1. Wellness is relevant to consumers. (You’ve heard us beat this drum before.) Whether it’s advocating for “inbound marketing” strategies or pleading that “Joe Public Doesn’t Care About Your Hospital” at healthcare marketing conferences around the country, our message is the same: Make your marketing communications relevant to your audiences.

   Remembering that consumers are constantly thinking “What’s in it for me?” provides the primary argument against daVinci Robot billboards and advertising that features physicians. Truth is, most people don’t need laser surgery or a new physician, so those ubiquitous brand-building approaches will not resonate as well. It’s not that you can’t build brand with these messages — you can. But because they’re not relevant to the vast majority of people in your community, it takes much more time and money for them to have an impact. Most people do have some level of interest in living healthier lives, whether it’s losing weight, cutting stress, exercising more, eating right, or whatever. A message focused on health and wellness is a message relevant to a lot more people, one that actually will build their awareness, along with their perception, utilization — and loyalty. And it’s a message that’s completely natural coming from a community health leader — You.

2. Wellness also helps deflect the negative focus on hospital advertising. As we noted in our last e-newsletter, there’s a small but growing “assault” on hospital marketing. Right or wrong, it wouldn’t be surprising if this sentiment spread as politicians, regulators, the media and others start to dig deeper into how our organizations spend their money. (A recent NPR story on the subject started with the on-air personality stating in a surprised manner that hospitals actually are out there competing for patients. Can you imagine?) It’s one thing to spend millions of dollars on advertising bragging about your awards or touting your new technology. It’s quite another to be focused on helping those in the community improve their health and pursue wellness. This isn’t a reason to focus on wellness as a brand position (see above and below), but it’s a nice side affect.

3. Wellness messaging will actually help improve the health of your community. Yes, anything we do as hospitals from a marketing communications perspective that brings the right patient to the right service helps improve the health of consumers (assuming, of course, the right service is your service). As opposed to marketing messages focused on promoting the benefits of your organization, however, wellness-based messaging focuses on what’s best for the audience, and is bound to help those in the community improve their health. So not only is it the right thing to do from a business perspective, it’s just the right thing to do period. (And for those in your organization who argue you don’t get “paid” for health and wellness, so why focus on it, see our blog post “Gettin’ Paid.”

The good news is that we’re seeing more hospitals and health systems attempt to build their brand on a position of health and wellness. The bad news is that if you’re not one of those organizations, you may be left behind. You see, that’s the Achilles heel of wellness as a brand position — anyone can claim it. Of course, like everything else (clinical quality, convenience, patient experience, advanced technology, etc.), how hospitals actually deliver on this promise varies greatly. But unlike some of the other potential positions a hospital could take, nearly every organization can pursue this position. And at some point, it could become ubiquitous as a position in a given market, like “we care,” or “high-tech, high-touch,” or “we’re award winning” have become.

So the key is to jump out there first and stick with it. Not for six months, not for two years, but for a long, long time. Be the first, be the most, and be the best — don’t just talk wellness, but build offerings and content that support the brand and that will consistently keep you ahead of the pack. Once you’re out there, if you don’t let up, it will be very difficult for others to catch you. Of course, if you let someone else get first dibs, the same can be said for you.

“Why should we invest in XYZ? We don’t get paid for that.”

This often comes from a CEO or CFO of a hospital, and what they mean is that whatever it is your asking them to invest in, the organization doesn’t get reimbursed for it. For example, we’ve heard this used in regards to investing in a better patient experience. One CFO we know said the following during planning for a major expansion:

“Why do we need to spend so much on patient rooms? We could just stick them in the hall and we’d get paid the same.”

Recently, this gauntlet has been laid down in front of marketers seeking to spend marketing dollars to promote health and wellness messaging from their organization. Why spend money there, the argument goes, when the hospital doesn’t get reimbursed for helping people stay healthy?

There are some exceptions – helping diabetics meet certain benchmarks, for example, can be tied to better reimbursement from payers. But from a short-term perspective, that’s mostly accurate – hospitals and physicians don’t get paid for keeping people healthy (though federal reform could eventually change that equation).

Here’s the disconnect: you will get paid from promoting health and wellness, just not today. Investing in health/wellness messaging, or a better patient experience, are examples of investments in building stronger brands, with the goal of increasing loyalty, word of mouth, and yes, over time, revenue.

So here’s the tip: next time this comes up, use our old branding friend Starbucks to make your point. Imagine the CEO of Starbucks had once said: “why should we invest in hiring friendlier baristas, or buying more comfortable furniture? We don’t get paid for that, we get paid when people buy our coffee.”

Seems kind of silly, right? People buy more coffee because of the investment in the Starbucks experience, and more people will engage your organization more times when you invest in the patient experience, or help them stay healthier with services, communications, education and more geared toward wellness. (Remember, the beauty of promoting health and wellness is that it’s relevant to your audience, making them more likely to notice, listen, and engage when they need you.) It’s not about getting paid today, it’s about getting paid tomorrow.

The first award was from HealthGrades, who seems to add new awards and ratings every year. (This year, for example, they’ve added the Transplant Excellence Award). I tried to count the number of awards or ratings from this organization alone, and I couldn’t sort it out. But here’s a rough overview:

• Diagnosis/procedure ratings (39 categories)
• Specialty Excellence awards (15 categories)
• Distinguished Hospital Award for Clinical Excellence
• Patient Safety Excellence Award
• America’s 50 Best Hospital Award
• Outstanding Patient Experience Award
• Women’s Health Excellence Award (3 categories)
• Transplant Excellence Awards

I didn’t want to break out the abacus to calculate how many annual awards or ratings that actually amounts to among hospitals across the country, but here’s a guess – a freakin’ lot. And that’s just HealthGrades. The other award that was new to me was a quality award from Premier, one of the larger Group Purchasing Organizations in healthcare. Now we have GPO’s joining the cacophony (good luck getting consumers to recognize those brands).

I know some folks at HealthGrades, and I think their quality ratings have in one way been a good thing for healthcare, driving providers to improve their quality and experience. Of course, it’s sad to think that what’s often driving them is embarrassment (re: a one-star rating in “Back and Neck Surgery (except Spinal Fusion)”), rather than because it’s the right thing (and smart thing) to do.

It’s from a marketing and brand building perspective that I start to get the hives. Rather than repeat our thoughts on why, just check out this previous post, “The battle of the gold stars.” Better yet, print out a copy and accidentally leave it on the CEO’s desk. Because in the end, if the leaders of provider organizations weren’t driven to such a frenzy to promote every award that comes their way, perhaps this virus-like growth of awards might finally slow down.

This week, Walgreen announced that it is offering free visits to its in-store clinics to customers who no longer have jobs or health insurance. According to a story on the Reuters web site, there are some restrictions. For example, the offer only applies to those who have already used their Take Care clinics at least once in the past.

So what are traditional hospitals and health systems doing to help consumers continue to utilize their services? We all know most hospitals and health systems already provide a significant level of charity care and community benefits. But what about those customers who aren’t eligible for charity care, or who traditionally wouldn’t need help if the economy weren’t so deep in the crapper?

We mentioned in an earlier blog post how many in the Twin Cities are becoming more proactive in working with patients to offer options for paying for care, which is a start. But what other options are out there, especially in an industry where every penny is precious?

How about offering free quarterly diabetes check-ups, in small group settings, for those with financial troubles? Or one free orthopedic assessment? Or a discount on screenings, labs or tests?

Who knows if the ideas above are even feasible, but imagine the awareness and loyalty providers could build by offering help to those who typically don’t need it.

So there are two blog posts in one here:

First, this is an interesting tactic by the paper. For a long time, this was a typical maneuver by magazines – keeping stories from current print issues off their web sites for a period of time. But recently, I’ve noticed that’s gone away. Typically, if I see a piece in a printed magazine I want to reference, I can usually find it on the web site right away. And of course, there are some media outlets that charge for online content, such as the Wall Street Journal. I don’t want to get too in-depth on the pros and cons of this strategy by the Star Tribune, mainly because I want to spend more time on the story itself. From my perspective (someone who still receives the print version of the newspaper because I love reading an actual print copy of something while sipping my coffee, and who looks at the arrival of my magazines in the mail as a little Christmas present each week), I say, “bravo!” I’m now getting access to content that those not paying for the paper typically get for free. My guess, though, is that there will be a mini-backlash from those who use the web primarily for content gathering. In most circumstances, restricting something that was previously free is not received well.

Anyhoo, on to the second part of the post – the actual topic of the story. Once again, reporter Chen May Yee is ahead of the curve in reporting the changing dynamics of the healthcare industry. The story details the varying efforts of hospitals and health systems in the Twin Cities to mitigate the rising flood of bad patient debt by trying to help patients understand their costs before they are incurred. These efforts can include upfront informational calls, suggestions of partial upfront payments, and offers of financing or payment plans. The data is staggering. According to the story, patients generated more than $600 million in unpaid bills at Minnesota hospitals last year, up from $150 million the year before.

Even more astounding, to me, were some of the reactions captured in the story. A woman who was planning a C-section delivery of her baby at a local hospital had received a call from the hospital explaining the costs and suggesting an early start to the payments. The patient’s initial reaction?

“In this the state of economy we’re in – that they’ll shake you down even before you have your baby?”

Shake you down. Wow – our society obviously has a long way to go if we’re hoping people will start understanding the cost side of their healthcare decisions. Apparently, having a baby is supposed to be free? (Later, it’s noted that the woman is an attorney at a large law firm – holy irony, batman). Then later, Steve Parente, a health finance professor at the Carlson School at the University of Minnesota, is quoted as saying, regarding the idea of offering financing:

“Hospitals should not be doing this stuff. It’s not in their core business.”

Not in their core business? They’re not making shoes or selling condo plots here. If collecting payment for services rendered is not core – to any business – I don’t know what is. From my perspective, any hospital not trying to get out ahead of patient payment issues is making a huge mistake. Certainly, creating a revenue stream from customer financing is one thing (see Target Corporation and the struggles they’re having with their once-profitable credit card business). But trying to help your customers figure out how to pay for your services is quite another.

His quote is another example showing that while healthcare is changing dramatically in this country, many of us are not prepared for those changes. We often rap our own clientele – hospital and health system leadership – for not moving fast enough to understand and take action on these changes. Obviously, they aren’t the only ones struggling to understand the changes.

The Tide is Turning
In 2007, roughly 10% of those with health insurance had some form of consumer-driven coverage, defined as an HRA, HSA or other high-deductible option. Combined with the uninsured, adult U.S. consumers with significant skin in the game are still in the minority. But given the accelerated adoption of consumer-driven plans and the current economic crisis, dramatic change is coming. Consider the following:

• Many predict adoption of consumer-driven plans will rise to 15% in 2009. According to Clayton Christensen, author of “The Innovator’s Prescription: A Disruptive Solution for Health Care,” that adoption will likely hit 50% by 2013, and 90% by 2016. (His book “The Innovator’s Dilemma,” cites research that shows the rate of adoption of innovation typically starts slow, then hits a tipping point when wide-spread use skyrockets.)
• Tough financial times are causing more employers to drop health insurance altogether. A new survey by Hewitt Associates shows that 19% of employers are planning to stop offering health benefits over the next three to five years, a response nearly five times higher than the previous year.
• The economic crisis has led to growing unemployment (8% nationally at this writing). Many expect that number to reach 10% before the end of 2009. This restructuring of the national economy is ratcheting up the number of uninsured and underinsured.
• Even those that have avoided job loss are tightening their belts in significant ways. Not only is income being threatened, but the old fall-back resources of home equity lines and credit cards are drying up. Many are watching every penny as their spending resources dry up, and pulling back on spending “just in case” of job loss, medical emergency or other dire situations.

All of these trends are causing an increase in exposure to out-of-pocket healthcare costs for consumers, and the impact has been significant. According to a recent Kaiser Family Foundation Health Tracking Poll, 53% of respondents said their households had cut back on healthcare in the previous year due to cost concerns. A recent Wall Street Journal online piece noted that retailer CVS is closing 90 MinuteClinics for the season, to “align with consumer demand.” Many hospitals and health systems are reporting dramatic drops in utilization. Summing it up recently was David Wessner, CEO of Park Nicollet Health Services in Minneapolis, who was quoted in a recent Minneapolis Star Tribune story on the financial ills of hospitals. Wessner said: “We’re seeing that demand is far more elastic than it was in other years.”

Of course, much of the drop in healthcare utilization attributed to the economic crisis could be seen as short-term. When the economy recovers, consumers will return to regular healthcare usage, and all will be fine. But chances are many of the changes we’re seeing will become permanent.

A permanent shift
Economic crisis has driven societal behavior change before. For example, those who lived through the Great Depression of the 1930‘s (often referred to as the “Greatest Generation”), were very cautious with their money. Debt was considered bad, as was spending beyond your means. The norm was to save carefully to buy a home, car and to have a significant cash reserve at the ready to meet unexpected, emergency expenses such as the need for medical attention. Economic crisis taught this generation (the youngest of which are in their 70’s now) the critical importance of making smart financial decisions, of not over-extending themselves, and the value of saving first and spending later. These financially conservative attitudes did not change until the next (Baby Boomer) generation.

Will we see the same shift in financial attitudes as a result of this crisis? A recent article in Time talked about how consumers are walking into stores with a new level of negotiating power:

“Store owners will tell you horror stories about shoppers with attitude, who walk in demanding discounts and flaunt their new power at every turn. They wince as they sense bad habits forming: Will people expect discounts forever? Will their hard-won brand luster be forever cheapened, especially for items whose allure depends on their being ridiculously priced?”

Once new consumer habits are formed, it’s very difficult to change them. Given how most of us have been blind to the true cost of healthcare our entire lives, it’s not surprising that old habits in choosing care die hard. Note the struggles of Carol.com in the Twin Cities market, which had trouble convincing enough consumers to shop for care through their innovative web site. Could the shift of greater out-of-pocket exposure to more and more people trigger a permanent change in healthcare behavior?

The impact on healthcare providers
The economic storm will pass eventually, but what if the newfound value priorities of healthcare consumers stick around? The impact would be profound for healthcare providers:

• The current drop in volumes may be a permanent reduction of utilization, as consumers avoid non-essential treatment, stretch out physician visits, and find lower-cost alternatives (alternative medicine, “home made” remedies and more). Of course, the wave of Baby Boomers and their increased need for care may cancel this out, or override it altogether.
• Price shopping will become the norm, as consumers carefully consider their alternatives and negotiate for lower costs whenever possible.
• While price will be one value driver, others such as convenience, experience and service will continue to grow in importance, relative to clinical quality, as patients demand more for their money.
• Competition in the healthcare market will become even more intense, while the resources to grow market share, increase volumes and build brands become increasingly scarce.

The healthcare hurricane is coming
The potential impact of consumer-driven healthcare on providers is like a hurricane forming in the Gulf of Mexico. The storm is out there but no one knows where it will hit: North, South or direct? Will it stay at its current level of strength, fizzle out before reaching shore, or grow to a Category 5 “killer”? Until recently, the “consumer-driven” hurricane was too small and too far out at sea to be a major cause of concern for providers. But depending on what happens with the economy over the next few months, it could rapidly grow in power and race toward shore. Is your hospital or health system ready?

It makes sense. The more paranoid and cautious we are about our jobs and the security of them, the more we might question leaving for any type of appointment. This might be especially true if it’s a preventative health visit, like a twice – yearly dentist appointment. Depending on the profession, some people struggle with it anyways – economic times or not – because they don’t want to dip out of work and notice being missed. Now more than ever though, people weigh the pros and cons of this, and know they can always reschedule when the time’s better, and get to it when they can. But this also begs the question – when is a better time? If this is a common response heard by healthcare professionals, it’s time to start catering. More than ever, it shows how patients could really benefit from things like extended or later evening hours, or weekend hours, to help accommodate.

Ultimately, it seems, people are going to sacrifice being healthy for face time at work. Once we bounce back from this, they’ll be back in the dentist chair at 10AM on Tuesday’s, but until then, and even after – it’s always good to give them options.

But the most intriguing presentation came from the keynote speaker, Clayton Christensen. The professor of business at Harvard and author of the groundbreaking book, “The Innovator’s Dilemma,” has turned his sights on healthcare with a new book, “The Innovator’s Prescription.” Christensen’s primary premise in his first book is that what leads organizations to grow and become industry leaders – a focus on efficiency, the pursuit of higher profits, and a repeatable business model – are the same elements that eventually spell their doom. I can’t wait to dive into his new book to get the full story on how that applies in healthcare, but here are some of my key takeaways from the day:

• Christensen’s 20-plus years of research demonstrates that disruptive business models cannot emerge from within current industry leaders. They either come from new entrepreneurial businesses, or when a industry leading organization creates a separate business unit (separate in goals, leadership and location) to drive the innovation. So when I hear Dr. Denis Cortese, the current CEO of Mayo Clinic and a brilliant leader when it comes to healthcare reform, pitch his ideas for change, and how they reflect what the Mayo Clinic is doing, I wonder: will this be the first time ever disruption comes from within? Christensen claims it’s never happened before. Not sure I believe it can happen here.
• “The traditional general hospital is not a viable business model,” was perhaps the most clearly spoken wake-up call for me. Christensen says the hospital value proposition is “whatever is wrong, we can fix it for anyone.” What other business could get away with saying that, he says. A reflection of this model, according to Christensen, is that the typical hospital has more than 100 patient pathways, and he likens it to a manufacturing plant that’s trying to produce multiple products, many of which are customized for different customers. It’s no wonder hospitals can’t survive without philanthropy, regulatory benefits and restriction of trade. Trying to serve, on average, 100 different types of customer interaction within one facility is bound to be inefficient and unprofitable. He points to specialized hospitals, like Shouldice Hospital in Canada, which only does hernia repair, as examples of models that can deliver much better quality of care, a better experience, and a lower price, because of economies of scale, efficiencies, a focused body of knowledge, and more. (MinuteClinic is another obvious example of this specialization, around common, low-end family ailments.)
• Another great insight: the concept of a hospital emerged in an era decades ago when transportation and communication was expensive, and doctors and technology were cheap, thus creating demand for centralized medicine. Now, Christensen argues, the reverse is true, and he believes a drive to decentralization is key to healthcare reform. In simple terms, we need what happens in a hospital to become available in speciality centers, and what happens in specialty centers to become available in clinics, and what happens in clinics to become available in a doctor’s office, and what happens in a doctor’s office to become available at home. Here’s a quick question: there’s no reason the care and service received at a MinuteClinic can’t be delivered over the internet with the addition of simple home monitoring equipment and the right communications technology. Are there businesses out there right now readying that for the market?

All around, today’s conference was a terrific gathering of minds, giving attendees lots of ideas and challenges. I’ll let you know more as I dig into the book.

So whenever I hear healthcare is “immune” to the economic downturn, I assume they’re talking about the “other” healthcare – primarily the pharma industry.

Of course, people skipping care saves individuals money now, but what are the long-term ramifications for national healthcare expenses as a whole for people who are skipping regular doc visits, cutting pills in half to make their prescription last longer, or trying to “outlast” the flu?

And at what point is healthcare optional? Reminds me of one of the greatest lines from one of the greatest movies of all time, Monty Python’s The Holy Grail. The Black Knight is getting his butt kicked by King Arthur, and despite losing an arm in battle, he refused to admit the damage: “Tis but a flesh wound – I’ve had worse.”

“We’re seeing that demand is far more elastic than it was in other years.”

This, in a nutshell, is one of the primary reasons for the financial suffering hospitals are experiencing this go-around, as opposed to previous recessions. The old saw used to be: “It doesn’t matter what the economy is doing, people still get sick.” That, of course, is still true. The difference this time is that because more and more people are having to pay for care out of their own pocket through high-deductible plans, more people are thinking twice about seeing a doctor, renewing prescriptions or getting a test for a chronic condition. The severity of the recession means more people will be tight with their money, lowering patient volumes further. In addition, more people will be without insurance at all (no job, no insurance), and government budget reductions will hit health subsidies for the poor. Both of these factors effectively raise the rate of the uninsured, causing more financial stresses for hospitals.

The key question for healthcare leaders: which force has the most impact on this drop in patients? The shift to consumer-driven health coverage, and the subsequent focus on costs by consumers? Or the economic downturn, and the focus on costs by consumers? The answer has huge ramifications. If it’s the economy, then much of the pain will end when the economy recovers (whenever that happens). But if it’s the trend toward consumer-driven health coverage, which most likely will only continue to grow, then leaders are facing a potentially permanent shift in how patients seek and use healthcare services.

For healthcare marketers, how does the answer to this question impact your strategies? How will you deal with greater elasticity in demand for care? How do you communicate the value of your offering when out-of-pocket patient dollars are at stake? Will consumers become increasingly suspicious of recommendations for additional diagnostics or testing? Is there anything you can do now to help your audience deal with the economic pressures they’re facing? How does price-based marketing fit in healthcare? Should it? Lasik eye surgery is one thing, diabetes care is quite another.

As often occurs, there seem to be way more questions than answers.

While the offering leverages already-existing business models, Walgreen’s extensive national presence ratchets the threat to traditional primary care providers up to a new level. It also integrates the disparate elements in a more convenient way for both employers who will house the clinics, and the consumers who use them.

How big of a threat is the Walgreen’s initiative? According to the article, Walgreen bought two large corporate health management firms last spring, and already serves more than 350 corporations, including Toyota and Walt Disney. Combine this with the company’s more than 6,600 drugstores, and the potential for expansion is obvious. The article states that the clinics will also appeal to companies through a clear pricing structure (the bain of the traditional provider world).

Does this move healthcare in the right direction? Depends on who you talk to. For consumers who will have access to Take Care through their place of work, the clinic will provide an enhanced level of access and convenience. But many tie healthcare reform to greater integration, not more divergence of care. For health systems and traditional providers of primary care, the impact is obvious: one more threat to their patient channel.

As we ponder our next paper, we thought it might be a good idea to ask our audience for input. What would you like the next paper to cover? Here is a list of ideas we had – let us know if there are any you like. Or let us know if you have alternative suggestions. Just leave your feedback in the comment box below.

Thanks – we look forward to hearing from you!

Possible paper themes:

• How should hospital marketers deal with the impact of consumer-driven health dynamics?
• Why should hospitals and health systems take strategic risks with their marketing?
• What role can social media play in hospital marketing?
• Should hospital advertising be outlawed?
• How should hospitals compete against niche provider models?
• How do you demonstrate the value of marketing/branding to hospital leadership?