Marketing Departments Under Pressure to Demonstrate Worth

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Accountability is more than the latest buzzword in hospital and health system marketing: it is an imperative. Senior hospital executives increasingly are requiring marketers to demonstrate the value and financial contributions they bring to their organizations, a challenge that until now has been difficult to meet. For decades, the…

Accountability is more than the latest buzzword in hospital and health system marketing: it is an imperative.

Senior hospital executives increasingly are requiring marketers to demonstrate the value and financial contributions they bring to their organizations, a challenge that until now has been difficult to meet.

For decades, the profession lacked consistent metrics for performance. In the late 1970s to the mid-1980s — when health care marketing debatably got its start — the focus was largely on promotion and public relations. Unlike other industries, many health care organizations made limited use of performance data and lacked tools to assess marketing’s effectiveness.

But the rules have changed. The absence of measurable standards for marketing and other disciplines is no longer acceptable.

To address this dilemma, the Society for Healthcare Strategy & Market Development, or SHSMD, part of the American Hospital Association, partnered with the Healthcare Financial Management Association to bring together a team of nine senior marketing and finance leaders to establish a set of core metrics for quantifying the contributions of health care marketing.

The committee performed research and conducted interviews with experts in the field that culminated in the development of a white paper titled “Life Beyond Promotion: Core Metrics for Measuring Marketing’s Financial Performance.”

“The growing emphasis on financial accountability was the impetus for developing the report,” said committee member Todd Nelson, vice president of education and organizational solutions for HFMA. “The white paper articulates core metrics for hospital and health system marketing.”

The committee identified four areas of strategic focus: growth, brand and image, stakeholder engagement, and marketing communications. In addition to developing 17 core metrics within the four areas, the committee assigned two key factors — accountability and influence — to all four areas of focus. The goal in adding the two factors was to more clearly attribute marketing’s level of responsibility for the success of the measured activities because other hospital disciplines can affect the implementation of marketing initiatives,

The 17 core metrics associated with the four strategic areas are:

Growth

  • Volume change
  • Increased revenue
  • New patient acquisition
  • Market share

Brand and Image

  • Brand awareness
  • Brand preference
  • Key service line reputation

Stakeholder Engagement

  • Patient satisfaction

Marketing Communications

  • Paid media
  • Earned media
  • Owned media
  • Social media metrics
  • Digital media
  • Direct marketing
  • Physician liaison or sales
  • Other sales
  • Return on marketing investment

One overriding conclusion of the committee’s work: There needs to be greater dialogue between marketers and leadership. The metrics and steps outlined in the white paper are designed to do just that.

“In today’s environment, accountability is vital to success,” says committee member David Feinberg, vice president and chief marketing officer for New York-Presbyterian Hospital. The metrics in the white paper provide a comprehensive and practical way to create a critical internal discussion to help identify value and refine the marketing mix to optimize results.”

The report also highlightskey actions health care marketers and senior executives should implement, including:

  • Agreeing on a definition of marketing to ensure that everyone has a common understanding and frame of reference
  • Setting specific, measurable goals for marketing initiatives, and determining the formula to be used in calculating return on investment
  • Specifying where marketing is responsible versus just influential
  • Developing a schedule to regularly review marketing outcomes and make needed course corrections
  • Determining the appropriate lag time for marketing efforts (the amount of time it takes to achieve desired results)

The group also acknowledged that organizations need to determine the best approach to meet their individual circumstances, including the development of metrics beyond those recommended in the publication.

“The report provides a framework for quantifying the impact of marketing,” says Bill Gombeski, a member of the committee and a senior adviser in health affairs at UK HealthCare, Lexington, Ky. “It gives health care marketers and senior leaders the basic tools they need to have meaningful conversations about the effectiveness of marketing decisions, resource allocation and program development.”

The transformational changes taking place in health care accelerate the need for these discussions to embrace a new, higher level of accountability for the marketing function within the nation’s hospitals and health systems.

DownloadLife Beyond Promotion: Core Metrics for Measuring Marketing’s Financial Performance,” and register for a SHSMD webcast on the report to be held Thursday, June 2, from 12 to 1 p.m. CDT.

Arthur Sturm is an independent consultant and chairman of the Society for Healthcare Strategy & Market Development’s Marketing Metrics Committee.


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