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.For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.
Every once in a while, I like to share with you how some readers have responded to my recent columns. Some like what I've had to say, some vigorously disagree, but either way I love to share the more interesting ones with the rest of you.
In some cases, I've edited for brevity and grammar. So without further delay, here are some of the best over the past eight weeks or so, with my commentary.
Hospitals continue to abuse status
This letter came from an advocate for the uninsured in response to my column about the fate of class-action attorney Richard Scruggs, who's now in federal prison.
Mr. Betbeze,
I advocate for uninsured and underinsured patients, and the overwhelming majority of hospitals do not even mention "charity care" programs or uninsured discounts to patients who would easily qualify.
What hospitals do is go after these patients for the inflated list charges. For instance, a hospital might bill $357 for a comprehensive metabolic panel (chargemaster price) and accepts about $20 from CMS for the same panel. Worse, most hospitals bill for equipment and monitors that CMS considers folded into the room/unit/procedure charge and for which it will not pay twice, but uninsureds/underinsureds are demanded to pay these duplicate charges.
As a result of these billing schemes, the list charge description master prices, even if discounted by a percentage, are still egregious and laden with duplicate charges. Regarding inpatient billings from hospitals, this is the norm and not the exception when hospitals sue anyone for billed charges.
Nora Johnson
MED-X
Caldwell, WV
Blue Cross policies unfair…or are they?
The next letter comes from an administrator of a pediatric clinic who feels that a recent decision by Blue Cross Blue Shield of Minnesota to eliminate copays for beneficiaries who use convenient care clinics is unfair to physicians. He offers some ways physicians might be able to fight back on such policies. The letter after that comes from a physician who has a surprising take on the policy.
Hi Philip:
Here we go again. It is against the law if a physician group waives a copay because it is considered steering the patient. The truth, as we all know, is that copays keep down physician visits. So now our bought-and-paid-for lawmakers are allowing mini-clinics and carriers to steer patients [through waived copays].
This should not be a problem [for physicians]. Every physician in Minnesota should drop Blue Cross and let all Blue Cross customers go only to such clinics. Further, the American Medical Association and all the physician specialty associations should send a newsletter to all their physicians to contact the medical director of Blue Cross of Minnesota and insist that if they don't stop this practice, we will resign. Carriers' sales pitch 25-30 years ago to physicians was "sign up with us or your patients will go to the physician around the corner that did sign with us."
Now we can use their tactics.
Harvey Brownstein Practice Administrator
Clarkstown Pediatrics
Clarkstown, NY
Dear Philip:
This is great news ... for patients in Minnesota. Primary care physicians need the incentive to run their businesses to the benefit of the customers. There's nothing like a little competition to raise the heart rate and improve performance. Point-of-service satisfaction of healthcare consumers probably can't fall much further. All physicians know at some level that much of what they do does not require a physician to do it. And the ridiculous practices of forcing patients to endure an office visit for prescription refills, minor acute illnesses and such are largely unconscionable. The retail clinic movement is most definitely one way to improve access to care while creating real market feedback to a system that sorely needs it. Let physicians go and get a fair price for those things that truly require their level of intellect, training, and skill. The only way they will know what those things really are is to "go cash" and openly and transparently compete with other forms of delivery.
Robert Teague, MD Austin, Tx
Right on, Michael Freed
This letter comes from a hospital administrator who didn't want to be named as speaking for the hospital, but he applauds one of my favorite sources, Spectrum Health CFO Michael Freed, for comments he made for a HealthLeaders magazine cover story that ran earlier this summer.
Philip:
Freed from Spectrum is right on with his comments. Our hospital is trying to educate the marketplace as to costs and quality (value) and we are not having much luck because the consumer feels it's out of their control and they just do what they are told. It's very depressing, because we have an excellent message to deliver but no one is home, so to speak.
I do want to defend Medicare, though. Although Medicare doesn't reimburse us our costs, why should they? It is not Medicare's fault that people live unhealthy lives for 40 years and now show up needing hips, knees, drugs, and heart surgery. Don't the commercial carriers that were responsible for that person for 40 years have some responsibility to help keep someone healthy and not just plop them on the next doorstep? That's a little unfair to Medicare or anyone else next in line.
I recently went to the Czech Republic and France, who have much lower healthcare costs than the United States. But both countries are facing the same problems the United States is facing—aging boomers and increasing costs. Both have a single-payer system. Both countries have longer life expectancies, but the one major difference I saw was that there are virtually no overweight people in those countries. How can you compare a 65-year-old American, 100 pounds overweight all his life, who smokes, drinks, never exercised, has diabetes, and now needs a total hip replacement to a 65-year-old Czech who is in shape and has no other ailments other than needing a hip due to use? Which one do you think costs more?
It makes my blood boil when people say our system is broken. It's not broken. No one is taking responsibility. Everyone wants someone else to fix the system, which as Freed says, is people. We need to fix ourselves . . . by being more healthy. The government is partially responsible for making healthcare so convoluted now; I have no confidence they can do anything to improve it. The most important thing driving costs and life expectancy is lifestyle! We all want to be fat and happy, but don't consider the impact that has on costs and life expectancy. So we blame it on the healthcare system.
Name withheld by request
Another anonymous letter follows, as the author comments on a column about the recent revelation that CMS has paid millions in claims from prescriptions supposedly written by dead doctors.
I generally avoid running these unless the author has a fear of retribution, which definitely applies in this case.
Dear Mr. Betbeze:
I read your article with great interest. It also got my blood boiling. I am a Medicare-approved durable medical equipment dealer. My company is also accredited by The Joint Commission.
We have provided specialty equipment, (lymphedema pumps), for 16 years. But getting money from Medicare for products, correctly provided, is like pulling teeth. They routinely downcode or deny claims without much thought or examination of supporting documentation. Having been doing this for a long time, I know what to provide and who not to provide to. But Medicare doesn't seem to care.
I am currently fighting Medicare for payment on a breast cancer patient who should be covered under the Women's Health and Cancer Rights Act of 1998. Yet Medicare has downcoded my patient. If a Blue Cross or Aetna did this, they would answer to the Attorney General's office. I know, because I have called them on several occasions. Yet Medicare considers itself above the law.
Now when I read that they pay millions on simple-to-understand fraudulent claims, but deny my legitimate claims, my head wants to explode. I hope you continue to shine the light of day on Medicare's stupidity.
Name withheld by request
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.Note: You can sign up to receive HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top quality issues facing healthcare leaders.
Three supporting players in a South Florida Medicare scheme have pleaded guilty to charges of fleecing millions from the federal health insurance program. The three—a physician, a clinic administrator and a money launderer—admitted in separate plea deals last week that they aided an elaborate conspiracy to bill $110 million in false Medicare claims. Others involved in their alleged Medicare scam, which authorities said included a vast network of straw owners, professional patients, and kickback payments, are cutting plea deals and cooperating with prosecutors.
Spending on direct-to-consumer advertising of prescription drugs continues to rise, but a new study suggests it might not be worth the cost. Drug companies spent an estimated $4.24 billion on direct-to-consumer ads in 2005, more than triple what they spent in 1996. But it was still far less than what they spend on marketing to doctors, researchers report.
WellStar Health System has entered into a partnership with Georgia's Kennesaw State University to enhance KSU's nursing program, develop WellStar's future workforce, and make a dent in the severe shortage of nurses facing the nation. The university and WellStar will work together to recruit more KSU Bachelor of Science nurses to work throughout the WellStar system. An adjunct faculty certification program will also be established for qualified WellStar nurses, through which nursing students will spend six to eight weeks per semester engaged in hands-on training.
A program through the Boston-based Beth Israel Deaconess Medical Center places doctors in residences primarily populated by the formerly homeless elderly. Now entering its second year, the Harvard Geriatrics Fellowship Program brings doctors, psychiatrists, and dentists into residences run by organizations dedicated to providing housing and healthcare for the elderly. The program is funded by a three-year federal grant worth about $1.8 million.