, using standard processes would be cheap to run and would stop the need for customers to visit long-established branches. Confidently, they launched the new service. What then happened was perhaps predictable. The new free telephone service was used but, when problems were encountered or the answer wasn't to the customer’s liking, they went to the branch just as before. Thus the impact on branch “foot flow” as it was called, was not what was expected or certainly what had been hoped for!

Still trying to reduce the ”foot flow”, the ever-optimistic gurus then saw the newly-emerging potential of the internet as the answer. Online banking would surely do the trick. Another free-to-use service was taken up but, unfortunately, just as before, customers phoned, went online and then visited the bank. Once again, the new channel was used, but the pull of the old traditional channels remained stubbornly high. Charging for branch use was also considered but the competitive market meant that it wouldn't be successful. (Bankers need customer loyalty and subsequent income.)

The next idea was to shut branches of the bank. That would surely force the customers to use the new channels. And indeed it did in part, but some customers left to join competitor banks whilst others found another NatWest branch nearby and used that.

The real breakthrough came when the main need for branches was almost removed. The debit card revolution meant that people rarely wrote or received cheques. Cash machines were installed all over the country as another very effective channel of delivery. These machines were cheap and, if other bank’s customers used them, then NatWest would charge that bank £1 each time! So the new channel actually made money. Consequently, it is no accident that many of the major railway stations still have a NatWest cash machine. The de-skilling and staff reductions in the branches meant that visiting them for advice became a largely futile exercise and, at last, NatWest succeeded in reducing its branch network. And this process in retail banking continues today. TSB is presently trimming its branch network drastically.

So back to the NHS and our STEP Campaign. The reason that RCEM is calling for primary care co-location is that the power of the A&E brand trumps all appeals to “only attend in an emergency”. I often find myself pointing out that encouraging the public not to attend the ED except in exceptional circumstances has a 25 year legacy of failure. There are a variety of reasons for this, not least the brand-pull argument above, but also the rational choices made by patients themselves. Their choice is influenced by where, in their perception, is the best place to go, the availability of other services, the impact of the visit on work life and indeed what other NHS service providers tell them to do - and many refer patients to the ED. Of course, whatever the choice, this is a free service (at least to the user)!

The other alternatives are bleak. In a world where patient numbers, acuity and demands are rising faster than supply, then queues are inevitable - a bit like my old bank branches where long queues used to form, particularly at lunchtime, consisting of angry, disgruntled people. The urgent care world is already experiencing this; the College receives report after report about the challenges of hospitals with fourhour and 12-hour waits.

Another option is closure and rationalisation of EDs. We can see this occurring at the present time with the consequent pressure that it puts on other local units. Unlike the bank customer, who was given a debit card and cash machines in many convenient locations or simply trotted off to a competitor’s outlet, closing an ED often offers a patient little alternative other than to simply travel further. Sometimes closure can be presented as centring demand on places with particular expertise but the patient doesn't start off with the perception that the closed unit delivered substandard care and so doesn't understand this argument easily. When the patient accepts the premise, it risks eroding trust in the NHS brand. A patient might ask: why would the NHS allow sub-optimal practices to persist? Or perhaps why was this not done years ago?

In my view, the channel management strategy of the NHS is in need of some resuscitation. A good place to start is with some sage advice. In their book “Developing Multi-Channel Strategy”, Dr Stan Maklan and Dr Hugh Wilson of Cranfield University offer just that. They state that: “Customers make channel choices alongside their product-service choices and expect suppliers to offer sales, marketing and service across multiple channels - online, telephone and physical presence. Offering all channel choices to all customers across all products and services is too costly for most companies. For many companies, channel strategy is now every bit as critical to their success, as are brand and product range policies. Companies must now determine how to service indifferent customers through a combination of channels that meets customer needs at competitive cost.” If we did a word search and replaced the word ”customer” with ”patient” and ”companies” with “NHS Trusts / commissioners”, this could well have lessons for us all.

So the STEP campaign, in my view, stands up well to a channel management strategy scrutiny. It is patientcentric and acknowledges the choices made by them. Additionally, it is potentially effective for the supply side too. One big challenge with co-location of services is space and estates, but often much can be achieved locally without the need for large infrastructure projects. The alternative is to try to reduce demand and we know how successful that strategy has been over the past few years! Growth rates of 2% per annum in ED patient attendance don't sound much but lead to an overwhelming demand on services over just a few years. And so next time you stand at a cashpoint with your plastic card, remember the banks and the lessons about patient flow that they can teach us!

Mr Gordon Miles, the chief executive officer of the Royal College of Emergency Medicine spent a significant part of his previous career with the NatWest Bank. It became obvious to us that some of the urgent care plans proposed by NHS agencies were already familiar to him in a different guise. Consequently, we asked him to write this piece……

Mr Gordon Miles, the chief executive officer of the Royal College of Emergency Medicine spent a significant part of his previous career with the NatWest Bank. It became obvious to us that some of the urgent care plans proposed by NHS agencies were already familiar to him in a different guise. Consequently, we asked him to write this piece……

Page 2

As CEO of RCEM, I spend quite a bit of my time in meetings with the great and the good of UK healthcare discussing the challenges facing emergency medicine and, alongside our president and other officers of the College, advocating our STEP Campaign. We often find ourselves rehearsing arguments that I am very at home with because of my financial background, especially the strategy of channel management. This is the concept of delivering services to customers through specific “channels”, such as face to face, by telephone, via the internet etc.

As some of you may know, I spent many years working for NatWest, before I joined the world of healthcare. I started in the days when bankers were more popular than double glazing salesmen and fortunately, left just before it all went wrong! My time included being a corporate financier for small and large businesses as well as some years in the strategy team. “So what?” I hear you physicians saying! Well, I think that, in many ways, the dilemmas facing retail banking in the 1990s have echoes in the NHS of today. Let me explain…….

In the 1990s, it became clear that the retail banking network was over-supplied with branches. There were more than 1700 of them owned by NatWest alone. These branches were essential in the past as the places where the processing of financial transactions occurred, where deposits were kept and where business was done. However, the centralisation of back office procedures and phone calls (telephony) into “centres” gave economies of scale and improvements in processing consistency. This reduced the branches to cashiers with a small team whose primary task was to sell products and deal with customer enquiries.

The branches were a financial drain - expensive to maintain and run - and the staff there didn't generally generate much income by way of sales. Moreover, the buildings were often situated in the wrong part of town because the NatWest network had been created
by the merger of the Westminster Bank and the National Provincial Bank and often dated back over 50 years. So what was to be done?

The banking gurus of the time needed a way to discourage customers from coming in to the local branches. (Is this starting to sound familiar?) So they thought that telephone banking would be the answer. A one-stop phone service in call centres, using standard processes would be cheap to run and would stop the need for customers to visit long-established branches. Confidently, they launched the new service. What then happened was perhaps predictable. The new free telephone service was used but, when problems were encountered or the answer wasn't to the customer’s liking, they went to the branch just as before. Thus the impact on branch “foot flow” as it was called, was not what was expected or certainly what had been hoped for!

Still trying to reduce the ”foot flow”, the ever-optimistic gurus then saw the newly-emerging potential of the internet as the answer. Online banking would surely do the trick. Another free-to-use service was taken up but, unfortunately, just as before, customers phoned, went online and then visited the bank. Once again, the new channel was used, but the pull of the old traditional channels remained stubbornly high. Charging for branch use was also considered but the competitive market meant that it wouldn't be successful. (Bankers need customer loyalty and subsequent income.)

The next idea was to shut branches of the bank. That would surely force the customers to use the new channels. And indeed it did in part, but some customers left to join competitor banks whilst others found another NatWest branch nearby and used that.

The real breakthrough came when the main need for branches was almost removed. The debit card revolution meant that people rarely wrote or received cheques. Cash machines were installed all over the country as another very effective channel of delivery. These machines were cheap and, if other bank’s customers used them, then NatWest would charge that bank £1 each time! So the new channel actually made money. Consequently, it is no accident that many of the major railway stations still have a NatWest cash machine. The de-skilling and staff reductions in the branches meant that visiting them for advice became a largely futile exercise and, at last, NatWest succeeded in reducing its branch network. And this process in retail banking continues today. TSB is presently trimming its branch network drastically.

So back to the NHS and our STEP Campaign. The reason that RCEM is calling for primary care co-location is that the power of the A&E brand trumps all appeals to “only attend in an emergency”. I often find myself pointing out that encouraging the public not to attend the ED except in exceptional circumstances has a 25 year legacy of failure. There are a variety of reasons for this, not least the brand-pull argument above, but also the rational choices made by patients themselves. Their choice is influenced by where, in their perception, is the best place to go, the availability of other services, the impact of the visit on work life and indeed what other NHS service providers tell them to do - and many refer patients to the ED. Of course, whatever the choice, this is a free service (at least to the user)!

The other alternatives are bleak. In a world where patient numbers, acuity and demands are rising faster than supply, then queues are inevitable - a bit like my old bank branches where long queues used to form, particularly at lunchtime, consisting of angry, disgruntled people. The urgent care world is already experiencing this; the College receives report after report about the challenges of hospitals with fourhour and 12-hour waits.

Another option is closure and rationalisation of EDs. We can see this occurring at the present time with the consequent pressure that it puts on other local units. Unlike the bank customer, who was given a debit card and cash machines in many convenient locations or simply trotted off to a competitor’s outlet, closing an ED often offers a patient little alternative other than to simply travel further. Sometimes closure can be presented as centring demand on places with particular expertise but the patient doesn't start off with the perception that the closed unit delivered substandard care and so doesn't understand this argument easily. When the patient accepts the premise, it risks eroding trust in the NHS brand. A patient might ask: why would the NHS allow sub-optimal practices to persist? Or perhaps why was this not done years ago?

In my view, the channel management strategy of the NHS is in need of some resuscitation. A good place to start is with some sage advice. In their book “Developing Multi-Channel Strategy”, Dr Stan Maklan and Dr Hugh Wilson of Cranfield University offer just that. They state that: “Customers make channel choices alongside their product-service choices and expect suppliers to offer sales, marketing and service across multiple channels - online, telephone and physical presence. Offering all channel choices to all customers across all products and services is too costly for most companies. For many companies, channel strategy is now every bit as critical to their success, as are brand and product range policies. Companies must now determine how to service indifferent customers through a combination of channels that meets customer needs at competitive cost.” If we did a word search and replaced the word ”customer” with ”patient” and ”companies” with “NHS Trusts / commissioners”, this could well have lessons for us all.

So the STEP campaign, in my view, stands up well to a channel management strategy scrutiny. It is patientcentric and acknowledges the choices made by them. Additionally, it is potentially effective for the supply side too. One big challenge with co-location of services is space and estates, but often much can be achieved locally without the need for large infrastructure projects. The alternative is to try to reduce demand and we know how successful that strategy has been over the past few years! Growth rates of 2% per annum in ED patient attendance don't sound much but lead to an overwhelming demand on services over just a few years. And so next time you stand at a cashpoint with your plastic card, remember the banks and the lessons about patient flow that they can teach us!

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