Beyond Marketing Roi 1

Cincinnati Alliance For Healthcare MarketingMarch 5, 2009

Presented by Patrick T. Buckley MPAPresident and CEO

PB Healthcare Business Solutions LLC

PB Healthcare Business Solutions LLCStrategy, Marketing, Management for Health Care®

©2008 PB Healthcare Business Solutions LLCThe material contained herein is protected and intended for use by clients and associates of PB Healthcare Business Solutions LLC, and may not be reproduced or distributed without the express written consent of PB Healthcare Business Solutions LLC.

Warning!

THIS PRESENTATION MAY CAUSE MENTAL CONSTERNATION AND

PROVOKE UNBRIDLED “OUT OF BOX” THINKING. DO NOT ATTEND THIS

PRESENTATION IF YOU ARE AVERSE TO UNDERTAKING A RADICAL

TRANSFORMATION IN YOUR VIEW OF HOSPITAL MARKETING!

Why I Wrote “The Books”

The Complete Guide To Hospital Marketing and Physician Entrepreneurs: Marketing Toolkit are based upon my experience of over 25 years as both a Chief Strategy and Marketing Executive and as a national health care marketing consultant Based on dozens of interviews with CEOs, C-suiters,

marketing VPs, physician leaders, group practice administrators

Wanted to help people who are new to health marketing, but also those who are already in it

Aim was to provide “boulders of wisdom”: a decided emphasis on practice over theory

Currently writing 2nd Edition of CGHM3

Workshops

Branding From The Inside Marketing Information and Analysis Marketing Planning Marketing Management Marketing Communications Marketing and Business Development Marketing and Physicians Managing Your Marketing Career

• Full-day: all 7 modules• Half-day: two modules in- depth

4

Topics We Will CoverPerceptions Of Marketing From Within

Traditional ROI Measurement Methods And Why They Are Insufficient For Determining Marketing Effectiveness

Going On The Offensive: Demonstrating The Value Of Marketing

In Many Organizations, Hospital Marketing Struggles To Prove Its Value

CMO

Observation #1:

In many health systems, marketers have suffered from narrow and outdated stereotypes, some which have been self-inflicted.

Low Level Of Confidence In MarketingOnly 8% of CEOs rate their marketing as very

strong.Only 27% of marketing officers rate their

organization’s marketing as very strong.51% of marketing officers say their work is highly

valued by their CEO, whereas 59% of CEOs hold a neutral or negative view of their organization’s marketing efforts.

25% of CEOs say their chief marketing officer is a member of the senior executive team

HCPRO/HEALTHLEADERS 2009 LEADERSHIP SURVEY

Observations

How Others In Their Healthcare Organizations Rate Their Marketing Programs

Q: How valued are the marketing department’s efforts to the following internal stakeholders?

Percent “Slightly Valued” or “Not Valued”:

Physicians: 38.6Staff: 43.8COO: 19.8CFO: 47.2Board Of Directors: 26.5Organizati0n-Wide: 34.8

HCPRO/HEALTHLEADERS 2009 LEADERSHIP SURVEY

Observations

10

Unrealistic Expectations?Health leadership is anxious for results –often expecting returns in as little as 3 months! Other industries take a longer perspective (e.g. telecommunications companies look at five year returns)

ROI Approaches

Traditional ROI FormulaNet Incremental Revenue-Direct Costs-Marketing

ExpensesMarketing Expenses

Key Questions: Is marketing an “investment” or an “indispensible

operating expense”? The Answer Is: Both

What constitutes an appropriate level of investment? Should ROI denominator be operational and marketing

expenses? For how long do we keep attributing results to a

campaign? Are we following through to see if the business we

generate from a marketing effort is being well-served?

INVESTMENT

RETURN

Image Campaign

Service Line Campaign

Single Procedure Promotion

$

$

The most effective application of the traditional ROI measure is to focus on specific high revenue to expense procedures that can be tracked to specific physicians

Midwest Hospital’s Promotional Campaign: Is This An Accurate ROI Calculation?

Revenue Projections Physician Office Visits (employed Drs.) $

154,392 Associated Stream-- Hospital -Related $ 898,054

Total Revenue $

1,052,446 Investment Start-up & Marketing ($ 20,000)Fixed Costs ($66,569)

Investment Total ($86,596)

ROI: $1,052,446 -- $86,596 / $86,596 = 11.15

Observation #2:

Healthcare is a moving target: today’s best practice is tomorrow’s runner up

Benchmarking can institutionalize current ways of doing things and stifle new or alternative approaches to measuring marketing’s value

Over time, it becomes increasingly difficult to show new incremental business from a campaign

MARKETING is a team effort, not a department’s responsibility

Relying Solely On Traditional Measures of Marketing Success Can Be Dangerous To Your Long-Term Marketing Health!

Then why would you staff or budget for your marketing program according to the median in an association survey?

Would you buy a medium size pair of pants because it’s the most popular size in the store? Or would you buy the pair that fits you best?

Relying On “Norms” and Averages Can Be Dangerous To Your Long-Term Marketing Health!

Observation #3:

Internet/Web sitesCommunity Resources

Provider-sponsored prevention/ educational programsEmployer Site and Community-Based Screenings

Provider Interaction: Breast Care Clinic

Hospital Interaction:

Surgery, Chemo, Radiation Therapy

Follow-up

and Self-Management

*Marketing Interaction:

Research

Service Planning

Promotion

Operations Consulting and Customer Fulfillment

*All of these are inputs to ROI

Observation #4:

Most of our marketing efforts have been focused on looking for current level solutions. Can we really attribute changes in market share (which take over a year to measure and can be affected by several variables) to a specific marketing promotion? If so, what if market share drops? Do we then say it is because of a lousy marketing campaign? Not!

Are there better measures where we can tangibly demonstrate improvements to the bottom line as a direct result of a marketing department initiative?

And if there aren’t, can we create them, and who else should be accountable?

Do We Need A New Business Model And Philosophy?

“It can be argued that one of the biggest reasons that companies fail to overcome their competition is their leadership’s inability to think in a way that enables execution at the next level.”--Rand Stagen, “Next-Level Leadership”

“You can’t solve a problem with the same level of thinking that created the problem”--Albert Einstein

TRADITIONAL MEASURES OF MARKETING PERFORMANCE

Build our awareness and preference

Increase inpatient market shares

Create positive media coverage

Sustain and increase physician referrals

Improve customer satisfaction

NEXT LEVEL MEASURES OF MARKETING PERFORMANCEAttraction and retention of strong performers

Improvements in physician/provider business relationshipsImprovements in our community’s health status

Innovations in customer service and in the way we price, deliver, and engage customers in “healthing themselves”

Others:

CURRENT LEVEL THINKING NEXT LEVEL THINKINGFocus On Winning Market Share

Focus On Changing The Market

Focus On Promoting Services Focus On Innovating Processes: “What Can We Do Better?”

Focus On Short Term Results Focus On Long-Term and Sustained Results

Focus On Post-service surveys Focus On Making The Right Experience in Real Time

Offer Product >Market It Product Occurs From Re-Defining Practices, Based on Customers’ Value Assessment

Linear Solutions Integrated Solutions

Case Study: Apple I-Pod and SONY Walkman*

Photos courtesy of Apple, Inc. and SONY, Inc.

CURRENT LEVEL THINKING APPROACH RESULT

SONY “command and control”

Own its own music, compete with other music labels

Precipitous drop in sales revenues

Missed a major opportunity to connect with customers

NEXT LEVEL THINKING APPROACH RESULT

APPLE “diffused ownership” Develop I Tunes Store where consumer picks and chooses music from several labels.

Make store compatible with all MP3 players

Huge success—a win/win for all of the music labels, APPLE, and consumers.

So What Can Marketers Do To Strengthen Perceptions Of

Their Value To Their Employers?

Five Steps To Bolster Value Step One: Re-define your role as the Chief Business Coach (CBC). Be a

change agent by educating your leadership on the difference between the marketing department and MARKETING

Step Two: Start associating all of your activities with outcomes that go beyond short-term “fill a bed” thinking. Show how what you do leads to new investments in clinical technology, enhancements in the community’s health status, innovation in our products and services, and to recruitment of the highest level performers

Step Three: Forget comparing yourself to industry norms—they won’t get you results. All that matters is your impact on your customers and your community.

Step Four: Stop wasting $ on traditional research and self-promotional activities such as annual community perceptions surveys. These rarely make a difference in decisions to improve products and services. Focus more on helping to make your internal employees more engaged and on making provider and customer processes more effective.

Step Five: Bolster your budget for physician relationship management. If your budget is limited, sacrifice advertising and non-strategic sponsorships and put that money into building physician loyalty.

“To exist is to changeTo change is to matureTo mature is to go on creating oneself endlessly”--Henri Bergson

PB Healthcare Business Solutions LLCStrategy, Marketing, Management for Health Care SM

262-408-5549www.pbhealthbiz.com