In the back rooms of your hospital, phone and spreadsheet at hand, lies the PR and marketing department you may not think about very often. Yes, the finance department, particularly accounts receivable, is and will continue to be a new public face of the hospital going forward, because a storm of issues is converging that needs addressing. Is your finance department really aware of the marketing and public relations implications of what they do on a day-to-day basis? And more importantly, is the real marketing and PR department in touch with these issues and talking with the CFO about them? CFO and CMO communications being what they are, they probably have not been speaking a whole lot. So let’s look at some of the issues.
MedFICO
A new FICO (short for Fair Isaac Corp.) score is emerging called Med FICO. It is designed so hospitals can see how likely people are to have the means to pay their bill. In concept it is a retrospective tool in that the score will not be looked at until after treatment is rendered. And my guess is that it will then be used to help determine whether to write off a bill, reduce it, send it to collections and, in short, to determine the aggressiveness of collection attempts. In theory, it is not supposed to affect access to care, but perception being everything, that notion is going to be a hard one to sell.
Consumer advocates will not leave this one alone. The CNN anchor who announced this story in early January was up in arms himself. So how familiar are you with this new score? Will you use it? How will you use it? How will the people working in AR explain it to people when asked?
Yes, this will be an issue for your actual PR department and they will have to explain it, but the media is fickle and the story will peak and die—in the media, that is. However, it will be a story that is active on a daily basis through individual patient encounters and how they are handled will fuel positive or negative word-of-mouth about the hospital.
Consumer-directed health plans
Many are brushing off consumer-directed health care plans as a fad that will fade. Think again. They are gaining momentum. And a new phenomenon is growing—healthcare insurance aimed at individuals. These people could be students not covered by mom and dad anymore, but they are just as likely to be mom and dad themselves.
As people in their 50s opt for early retirement, they are facing a dilemma. Medicare will not kick in for 10 or more years, and retiree medical coverage is a dinosaur for many. So these boomers are looking at individual health plans with higher and higher deductibles. Which means more of the hospital bill will fall into their responsibility, and it will be the consumer—not the insurance company—from whom your AR department will be calling to collect. Are they trained in customer service skills to deal with this vocal population?
Price packaging
Medical tourism is a phenomenon that does not seem to be fading. But there are lessons to be learned locally. Price packaging—primarily low-price packaging—is what drives this growing industry.
A boomer facing a deductible that might reach $7,500-$10,000 (and aching hips and knees that need replacement) is going to be very open to “shopping around” first on quality but with price never far from their radar screens. But medical tourism doesn’t have to take place overseas. Packaging services to this population could be an attraction and could draw people outside of their traditional service area.
While healthcare is said to be local, market forces are changing that. To compete in this arena, the finance department has to be bold. We have heard all the arguments about why this can’t be done. Why not? Especially in systems where the majority of physicians are employed?
Tag team
In other industries, marketing and finance work in tandem. When the price of the iPhone was lowered by Apple, the departments of marketing and finance were behind it. The price cut was meant to drive sales while meeting a revenue target. Marketing and finance do not work together in hospitals. Two things need to happen to start fostering more interaction. Financial leaders need to understand that they, in many ways, affect marketing and public relations, and the CFO needs to be open to making the first approach. But hospitals have a dilemma. The skill sets to connect the finance and marketing dots are probably not there.
The market is moving with you or without you. Recognize that there are opportunities to be seized by looking at the organization and seeing the possibilities.
Anthony Cirillo is president of Fast Forward Strategic Planning and Marketing Consulting, LLC, in Huntersville, NC. He may be reached at cirillo@4wardfast.com.
A recent survey by the Health Management Academy of 40 hospital systems with aggregate long-term invested assets of $51 billion indicates that over the past several years, some shifts in asset allocation can be seen. While hospital systems have long taken a conservative approach to asset allocation, this survey shows this may be changing.
To hear the pronouncements coming out of the American Hospital Association or any number of other special interest groups, one would think hospitals are unified in their political voice. Some of the takeaways from recent press releases from healthcare provider organizations can be summed up thusly: We have a broken healthcare system. There are 47 million uninsured. Big for-profit insurers are bad. Any kind of cut in reimbursement from the feds or anyone else would do irreparable damage to suffering nonprofit healthcare providers—and probably kill people.
Of course that's an exaggeration, but hospitals are a powerful lobbying force. I don't wish to single out hospitals for hyperbole among special interest groups—but I write about hospitals, not the automobile manufacturing or beverage industry.
Some hospitals and systems undoubtedly will suffer from any action that reduces their reimbursement or allows more competition in such a highly regulated industry. When any such action is threatened, the bleating from interest groups begins—never mind the big picture. As an advocate for their industry, that's their job.
But I don't hear too much from the big interest groups when members are fighting each other. And believe it or not, it does happen. Lately those fights seem to have shown up as hospital systems battle each other over local market dominance. One claims its attempt to buy a local hospital or system is a cost-saving merger that will result in a reduction of expensive duplicated services. The other claims it's working for the little guy to prevent a monopoly from driving up healthcare costs and squeezing out competition.
Monopolies are like pornography in that they're hard to define. As the late Supreme Court Justice Potter Stewart once famously said about pornography, "I know it when I see it." But preventing anticompetitive behavior, even when you see it, is difficult at best. The Federal Trade Commission is charged with preventing anticompetitive behavior in the hospital business. Its record is spotty, as the organization has failed to stop any of the seven mergers it has challenged since the mid-1990s. And even though it negotiated a face-saving solution to the merger it tried for five years to block between Chicago's Evanston Northwestern Healthcare and Highland Park Hospital, the merger remains final.
But in its own back yard, the FTC has had some recent success. It blocked a planned merger in northern Virginia between Inova Health System and Prince William Hospital before it happened, scrapping 22 months of planning, according to the Washington Post. If the merger had been completed, says the FTC, Inova would have controlled about 73% of the hospital beds in northern Virginia—a certificate of need state—and would have invested more than $200 million in Prince William Hospital. The key to preventing what the agency called an anticompetitive merger may have been that the FTC was proactive this time, challenging the merger prior to its completion rather than waiting until after it was a done deal, as in the Evanston Northwestern case.
Does this mark a change in the winds for the viability of hospital mergers in general? Too early to tell, perhaps, but others are lining up to try to level the playing field, just to the south of Inova's failed merger attempt. In that case, it's not a hospital merger they're trying to prevent—they're seeking to introduce competition into an area that seems to have very little at the moment.
Virginia isn't just for lovers anymore—it's for hospital monopoly fights.
Editor's Note: When this column returns, July 7, I will look at another potential firestorm in Virginia—this time in the southern part of the state.
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.
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Each year, thousands of Californians find themselves at odds with their health insurers over whether they should get the treatment their doctors prescribed. Health insurers "are going back to the old strategies of the '90s, when they interrupted care on the front end by denying or delaying treatment offered by a doctor," said Jerry Flanagan, health advocate for Consumer Watchdog. But now patients have a number of resources to turn to if they believe they received an unfair denial.
Online second-opinion services offer patients consultations from specialists based on the medical records that they fax, mail or send via the Internet. The average cost is $500 to $1,500, depending on the number of radiology or pathology interpretations required. Patients then receive online access to a second opinion in about two weeks. One company that offers the service is Partners Online Specialty Consultations. Since POSC went online in 2001, about 10,000 patients have taken advantage of the service.
Fulton County, GA's public subsidy for ambulance service ends soon, and ambulances could be slower to respond to emergencies as a result. Physicians and hospital administrators say that the cutbacks could endanger lives or cause permanent harm to some patients, and now officials say that they haven't given up on finding some additional sources of income.