Commentary

Marketing in Health Systems: Asset, Not Expense

previous post by José Villa of Sensis reinforced the strategic value of marketing as an asset, as critical as the other major components of a company’s balance sheet. He wrote that “marketing is generalized as an expense and is usually one of the first line items cut by companies when they are facing difficulties and tightening budgets.” 

There’s much to be learned from category leaders who comprehend that marketing is indeed an asset versus an expense. 

Let’s consider two extremes on the spectrum of valuing marketing: Amazon, a colossus swimming in revenue — and hospitals, inundated with costs.

Amazon reported record profits in 2018, earning $10.1 billion in net income compared with just $3 billion the prior year. Amazon ranked as the nation's fourth-largest advertiser in 2017, spending an estimated $3.4 billion in U.S. advertising and promotions. That’s up 28% from 2016, when it was No. 8. In 2010 it was No. 70.

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In a  letter to shareholders, Amazon outlined the four principles that guide the company: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. 

It is customer obsession that has helped the company engage  and generate consumer insight at every touchpoint. Advertising and marketing drives consumers to those touchpoints that Amazon actually invented. 

Amazon is not the only company appropriately valuing marketing. Many modern consumer-focused enterprises are moving from seeking maximum ROI to actually transforming the marketing value chain. 

Hospital systems stand in stark contrast. About 10% of hospital budgets are designated for marketing. It’s been that way for years, with stagnant year-on-year growth. But both hospitals and entire health systems are starting to change this paradigm. 

According to the 2018 By the Numbers report from the Society for Healthcare Strategy and Market Development, research among 2,700 hospital industry respondents points to gradually accelerated growth in marketing and communications budgets. The good news? Only 4% of respondents indicated a decrease in marketing budget in 2018, versus 16% in the prior year. 

Part of the reason hospital systems are starting to spend more on marketing is that the function is broadening. Marketing teams are being asked to take on more strategic tasks, from managing the hospital’s brand and reputation to operationalizing patient engagement. 

Traditionally, patient experience falls under the purview of quality or safety. But in the last decade, health systems have seen the marketing department’s impact on the patent experience, even going so far as to have marketing report to the chief patient experience officer.

Leaders are seeing that the care they provide accounts for just 20% of patients’ optimal outcomes. The rest is attributable to factors like social determinants of health. Today, if hospital systems want to keep patients healthy, they have to influence experiences patients have outside the hospital walls. 

Hospitals and health systems are moving beyond simple outreach and using the principles of marketing — such as segmentation, personalization and meeting consumers where they are — to engage patients in changing behavior and getting them invested in their own well-being. 

Health systems must ensure that every time a patient interacts with their brand, that interaction keeps patients engaged and satisfied and delivers on the fundamental promise that they make to their patients: making and keeping them well.

This juxtaposition of Amazon with hospital systems is not a comparison, given, among other things, how distinct their business models are. That said, the prioritization of marketing as a strategic asset is equivalent, and essential. As Villa’s article concludes, marketing — and the consumers who drive it — is paramount to ensure health systems’ business and patient outcomes.  

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