Cases and Select Readings in Health Care Marketing

William Winston, Robert L Berl *Deceased*, Robert Sweeney

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781317941637
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Directed specifically at the practicing marketing executive, Cases and Select Readings in Health Care Marketing integrates understandable explanations of marketing concepts, articles selected for topical timeliness and pragmatic value, and case studies illustrating the detail and complexity of market decisions faced by today's health care and human services marketing professional. Each chapter of this landmark volume includes a brief but thorough presentation of one conceptual area of marketing, which is then evaluated, analyzed, or demonstrated in selected articles written by prestigious and successful members of the marketing profession. Finally, a variety of extensive case studies follow which have been gathered to demonstrate further the service marketing profession at work. Many of these excellent cases were prepared especially for this volume and represent path-breaking treatments of such topics as health care marketing auditing, psychographic analysis, pricing in alternative delivery systems, promoting a public health service, and marketing planning for private colleges. Special offer from the editors:
Buy Cases and Select Readings in Health Care Marketing and the authors will guarantee you a free written response--up to three pages--to your first inquiry about marketing your own organization!

Part I

Introduction

CHAPTER 1

Basic Health Care Marketing Principles

William J. Winston

INTRODUCTION

Health care marketing has become an important management tool for health administrators during recent years. It has only been an accepted scope of study in research during the last decade. However, marketing has been used in health care for centuries. This is documented in the cases of public health campaigns during the 17th and 18th centuries. It has also been extensively utilized by pharmaceutical firms, hospital supply firms, health maintenance organizations, and public health agencies during the last 40 years.

The recognition and acceptance of marketing in health care during the 1980s is similar to the rise in importance of finance during the 1970s. Finance was considered the “savior” during this decade as budgeting and financial forecasting became popular in health organizations. Budget directors and controllers were promoted to vice-presidency positions. In comparison, marketing has become the name of the game for the 1980s. Directors of public relations are being promoted to vice-presidents of marketing and planning. Unfortunately, marketing is perceived by many administrators and providers as the future savior. As it will be discussed later, no management tool by itself is a savior.

The development of health care marketing is entering its second phase. During the first half of the 1980s, most of the attention was placed on answering the key questions “what is marketing?” and “why do we need to market?” The second phase during the middle and second half of the 1980s is addressing tools, applications, and sophisticated methodologies for practical use by health administrators and providers. This text describes one of the most important marketing tools: writing a formal marketing plan for the health organization/facility. It is applicable for health managers in all health delivery systems. Before outlining the steps to the marketing planning process in detail, the basic principles of health marketing are surveyed.

WHAT IS HEALTH CARE MARKETING?

Health Marketing is an organized discipline for understanding: (1) how a health marketplace works; (2) the role in which the health organization can render optimum services to the marketplace; (3) mechanisms for adjusting production capabilities for meeting consumer demand; and (4) how the organization can assure patient satisfaction.

COMPONENTS OF HEALTH CARE MARKETING

Marketing includes a variety of functions, such as

1. 1. Marketing research, which describes the collection of information about an organization’s internal and external environment;
2. 2. Marketing planning, which is the framework for identifying, collecting, and capturing select segments in the marketplace;
3. 3. Marketing strategy development, which relates to new service development and actions to be taken for taking advantage of opportunities and gaps in the marketplace;
4. 4. Public relations, which describes the action of communicating with the publics that interact with the health organization;
5. 5. Fund Development, which is the solicitation of resources for the organization or special services;
6. 6. Community relations, which acts as a liaison with the publics served;
7. 7. Patient liaison, which acts as intermediators between the provision of care and the patient;
8. 8. Recruitment for medical providers or staff;
9. 9. Internal marketing, which includes staff development in marketing, marketing role expectation, and triage efficiency; and
10. 10. Contracting for new modes of delivery, such as preferred provider organizations, IPAs, or HMOs.

MARKETING AS A SUBSYSTEM OF MANAGEMENT

Marketing is one function of management. It is integrated with other management subsystems of production, finance, and human resources. Marketing determines the needs of the consumer in the marketplace and lays out a plan for satisfying these needs. Production, finance, and human resources follow this lead and initiate the process of satisfying consumer needs through service provision.

TYPES OF HEALTH MARKETING

There are many applications of marketing in health care. Some of these applications include marketing for services, patients, new staff, donors, social causes, creative ideas, goodwill, staff morale, public relations, provider relations, community relations, political and lobbyist activities, new products, fund raising, patient relations, and contracting.

BASIC PREMISES OF HEALTH CARE MARKETING

Before implementing a market program, some basic premises must be established about marketing. These include

1. 1. The patient is a client. There is an exchange process occurring between the consumer and supplier. Even with extensive insurance coverage, every client exchanges time, money, discomfort, and anxiety in obtaining a health service.
2. 2. The best outcome of marketing is a patient or client referral.
3. 3. All providers must continue to assess the effectiveness of their services and not be satisfied to assume they are good just because people use them.
4. 4. Like a new suit of clothes, services must pass initial examination by clients and continue to hold up after the time of initial purchase by the consumer.
5. 5. Marketing is a management tool. it does not offer all the answers to effectively operating a successful organization. It must be blended among financial management, human resource management, strategic planning, and economic analysis.

TEN KEY QUESTIONS ANSWERED BY MARKETING

Marketing supplies answers to the following basic questions:

1. 1. What business are we in and what is the purpose for the organization’s existence?
2. 2. Who is our client?
3. 3. What does our client need?
4. 4. Which markets should the organization be addressing?
5. 5. What are the strengths of the organization?
6. 6. What are the weaknesses of the organization that need to be attended to?
7. 7. Who are our competitors?
8. 8. Which groups (segments/targets) do we want to serve in the community?
9. 9. What are our marketing strategies to communicate to these groups?
10. 10. What strategies should we develop related to pricing, promotion, access, and the types of services offered?

TRADITIONAL VERSUS NEWER MARKETING CONCEPTS

The traditional method for understanding marketing is demonstrated by the following relationship:

PRODUCT + SELLING AND PROMOTION = PROFITS THROUGH SALES VOLUME

This relationship is based on the traditional “Madison Avenue” aspect of selling being the most important part of marketing. Selling is only one function of marketing, and the real outcome of marketing will be client satisfaction. This is exemplified in the following relationship:

UNDERSTANDING CLIENT NEEDS + INTEGRATED MARKETING = PROFITS THROUGH CLIENT SATISFACTION

Integrated marketing includes researching the environment, developing a marketing plan, and creating communication strategies based on the research and planning.

Marketing programs which have failed are partly due to a lack of preliminary research, analysis, and planning before implementing communication strategies.

The selling concept focuses on the services, is solely dependent on public relations, and increases revenues through volume. The marketing concept focuses on consumer needs, uses integrated marketing, and increases revenues through consumer satisfaction.

The marketing concept refers to the study or practice of marketing strategies designed to assess consumer preferences about existing or proposed services, implies a direction to delivery services that meet these preferences and needs, and establishes a criterion of effectiveness so that consumers’ health needs are satisfied by the services.

PUBLICS, MARKET, EXCHANGE PROCESS

Every organization conducts its business in an environment of both internal and external publics. A public is a distinct group of people or organizations that have an actual or potential interest or impact on the health organization. For example, publics for a hospital would be the media, government agencies, other health organizations, the population in the community, medical providers, and its employees.

A health organization functions through the exchange process in a market. A market is a process where a minimum of two groups possess resources they want to exchange for some benefit. It is the matching of demand and supply.

Every marketplace has an exchange. Exchange involves mutual satisfaction of the groups involved. There must be two parties and each must have something that is valued by the other party. For example, patients exchange time, money, discomfort, anxiety, and inconvenience for the services provided.

THE MARKETING MIX

Just as everyone who has studied economics remembers the basic principles of demand and supply, a marketer always is able to fall back on the foundation of the marketing mix. The marketing mix is the mixture or blending of select characteristics of the organization that are utilized to achieve some marketing objective and communicate with a select public.

There are four components of the marketing mix:

1. PRICING: This is becoming an important area of health marketing. It can include the direct cost, indirect costs, opportunity costs, discounting, prepayment plans, contracting, co-payments, credit terms, and deductibles. All organizations must price their services to be able to earn a normal profit which is the amount necessary to keep operations and some capital investment going. Normal profits are a regular part of operating costs. Some factors that must be included in the pricing of a service include demand characteristics for the service, pricing by competitors, consumer expectations for pricing, possible effects on other services provided by the organizational, legal aspects, competitive reaction to changes in prices, profitability, and the psychology of the consumer. Some pricing strategies include competitive pricing, which sets the price at the “going rate” in the marketplace; market penetration, which sets a below-competition price to capture additional market share; skimming which is useful in launching a new service for which the initial price might sustain a high price; and variable pricing based on seasonal fluctuations.

2. PRODUCT: Marketing strategies can be developed related to the physical characteristics of the products and services provided. These characteristics include quality of care, atmospherics, style, size, brand name, service, warranties, types of medical providers, quality of staff interactions, level of technology, and research activities. A health organization must have an attractive service that offers some value to the consumer. These values have to satisfy the needs of the consumer. Every new service needs to be researched, have the market screened for potential acceptance, tested for performance levels, and finally, launched into the market selectively. Typically, health organizations offer an array of different services. Therefore, a product portfolio needs to be established, which plans out the kind of product/service mix most readily acceptable for the market served.

3. PLACE: A key aspect of developing marketing strategies is related to access to the service. The place component of the marketing mix consists of the characteristics of service distribution, modes of delivery, location, transportation, availability, hours and days opened, appointments, parking, waiting time, and other access considerations. Some strategies have included opening a health center on weekends or in the evenings, hiring security guards for evenings, lighting parking lots, possessing excellent triage systems for small amounts of waiting time, locating near public transportation, and changing the mode of delivery to include home services.

4. PROMOTION: The promotional strategies relate to methods for communicating to the publics. Promotion can include advertising, public relations, personal selling, sales promotion, and publicity. A promotional mix needs to be established by blending advertising, sales promotion, personal selling, health education, and publicity. The three main ingredients of external communication are the provision of information about the service, persuasion, and influence to use the service if needed. When using promotional strategies, the basic factors to consider are the availability of funds, the stage of the life cycle the service is in, the nature of the service, the nature of the market, and the intensity of the competition.

SERVICE/PRODUCT LIFE CYCLE

Just like the human life cycle, every product or service exp...