Atlanta's struggling Grady Memorial Hospital has come under fire recently for increasing its marketing and public relations budget at a time when some say it should put that money toward improving care. But guess what opponents—the two aren't mutually exclusive. Grady is clawing its way back into its fiercely competitive market and an aggressive marketing strategy is essential to its success.
Watchdog groups blasted Grady earlier this week when the Atlanta Journal Constitution reported that the 953-bed hospital spends about $1 million on marketing each year and is expected to spend an additional half-a-million this year in an attempt to improve its tarnished image. Publicly known as a hospital that treats the poor, gunshot wounds, and car-crash victims, Grady has hired an advertising firm to revamp its brand and attract a more diverse payor mix.
Not everyone is happy about that.
"I would have preferred to use [the money] toward patient care," state Sen. Vincent Fort, a leader of watchdog group the Grady Coalition, told the Journal. "Two-and-a-half-million dollars over two years is completely indefensible."
Well, Sen. Fort, I'm going to give it my best shot.
First, let's put things into perspective. Grady's $1.5 million marketing budget is 0.2% of the hospital's total $740 million budget. Even among hospitals, which spend much less than other industries on marketing overall, that's low. I bet the hospital spends at least that much on Mop 'N Glo.
Secondly, to improve patient care with any sustainability, Grady has to attract insured patients. In the long run, running a successful marketing campaign that increases patient volume for profitable service lines will result in much more resources to put into patient care than the $1.5 million marketing spend.
And Grady is actually making its marketing budget go a long way. It's spending about $120,000 for a public relations firm to market positive patient stories to local newspapers, $800,000 on an integrated ad campaign, and $40,000 for glossy booklets for an annual report and a new stroke center.
An advertising firm, which crafted the hospital's new "Atlanta can't live without Grady" slogan, is expected to cost $100,000. The Grady Health Foundation also recently unveiled a new promotional ambulance which will promote the hospital at community events.
Not included in the budget are the salaries of the hospital's seven-person, in-house marketing staff. But again, for a hospital Grady's size, that level of staffing is already very lean. Besides, part of the cost is offset by a Georgia Pacific donation of $200,000 worth of advertising space for this year.
The point is Grady's marketing team is spending its 0.2% share of the budget wisely. The coordinated PR, advertising, and rebranding efforts have the potential to financially help the facility expand their payer mix and eventually grow a broader base of business—which will sustain them into the future. Spending on an annual report, a branded ambulance, and promoting its stroke center—one of those aforementioned profitable service lines—are smart choices, too.
Just this month, Grady officials announced its first surplus in about a decade. Their marketing efforts are one more block that helps build upon this momentum.
What's more, patient quality and satisfaction, which had been poor in past years, are now improving. Hospital acquired infections are down, pharmacy waits are down, and MRI waits are down.
This means when the high-value patients come to Grady as a result of the PR and advertising efforts, their experience will match the brand message—which is what all hospitals strive for. Thanks to its so-called "indefensible" marketing expenditures, Grady just may secure itself in the black ink.
Marianne Aiello is a contributing writer at HealthLeaders Media.