Finding Information and Market Planning

Patrick T. Buckley, for HealthLeaders News, October 31, 2007

Editor's note: The following is an excerpt from The Complete Guide to Hospital Marketing, a new book from healthcare marketing expert Patrick Buckley and HealthLeaders Media.

In healthcare marketing, the information you need to draw a composite picture of your service area is much more difficult to come by than it is in other businesses. Even though healthcare is a multibillion-dollar industry, historically, hospitals have operated as a cottage industry.

Marketers in industries other than healthcare are used to sharing a significant amount of competitive intelligence, something that is still emerging in healthcare marketing. In the auto industry, for example, the major manufacturers have shared data for decades, resulting in uniformity of suppliers' specifications and enhancement of consumers' ability to compare prices, performance, quality, and safety. It is likely that a consumer will ask more questions about performance and safety when looking to buy a car than when he or she is about to have his or her chest cracked open for quadruple bypass surgery.

The toy industry, like the healthcare industry, is subject to numerous federal regulations. In response, it has developed voluntary safety standards that make it almost impossible for a toy to be marketed without first passing stringent safety tests and requirements. In healthcare, on the other hand, best practices are only just beginning to be shared industrywide. As a group, hospital marketers need to get past the fear of sharing competitive intelligence and push their organizations to support data sharing to make it possible for consumers to compare hospitals on a level playing field.

With all the focus today on Internet-enabled technologies, electronic medical records, and quality and safety improvements, healthcare is a burgeoning IT playground. And yet it can still be a struggle to get such basic information as the number of procedures performed by a particular physician and the outcomes of his or her patients.

Enter the healthcare marketing information system. Healthcare information businesses have mined years of health insurance claims data, Medicare claims, and cost reports; and they have married this information with demographic modeling software that enables marketers to project the potential number of hospitalizations and outpatient visits in a geographic area by gender and age group. These information companies purchase state and Medicare data to help their clients research their markets. The data are populated by the diagnosis-related group (DRG) utilization reports submitted by all hospitals to their state healthcare departments.

By rolling up the data by service line (which is defined by a grouping of related DRGs), modeling software makes it possible to estimate what a hospital's market share for a particular disease or procedure might be.

The challenge for the healthcare marketer is to know what information is meaningful and what isn't. Information is meaningful if it fosters strategic decision-making; otherwise, it is just data (and not information). Many hospital marketing departments do not proactively design marketing information systems.

Instead, they depend on a number of sources to get their information and then cobble together reports that contribute marginally to new program development. A chief weakness of hospital marketing information systems is that market share measurements often lag by a year or more, and the biannual consumer preference survey does not match current market behavior.

It is important that a marketing information system is designed to be more than a tool to measure market share trends and track patient volume trends. The marketing department should take the lead in working with operations and IT to build a marketing information system that produces the type of reports that service line leaders require to deliver necessary and profitable services now.

Market research and analysis
Market research and analysis includes primary and secondary market research.

Primary market research involves seeking information generated from sources other than the hospital's internal reporting systems and from externally generated reports. It includes quantitative (research data that are projectable) and qualitative (research data that are not projectable) methodologies. This information can be gathered through a number of vehicles, such as consumer household surveys, physician surveys, mall intercepts, focus groups, personal interviews, and Internet-based surveys.

Conversely, secondary market research refers to already existing information obtained from the hospital's internal departments or from organizations that have compiled and processed data for a particular purpose. This type of research is often utilized to develop management reports on productivity; volume, population, and financial trends; market position; and physician productivity. Examples include market share reports and incidence and prevalence rates compiled by local, state, federal, and private healthcare agencies and associations.

When to use qualitative and quantitative research
Qualitative research is most beneficial for testing concepts, products, and ideas with consumers through focus groups. Quantitative research is used when it is more important to track changes in consumer attitudes or behavior over time. Quantitative surveys provide a measurement baseline and make it possible to project results, whereas qualitative research is not projectable but has the advantage of eliciting ideas and attitudes that are not attainable through quantitative research.

Measuring marketing-driven ROI
One area of marketing measurement that has become a huge focal point is analysis of return on investment (ROI). You can't be in the hospital marketing business long before you hear the question that provokes terror in the hearts of those who can't answer it: "How will this marketing project contribute to the bottom line?" Much has been written and spoken about this subject. Although there are increasingly better ways of measuring ROI in healthcare marketing, it is still a fairly elusive goal.

Many organizations require marketers to demonstrate ROI to justify their staffing levels, overhead, and annual budget. Some organizations expect marketing to deliver a 200 percent return, others 10 percent, whereas still others have not set a specific target number. But there's a danger in basing the annual marketing budget on an artificial ROI target, because there are several barriers to measuring ROI that are unique to the healthcare industry and many variables that affect healthcare marketing ROI.

Tracking results
One of the most common questions about measuring ROI often comes after a campaign has been "out there" for some time, and it becomes increasingly difficult to track whether the campaign still brings in patients.

Management will often ask whether the people who use the hospital's services would have come to the hospital regardless of whether they saw the campaign. Hospitals must decide whether they consider patients to be new business if they come for a new service, even though they have been patients of the hospital for some other need for one or more years prior. Hospitals may choose to define a "new" patient as one who has not had any medical record activity for the most recent two or three years. Still, counting these people as new patients could be misleading because they may be coming to your hospital for a service that isn't offered at competing healthcare organizations. If their physician isn't affiliated with any other hospital but yours, a referral from that physician that results in a hospital inpatient admission probably can't be attributed to a marketing campaign either.

In both cases, these patients would have come to your hospital regardless of marketing. If you want to measure the ROI of a campaign, it's a good idea to get buy-in about whom to consider a new patient and how to account for patients who would have come to the organization anyway.

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Patrick T. Buckley is president and CEO of PB Healthcare Business Solutions LLC and the author of The Complete Guide to Hospital Marketing, published by HealthLeaders Media. He can be reached at 262-408-5549 and via e-mail at pbuckley4@wi.rr.com.