Marketing: The Fight Over Market Share Gets Nasty
Qualify for a free subscription to HealthLeaders magazine.
Some hospitals and health systems are getting more aggressive about marketing—but does it put their public image at risk?
It's hard to pinpoint the exact moment that healthcare went from competitive to cutthroat. One day, after 20 or so years of genteel—even passive—advertising, hospitals started to make bold claims about being the best this or having the most that. A smattering of hospitals put up billboards within view of other hospitals' front doors. Hospitals started creeping into new territory—opening freestanding clinics and critical care units within spitting distance of their competitors' facilities and expanding their referral share by gobbling up physician practices. Hospital CEOs started arguing in the local press about quality claims and awards, telling reporters that the data was meaningless, flawed, or bought and paid for. Take the case of Cooper vs. Virtua, for example.
"You cannot love a thing without wanting to fight for it."—Gilbert K. Chesterton
Virtua Health, a four-hospital system headquartered in Marlton, NJ, ran an ad with the tagline that boasted "the most Top Docs are at Virtua."
There was a time when the folks at Virtua's competitor, the Cooper Health System in Cherry Hill, NJ, would have shaken their heads and shrugged their shoulders. Not so in the current climate. Cooper took Virtua to court and, after a lot of wrangling over the exact number of top doctors at each organization, won an injunction forcing Virtua to pull the ad and online promotions.
There are many factors that have prompted that kind of tension. State and local politics, certificates of need, patient satisfaction and loyalty surveys, quality demonstration projects, centers of excellence, Magnet ™ designations, a technology arms race, and the dozens of organizations that name top hospitals, give out quality awards, and rate hospitals as best places to work—it all leads to an environment that has become not just a fight for market share but an all-out throwdown.
At the core is the need to defend against losses of volume and profits.
"Hospital competition is really driven off of the need to maintain a certain level of volume," says Robert Sutton, founding partner at IMA Consulting in Chadds Ford, PA. "Hospitals don't make money when they're 50% occupied."
"It is best to win without fighting."—Sun Tzu
In particular, says Rodney Reider, vice president of operations of Aurora St. Luke's Medical Center in Milwaukee, there are a lot of different ways hospitals can claim they are the best. The trouble starts when more than one hospital claims that it is the best.
"We always want to keep improving and they are, too. And that's where some of that throwdown comes in," Reider says. "The bar is raised as everybody else gets better. We're all fighting on quality."
There's plenty of competition in the Milwaukee area, but Reider says his organization tries to rise above the fray. Instead of worrying about what others are doing, he says, his organization concentrates on four key areas: quality, patient loyalty, employee satisfaction, and business development. In the latter category, he admits, sometimes you do have to get aggressive.
One of the big battlegrounds in business development and growth are ERs because of their potential to increase admissions and grow revenue, he says. "It's still better to play offense. You've got the ball, you can make the decisions."
"Great is the guilt of an unnecessary war." —John Adams
The battle between Cooper and Virtua didn't end after the court ruling earlier this year, by the way. For a while, it looked like the two organizations would never stop squabbling over the details. After winning the injunction, Cooper kept pushing, saying Virtua's "orchestrated advertising scheme" was designed to mislead the public and tarnish Cooper's reputation.
"It is unfortunate that in such uncertain economic times, when our community is looking for clear concise information about their healthcare options, that Virtua would intentionally mislead our South Jersey community," John P. Sheridan Jr., president and CEO of Cooper University Hospital, said in a statement. Virtua's CEO, Richard P. Miller, meanwhile, continued to defend the top docs claim even after the injunction and accused Cooper of wasting taxpayers' money on "frivolous" lawsuits.
And how did the public react? Online comments on news sites and blogs were uniformly negative—bordering on nasty—toward both organizations.
- 'Mega Boards' Could be Rural Healthcare Disruptor
- 1 in 5 Eligible Hospitals Penalized for HACs
- HL20: Rebecca Katz—Cooking Up Sustainable Nourishment
- Meaningful Use Payment Adjustments Begin
- HL20: Peter Semczuk, DDS, MPH—Taking on the Big Challenges
- PA hospital to pay $662,000 to settle Medicare fraud case
- Supreme Court to hear Obamacare subsidy challenge in March
- How the high cost of medical care is affecting Americans
- HL20: Lee Aase—Who's Behind @MayoClinic
- Dr. Oz gets fact-checked and the results aren't pretty