The ever-changing, dynamic nature of the healthcare industry has forced physicians, hospitals, and health insurance companies to change the way they do business. Because competition is fiercer than ever, marketing has become an essential way to ensure the survival of healthcare organizations. The purpose of this SBR (Strategic Business Review) is to analyze the marketing/communications strategy of Company X, Inc.
Evaluation of this strategy can help determine how well COMPANY X is strategically positioned in the marketplace. How does COMPANY X stack up against its competition? What can be done to improve its position? Are the current strategies working?
Analysis of the marketing plan is based on the following:
The first step in the analysis process was to thoroughly review the written marketing plan. Although the plan does not resemble a traditional marketing plan, its content and format did offer insight into the overall strategy and philosophy of the organization. Additionally, it laid the foundation for developing an interview questionnaire.
- Interview/Questionnaire (Appendix B)
Because the written marketing plan lacked the detail and scope necessary to fully understand the organization’s marketing positioning, an interview questionnaire was developed. The majority of this SBR is based on the one-on-one interview with the Outreach Director.
- Research
A number of marketing resources were consulted to ensure that all important elements of an effective marketing plan were addressed in the analysis and to help formulate the right interview questions.
COMPANY X is an orthopedic surgical practice with five offices located throughout the Pittsburgh area. It comprises seven orthopedic surgeons and a support staff of over 50 employees. Its recent expansion, increased advertising, and diversification into other markets convey the impression that it is doing everything right to meet its objectives. This SBR will hopefully confirm this impression or at least recommend ways for COMPANY X to improve its current marketing methodology.
To better understand COMPANY X’s overall marketing strategy, the key components of the traditional model will be examined and compared to both the written plan and interview. The key components of a marketing plan typically include: a mission statement, a vision statement, assessment of the current marketing situation, a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, marketing and communications objectives, marketing strategies, a tactical plan, and an evaluation/analysis. COMPANY X’s written plan does not contain several of these components. According to the Outreach Director, the written plan is simply a "roadmap" that highlights key issues. The physicians (owners) of the practice would have the time or inclination to read an in-depth marketing plan; therefore, one has not been devised.
• Ambulatory Surgery |
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• Non-ambulatory Surgery |
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Competition
COMPANY X’s major competitors in orthopedic surgery would include other orthopedic surgical practices, hospitals, and insurance companies. Competition varies from region to region. For example, in the North Hills, Tri-State Orthopedics is COMPANY X’s number one competitor. Moon is considered the most competitive market because COMPANY X has to compete with MH&D (an orthopedic surgical practice) as well as the sports medicine facilities of the University of Pittsburgh Medical Center and Allegheny General Hospital. COMPANY X does not conduct a formal analysis of its competitors. For example, management does not know the market share of each of its competitors. Knowledge about the advertising plans of each competitor is based purely on observation (print ads, TV ads, promotions, etc.). Because prices are determined by insurance companies, the pricing strategies of COMPANY X would be identical to that of its competitors.
Although COMPANY X does not conduct a formal analysis of its competitors, management can get a good idea of where the company stands by studying admissions and revenue data provided to them by area hospitals. For example, in the area of orthopedic surgery, COMPANY X generates the most revenue for its hospital.
Distribution
Orthopedic care at COMPANY X is provided in its five office locations, hospitals, primary care centers (Blue Cross/Blue Shield), and nursing homes.
Macroenvironment
Cost containment in healthcare is expected to become more stringent in the coming years. Continued cost-cutting, decreasing reimbursement, and stricter parameters placed on specialists by primary care physicians will make it increasingly more difficult for physician practices to realize profits.
SWOT Analysis
A company must identify the internal and external factors that directly influence its level of success. By identifying these factors, a company can capitalize on its strengths and opportunities, improve upon its weakness, and eliminate or create contingency plans for its threats. Although COMPANY X does not address its strengths, weaknesses, opportunities, and threats in its written marketing plan, management is keenly aware of them. Two or three times a month, COMPANY X conducts a strategic management meeting, during which time, these types of issues are discussed. Below the key strengths, weaknesses, opportunities, and threats are highlighted. The Interview Questionnaire (Appendix B) outlines the SWOT Analysis in more detail.
Strengths
- COMPANY X is visionary in its approach. Management is continually looking for new ways to improve quality of care, customer service, and reputation.
- Management values its employees and conveys this by creating a pleasant working environment and offering special perks.
- COMPANY X has the financial resources to invest in technological improvements, highly qualified personnel, and a solid marketing program.
Weaknesses
- Because COMPANY X seems to be in a constant state of change, its employees do not have enough time to adapt to these changes.
- Increasing office volumes force some patients to wait up to three weeks before getting a first appointment.
- The increasing volume of patients and new computer system are creating a bottleneck in the medical records/transcription department.
Opportunities
- Diversification into the alternative medicine field will provide COMPANY X with the financial resources necessary to prosper in the healthcare industry.
- People want credible information from sources they can trust—COMPANY X can be a leader in the community by educating its customers.
Threats
- Cost containment in healthcare will make it more difficult to realize profits.
- Providing care to the uninsured and signing non-profit contracts will force practices to overextend themselves financially.
Objectives
After the SWOT analysis has been completed, the marketing and communications objectives are then established. These objectives aim to eliminate threats and weaknesses and take advantage of strengths and opportunities.
Marketing Objectives
Marketing objectives are quantifiable and answer the questions: how much, of what, to whom, by when, and at what return. No true marketing objectives can be found in COMPANY X’s written plan. For example, one of the objectives in the written plan reads, "Increase patient volumes." While it attempts to be quantifiable by referring to volume, it also contains tactical elements which are not included in marketing objectives. In addition, the goal is vague—it does not answer the question "how much."
Communications Objectives
The remainder of the objectives could be categorized as communications objectives because "they are qualitative in nature and define what result you expect the audience to give your product/service after the communications program is completed." One objective reads, "maintain/increase awareness of Company X's services/expertise."
Marketing Strategies
After the objectives have been established, an organization must identify ways to achieve those objectives. The strategies outlined in COMPANY X’s written marketing plan can categorized as follows:
Advertising
- Utilize print, television, and/or radio advertising to build additional name recognition.
Public Relations
- Engage in targeted marketing and/or public relations activities designed to raise awareness about specific conditions and/or Company X's ability to provide high-quality orthopedics service. Apply strategy to all markets.
- Engage in targeted media relations activities designed to establish Company X as an expert in and source for orthopedic information.
- Participate in selected community events that provide a logical association with orthopedic care (i.e., road races or senior events) or demonstrate significantly that Company X is a "good corporate citizen." Apply to all markets.
- Participate in Chamber of Commerce activities that will raise Company X's visibility among community leadership.
- Sponsor office manager workshops, CPR certification classes or other such events that provide useful information to referring physician offices and enhance Company X's visibility among other healthcare providers. Apply to Moon, North Hills, and Cranberry markets. (Determine necessity in Butler).
- Spearhead the development of educational campaigns and/or events designed to raise Company X's visibility in community and result in an educational benefit targeted segments of the population.
- Develop and maintain a speakers bureau program.
Direct Marketing
- Develop and distribute an informational, quarterly newsletter on orthopedics. Apply strategy to all markets.
Research
- Identify potential new referral sources
Other categories often associated with the marketing strategy, (e.g., sales/service, pricing, distribution, sales promotion, and internet marketing) are not covered in the plan. "While the concept of strategic planning is universally applicable to all organizations, the process must take into account the idiosyncrasies of the industry in which the firm operates." Because insurance companies dictate how much a physician practice can charge for a particular service, COMPANY X’s strategies would not involve pricing, sales, and sales promotion. Although distribution and internet marketing are important ways to meet a company’s objectives, they are not addressed in the 1997/98 plan because COMPANY X does not plan to add additional locations (distribution points). Internet marketing is relatively new to COMPANY X and will be integrated into the strategic planning effort in 1998/99.
Tactical Plan
While strategies give a broad overview of how the goals and objective are to be achieved, the tactics elaborate on those strategies by answering the following questions:
- What will be done?
- Who will do it?
- When will it be done?
- How much will it cost?
Action Plan
The action plan answers the question, what will be done. All tactics in COMPANY X’s plan clearly answer this question. For example, the five tactics identified under the strategy, "develop and maintain a speakers bureau program", read as follows:
- Identify potential topics that can be presented to community audiences. Identify potential speakers.
- Develop a "speakers bureau" brochure.
- Mail brochure to churches, civic groups, etc., in all markets.
- Send news release to local media announcing speaker bureau.
- Respond appropriately and promptly to requests for speakers.
Responsibility
None of the tactics identify who is responsible for implementing these tactics. In other words, they do not answer the "who will do it" question. All marketing efforts at COMPANY X are managed by the Outreach Director and her assistant; therefore, assigning responsibilities in a formal plan would waste time. If the marketing department were bigger, then perhaps responsibility/accountability would be an important issue.
Timetable
There are only a couple references in the entire plan that answer the question, when will it be done. Setting deadlines for all tactics would ensure that goals and objectives are met in a timely fashion.
Costs
Costs are not addressed anywhere in the written plan. Although the Outreach Director does have a marketing budget ($95,000/year), the cost of implementing each tactic cannot be pinpointed.
Evaluation/Analysis
To determine if their marketing efforts have been successful, companies can conduct communications research by analyzing pre or post-media activity and media effectiveness as well as conducting concept testing and qualitative research. COMPANY X does not conduct such formal communications research; however, management does correlate its marketing efforts with increased revenue. After various marketing strategies had been implemented, COMPANY X noticed a significant increase in the number of new patients and dramatic increases in office volumes. Moreover, another orthopedic surgical practice (a major competitor of COMPANY X) is copying COMPANY X’s marketing strategies—a true sign of success.
Conclusion and Recommendations
This SBR reveals that COMPANY X has successfully applied various marketing strategies to position itself as a leader in the orthopedic community. Without having a profit-and-loss statement and an exact breakdown of its core services, it is difficult to assess exactly how well COMPANY X is actually performing. However, its expansion from two locations to five locations, an increase in patient volumes and staff, and diversification into other areas (e.g., alternative medicine and medical consulting) all indicate that COMPANY X is achieving its goals and objectives.
Although COMPANY X may be prospering at the present time, there are several ways that COMPANY X can improve its marketing strategies to stay ahead in the game. First of all, a formal marketing plan that conforms to the traditional model would be recommended. Physicians may not have the time or inclination to read an entire marketing plan—the current roadmap format would suffice for the physicians, but a formal plan would force the marketing department to take a look at the business from all angles. It would prevent the Outreach Director and her assistant from overlooking important issues. A formal plan would also encourage them to quantify how much time, effort, and money are being spent on each strategy and tactic. In addition, without having a comprehensive plan to refer to, management would be unable to determine exactly what has been done and what needs to be done if the Outreach Director were to leave COMPANY X.
Increasing patient volumes coupled with a new computer system (technology was listed as a strength) have backed up the medical records/transcription department. This also translates into a potential weakness. If medical office notes are not completed in a timely fashion, primary care physicians and insurance companies will become dissatisfied. A delay in submitting medical office notes equals a delay in reimbursement as well. If a SWOT analysis had been conducted, these issues may have been identified earlier.
Finally, a thorough analysis of the competition would be recommended. While COMPANY X has been using less formal methods of tracking its competition (e.g., hospital admission and revenue data, operating room schedules, and a general observation of advertising), other methods could be employed. For example, COMPANY X could survey the competition’s current patients or survey patients who have left the competition to come to COMPANY X. COMPANY X cannot assume that just because its competitors are not engaged in an advertising blitz that they are not trying to steal COMPANY X’s customers.
One important differentiating factor in analyzing healthcare organizations versus other types of businesses is that healthcare is a unique industry. Insurance companies dictate prices. Hospitals and physicians treat people who cannot afford to pay for treatment. These restrictions make it more difficult than ever for organizations to survive let alone compete. COMPANY X has managed not only to survive but prosper in this competitive jungle. COMPANY X’s marketing strategies are largely responsible for its level of success. If COMPANY X continues to implement these strategies and adopt new ones, it will continue to prosper in the future.
T. L. Tassone, Strategic Marketing/Communications I, Marketing Communications Workbook (USA: T.L. Tassone, Inc., 1998), p. 2-5. David H. Bangs, The Market Planning Guide 5th Edition Creating a Plan to Successfully Market Your Business, Product, or Service (USA: Upstart Publishing Company, 1998), p. 3. Tassone, p. 2-6A. David Kerry Carson, Paula Phillips Carson, C. William Roe, and Alan R.Whitman, Health Management Systems (Cincinnati, Ohio: South-Western College Publishing, 1998), p. 174.
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Ibid., p. 178. Tassone, p. 2-12. Carson, p. 174.