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Marketing by Hospitals Myths and Realities.

Marketing by Hospitals Myths and Realities.

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Mar keting by Hospitals

:

Myths and Realities

F. Brown Whittington, Jr. and

Ray Dillon

Is marketing by hospitals myth or reality? This article explores five myths of marketing as well as examines the perceptions of hospital administrators concerning the appropriateness of a number of marketing techniques. The opinions of these administrators indicate several opportunities for expanding the usefulness of marketing by hospitals.

0361-6274/79/0041-0033$2.00

© 1979 Aspen Systems Corporation

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Conversation about the use of marketing techniques by health care organizations has become instant chic, and all the trappings of an emerging discipline are beginning to appear. Debates over the appropriateness of various marketing techniques go on in forums and workshops, in professional journals and even in specialized books. Consultants and professors argue the merits of alternative organizational approaches, planning processes and the implementation problems of marketing in the health care environment.

However, amidst the clamor, one wonders whether these techniques are actually being practiced in hospitals and what the future holds for their further development and adoption. Has all this discussion resulted in widespread usage of marketing techniques by hospitals or is it merely a highly visible manifestation of some short-lived, comparatively meaningless fad? Are the "marketing principles" of the growing folklore deemed appropriate by those who must implement them? Is marketing by hospitals to be a myth or a reality?

HOSPITAL MARKETING PRACTICES: TODA Y'S AND TOMORROW'S

Many conceptual and theoretical frameworks designed to speed the use of marketing techniques in health care organizations have been adapted from those used in business; entirely new ones have been developed.' These marketing frameworks and approaches are now widely and easily available and, if the amount of published work 2-8 and meeting attendances? are any indication, interest in them is high. However, interest is not necessarily synonymous with performance. Individual instances of marketing positions being created in hospitals'? and some specific techniques!' being used have been reported in various

F. Brown Whittington, Jr., Ph.D., is an Associate Professor of Business Administration at the Graduate School of Business Administration, Emory University, Atlanta, Georgia where he teaches courses in marketing strategy and marketing research. He is a frequent speaker in management development programs and has consulted extensively with national firms and governments on marketing strategy, marketing planning and marketing research.

Ray D. Dillon, D.B.A., is an Associate Professor of Accounting at Georgia State University. He is a member of Financial Executives Institute and the American Accounting Association and has contributed to a number of professional publications in both health care administration and financial administration.

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periodicals or meetings, but precious little has been done to answer these questions:

1. What marketing practices are US hospitals presently carrying on?

2. What marketing concepts and practices do health care professionals perceive as appropriate for hospitals?

3. What do health care professionals perceive for the future of marketing in hospitals?

The Significance of Today's Marketing Practices

Marketing practices actually being carried on by hospitals are significant in at least two ways. First, they mirror preyalent attitudes about the effectiveness of particular techniques. For example, a hospital will not undertake the expense of a survey of patient attitudes unless the use of the resulting information is perceived to be useful by someone having the authority to expend the needed funds. Second, today's practices are an important influence on tomorrow's decisions. If a hospital has advertised, it has already made decisions about appropriateness, copy, audience and objectives. If no advertising has been done, some (and possibly all) of these questions must be considered and answered before the campaign is begun.

The Appropriateness of Specific Marketing Practices

The propriety (or impropriety, some say) of hospitals' using marketing techniques is a subject of continuing debate. Much has been said on a conceptual or theoretical basis about the acceptability of marketing as a total entity among the tools of hospital administration. In contrast, very little has been said about the appropriateness of specific marketing techniques, with the notable exception of advertising. It is very useful to examine the perceptions of hospital administrators concerning the appropriateness of a number of

The expectations of administrators are important indicators of their actions in the present, as well as clues to their professional needs.

marketing techniques-not just marketing as an entity or advertising as a single technique-in order to understand the administrative environment in which. decisions about marketing are made.

HeM Review/Winter 1979

What Trends Are Expected?

It is often said that prophesying is very difficult, especially with respect to long-term planning. However, the expectations of administrators are important indicators of their actions in the present, as well as clues to their professional needs. Is marketing activity by hospitals expanding? What are the barriers to further development and adoption? What are future needs? These questions are very important to marketing as it is translated from concept to action.

To develop benchmarks in each of the three areas, we surveyed a nationwide sample of hospital administrators drawn from the 1977 member list of the American Hospital Association. One hundred ninety-one (or about 55 percent) of the administrators in the survey answered a mail questionnaire which allowed a wide variety of responses to questions about present and future marketing practices as well as their perceptions of the appropriateness of specific practices. We were able to analyze the responses on the bases of number of beds, geographical area and educational level of the administrator. The findings give a comprehensive view of what is being done in marketing by hospitals, where it is going and a rather specific view of what practices are seen as appropriate and not appropriate. In several important aspects, the results are counter to the conventional wisdom of the marketing discipline.

FIVE MYTHS OF MARKETING BY HOSPITALS Myth: Marketing techniques are rarely used by hospitals. Reality: The use of marketing techniques by hospitals varies widely. Some techniques are in rather general usage while others are hardly used at all.

For example, responding hospitals frequently reported the use of:

• Attitude surveys of current or discharged patients (70 percent of respondents reported conducting attitude surveys in 1977).

• Studies of services offered by nearby hospitals (64 percent).

• Formal definition of hospital's "target market" (59 percent).

• Development of a demographic profile of patient population (47 percent).

• Use of marketing research techniques to assist in feasibility studies (34 percent).

• Even in the controversial area of advertising, 20 percent reported that they used patient oriented advertising.

Marketing by Hospitals

On the other hand, only nine percent reported that they had implemented a formal marketing plan and a paltry four percent that they had a staff member with "Marketing" in his/her title. Thus a variety of marketing functions is being practiced by hospitals on a rather widespread basis, but little recognition of this activity is given through staff titles or by the preparation of a formal, integrated marketing plan.

Myth: Marketing is perceived to be a non appropriate, il-

legitimate function for hospitals.

Reality: While hospital administrators believe marketing to be a legitimate function of hospitals, their perceptions of the appropriateness of specific marketing techniques vary widely from technique to technique. Only six percent of the administrators in the study disagreed with the statement "Marketing is a legitimate function of hospitals." However, when asked whether specific techniques should be included in a hospital's marketing program, the answers showed a much more diverse and complex set of perceptions. Less than ten percent of the respondents stated that the following marketing activities "probably" or "certainly" should not be included in a hospital's program:

• attitude survey of current or discharged patients;

• marketing research studies to assist in feasibility

studies;

• patient demographic profile;

• definition of target market;

• formal marketing plan;

• study of services for medical professionals.

In contrast, about one third of the administrators thought that patient-oriented advertising "probably" or "certainly" should not be included and about one fourth thought that direct mail promotion to physicians should not be included.

The strongest positive recommendations were made for the attitude survey of patients (where 87 percent of administrators replied that this activity should "certainly" be included), the patient demographic profile (73 percent "certainly"), the study of services (81 percent) and the definition of target market (71 percent).

Thus those activities dealing with knowledge of the patients were seen to be most appropriate for hospital marketing, while those activities associated with demand creation were suspect in the perceptions of the respondents.

Myth: Interest in marketing by hospitals is merely a passing fad.

Reality: Skeptics argue that the primary contribution of efforts to use marketing techniques in hospitals is to

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provide thought-provoking fodder for academic debate and professional forums. These critics would say that there is really little of substance in these efforts and that interest in them will disappear in a short time. While the skeptics' voices may be loud, their opinions are not those of hospital administrators.

Nine out of ten administrators in the study agreed (either "strongly" or "mildly") with the statement that "Marketing activities by hospitals will increase in the next five years." Also a substantial number of hospitals reported that they were not now carrying out certain marketing activities but were planning them for future implementation. For example, only nine percent responded that they had implemented a formal marketing plan in 1977, but 19 percent (or double the present number) reported that they would have such a plan in

Application of the tenn "marketing" may actually hinder the implementation of a true marketing strategy by hospitals.

the future. Other planned 'activities, such as demographic profiles of patients (17 percent planned it for the future, but did not have it in 1977), definition of target market (18 percent planned it) and study of services (ten percent), indicated that marketing activities will continue to, grow in the future.

Myth: Use of the term "marketing" merely adds legitimacy to a group of administrative functions which has been practiced for some time.

Reality: This myth is suspect on two counts. First, we have already seen that marketing activities have been unevenly adopted by hospitals, so that the practice of truly integrated marketing strategy by hospitals is very rare. Second, application of the term "marketing" may actually hinder the implementation of a true marketing strategy by hospitals. Seventy-two percent of the study'S administrators agreed ("strongly" or "mildly") that "Our hospital can carry out marketing functions more effectively if the term 'marketing' is avoided." Only four percent reported that they had a staff member with "marketing" in his/her title and only four percent reported that they planned such a title in the future. Eighty-two percent responded that they had not even considered this action. "Marketing" appears to be such a loaded term-with all the overtones of hucksterism-that administrators are proceeding to adapt and implement the tools of marketing

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without calling them such. While this approach may allow the expenditious use of individual techniques in the short run, it is a major barrier to the widespread acceptance of true marketing strategy in the long run.

Myth: There is sufficient detailed procedural information

about marketing techniques for hospitals. Only the task of implementation remains.

Reality: Opinions on the sufficiency of available marketing procedures vary widely among administrators. While 54 percent of responding administrators felt that sufficient procedures were available, 39 percent disagreed that the available procedures were sufficient. Another 16 percent had "no opinion" on this matter. When the data were examined on the basis of bed size, age of administrator and education of administrator, no significant differences were found in the pattern of responses. There seems to be three groups of opinions on the sufficiency of available procedures. The first, and largest, group believes that sufficient procedures are available for useful implementation. However, there are substantial numbers of administrators who either believe that the present procedures are not sufficient for implementation or who have not examined the techniques in enough depth to have formed an opinion.

OPPORTUNITIES FOR ACTION

A marketing strategy is a complex, subtle phenomenon, both in concept and in implementation. This is true in any organization, profit or not for profit, manufacturing or health care. To regard it as a monolithic, static entity is to doom it from the beginning. Certainly, the opinions of the hospital administrators in our study reaffirm these truths. More importantly, however, they give several clear indications of opportunities that exist for expanding the usefulness of marketing by hospitals.

Recognize the Development of Marketing Strategy as a Continuing Process

The notion of a marketing strategy is that of an integrated set of controllable factors which are used to satisfy a chosen group of users. Too often, we regard our organizations as either having or not having a marketing strategy. In reality, the most frequent case is that of an organization which has parts of a truly complete marketing strategy, but not all the parts that are needed. The challenge here is to recognize that (t) the goal is a marketing strategy which mobilizes usefully

HCM Review/Winter 1979

all the resources available to the organization in order most effectively to meet the needs of those that it serves, and (2) that the realization of this goal does not happen instantaneously, regardless of the amount of planning that precedes its implementation. The components of a marketing strategy not only touch many constituencies of a hospital, but they touch them unevenly. It is only realistic to expect uneven acceptance, enthusiasm and effectiveness. Because of this ongoing nature of the development process for a hospital's marketing strategy, a guiding philosophy for action is needed, and the one that is most prevalent among administrators is to begin to implement a coordinated marketing strategy.

Move from the Use of Individual Marketing Techniques to Implementation of a Coordinated Marketing Strategy

Conventional marketing theory would recommend that a marketing strategy be planned in toto, agreed upon by all concerned, presented for unanimous approval by the hospital board and then implemented at a chosen instant in time. The actions of administrators suggest that such an approach may be infeasible in many cases. Where apathy or antagonism toward "marketing" as a totality (or toward individual techniques, such as advertising) exists, the more effective approach may be to lay the groundwork for the integrated strategy by demonstrating the usefulness of single tools, and to avoid the term "marketing" at the outset. The use of attitude surveys, definition of target markets, studies of services offered by nearby hospitals, or other techniques which add to the hospital's understanding of present or planned patient populations are likely candidates for initial efforts.

Misuse of the demand-creating techniques of marketing is probably the single greatest cause of marketing disrepute.

After techniques such as these have been successfully used, they can be identified as the foundations of a marketing strategy. Their integration with the other necessary components of the strategy can then be shown to the controlling authorities of the hospital. It is most important, however, that the essential integrated nature of the strategy be always used as the overall guide for the administration and the goal

Marketing by Hospitals

for action, even though single parts of the strategy are being executed in the beginning.

If individual organizational conditions are so favorable that a true strategy can be planned and implemented at a single point in time, the results can be excellent. However, the evidence from the "real world" does not indicate that this instantaneous implementation is an event which can be expected in the typical hospital setting.

Recognize Marketing as a Potentially Complex Set of Activities Used to Meet Patient Needs and not Merely to Solve the Problems of Empty Beds

Creating demand, whether it be for household detergents or for hospital beds, is only one function among the large number available to the administrator who understands marketing strategy. Misuse of the demand-creating techniques of marketing is probably the single greatest cause of any disrepute which accrues to the discipline, and this misuse is inevitably detrimental to the organization, health care or not. The administrator must keep in mind that patient needs and wants are diverse, difficult to measure and even more difficult to satisfy-but that this satisfaction is the true object of marketing-not just the proportion of beds filled at a certain time.

Preoccupation with the use of advertising, promotional schemes or any other technique to fill beds is an ineffective perversion of what marketing should be and inevitably leads not only to disrepute for the discipline, but ultimate disaster for the organization and its administrators. Keep your patients at the top of your strategy. Use the entire set of tools at your disposal. Be vocal about the documented results. Then you have the reality of marketing, and have dispelled the myths.

REFERENCES

1. MacStravic, R.E. Marceiing. Health Care (Germantown, Md.: Aspen Systems Corp. 1977).

2. Clarke, R. "Marketing Health Care: Problems in Implementation." Health Care Management Review 3:1 (Winter 1978) p.21-27.

3. Wexler, N.N. "What Is Marketing?" Hospitals 51:11 (June 1, 1977) p. 52-53.

4. Ireland, R.e. "Using Marketing Strategies to Put Hospitals on Target." Hospitals 51:11 (June 1, 1977) p. 53-58.

5. Seaver, D.J. "Hospital Revises Role, Reaches Out to Cultivate and Capture Markets." Hospitals 51:1 (June 1, 1977) p. 59-63.

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6. Karr, D.O. "Increasing a Hospital's Market Share." Hospitals 51:1 (June 1, 1977) p. 64-66.

7. McLaren, J.A. and Traeger, B.S. "Marketing Assures a Satellite Facility a Safe Send-Off." Hospitals 51:1 (June 1, 1977) p. 67~69.

8. Falberg, W.e. and Bonnem, S. "Good Marketing Helps a Hospital Grow." Hospitals 51:1 (June 1, 1977) p. 70-74.

9. Blaine, R.A. "Hospital Marketing Emerges." Hospital Public Relations 3:6 (June 1977).

10. Ibid. p. 2.

11. Karr. "Increasing a Hospital's Market Share."

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