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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• Service Line Marketing for the Health Care System• Putting it all Together

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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

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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

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

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Prioritize Your Lines

NeuroCV

Women’s

NeuroCancer

Ortho

Wellness

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1. 2. 3. 4. 5. 6. 7. 8.

Clinical Strengths

Positioning Power

Profitability

Competitor Vulnerability

Spin-Off Revenue

Small Investment

Provider Capacity

Product Champion

Loyalty Quotient

Total Score

Service

Service Line Marketing Prioritization Criteria

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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.

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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

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SERVICE Women’s Heart Peds CancerBone/Joint

Primary Care

Neuro ED

Clinical Strengths 27 108 96 90 66 64 90 81

Positioning Power 90 108 96 108 58 32 90 75

Profitability 22 108 24 84 102 13 46 29

Competitor Vulnerability

36 38 68 36 30 60 64 25

Spin-Off Revenue 90 108 54 78 72 108 64 75

Small Investment 82 9 73 60 56 30 56 42

Provider Capacity 30 30 90 40 34 48 18 69

Product Champion 12 54 78 74 26 64 64 69

Programmatically Integrated

102 54 76 74 40 68 62 47

Total Score 491 617 655 644 484 487 554 512

Mean Score 41 51 55 54 40 41 46 57

Rank Order 6-7 4 2 3 8 6-7 5 1

Maximum mean score: 81

Sample Prioritization

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Sorted by # discharges. The

top 6 MDCs account for 71%

of inpatient volume and 63%

of inpatient reimbursement.

# % # %

14 Pregnancy, Childbirth, and Puerperium 651 14% $1,961,193 7%15 Newborns and Other Neonates 601 13% $808,776 3%6 Digestive System 594 12% $4,374,048 16%5 Circulatory System 571 12% $3,455,006 13%4 Respiratory System 569 12% $3,077,533 12%8 Musculoskeletal System and Connective Tissue 404 8% $3,217,367 12%1 Nervous System 237 5% $1,362,851 5%13 Female Reproductive System 166 3% $1,287,135 5%7 Hepatobiliary System and Pancreas 143 3% $1,315,019 5%11 Kidney and Urinary Tract 141 3% $770,349 3%10 Endocrine, Nutritoinal, and Metabolic 123 3% $552,954 2%23 Factors Influencing Health Status 114 2% $1,338,132 5%9 Skin, Subcutaneous, and Breast 111 2% $571,790 2%21 Injuries, Poisonings, and Toxic Effects of Drugs 83 2% $488,589 2%18 Infectious and Parasitic 73 2% $532,473 2%3 Ear, Nose, Throat 53 1% $243,662 1%0 Unspecified 32 1% $437,439 2%16 Blood and Blood Forming Organs and Immunological 28 1% $132,048 0%12 Male Reproductive System 27 1% $180,392 1%19 Mental Diseases and Disorders 23 0% $127,233 0%20 Substance Use 23 0% $75,833 0%17 Myeloproliferative 14 0% $151,386 1%

(none) 13 0% $200,668 1%2 Eye 6 0% $15,759 0%22 Burns 2 0% $17,804 0%24 Multiple Significant Trauma 1 0% $33,659 0%

Total 4,803 100% $26,729,099 100%

Discharges ReimbursementMDC Definition

The 80/20 Rule (or, in this case, 71/63)

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What To Market?Generally Yes

CV/CP

Cancer

Neurosciences

Bone and Joint

Diabetes

Women’s Health

Emergency/Trauma

Questionable

Senior Services

Surgical Services

Medical/Surgical

Diagnostic and Imaging

Rehab and Wellness

Transplant

Emerging

Bariatrics

Complementary Therapies

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Cardiovascular Service Line Volume Flow

Cardiac Screenings:BP,Chol., Body Weight, etc.

PCP Visit:Lab tests $$

Cardiology Visits:DX echo, stress testsTX: interventional

procedures $$

CV Surgery $$

Marketing Interaction

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Defining Roles

Definition of Roles

Service Line Executive Facilitator Troubleshooter Implementer

Marketing Executive Creative Thinker Discoverer of

Opportunities Counselor

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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

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Market Analysis

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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?

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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

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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

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Where Does Business Originate?

• Identify:

– key referral sources

– percentage of referrals by key source

– potential untapped sources of business

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Where Business Originates: Digestive Diseases

9 0 % fromM J S urg e o ns

(1 8 % )

1 0 % S u rg e on s fromO th e r A re a s (2 % )

From General Surgeons

20%

7 0 % fro m M J In te rn is ts &F a m ily P ra c tice P h ys ic ia ns

(4 9 % )

3 0 % O th er A reaIn te rn is ts a nd

F a m ily P ra c tice P h ys ic ia ns(2 1 % )

From Internists

70%

Self-Referrals

10%

G A STR O EN TER O LO G Y SER VIC ESR eferrals

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$2,923

$2,736

$1,943

$0 $2,500 $5,000

CY01

CY02

CY03

Inpatient Oncology Average Contribution Margin

-34%

Percent change from CY01 to CY03 is outlined in text box.

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Oncology: Top Volume Cancer Cases

59% of Total Cases

Bladder5%

Colon/Rectum11%

Bronc/Lung10%

Prostate17%

Breast16%

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Cancer: Relative Risk by Body Type

Source: Illinois Department of Public Health, Illinois State Cancer RegistryData represent 5-year age adjusted cancer incidence rates

Relative risks that are 10% or higher highlighted.

Service AreaCounties Male Female Male Female Male Female Male Female Male Female

Cook 104% -- 113% 99% 97% 99% 100% 98% 94% 101%

DuPage 101% -- 67% 110% 82% 93% 92% 92% 108% 106%

Kane 98% -- 73% 101% 86% 89% 93% 96% 97% 111%

Lake 98% -- 60% 109% 81% 107% 91% 94% 99% 109%

McHenry 96% -- 60% 110% 98% 105% 101% 99% 118% 117%

BladderProstate Breast Lung/Bronch Colon/Rectum

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Oncology Patient/Referral Flow By Body Site: Prostate

90% Surgery

10%

Consumer PCP

Urologist

Radiation

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82%

58%

40%

23%

0% 20% 40% 60% 80% 100%

$40

$75

$100

$150

Survey of 1000 adult women: Rynne Buckley Marketing and Communications

Interest in Osteoporosis Screening Willing to Pay Out-of-Pocket

69%

78%

73%

63%

0% 20% 40% 60% 80%

65-74

45-64

35-44

20-34

Definitely Use Probably Use

Assessing Price Elasticity for Discretionary Services: Bone and Joint Center

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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) 2.1Circulatory Disorders (DRG 121) 1.3Circulatory Disorders (DRG 124) 1.3Cardiac arrhythmia .90Heart failure .84Chest pain .83

*Based on total cardiac inpatient cases with overall average reimbursement =$6,310. Number of procedures = 10 or more.

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Market Planning

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Service Line Market Planning

Complete research & analysis

Service line directors complete their next year

operating budgets

Top management begins strategic planning

Top management completes strategic plan

Board of Directors reviews and adopts strategic plan

SL and Marketing assess marketing impact and

fine-tune plan

Review previous year’s achievements

Service lines complete marketing plans

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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

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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)

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Tracking Results

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Tracking Results

Strategic Initiative

Accountability Leader

Priority Resource Requirements

When it will be implemented

Result

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Month 6

Month 7Month 1

Month 4

Month 5

Month 8

Month 9

Month 10

Month 11

Month 12

AnnualMonth 2

Month 3

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

Expense

AvgPhysician Office Revenue Freq ChgOffice 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 $ 6,628Down Stream

Contribution

250 Bed Facility

Case Study : $ 361 per call x 4425 annual calls = 1,597,425 x 0.33 Incremental adjuster

= $ 527,150

Revenue

Investment Start-up 7% growth 7% growth

Start-up & Mkt. $ 20,000 $ 12,000 $ 5,000Fixed Costs $ 66,569 $ 71,258 $ 76,246

Investment Total $ 86,596 $ 83,258 $ 81,246

Revenue Projection Physician Office (CM) $ 154,392 $ 165,200 $ 176,764Stream Hospital $ 527,150 $ 564,050 $ 603,534Associated Revenue - - - Revenue Total $ 681,542 $ 729,250 $ 780,298

Net Revenue Enhancement $ 594,946 $ 645,992 $ 699,052

Year 1 Year 2 Year 3Overview

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Billing Records 102,714Calls 4,425Referrals made 6,635Records matched 1287Total $ matched $ 1,599,035Average $ per match $ 1,242Average $ call rec’d $ 361Average $ per referral $ 241

Case Study # 1

Billing Records 192,714Calls 48,130Referrals made 76,314Records matched 5,965Total $ matched $ 20,551,923Average $ per match $ 3,445Average $ call rec’d $ 427Average $ per referral $ 269

Case Study # 2

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• 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

Re-thinking ROI

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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)

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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)

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Health Systems

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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

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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