Sunday, March 20, 2016

When a health system faces potential failure, what’s marketing’s role?

A health system is in trouble.  It was disclosed this week in several news outlets of a $186 million dollar loss due to revenue write-offs, malpractice settlements, ineffective revenue cycle management, outmoded billing and collection polices-processes, etc.  See “Presence Health CEO tending to ailing hospital chain”, Chicago Tribune, March 20, 2016. Also telling was the statement of declining inpatient and outpatient utilization.

So what is planned?

üLayoff 250 support and administrative staff with a total reduction target of 700 FTEs mostly through attrition.
ü  Revamped revenue cycle management, improved collection and billing processes-procedures.
ü  Raising prices.
ü  Replace key senior leadership holdovers from the previous leadership team.
ü  Trot out “key” board members to support the changes.
ü  Subtlety throws the old leadership team under the bus.

Leadership hit the standard checklist of what to do.  I do understand that these are the actions to be taken and communicated to the bondholders, given that Presence Health is in violation of several bond covenants of their billion dollar debt.

But no mention was made of how they intend to turn around the declining utilization. And beyond the actions mentioned above required to stabilize the business, that is what is at the heart of the matter.

Which brings me in a roundabout way to the original question of what is marketing’s role in assisting the turnaround of the system?

Marketing can be an integral part if leadership has the wisdom and foresight to take bold action and include marketing in the efforts.  And this isn’t a PR effort or meaningless advertising.  It is a system marketing opportunity to drive meaningful change in experience, engagement and value, running concurrently with the business changes. 

And this is critical for the long-term survival of the system.

Why? Because Presence Health still lives in a predominately fee-for-service environment. If they don’t have patients, they cannot bill for services or collect co-pays and deductibles no matter who the payor.

If physicians are not sending their patients for services and the healthcare consumer is not choosing them for care, then a long hard look is needed with marketing involvement across the dimensions of experience, engagement, and value with an eye towards improvement.

The marketing work also means rewriting the system value proposition and answering the questions of why should a patient or physician choose the system in a contextual and meaningful way. Why should doctors and consumers select the system based on value, price, experience, and engagement?

That’s the question needing to be answered going forward.

Are the current marketing efforts working? There may be some disconnect between the business strategy and current marketing campaigns. Marketing today should not be about shiny new buildings, the ability to treat varicose veins, or claiming clinical excellence. There are reasons why physicians and patients choose not to use the health system.

It’s about proving value, engaging physicians, patients and the healthcare consumer in a meaningful and lasting way as well as providing an experience that creates loyalty.

But once this situation is stabilized, just how do you plan to grow? Growth is good.

Best of luck raising prices and asking patients, healthcare consumers and payers to pay more without real improvements in the physician experience, patient engagement/experience, and marketing without meaningful actions and content.

For more topics and thought leading discussions like this, join Healthcare Marketing Leaders For Change, a LinkedIn Professional Group.

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