Health Care Market Strategy

Steven G. Hillestad and Eric N. Berkowitz (2004)

Upset the Apple Cart—Quietly
• Any useful strategy must include a means of upsetting the competitive equilibrium and reestablishing it again on a more favorable basis. • Many physicians consider health care organizations members of a medical fraternity. • As a result, physicians or hospitals may compete with one another, but they would rather avoid the use of overt and aggressive competitive strategy.

Push and Pull
• Push: get doctors, nurses, and therapists to refer patients to us. • Pull: get patients to choose us independently for various reasons, including word-of-mouth or website visit. • Push works better now; pull will become more important as people take control over their own health care choices.

Developing Strategy
• We should make no major changes without first consulting our “heavy users.” • New strategies should be tested through limited implementation before full implementation. • Find out what our customers really want— then do it!

Environmental Trends to Watch
• • • • • Demographic shifts: Christian NE is serving more African Americans Regulatory changes: competitive bidding Technological advances: the C-Leg Competitive shifts: Precision closing Corporate changes: more practitioners here at P&O Care

• Baby Boomers use computers more and do more of their own health care research. • 27% Ages 55-64 • 17% Age 65+

Marketing or Operations?
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Awareness Knowledge Perception Contract Access Location Preference Choice Usage Satisfaction Advocacy

Marketing Operations

Service vs. Clinical Quality
• Clinical quality is the cost of entering a market. • But service quality will be the competitive dimension of the future. • Consumers have a difficult time determining the competence of various physicians and hospitals, but they have little difficulty perceiving such characteristics as high-tech or high-touch approaches, convenience, safe neighborhood, and friendly staff.

Market-Based Planning
• Probably the most dangerous marketing judgment we can make is to presume we know what the marketplace wants without actually testing those perceptions. • A market-based orientation requires health professionals to accept the fact that the marketplace should have an impact on decision making. • Organizations that consider themselves knowledgeable about their customers are often surprised when they find out what their customers really want.

Marketing is…
1. The process of listening to consumers and the marketplace. 2. The philosophy of organizing to satisfy needs of a group or groups of consumers. 3. The satisfaction of these needs in a profitable fashion.

The Essence of Marketing is…
1. 2. 3. 4. 5. 6. 7. A philosophy of consumer orientation A system of objective data gathering A road to dynamic business strategy A process of business planning An emphasis on innovation A means of performance evaluation A focus for future opportunities

The marketplace should have an impact on the following decisions:
• • • • Location Office hours Insurance contracts Publication and web content and design

A Health Organization has a marketing perspective if…
1. Its marketing department has a key role in the planning activities of the organization. 2. Its administrator or other key personnel have marketing experience. 3. There are specialized training programs for key personnel that emphasize the marketing concept.

Build up the referring physician in the patient’s eyes

Send a package of follow-up materials to the doctor so that he or she can give them to the patient at the next visit or send it on to the patient.

• When a segment of the health care industry and an organization are both in a stage of growth, the major need of the organization is for differentiation from its competitors. • The role of the sales force often becomes more important at this stage. Their key goal is to control the channels of distribution/referrals. • The most common way for health care services to achieve differentiation is through distribution.

• In order to distinguish its offering from that of competitors, an organization should consider:
1. Hours/days of availability 2. Number of locations 3. Accessibility/convenience

The best form of differentiation may be to have a number of sites with one brand name throughout the community.

Key Service Enhancements
• • • • Responsive call-backs Respect for time restraints Assistance filling out insurance forms Next day calls to make sure everything is okay • A birthday card • Newsletter every 4 months • A free bus pass

Individuals or Organizations?
• In our society, there is a stronger initial belief in organizations than in individuals. • Patients often ask for a specific physician within a small group but do not do the same when they go to a larger facility, such as the Cleveland Clinic.

Better Branding of “P&O Care”

Fewer Requests for Specific Provider

• Personal selling is a promotional technique that most hospitals and clinics still do not use to its full potential. • In fact, most health care organizations have underestimated the effectiveness of a sales force. • The more technical or complicated the service, the more valuable a sales staff. • The final role for salespeople is to monitor the satisfaction of users.

Importance of Salespeople (Including our Practitioners)
• The salesperson is part of the “program” purchased by the buyer. • The greater the risk that the buyer sees in using a program, the more important personal selling is. • Post-purchase (referral) personal contact is important in reducing post-decision anxiety.

What Sales Reps to Best
1. Gather Market Information 2. Maintain Referral Relationships 3. Increase Name Recognition and Familiarity. 4. Distribute Information and Educate Providers. 5. Ask for Referrals and Increase Sales

Keep your eyes open
One of the principle tasks of the marketing professional is to constantly scan the environment and customer data for early signs of new ideas and structural shifts in the marketplace.

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