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Topics Covered

Topics Covered. Learning Objectives and Take-A-Ways Essential Ingredients for Service Line Marketing Marketing Prioritization Role of Service Line and Marketing Executives Market Analysis Market Planning Integrating Physicians Tracking Results and Return on Efforts

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Topics Covered

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  1. Topics Covered • Learning Objectives and Take-A-Ways • Essential Ingredients for Service Line Marketing • Marketing Prioritization • Roleof Service Line and Marketing Executives • Market Analysis • Market Planning • Integrating Physicians • Tracking Results and Return on Efforts • Service Line Marketing for the Health Care System • Putting it all Together

  2. Learning Objectives and Take-A-Ways • How to more clearly focus marketing efforts to achieve measurable, profitable and sustained results • How to leverage the expertise of service line and marketing executives in the execution of market analysis and planning • How to assess return on marketing initiatives

  3. Essential Ingredients • Commitment to the Marketing Process • Prioritize Service Line Offerings • Involve Stakeholders With Appropriate Skill Sets • Include Physicians From Beginning. • Build Feedback Systems Into the Marketing Plan • Build Your Efforts Around the Consumer Rather Than Supplier

  4. Who’s at the table? • Tailor to your situation • CEO • COO • Finance • Physician Representation • Service Line Executive • Strategic/Business Development • Marketing Executive • Others as appropriate

  5. CV Neuro Women’s Prioritize Your Lines Ortho Neuro Cancer Wellness

  6. Service Line Marketing Prioritization Criteria

  7. Explanation of Ratings on Marketing Prioritization Criteria -Clinical Strengths: Does this service have exceptional physician or clinical leadership? The service with strong clinical quality will perform better in the marketplace than one that requires recruitment. -Positioning Power: Some services have more symbolic impact on the marketplace than others in terms of overall reputation for quality, service and positioning, and can spread a halo effect over the organization as a whole, such as heart surgery, neurosurgery and trauma services. They convey an aura of life-and-death medicine. -Profitability: Is this a service that generates profit for the organization? If so, then it should be rated more highly than one that requires subsidization. -Competitor Vulnerability: Even if your service does not currently have market share, or has low market share, consider whether the competitors are vulnerable due to lack of/change in leadership, location, responsiveness or quality. -Spin-Off Revenue: Some services produce significant indirect revenue. Some services produce more long-term customers than others. While not gushers in term of direct revenue, they may be gushers in terms of overall revenue or contribution to the business.

  8. Explanation of Ratings on Marketing Prioritization Criteria(con’t) -Small Investment: The smaller the investment required and the greater the potential leverage of the investment, the more attractive is the service as a gusher. -Provider Capacity: Will this service be able to handle more business? Services that are able (and willing) to accommodate more business receive higher ratings. -Product Champion: When a service is led by someone who "makes things happen," it is an important indicator of a gusher. A product champion is the rallying force and cohesive power who can bring together all the component parts and motivate the whole team to go after the marketplace. -Loyalty Quotient:Services that serve as front doors or entrée points for patients who are likely to remain within the system for other types of personal or family care have a high Loyalty Quotient. Scoring: -Highly correlated = 9 points -Moderately correlated = 3 points -Minimally correlated = 1 point -Not at all correlated = 0 points

  9. Sample Prioritization Maximum mean score: 81

  10. The 80/20 Rule (or, in this case, 71/63) Sorted by # discharges. The top 6 MDCs account for 71% of inpatient volume and 63% of inpatient reimbursement.

  11. What To Market?

  12. Cardiovascular Service Line Volume Flow CV Surgery $$ Cardiology Visits: DX echo, stress tests TX: interventional procedures $$ PCP Visit: Lab tests $$ Cardiac Screenings: BP,Chol., Body Weight, etc. Marketing Interaction

  13. Defining Roles

  14. Definition of Roles Service Line Executive Facilitator Troubleshooter Implementer Marketing Executive Creative Thinker Discoverer of Opportunities Counselor

  15. Desired Characteristics Service Line Executive Visionary Marketing Savvy Clinical Expertise Political Insight Ownership of Results Energy Marketing Executive Visionary Know Marketplace Marketing Expertise Political Insight Ownership of Results Energy

  16. Market Analysis

  17. Market Analysis: The Big Picture Questions • National Trends • In 5-10 years, how will the provision of care be different? • Which services are deemed as visionary? • What are the 3 most important services or features that are needed to move the service line to the role of regional market leader and destination status?

  18. Marketing Assessment for Service Line: What Should Be Profiled? • Clinical Review: Clinical Capabilities and Deficits • Pricing • Market Review • Quality Achievements • How the Business Come in • Perspectives of Consumers and Referring Physicians • Out-migration From the Service Area • Care Coordination Processes • Clinical Services Interdependencies (What Feeds What and Is Fed by What) • Potential Partnerships and Affiliations

  19. Market Research/Analysis • Primary: • qualitative and quantitative: awareness, preference • needs assessment • Secondary: • market share • competitive profile • benchmarks: quality and satisfaction measures • physician referral patterns, productivity and “loyalty” • revenue generation by major procedure

  20. Where Does Business Originate? • Identify: • key referral sources • percentage of referrals by key source • potential untapped sources of business

  21. Where Business Originates: Digestive Diseases

  22. Inpatient Oncology Average Contribution Margin -34% Percent change from CY01 to CY03 is outlined in text box.

  23. Oncology: Top Volume Cancer Cases 59% of Total Cases

  24. Cancer: Relative Risk by Body Type Source: Illinois Department of Public Health, Illinois State Cancer Registry Data represent 5-year age adjusted cancer incidence rates Relative risks that are 10% or higher highlighted.

  25. Oncology Patient/Referral Flow By Body Site: Prostate Consumer PCP Urologist 90% Surgery 10% Radiation

  26. Assessing Price Elasticity for Discretionary Services: Bone and Joint Center Interest in Osteoporosis Screening Willing to Pay Out-of-Pocket Survey of 1000 adult women: Rynne Buckley Marketing and Communications

  27. Highest Reimbursed Procedures: Cardiac Service Line The top cardiac inpatient procedures that had the best average reimbursement (collection) per case :* Other permanent cardiac (DRG 116) 2.1 Circulatory Disorders (DRG 121) 1.3 Circulatory Disorders (DRG 124) 1.3 Cardiac arrhythmia .90 Heart failure .84 Chest pain .83 *Based on total cardiac inpatient cases with overall average reimbursement =$6,310. Number of procedures = 10 or more.

  28. Market Planning

  29. Service Line Market Planning Review previous year’s achievements SL and Marketing assess marketing impact and fine-tune plan Complete research & analysis Top management begins strategic planning Service lines complete marketing plans Top management completes strategic plan Board of Directors reviews and adopts strategic plan Service line directors complete their next year operating budgets

  30. Service Line Marketing Plan Template • Market Situation • Measurable goals and objectives • Target audiences • Strategies: • Program development/enhancement • Referral development • Internal marketing • Pricing • Sales and Promotion • Tracking and evaluation systems

  31. Integrating Physicians • Physician Champion is crucial • Show physicians value of following protocols • Tie together quality/customer satisfaction/net income • Provide real time and periodic progress reports • Hold marketing education session(s)

  32. Tracking Results

  33. Tracking Results

  34. Avg Physician Office Revenue Freq Chg Office Visit Avg Gross Chg 100 $ 24,500 $ 29,000 $ 32,000 $ 32,000 $ 32,000 $ 34,000 $ 38,000 $ 38,000 $ 38,000 $ 31,000 $ 38,000 $ 38,000 $ 442,500 Contribution Margin /SP adj. $ 8,548 $ 10,118 $ 11,165 $ 11,165 $ 11,165 $ 11,863 $ 13,259 $ 13,259 $ 13,259 $ 10,816 $ 13,259 $ 13,259 $ 154,392 Primary Care 43% 61.5 $ 6,479 $ 7,669 $ 8,462 $ 8,462 $ 8,462 $ 8,991 $ 10,049 $ 10,049 $ 10,049 $ 8,198 $ 10,049 $ 10,049 $ 117,019 Urology 9% 46.1 $ 1,021 $ 1,209 $ 1,334 $ 1,334 $ 1,334 $ 1,4,17 $ 1,584 $ 1,584 $ 1,584 $ 1,292 $ 1,584 $ 1,582 $ 18,441 Orthopedics 7% 41.5 $ 681 $ 806 $ 890 $ 890 $ 890 $ 945 $ 1,057 $ 1,057 $ 1,057 $ 862 $ 1,057 $ 1,057 $ 12,304 Cardiology 5% 29.2 $ 367 $ 434 $ 479 $ 479 $ 479 $ 509 $ 569 $ 569 $ 569 $ 464 $ 569 $ 569 $ 6,628 Overview Year 1 Year 2 Year 3 Investment Start-up 7% growth 7% growth Start-up & Mkt. $ 20,000 $ 12,000 $ 5,000 Fixed Costs $ 66,569 $ 71,258 $ 76,246 Investment Total $ 86,596 $ 83,258 $ 81,246 Revenue Projection Physician Office (CM) $ 154,392 $ 165,200 $ 176,764 Stream Hospital $ 527,150 $ 564,050 $ 603,534 Associated Revenue - - - Revenue Total $ 681,542 $ 729,250 $ 780,298 Net Revenue Enhancement $ 594,946 $ 645,992 $ 699,052 Expense Average cost per call 15.05 Calls per Month/adjusted 245 290 320 320 320 340 380 380 380 310 380 380 4425 Investment $ 3,687 $ 4,365 $ 4,816 $ 4,816 $ 4,816 $ 4,816 $ 5,719 $ 5,719 $ 5,719 $ 4,666 $ 5,719 $ 5,719 $ 66,596 Revenue 250 Bed Facility Down Stream Contribution Case Study : $ 361 per call x 4425 annual calls = 1,597,425 x 0.33 Incremental adjuster = $ 527,150

  35. Case Study # 1 Billing Records 102,714 Calls 4,425 Referrals made 6,635 Records matched 1287 Total $ matched $ 1,599,035 Average $ per match $ 1,242 Average $ call rec’d $ 361 Average $ per referral $ 241 Case Study # 2 Billing Records 192,714 Calls 48,130 Referrals made 76,314 Records matched 5,965 Total $ matched $ 20,551,923 Average $ per match $ 3,445 Average $ call rec’d $ 427 Average $ per referral $ 269

  36. Re-thinking ROI • Traditional approach: incremental net income (marginal profit) divided by incremental marketing dollars; limited to tracking a discrete service line return Observation #1: Marketing is an essential operating expense, as well as an investment

  37. Re-thinking ROI (con’t) Observation #2: Health care as a rule is impatient for results (6 to 18 months); other industries take a longer perspective (e.g. telecommunications companies and banks look at five year returns)

  38. Re-thinking ROI Observation #3: There is no one overall formula for determining total ROI • True ROI measurement can only be done by having a data repository • Points of access provide a model for pursuing ROI measurement • ROI vs. ROE (Returns on Efforts)

  39. Health Systems

  40. Service Line Marketing Across Health Systems • Best for information sharing, but not always practical for local clinical delivery (particularly where the system is geographically disparate) • Case in Point: Southeastern Health System tries to standardize cardiovascular services across the system

  41. Putting It All Together: Right Ingredients = Success • Commitment of Leadership • The right people with the right skills • Clearly defined roles • Robust market analysis • Track progress with marketing plan • Physician collaboration and buy-in • Straightforward results reporting

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