Arthur C. Sturm, Jr. 

Wouldn't it be great if we could just leapfrog to success? Just close our eyes, and when we open them, we're "there"? Truly a fantasy.

But as we have all learned, success is built carefully and crafted soundly. So it should come as no surprise that acquiring and retaining patients can and should be taken in measured steps.

As a broad organizational perspective, acquisition and retention are not plug-and-play strategies. They are evolutionary. They draw on their own successes and failures. And they never have a stopping point.

Step 1: Create a Data-Driven Strategy that Reflects Your Organization's Performance

Historically, hospitals have relied on a wide range of third-party data products for planning and strategy development. They have served the industry well, but today's dynamic market requires data that are both more timely and relevant. That data source, of course, is your own.

Once stupendously costly to implement, data applications that harness a hospital's own data even from a multitude of sources are now affordable, accurate-and, frankly, essential. This column isn't about which database to use; it's simply alerting you that you need to move your organization in this direction. Quickly.

Harnessing the data is only a small step in the road to patient acquisition and retention. Its true value comes from smart integration into both your planning and your operations. Customarily, this starts at the top with a commitment from senior management to recognize that hospitals are now in a dynamic market, which requires data that are timely and accurate. Sure, market share provides valuable data, but in most cases it's a year old. And hospital executives need to begin creating a culture that has managers using their own market performance data to develop, manage, and refine service offerings to the marketplace. The take-home message here is not "management needs to see more data reports"; it's that executives need to get managers to integrate the organization's data into their mainstream thinking and behaviors.

Step 2: Use Targeting to Maximize Opportunities

I certainly recognize your mission to serve the community at large, and I acknowledge that it's your main reason for existence. But on the business front, I would argue that with the continuing restraints on resources, management needs to continue to sharpen its focus-not only on what it is spending, but also against whom. Although your organization has a mass market mission, it also most likely has highly targeted business opportunities. I'd even go so far as to say they are responsibilities. The question, of course, is: How do you approach the market in a highly targeted fashion?

Targeting applies a disciplined approach to strategy, product design, and messaging. Simply defined, targeting is the discipline that eliminates groups less likely to succeed and focuses on those that portend the highest probability of success. Whether the business category is hospitals or luxury cars, the discipline is the same.

Health care is awash with various segmentation programs, and each has strengths and weaknesses. Again, this column isn't a buyer's guide; it's strategic guidance. Understand, however, that targeting is itself a multistep process. Targeting uses the math of predictability of someone's behavior. It's not a guarantee.

Step 3: Commit to Convert

With all due respect to the personal beliefs of my readers, I'm talking not about religion but about converting passive interest to active engagement. In other words, convert into patients those individuals who have indicated an interest in your organization (came to a lecture, used your web site) or identified themselves as needing care (at-risk attendees at a screening program). Frankly, most hospitals don't do that.

Conversion is a discipline. It's also sales. Conversion recognizes that if given the opportunity, people will choose to do nothing. Pharmaceutical manufacturers have historically been challenged in this regard. Only half of the prescriptions written ever get filled. And persistence (keeping patients on the medication) is even more challenging. But they know that converting patients to a prescription-and keeping them on it-means revenue for their organization. It's no different for providers.

Converting an individual is often as simple as a follow-up phone call. "Hi, Mrs. Smith. I see you were at our metabolic syndrome screening over the weekend. Given your results, I'd like to get you in to see one of our doctors as soon as possible." The registration process at the event should include an opt-in check-off, and the call center should handle the conversion with an outbound call. Overly simplistic? Not really. Essential to success? Absolutely.

Remember that every time you give an individual the opportunity to say "I'm not going to do that," you risk losing all the momentum and commitment you have gained up to that point. My unbending credo: Never ever let a patient self-refer.

Step 4: Understand Your Risk-Reward Tolerance

Let's face it: Strategy is akin to betting.

You're taking a risk. And if you are a good steward, you'll have a good understanding of how much you're willing to risk against what you want to get.

In the acquisition and retention world, the risk-reward discussion nets out as, "How much do you want to spend to get (or retain) a customer?" If you don't know the answer to that, I would argue that your budgeting, accountability, and other measures of success are fundamentally flawed.

Establishing a risk-reward tolerance comes down to a basic mix of business reality and guts. The business reality starts with understanding how much a customer is worth to you. The best place to find that number is in your own data, which should isolate the revenue stream of patients by service line. Most important, look at individuals' contributions over time rather than at episodic events. What someone "spends" in the emergency department should be an initial transaction, as that "value" will be determined by conversion to inpatient or outpatient experiences.

But the revenue contribution can be an isolated metric. Your consideration set may be on a different strategic plane. Maybe you are cash-hungry and the name of the game is revenue, not profitability. Or perhaps you are introducing a new service line and you need to build short-term volume. The reward is in understanding the revenue potential; the risk is in knowing how much you are willing to spend to get it. Unless you do that math, you're not giving the effort thoughtful consideration.

Step 5: Use Meaningful Performance Metrics

If you have been thoughtful enough to take this step-by-step approach, then it begs common sense that you will want meaningful metrics to measure your efforts. My March column identified a set of metrics in use by UK Healthcare, and I think it represents a good starting point.

The key to "meaningful" is twofold. Obviously the ratios, metrics, and methods should reflect the beliefs of-and make sense to-your organization. More important is that metrics need to be dynamic. If you look at most measurements of healthcare performance, they are retrospective-or as Bill Gombeski of UK Healthcare calls them, "lagging measures."

Health care is moving from what was typified as a "wholesale" market, driven by large contracts, to one that is more retail, driven by the end user. That shift requires more dynamic measures that track performance and demand almost in real time. Before immersing your organization into a comprehensive acquisition or retention strategy, take a step back and then five steps forward.


Arthur C. Sturm, Jr., is president and CEO, SRK, Chicago (ASturm@SRKSolutions.com).

Publication Date: Tuesday, May 01, 2007

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