Scott MacStravic, PhD
It can be argued that healthcare marketing, as an accepted and common part of the operations and budgets of healthcare organizations (HCOs) is about thirty years old this year. If there was an “official” beginning, it was probably the first-ever national conference on the subject in Orlando, Florida in October of 1977, sponsored by the American Hospital Association and its Public Relations group, since it had no marketing group at the time.
That year was also the year the first book on the subject was published, with the imaginative title of “Marketing Health Care,” published by Aspen and written by yours truly. There had been a few articles published on the subject, more often by academics speculating on the potential, but one or two by practitioners who were trying it out. It was certainly in an incipient phase, with few hospitals and virtually no physician practices active in anything that could be called marketing efforts. The very idea of marketing, mainly as advertising, had been condemned by the American Medical Association.
When I began my own marketing consulting, since I was, at the time, an “academic” myself, though encouraged by the Medical College of Virginia where I taught, and permitted to engage in consulting, it involved mainly modifying the way health care was delivered. The hospital at MCV, for example, offered outpatients two appointment times each day, one at 8:00 AM, and the other at 1:00 PM. Patients who arrived any later than 7:00 AM were doomed to wait many hours before being seen, while those who arrived in the afternoon might wait even longer, depending on how many were left over from the morning.
My first marketing consulting engagement was with a hospital that had innovated by opening its own primary care center, fifteen miles north of its facility, with the idea of “capturing” the patients living in that community as potential hospital patients. It was having trouble, however, attracting and keeping patients. By first making sure that the physician it hired would actually begin seeing patients at the times they had appointments for, vs. the average of one or two hours later as had been the case, and having one or two employees park out front so people could see the practice was actually open, as well as conducting patient satisfaction surveys and responding to feedback, the practice was effectively turned around. The hospital eventually created a network of such practices in its main service area, and both practices and hospital did very well, even with minimal advertising.
Back then, hospitals and physician practices were essentially the opposite of “patient” or “customer” centered; they operated for quality, efficiency, and physician’s convenience, with patients expected to show up, wait as long as needed, and do what they were told. But when a few initiated even simple improvements in how customer-friendly they were, their competitors were virtually forced to join in, often reluctantly and slowly to be sure, but eventually, marketing became an almost universal element in HCO operations.
Most of the early emphasis was on promoting patient satisfaction, learning what it took to attract and retain them, as well as on physician relations, since most hospital patients came from physician referrals or direct admissions. Advertising was a nasty word, at the time, to Medicare, for example, that would not accept advertising costs as reimbursable. Physicians almost never advertised, and even in 1990, when I offered a well-attended seminar on marketing to physicians on the hospitals’ medical staff where I was VP of Marketing, there were none that either surveyed their patient satisfaction or did any advertising then.
I was lucky, since the CEO I worked for expected me to demonstrate ROI from marketing investments even then, and because we were able to do so. The rest of the senior executive staff were happy when we could use projections of increased revenue, resulting from physician relations and advertising efforts, to use rather than the usual budget cuts when the annual budgets were prepared. Recently, healthcare marketers are being expected to demonstrate ROI for everything they do.
But marketing has become more of a competition with rivals to capture a larger share of what may end up being a declining market. There seems to be a “critical mass” of employers, insurers, governments, and consumer advocacy organizations moving toward preventing and managing disease and injury, rather than just waiting to treat it in increasingly expensive ways. And hospitals have serious competition from physician-owned freestanding ambulatory surgery centers, diagnostic imaging centers, and specialty hospitals taking away too many of the profitable patients out there.
The move to make hospitals look more like resort hotels, with huge gardens, inside and out, gourmet meals, concierge and valet services for patients, etc. reflects the “inflation” in this competition, while payers are everywhere trying to reduce their payment obligations, and consumers becoming that much more difficult to collect from. Meantime, many hospitals are understaffed for the patients they are already treating, and the growing shortage of skilled healthcare professionals is threatening the clinical quality of care.
To me, it seems that too much of marketing in healthcare has been tactical, trying new tricks to sell more of the same services, rather than strategic, looking at new and different ways of doing business. I have seen numerous writers and vendors, for example, recommending that hospitals strive for better relations with employers, so that they might steer more of their workforces to the hospitals’ services. Contrast that tactical approach to the strategic one of taking on the challenge of enabling employers to reduce their healthcare and labor costs, improve their productivity and performance vial proactively managing their employees’ health.
Marketers could be beneficially employed as major contributors to hospitals’ own efforts, as employers, to reduce their healthcare and labor costs, improve productivity and performance. While some additional revenue is available from payers who are willing to pay bonuses for better sickness care, there is immensely more generosity likely if hospitals can help payers reduce their labor costs in general, and improve their own performance. Marketers have always been charged with championing the interests of customers, but when they are limited to championing only the current, tactical interests of hospitals, they are severely limited.
In the next thirty years, I feel certain that there will be dramatic changes in healthcare, and in marketing that serves the interests of healthcare customers and providers. I miss being part of such changes on a day to day basis the way I was in the first thirty years, but I will enjoy at least writing about them as long as I can.
