By Stewart Gandolf
Chief Executive Officer
Competition is a fact of business life. In fact, as a general rule, the higher the level of competition, the more demand there is for the product or service that has inspired that high level of competition.
All you have to do is look up from your patient charts and pay a little attention to realize how rapidly the quantity and quality of your competition is growing.
Success is not achieved by ignoring your competitors but rather by anticipating competitive issues and influences so you can always have a proactive plan and strategy for staying ahead of your competition.
Before you can develop a winning competitive strategy, you need to understand the market forces that affect competition. Then you need to do your homework in the form of competitive research and analysis in your field and your community.
Quantity of Marketing Competitors
A number of factors contribute to the increase in the quantity of marketing.
1) The pie keeps shrinking – along with reimbursement.
It’s no secret that the business of owning a profitable private healthcare practice is getting harder every year.
Insurance companies continue to put downward pressure on reimbursement rates. Although levels of reimbursement vary from one plan to the next, the general trend can be expected to continue.
More large companies with self-insured plans are continued to exert more leverage and pressure on providers to deliver services at increasingly competitive (meaning lower) rates in order to keep their business. In markets where a few major employers have a big impact on the community, this pressure can also have an impact on business over time – more work for the same or even less reimbursement if you want business from employers.
With increasing pressures from more competition fighting over a perpetually shrinking pie, aggressive marketing tactics almost always and inevitably increase – whether or not they are effective. Not all tactics are overt, not all are even strategic. In fact, you see lots of “spaghetti thrown against the wall” hoping something will stick.
In this kind of environment, regardless of the market or the industry, the businesses with the smartest strategy, the strongest message, the most aggressive tactics and the most unwavering commitment inevitably win. Aggressive does not have to mean unethical, by the way – nor should it.
2) Marketing creates a chain reaction of more marketing.
Younger, hungrier practitioners today tend to be much less reluctant to market than their predecessors. As marketing activity increases, so does the pressure on competing practice owners – particularly those who don’t market much (or at all).
These non-marketing providers eventually feel the dip in new patient counts and related income – or at least worry about the potential for decline – so they jump into the marketing fray and increase the noise level. In response, the practices who were already marketing pump up the volume further to try to stay ahead of the increasing number of marketing competitors.
Many of the “old school” healthcare professionals complain that this is all a vicious conspiracy fostered by advertising companies, Yellow Pages publishers, newspapers and other media organizations. You will even hear voices advocating that “we should all agree to not market our practices and we’ll all save wasted money.”
Unfortunately, this is unrealistic, because there are always going to be practice owners who will market – no matter what. In fact, those owners WANT everyone else to agree to abstain so they can have the playing field to themselves.
3) Your competition includes more than just other practices in your profession or specialty.
If you expand your definition of competition to include anyone or anything that may influence a prospective patient to not become your patient, the competitive playing field expands even more.
- Competition from Direct-to-Consumer (DTC) Advertising by Pharmaceutical Companies and Product Manufacturers with Huge Advertising Budgets
- Competing Priorities for the Consumer’s Discretionary Dollar
- Fear of Pain
Competition from Direct-to-Consumer (DTC) Advertising Pharmaceutical Companies and Product Manufacturers with Huge Advertising Budgets
You would have to be Rip Van Winkle to be unaware of the pervasive direct-to-consumer marketing from the “Big Pharma” companies.
Ads from Pfizer, GlaxoSmithKline, Johson & Johnson, Merck, AstraZeneca, Novartis, Roche, Bristol-Myers Squibb, Wyeth, Abbott Labs, Eli Lilly, et al about products ranging from cholesterol medications to erectile dysfunction solutions have permeated and overwhelmed our eyes and ears through global advertising on television, radio, Internet, billboard, retail point-of-purchase displays, and doctors offices.
So why is this competition for physicians? Well for starters, the “clutter” or “noise factor” that these companies add to the literally thousands of commercial messages we are exposed to on a daily basis makes it that much more difficult – if not impossible – for a private practice to get its important messages noticed or heard.
But beyond that, these ads empower patients over time to feel that they can and often should instruct their physicians about what medications should be prescribed for them.
Once consumers travel down this slippery slope, it’s natural for them to assume one of two different mindsets.
- Either they decide that they need to make appointments to see their doctors for the most minor of symptoms because the pharmaceutical advertising has gradually transformed them into paranoid hypochondriacs; or,
- They decide that they can self-prescribe and self-medicate through various over-the-counter remedies (often manufactured and marketed by the same companies).
So patients are either cluttering doctors’ schedules unnecessarily or they are seeking time-intensive and cost-intensive care for more advanced and serious conditions and complications because they delayed seeking treatment too long while self-medicating improperly.
Product and Device Manufacturers
Crest Whitestrips is a perfect example of manufacturer competition. Crest markets Whitestrips in different levels of hydrogen peroxide concentrations, branded as “Whitestrip Classic” (lowest concentration) all the way up to “Whitestrip Supreme” (highest concentration).
Crest markets “Whitestrip Supreme” to dentists as a premium product that can only be purchased in a dentist’s office. Yet, Crest also markets “Whitestrip Premium Plus” as being “virtually the same ingredient as you can get from a dentist” so they can be sure they can generate as much revenue from as many channels as possible.
In essence, Crest appears to be working with and through dentist offices as they compete with the higher-priced in-office whitening systems from Zoom! and BriteSmile. But in reality, they are also competing with you through their massive external advertising campaigns. And the more people buy Crest Whitestrips through retail stores or in dentist office, the less teeth whitening profits dentists can expect to earn.
Competing Priorities for the Consumer’s Discretionary Dollar
Whether or not healthcare providers like to accept it, the reality is that most patients consider virtually all healthcare to be elective (except perhaps for painful emergencies). This includes procedures that are covered by insurance as well as those that aren’t.
On the consumer’s list of desirable discretionary marketing priorities, healthcare services are generally not going to rank near the top of the list.
Procrastination is a natural and predictable human response to dealing with life’s problems, hassles and challenges. We tend to avoid, delay and defer facing our problems as long as we possible can – even though we often know that delaying will also create negative consequences. Healthcare generally falls into the “problems/hassles/challenges” category for most consumers.
Fear of Pain
Fear of pain is a significant competitive factor because it inhibits proactive patient self-referral. In some professions that are frequently associated with pain (such as dentistry, for example), this is unquestionably the most consistent obstacle to the long-term growth and financial health of all dental practices.
Quality of Marketing by Competitors
Multiple market forces are inspiring a more sophisticated and impressive quality of marketing among private practices.
Private practice healthcare is a unique industry in marketing terms because most of the practice owners have historically refused to market their services. Most felt that marketing was unprofessional – even unethical – and would damage their reputation. They feared (as many still do today) that marketing their practice would make them appear either needy or greedy – probably both – to their colleagues and to their patients.
As a result, most practice owners refused to consider marketing their practice, leaving a largely uncontested opportunity for the few who held a different point of view. Not so long ago, in fact, marketing in private practice healthcare was such an open playing field that almost anything worked if a practice owner was simply willing to try it.
What many practice owners did not understand (and some still don’t) is that the public is hungry for information. They did not understand that in the absence of more information and options, consumers would turn to and favor the few that were willing to provide them with information, even if the information was not always accurate or even truthful.
Today, marketing is a fact of business life. And because the quantity of marketing competitors continually grows, the quality of marketing has matured, becoming more skillful and sophisticated as practices work to effectively differentiate their practice from their competitors.
Until fairly recently, most private practices did not even have their own website or promotional practice brochure. Today, many practices have both. While the quality of marketing ranges widely from embarrassingly bad to outstanding, it is increasingly clear that there is a rapid increase in the number of practices who are actively marketing their services with an impressive level of sophistication and high quality.
Competitive Research and Analysis
There are many ways to compile good research on your competition. For details, review Competition section of What Is a Marketing Plan?