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Connect Branding to the Bottom Line, Part 1

Gabrielle DeTora, for HealthLeaders Media, September 2, 2008

In healthcare's highly competitive marketplace, your brand has to be developed into something extraordinary. It must evoke a positive rational as well as emotional response from all your stakeholders, including patients, physicians, employees, and donors. But most importantly, your brand needs to drive the bottom line.

Tracking objectives and calculating ROI is necessary to learn what is and is not working with your branding initiatives. The pressure to perform is immense and resources are scarce. CFOs have the opportunity to ensure more cost-efficient marketing, more clearly defined financial forecasting, and greater marketing value for every dollar spent. By working with their marketing teams, CFOs can drive bottom-line growth while eliminating unproductive marketing expense.

ROO vs. ROI
First let's clarify some terminology. Marketers often confuse return on objectives (ROO) with return on investment (ROI). CFOs can educate marketers on the difference between these terms. ROO is a set of predetermined goals you wish to accomplish through your efforts. Examples include: awareness for the cancer center increased 17%; 500 women attended a cardiology seminar; the public relations office placed 35 articles about the health system in the first quarter. These are all specific objectives tied to communications efforts. ROO is valuable to demonstrate that marketing is showing a measured success, that there is a viable return for marketing resources spent, that marketing is tracking success and failure to improve strategy and process quality, and that marketing can forecast success. These are all valid; however, marketers cannot be "credited" for this work as ROI, because it's not.

If you use column inches of press received from PR efforts to provide a financial estimate of what that would have cost if it were purchased ad space, that measurement does not demonstrate income derived and therefore is not categorized as ROI. ROI--some call it "pure ROI"--measures the net revenue derived from business that can be connected to a specific marketing effort. ROI is about net financial return. If one uses gross charges instead of net revenues, that results in an overstated ROI. If adjustments for unpaid bills and the cost of the service to determine net revenue have not been calculated, the assessment is not correct.

Is it worth the effort?
Many have concerns about expending resources on tracking. Too often, CFOs do not assign marketing a budget that is large enough to make measuring ROI an option. Moreover, when marketers do attempt tracking, they have great difficulty identifying direct links between marketing efforts and net income, better known as "causality." Lag time between marketing and nonelective service usage makes ROI a challenge to track. Defining patients who received cross-marketing also makes causality very difficult to determine. For example, is there causality between an obese patient who attended a hospital's healthy heart presentation and then has knee surgery a month later at their orthopedic center?

With all of these challenges, is it worth tracking ROI and ROO? Absolutely. These tools can enable CFOs to better allocate the marketing budgets required to achieve business goals. CFOs can see exactly what works and what doesn't in order cut expenses. They can forecast the budgets necessary to fill capacity for high-margin services. Forecasting also forces pre-planning for internal teams to evaluate past market trends, detail expected changes, and predict the future. It sets realistic expectations and stimulates internal communications on capacity, the impact of growth, leadership support needed, and potential pitfalls.

How to create a tracking system
ROO and ROI tracking can be as comprehensive or simple as the parameters you define. Some CFOs feel if you can't make it comprehensive, why do it? The answer is that because all comprehensive systems begin small in order to define the scope of work, organizations should test processes on a small scale and build resource support for larger initiatives. Building such a system can be organized using five major steps: define, measure, analyze, improve, and report.

Define Objectives Have your marketing leaders begin by defining your marketing goals or "objectives." These objectives should be based on the business goals laid out in your strategic plan. They may include big picture growth in awareness, preference, share of voice, and market share. Your goals may also include the penetration of a particular demographic of patients or patients having certain insurance with higher reimbursement rates.

You should also define specific tactical goals, such as increasing call center activity, Web visits, number of clinical procedures, revenue increases, etc. It is best to strategically break these goals down by service line or specific initiatives that will individually contribute to overall system growth. CFOs should define in advance what portion of growth can be credited to marketing and what determines causality.

Many hospital marketing departments get it wrong right here because they do not take the time to directly link their goals to the goals of the organization. The marketer must first determine what it is he or she needs to be working on before defining the various ROI metrics that need to be tracked.

Marketers often want to be all things to all people and they simply cannot be if they are going to get their jobs done strategically. Prioritizing objectives and putting a true marketing plan together gives you license to say no to requests that do not support the organization's goals.

Measurement
How will marketers quantify the objectives associated with their efforts in ways CFOs consider factual? Think about long- and short-term metrics. The goal is to identify what is happening as spending occurs, not to gather information after the fact. Reducing the lag time in measured response gives you the ability to predict scenarios, as well as tweak strategy if objectives are not being met. This work is not as easy as it sounds. In healthcare, marketers can wait more than a year to track whether individuals who attended a bariatric seminar later scheduled bariatric surgery. We can wait months to determine whether our share of voice increased or if unaided recall levels of the service line initiatives improved.

Start by having marketers set up Leading Monthly Indicators (LMIs) based on your defined objectives such as physician referrals, health screening follow-ups, and new patient admissions attributed to marketing initiatives. This information can help with forecasting by calculating the number of people invited to screenings, the number of people we reach through marketing, etc. This allows strategic marketing efforts to be more precise.

For a robust ROO and ROI tracking system that will help to define cause-and-effect relationships between marketing initiatives and their impact on the bottom line, the key elements are structure, process, activity, benchmarking, performance, and financial measures. Structure measures may include items like quality of system/equipment in place, such as call centers and professional memberships available. Process measures are items such as defined critical success factors and quality control in work flow process. Activity measures revolve around launching initiatives on time and within budget. Benchmarking resources can include Healthcare Advisory Board data and National Research Corporation data. Performance measures should include items such as awareness, image, preference, user share, and consumer loyalty. Lastly, financial measures should include volume of inpatients and outpatients, Medicare case mix, payer mix, and revenue cycles.

Next week, we'll talk about ways to analyze and improve your ROO and ROI efforts.


Gabrielle DeTora is a Strategic Healthcare Consultant in Philadelphia, PA. She may be reached at 908-447-9231 or info@GabrielleDeTora.com. To learn more about effective ROI tracking go to www.GabrielleDeTora.com.
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