John A McLaren, MD

Marketing hospital services The hospital industry stands ready to embrace the marketing concept. In the past year, the growth of interest in this management function has been phenomenal. No hospital wants to be left behind if a mass marketing effort occurs. All this has become apparent to me since I accepted the appointment as vice-president for marketing at the Evanston Hospital, Evanston, 111, in April 1976, the first such position in any hospital in the country.

John A McLaren, MD, is vice-president, marketing, at Evanston Hospital, Evanston, Ill. He received a B A degree fiom the University of British Columbia, Vancouver, and an MD fiom McGill University College of Medicine, Montreal. He is chairman of the marketing and advertising committee, Illinois Hospital Association. 692

To understand this interest, it is necessary to understand the marketing concept and the competition developing among hospitals. Kotler defines marketing as the analysis, planning, implementation, and control of carefully formulated programs to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives.’ The essential element of marketing is a n exchange of goods or services between a buyer who wants to buy and a seller who wants to sell. The term “marketing” conjures up many different images to people. To some it denotes selling, to others promotion and advertising. It is the image of a cabin attendant or an airline ticket agent trying hard to create a satisfied customer. Marketing is management of need by provision of goods or services. It is stimulation of demand through promotion and selling; it is competitive pricing; it is communication through advertising-all more characteristic of for-profit industries than of the health care field. In hospitals, marketing becomes somewhat specialized. The hospital provides services. Its clients are primarily patients and physicians. The basic premise of a hospital marketing program is that through carefully

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planned and implemented programs it will meet the needs of its publics and increase its share of the market. At the same time, the hospital will maximize the return to the community of its investment in buildings, equipment, training programs, and personnel. Among other hospital publics who have perceived needs are patients’ families, visiting clergymen, neighbors, donors, city officials, and numerous service organizations that directly or indirectly impinge on the provision of health care. Predictions are that as many as 1,500 hospitals will cease to function as acute care facilities in the next ten years because of declining number of patients, rising costs, and formal rate reviews. Aggressive institutions aware of this already are trying to insure their futures. Joseph Califano, secretary of the US Department of Health, Education, and Welfare, speaking before the American Medical Association, implied that the noncompetitive world of hospitals is conscious of quality and insensitive to cost. He did not state how he would introduce competition as a cost-cutting measure. I suggest a good marketing plan may increase competition and, if properly implemented, should be cost effective. Hospitals today are being compared to banks of 30 years ago. Was there ever a more conservative business than banking? Was there ever a business that characteristically allowed the consumer to seek out its services more than banking? The bank was a symbol of solidarity but also a symbol of cool diffidence, confident that people needed it more than it needed people. All this has changed. Charge cards, auto loans, small business loans, home mortgages, and various kinds of account services are tested, advertised, and promoted with endless regularity.

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Competition for your savings dollar is at an all-time high. Will hospitals follow a course parallel t o that of the banking industry? Will there be intensification of competition between hospitals? Will marketing costs be reimbursable through Medicare, Blue Cross, and other thirdparty payers? The tools of marketing include research, new productlservice development, pricing, distribution, and communication. Research is a specialized procedure t o identify the perceived needs of the client or public. Of all the new consumer products developed in industry, only 10% reach the market after appropriate testing and product research. In the history of hospitals, however, new services have generally developed without an adequate data base and often without any real knowledge of patient needs. For example, most hospital outpatient departments are open during the daytime hours when most patients who need their services are working. If patient needs were to be truly met, the clinics would be open evenings. Other services meet the needs of the institution rather than those of the patient. In the past, emergency departments were staffed by house officers gaining experience. Even as the whole thrust of emergency departments changed and it became apparent that emergency room care substituted for care by the primary contact physician, hospitals were slow to change staffing patterns. Today, major emergency departments are staffed by full-time, specialized physicians in response not only to patient needs but also t o patient demands. For years, hospitals have engaged in marketing on an informal basis. This has been true for operating rooms as well as other areas. Anesthesiologists

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urgeons use marketing in terms of options they offer patients.

at Evanston Hospital began 15 years ago to make pre and postoperative visits to patients to identify themselves as the patient’s anesthesiologist. This practice individualized the service they were rendering and justified to the patient the professional fee for service. The Evanston Department of Nursing has developed primary nursing. The patient has a primary nurse who has 24-hour responsibility for all nursing care given to the patient by others. This has led to holistic rather than atomistic care and to greater patient satisfaction. The efforts on the part of all departments of the hospital to individualize and personalize care have led to a successful marketing effort that falls within the area Kotler describes as “the fully responsive organization.”* Ambulatory surgical centers, now less than ten years old, were conceived as a method of reducing hospital costs, increasing surgical productivity, and reducing the period of morbidity. Clearly addressed to client needs, the centers have enjoyed a considerable measure of success. Whether the economic pressure to develop ambulatory care was a factor in the development of these centers or whether the centers stimulated other forms of ambulatory care is moot. A chain of events was initiated that led to a marked increase in outpatient care.

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Surgeons use marketing in terms of options they offer patients. The development of new operations and new techniques has opened promising vistas for patients. Hip replacement is a good example. If a surgeon is convinced that this is the treatment of choice, he consciously or unconsciously markets the patient. We have done some marketing of our surgeons. We make an identical charge whether a minor or major surgery room is used for routine procedures, which include many ambulatory cases. This gives the surgeon the option to treat his patient in the safest possible area. We clearly make it easy for the surgeon to opt for the major operating room with its more sophisticated resources. The terms “demarketing” and “overmarketing” are almost self-explanatory. Examples of each can be found in recent trends in the operating room. A good deal has been written nationally about the alleged overuse of tonsillectomy and hysterectomy. There has been an effort through articles and education of the public to demarket these surgical procedures. As a result, more patients are requiring more reasons from the surgeon to support his recommendation for either operation. Surgeons tend to consider the procedure they recommend in light of their o w n experiences. Occasionally, the patient feels the procedure was more

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profound than he was advised, the convalescence was protracted, or the outcome was not up to the level indicated by the surgeon. This overmarketing has led to some patient dissatisfaction and has perhaps contributed to the increase in malpractice suits. As a result of my experience in marketing, I can identify some personal feelings and preferences about marketing programs. First, I believe recognition of the marketing concept and development of a positive attitude toward marketing are beneficial to the hospital. They underscore the need to think in terms of the patient, the family, the physician, and the community. Marketing emphasizes the service aspect of all health care and is an important part of our caring philosophy. Second, all projected new hospital services should be subjected to marketing analysis, using marketing tools. This will clearly identify the beneficiaries, the features, the cost, the cost effectiveness, and other aspects of services generally studied retrospectively. A good example is a pediatric surgery program. Will pediatricians of the area refer to a pediatric surgeon more frequently than a general surgeon? Can a pediatric surgeon be selfsupporting? What special equipment and instruments will be necessary? Will some of the secondary benefits be reflected in using the pediatric unit? Can the financial aspect be quantified? Third, the role of the voluntary, not-for-profit institution in promotion and advertising troubles me. Demand stimulation through flamboyant advertisements does not fit comfortably into my style. One risk of widespread advertising is the development of intense competition between hospital-as between banks-which could become a significant patient care cost. Premiums, incentives, gifts, and dis-

counts as part of a hospital advertising program would be costly and could be a negative marketing influence. On the other hand, informational advertising of services in a restrained fashion may be useful. Recent studies suggest that many people in the community are not aware of all the services basic to most hospitals. Finally, the development of a data base to provide a measure of how the hospital is serving its publics is extremely important. Feedback by direct solicitation from clients is a technique used by the majority of all companies with a marketing program. Market research through questionnaires, telephone interviews, and letters provides ongoing information about the effectiveness of a marketing program. In conclusion, good marketing should lead to satisfaction on the part of the purchaser of services and should meet the goals and objectives of the provider institution. Each hospital department has unique qualities that make it possible to think of it in marketing terms. Understanding the marketing concept and applying marketing techniques will increase effectiveness and lead to greater patient satisfaction. 0 Notes 1. Philip Kotler, Marketing for Nonprofit Organizations (Englewood Cliffs, NJ: PrenticeHall, Inc, 1975) 42. 2. /bid.

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Marketing hospital services.

John A McLaren, MD Marketing hospital services The hospital industry stands ready to embrace the marketing concept. In the past year, the growth of i...
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