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Mending marketing mistakes in healthcare

Ratan Jalan, Founder & Principal Consultant, Medium Healthcare Consulting outlines the top five mistakes in hospital marketing and recommends steps to rectify them

In a usual hospital setting, marketing, unfortunately, happens to be one of those functions, which is not adequately understood and, hence, not appreciated. It is often viewed as something not even desirable (You can’t exploit the sick!), cosmetic in nature (It’s all about colours, clever headlines, and pictures.) and non-productive (You don’t even know whether it works). To make matters worse, a large number of hospitals, in the name of marketing, simply stop at creating and maintaining an incentivised referral network and chasing a few corporates or TPAs. Ironically, all that is not even marketing!

Here are the top five mistakes that hospitals make. I would also like to suggest some ways to address these challenges.

Customer un-friendly communication: Think about the hospital advertisements you usually come across. They boast of state-of-the-art equipment and highlight plush interiors. I find it ridiculous that a cancer hospital talks about tumour boards. Or a large hospital talks about 16 micron HEPA filters in their OTs or 128-slice CT scans. Hospital marketers frequently forget that people do not live and work with the highly technical jargon that pervades hospital atmospheres. Those poor souls don’t understand HEPA filters, non-invasive surgeries, or intrauterine fibroids. Is oncology really a better term than “cancer”? It is important to focus on what the new technology, procedure or an accomplished physician means to the patient in terms of end-result or benefit. For those who find merit in being incomprehensible, since they may believe it helps in cueing expertise, I would request them to analyse Intel’s advertising campaigns. It is the sheer simplicity of messages (a microprocessor can be no less complex to talk about!), which makes even the kid in a small town insist on buying a PC that has ‘Intel Inside.’

Not focussed on high margin segments: A hospital usually focusses on high-profile specialities. Similarly, marketing or sales efforts are largely directed towards customer segments, which are relatively easier to acquire, be it corporates, TPAs or through referral route. There is a certain amount of disconnect between the financial impact and the strategic priorities of the marketing plan in many hospitals.

Different specialities and procedures yield very different margins, which may be on account of high consumable cost, for example. Also, a walk-in patient is likely to be a lot more profitable than a corporate or an insurance patient, since the effective tariff will be much higher with no account receivables (and hence, no bad debt either). It is vital that the marketing function is equipped with in-depth analysis of margins across different services and different customer segments. To capitalise on such disparities, a truly efficient marketing plan would prioritise and focus on increasing volume for those areas that will have the highest impact on the bottom line.

Lack of an effective outreach programme: A hospital, whether it is a large hospital or a mid-sized hospital, will have a catchment area much larger than the town in which it is located. While Medanta Health City receives patients from almost everywhere in the country (or, in fact, anywhere in the world), smaller hospitals may be catering to areas within 200-300 km of their location. An effective marketing programme needs to ‘take the hospital’ to such out-reach locations. A well-executed marketing programme will achieve high visibility and recall among the target audience in such locations. It needs to be done through a judicious mix of physician visits/camps, CMEs, PR and mass media, in select cases. It also needs to be done regularly, and more importantly, monitored closely to assess impact to help fine tune strategy. Some hospitals have effectively leveraged out-reach programmes to promote and build equity for their lesser known physician pool. Given Apollo Hospital’s vast network, the Apollo Clinics initiative was a strategic attempt to address the need for institutionalised outreach across the country.

Inadequate PR: PR in a hospital context not only offers much higher credibility, but is also much less expensive. A large number of times, PR gets into a hyper-active mode as a crisis management exercise when something goes wrong, be it a messed-up surgery or a natural disaster. One also comes across PR centering on new equipment or extraordinary procedures, like separating Siamese twins or performing cardiac surgery on a 93-year old patient. While such PR initiatives, if executed well, can help in reinforcing expertise and enhancing brand visibility, there is a lot more which could be attempted as a planned strategy. It is important to keep the journalists engaged on a proactive basis, be it around certain burning healthcare issues like infant mortality, hypertension or patient-friendly initiatives, or physician accomplishments and newer approaches. However, it is important to understand that you should not paint a picture which is far from reality! It is equally important to have a strategy ensuring consistency in messages. Narayana Hrudalaya, for example, has managed to leverage PR extremely well to drive home the message of affordability with a single-minded focus.

Not-in-time marketing: Hospital marketing usually starts only after the hospital becomes operational. There is an incredibly frenzied pace of activities during the last few months before the launch, be it equipment installations, physician recruitment, training, software glitches, licenses, outsourced agencies or interior finishes. And marketing somehow goes unnoticed. It is disappointing to witness a hospital willing to incur high fixed expenses as minimum guarantee for a large number of surgeons, but not invest enough in marketing or sales to promote these very assets! In almost all other industries - marketing and sales activities get initiated well before the new facility becomes operational. The objective is clearly to generate enough footfalls and revenue in the first few months. Unfortunately, in a hospital which has extremely high fixed costs, the first few months are normally quite bleak.

It is a well-institutionalised myth that hospitals suffer from long gestation periods and it takes time to move up the occupancy levels and revenues. I believe it has largely been a result of poor and inadequate sales and marketing efforts put in by hospitals over the years. The reality, can be very different. This list of five mistakes, by no means, is exhaustive. My objective is to sensitise managers and promoters about how marketing can leverage produce results.

Hospitals aren’t the only ones who lose out from ineffective marketing. Patients deserve and, in fact, crave information about their healthcare options. They scour the internet, talk to relatives, coworkers, and friends, read the papers, watch television and call hospitals with questions, all in the hopes of learning enough to make a good decision. They trust what they learn at outreach events or read in newspaper and they place deep faith in what fellow patients say. Ignoring this reality doesn’t really help them or your hospital.

Comments   

 
#2 Ratan Jalan 2012-10-04 21:52
Dear Dr Rao,

I appreciate your concerns. A for-profit hospital will necessarily have to take steps to address diverse needs of multiple stakeholders, which shall include attractive returns for investors. There will have to be other models such as NGOs, govt owned facilities or PPP models, which will need to serve under-privilege d patients. There simply can't be one model, which can serve everyone.

Ratan Jalan
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#1 Dr P H Rao 2012-08-18 16:59
Dear Ratan

If all hospitals focus on high margin segments, who will take care of those diseases, which are more frequent but less paying.

Is there a place for social objectives in hospital marketing strategy.
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