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New Marketing: Improving Service Line Profitability (Part One)

By Stewart Gandolf, Chief Executive Officer

profitabilityEditor Note: [First of a two-part article] Stewart Gandolf, CEO of Healthcare Success, authored this article for print and online publication by Strategic Health Care Marketing. It is presented here with permission.

Clinical service department profitability is a constant challenge for hospitals. What’s changed, however, is just about everything else. Boosting service line profitability requires adjustments to various “new school” marketing shifts.

The newly empowered patient now regards medical services with the critical eye of a retail shopper. The dynamics of healthcare reform, facility mergers and acquisitions, and increasingly intense competition have business savvy CEOs and marketing pros laser-focused on Return-on-Investment (ROI).

Change is so rapid and pervasive that relatively recent marketing goals, strategies and tactics are being challenged as “old school.” One course—usually the longer path—is to create a completely new service line where the payback potential is long term.

But for most hospitals, the more natural starting point is to apply fresh thinking to the process of attracting patients to departments that already harbor the widest appeal, best margins and maximum profitability.

Traditionally, service departments representing the best business opportunities include cardiovascular, general surgery and orthopedics. And, depending on market dynamics, geriatrics, neurosurgery, urology, PCP/FP, oncology and others have demonstrated business strength.

Shifting to a New Course for Greater Success

Hospital executives understand that being the generic medical commodity in a community—being all things to everyone—is no strategy at all. Specific services differentiate hospitals in the mind of the public and lay claim to a competitive advantage in the marketplace.

Moreover, patients and hospitals first encounter each other at the service line “front door.” How the public sees and experiences the hospital is not as an institution or system, but as an intimate resource for an immediate and personal need.

There are several concepts that can drive greater success for existing and emerging hospital strategies. Most require rethinking past concepts where hospital “service silos” were narrowly based on individual medical specialties.

If you have been relying on the ways and means of doing “business as usual,” carefully consider the following ideas and shifting to a new course for going forward.

Shift: From self-centered to New Consumer-centric…

In our work with clients throughout the US, a high-altitude perspective of hospital adverting trends is revealing. A lot of the hospital material that we find—and that which characterizes an “old school” approach—is self-centered, with a message of “look how great we are.”

Old school approaches brag about the wondrous “new robot,” or spotlight a “top doctor” or other individual. We suspect that these early marketing efforts—where features or egos overshadow patient benefits—were born of internal pressures, marketing inexperience or both.

The preferred, and now virtually required, alternative is to communicate a message of “how we are better able to help you.” Healthcare marketing professionals understand that today, patients are better informed and increasingly empowered buyers.

The selection of a hospital—by the individual or family member—is no longer exclusively doctor-dictated. Patient/consumers—now with financial “skin in the game”—are increasingly selective. More than ever, their purchase decisions are strongly influenced by benefit-driven marketing messages.

This article continues in Part Two where Stewart discusses other significant marketing shifts that may require course adjustments for continued or greater service line profitability.

Stewart Gandolf, MBA

© Copyright 2014 Healthcare Success

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