Why Healthcare Marketing Challenges Even the Best Marketers

Marketing for over 60 managed care providers including HMOs, PPOs and hospitals in the last 30 years presented some of my most difficult assignments. The healthcare marketing landscape contains unprecedented complexity that makes marketing goal setting skills more critical than ever.

To quote the book I wrote in early 1987 entitled The HMO, PPO Marketing Plan -- A Step-by-Step Guide:

The underlying theme throughout [this book] is the need to determine and agree on a member acquisition cost and to become sensitive to how the degree of market penetration in an organization's service area dramatically affects the level of that expense.

Whether B2B or B2C healthcare marketing, the goals often end up murky. The resulting marketing campaigns defy any reliable evaluation.

How can the marketer evaluate subjective goals and grand visions? Healthcare marketing goals go either unstated or lack quantification and specifics.

This short post will not try to deal with all of the healthcare market's complexity. But perhaps a bird's eye overview of the interplay between key healthcare audiences will clarify the complexity to some degree.

This post will help healthcare marketers define the challenge as a first step in creating the marketing goals making them both achievable and amenable to back end evaluation.  

Let's look briefly at what healthcare would look like from a classical marketing audience persepctive.

The chart above looks at what most marketers would like to see. It looks like a typical enterprise audience identification flowchart.

The providers provide the services and products taking responsibility for selling their services to purchasers such as employers (payers), consumers (end-users) and insurance companies.

If only it were that simple.

First of all, classic marketing sells value based on a balance between quality and price. But healthcare marketing is mired in regulatory and traditional constraints.

For example, the AMA positions provider (physician) marketing as a negative activity.

Quoting from the Advertising and Publicity in the AMA Policy on Advertising under E-5.02.

The key issue, however, is whether advertising or publicity, regardless of format or content, is true and not materially misleading.

The only advertisng the AMA is really comfortable with according to this same manifesto --

The communication may include (1) the educational background of the physician, (2) the basis on which fees are determined (including charges for specific services), (3) available credit or other methods of payment, and (4) any other nondeceptive information.

This second chart tries to look at the healthcare market to reflect the confusion, duplication of effort and overall complexity of the marketing environment.


First of all, providers abdicated final responsibility for marketing directly to payers and end-users. This anomaly came as a result of the idea that any physicians or hospitals that aggressively market weaken their professionalism. They also fear litigation and essentially rely on others to assume a significant share of the litigatory and financial marketing risk.

In the healthcare environment, insurance companies (essentially underwriters that assume the financial risk and administrators that pay the claims incurred by end-users), managed care organizations, drug companies and other such enterprises have assumed the bulk of all healthcare marketing.

In essence, providers provide a supportive, though anemic role in healthcare marketing planning and decisions.

This environment explains weak hospital and physician marketing.

It is true that providers are beginning to take more responsibility for their marketing efforts. But this change continues to move at a snail's pace.

Providers dependence upon others for their marketing and growth, however, will increase faster than ever with the implementation of ACA (Obamacare).

Assuming most of this is true, where should experienced marketers spend their time in this space? Where are the future marketing opportunities? Please comment and share your thoughts.

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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