With the start of the Chinese New Year and it’s the Year of the Horse, why not make 2014 the year of healthcare marketing ROI? As we all face increasingly reduced marketing resources both human and capital in hospital, health systems and other providers, the only way I know to even begin to turn that around is by proving to the organization the Marketing Return on Investment or ROMI.
It’s not the impossible task. And it does involve a high degree of collaboration with the finance department.
Depending on the type of health care organization that one is employed by the measures will be different. For example, if the healthcare organization is sales drive, then measure the generation of Marketing Qualified Leads, Sales Accepted Leads, and based on that increases in the long and short term funnel compared to YOY. Any organization using email can measure click through rate, open rate, unsubscribed rates, open rate and downloads. For hospitals and health system if you have the right systems then you can pull integrated clinical and financial databases by campaign to calculate the ROMI.
Below is an example of an actual computation that I completed for a multi-hospital health system. Now that being said, I did have the good fortune to have an RN staffed call center which was used heavily in all campaigns. And because the call center and finance systems were linked, once you have that name then you can track and determine the customer value, revenues generated and a return on investment ratio.
The method can be adapted to any campaign and provides you with the data fields and logical analysis you need. This is not prohibited under HIPPA, so that is not a reason to say no can’t.
An analysis was undertaken to look at the ROMI of the Physician Referral Call Center. The analysis matched a database of call center name records for the period to financial records which had already been downloaded. The analysis produced the following results:
9,102 call records were matched with utilization and financial data.
9,102 calls resulted in a total of 9,121 encounters in the ER, Inpatient and Outpatient categories of service.
751 encounters were ER
o 177 returning encounters
o 573 first time encounters
1,105 encounters were Inpatient
o 530 returning encounters
o 699 first time encounters
7,267 were Outpatient
o 2,014 returning encounters
o 5,253 first time encounters
Total charges for all encounters equaled $22,522,649
Charges for new encounters all services totaled $16,085,198 or 71 percent of the total charges
Average charge per ER encounter $1,304
Average charge per Inpatient encounter $13,581
Average charge per Outpatient encounter $903
Gallup measures loyalty at 68 percent (would return for service) which means that for every 100 patients 32 would not return for care- therefore:
o ED- 57 returning encounters captured that would not have returned
o Inpatient – 170 returning encounters captured that would not have returned
o Outpatient- 645 returning encounters captured that would not have returned
Incremental charges counted returning encounters not loyal
o ER - $74,337
o Inpatient- $2,308,851
o Outpatient- $582,505
o Subtotal charges counted: $2,965,693
Overall market share in primary and secondary service area is 14.53 percent. The number of first time encounters have utilized us above market presence is therefore:
o ER 573 first time encounters, 83 not countered, 490 counted –
o Inpatient – 699 first time encounters, 101 not counted, 598 counted
o Outpatient – 5,253 first time encounters, 763 encounters not counted, 4,490 counted
Based on an overall market share of 14.5 percent the incremental charges counted for new encounters not because of market presence:
o ER - $638,960
o Inpatient – $8,121,438
o Outpatient – $4,054,470
Total Charges counted: $12,814,868
Discount from gross charges for Medicare, Medicaid, Managed Care, Bad Debt and Charity Care @ 65% is $8,326,644
Net Revenue: $4,488,224
PRCC program costs: $233,410
Net contribution: $4,254,814
Let’s make 2104 the year of return on marketing investment in healthcare.