A Prescription For Improved Hospital Sales

Studying the healthcare category will make your head spin. It’s a large, complex category with many moving parts.That’s why it’s important to break the category down and focus on one subcategory at a time to keep from being overwhelmed. 

The first stop on any seller’s list should be hospitals. Many seasoned sellers can be intimidated when calling directly on hospitals.This leads to sellers falling back to the safety of the hospital’s agency and, thus, a missing an opportunity at the client level. Large hospitals have substantial marketing budgets sellers can help shape if they can break through hospital culture and build a relationship directly with the hospital marketing director or CEO.

Understanding the important issues facing hospitals and the inner office dynamics of their organization will go a long way in building mutual respect and developing this relationship.  Knowledge and confidence eliminates intimidation and will put the seller well ahead of the field.

Let’s look at five main topics which will help each seller gain an edge when presenting to hospital executives:

Obamacare

The first is the Patient Protection and Affordable Care Act, better known as “Obamacare.” I recently had the privilege of working with one of the top hospital COOs in the country, Gordon Docking of HMC/CAH Consolidated, Inc., and he explained how this bill affects all hospitals. This is a complex issue that can lead to a high intimidation factor. Medicare reimbursement is one key component of Obamacare which affects all hospitals. For urban, suburban and larger small town hospitals, Medicare reimbursements will be reduced under Obamacare. Critical Access Hospitals in small towns will continue to get paid as they have in the past. 

So how does this affect a hospital’s marketing budget? If a hospital receives less income, the first place they look to cut is their marketing budget (see CFO segment later in this article). We have an important election coming up and the results of this election directly impact hospitals. If President Obama is reelected, Obamacare is full steam ahead.  Should Mitt Romney win, he has pledged to repeal parts of Obamacare.  But what parts? Pay close attention to the results of the presidential election and be prepared to act quickly. 

Bad Debt is another key component of Obamacare (this one will help you): Bad debt is a huge and growing issue with many hospitals and can represent 10-15% of the hospital’s revenue.  This is driven by a growing number of uninsured.  If the uninsured population is dramatically reduced under Obamacare, hospitals should see an increase in payments and a reduction in bad debt.  This could conceivably offset the losses a hospital receives from a reduction in Medicare reimbursements. 

Understanding these two important components of Obamacare will help you tremendously in any conversations you have at the highest level inside the hospital.

Hospital Marketing

A strong grasp of how and when hospitals market themselves is also important. Ramping up their media activity during open enrollment insurance periods is commonplace in hospital marketing. They advertise at open enrollment time in order to get their message out before consumers choose their plans.  Hospitals want consumers to be knowledgeable about their doctors and services to make sure consumers choose a plan that includes their group. Knowing when open enrollment periods begin will help you plan your visit to see your hospital marketing director. (By the way, in hospital terminology, CMO does not refer to a Chief Marketing Officer, it means Chief Medical Officer.)

Hospitals tend to promote services where consumers have a choice like maternity care and emergency room visits. Here’s an example from Gordon on a good emergency room campaign: When Gordon was CEO of St. Joseph and St. Mary’s hospitals in Kansas City, he ran a campaign letting consumers know they would have a 30-minute wait time or less at either hospital emergency room.  Consumers were also guaranteed to see an actual doctor within that time frame.  This was a successful campaign with easy measurements on its success.  Talk to your hospital marketing director about the services they offer where consumers have a choice.  Hospitals want you to come to them with ideas on how they can market these “choice” services.

Technology

Another key component in hospital marketing is new technology.  Technology can be a great forum for image advertising.  Some hospitals have robots to assist surgeons in the operating room and these robots greatly increase the quality of care and the accuracy of the surgeon. Ask your hospital marketing director if their hospital has a robot in surgery or any other type of high-tech equipment like a cyber-knife for cancer treatment. This type of technology raises the profile of the hospital and can form the base for an effective marketing campaign. Chances are good you will be the only seller asking the hospital director this key question.

Hospital Politics

Now comes one of the tough topics: the battle between hospital CFO and CEO. Gordon and I hosted a webcast for TVB and NAB this past July. In that webcast, Gordon spoke about an underlying dynamic present at almost every hospital.  He gave us a glimpse behind the curtain to allow us an executive level view of the hospital. Gordon said he has never met a CFO who believes advertising is a good thing. They operate with the belief that “a dollar spent on advertising is a dollar flushed down the toilet.”  CFOs believe this because a hospital’s core business is driven by insurance companies or by physician referral. However, hospitals have many other areas where they offer consumer choice (see previous topic).  ER, urgent care, mammography are all examples of consumer choice. Most physicians who deliver babies do so at two or more hospitals.  The patient has a choice between the facilities served by her physician. The same is true for other services where physicians go to more than one hospital. 

Sellers need to work with the hospital marketing director, and sometimes the CEO to battle the CFO. Come up with a marketing plan that provides measurable advertising results in consumer choice areas and provide these results to the CFO.  The ER example I provided from Gordon is a perfect measurable campaign. Quarter-to-quarter and year-to-year data is easy to measure with an effective ER campaign.  If a seller can provide results from a measurable marketing campaign, you will win that hospital’s marketing director, CFO and their business for many years.

Hospital Mistrust of Media

Lastly, we need to understand the hospital culture. Hospitals are different from other organizations in that they do not believe any publicity is good publicity.  The feeling is prevalent among hospital executives everywhere that no media is good media.  Healthcare issues like Obamacare are complicated and are difficult to explain in a 90-second news story. Know going in that hospital executives, doctors and administrators have a built-in mistrust of media.  This is part of hospital culture and they expand this mistrust to the entire station, including sales.  Couple this with an unwilling CFO and marketing dollars can be hard to come by. However, if a seller understands this culture, they can accurately prepare their case. I want to share a newly released piece of research that will help you prepare your case. Take a look at the information below from The Futures Company.

The Futures Company wanted to know from consumers how all the different forms of media influenced them at each step in the consumer decision process. You can see the powerful results in this category. Consumers overwhelmingly responded that television is their primary influencer at every step in their decision process. 

Hospitals now have a blueprint, straight from the consumer, on how they are influenced in this category. This research should be a staple in every hospital presentation. Share this research with your hospital marketing director to provide them the ammunition they need to battle their CFO. Become a resource for your hospital marketing director and you will beat your competition every time.

Understand these five key topics, and you will have success in this category. Happy selling!

Brad Seitter is VP of marketing for TVB. Brad travels the country at the request of local stations working with local advertisers and account executives.