Internet marketing: software for the hard sell – Includes related article on Mapping the market: managed care and geographic systems

Internet marketing: software for the hard sell – Includes related article on Mapping the market: managed care and geographic systems – Industry Trend or Event

Karen Sandrick

Once considered unprofessional in the hallowed halls of hospitals, health care marketing has new life. Tools like the Internet and geographic systems help produce valued-added services and develop customer loyalty.

While the health care industry has been highly competitive for the last ten years, competitive forces are intensifying.

So health care providers and managed care organizations must market actively today to offset collapsing markets and tight money.

The goal: find, please, and retain customers.

In many cases, they are turning to the Internet to make quick and inexpensive personalized connections with current customers and prospects.

Ernst & Young principal and former health care CIO Steven Ummel explains, “Customers can become partners with health care providers in maintaining their good health or in trying to reach a higher level of health status. Technology can take them there and keep them there,” he says.

While some may disagree, Ummel believes that Internet marketing can lead to customer loyalty.

“Look how Americans buy other products and services,” he says. “Image is everything, convenience is everything. We like repetitiveness, predictability, affordability, and we like brands.

“So if the Internet provides a repetitive corporate identity and easy access, then yes, I think customers might form a quick bias to choose that health care provider,” he says.

Increased competition

Understanding how to effectively use technology for marketing requires understanding why marketing has become a necessity.

There are several reasons, according to Ummel

* changing customer expectations;

* managed care;

* too much capacity; and

* fragmented services.

“Ultimately, customers want more value,” he says.

“Their expectations are changing. Whenever there is a changing customer expectation level, everyone begins competing to find a new answer, a new solution, a better product — a better mousetrap, as it were. Providers, therefore, are scurrying around, merging and improving their operations. That fosters more improvement opportunities and more competition.”

Managed care has, of course, been an impetus to competition within the provider community, Ummel says.

“Managed care reduces the use of services; it also reduces the level of payment for the reduced level of service delivery. That kind of assault on your core business gives rise to competition for a shrinking dollar and even a shrinking market share,” he says.

The health care industry also has too much capacity — too many physicians, too many hospitals, too many expenditures — and its services are too fragmented and uncoordinated, Ummel says.

“As a result, opportunists are forming upstart companies that enter traditional markets and compete against well-established providers. These are the niche players that try to woo a hospital’s doctors into some kind of joint venture and in the process cause a lot of disruptive, rippling effects,” Ummel says.

But while other industries think nothing of responding to competition with more aggressive marketing, health care providers have not been entirely comfortable with it.

“From the time marketing erupted — maybe in the 1980s — doctors and hospitals have considered it to be unprofessional.

“It is a management competence that is utterly foreign to them,” Ummel adds.

Internet marketing

But providers are beginning to find that the Internet is a relatively painless way to dip their toes into marketing by empowering their customers.

“Technology takes health care information outside of the confines of forbidding hospitals and makes it more accessible for people as they move around in society. Having this technology in their homes makes people less dependent on one hospital or doctor for access to information,” Ummel says.

Increasing the independence of health care consumers might seem to work against marketing’s objectives, which are, of course, to increase and support a consistent customer pool.

There has, in fact, been a steady growth in the use of the Internet for marketing purposes, according to a 1997 survey of 311 hospitals and health care organizations by Daniel+Douglas+Norcross, a marketing, communications, and interactive technology consulting firm in Chattanooga, Tenn.

The survey found that 32 percent of hospitals were using the Internet in some way in their marketing efforts. Similar surveys in 1995 and 1996 indicated fewer than 20 percent of hospitals were using the Internet in marketing.

Interest in the Internet marketing indeed is quite fresh: 46 percent of hospitals have been doing it for only one or two years and 48 percent for a year or less.

More than 70 percent of the respondents in the survey, however, said that the Internet was an important marketing tool now and it would continue to be, at least for the next five years.

Larger hospitals — those with 400-plus beds and bigger budgets — are more on the cutting edge of Internet marketing.

Still, even these hospitals are at what Danny Fell, marketing consultant and partner in Daniel+Douglas+Norcross, calls “stage one Web presence” — showing who they are and what they do.

“Hospitals are using the Internet to communicate with referring physicians or consumers by offering health information, education class schedules, a directory of physicians,” he says

Managed care marketing

Managed care organizations have taken their Web sites further.

“The larger HMOs — United Health care, Blue Cross and Blue Shield, have developed very robust sites that have some interactivity so their participants can go in and search for a provider in their area, sign up for health information, and stay in touch with the managed care plan.

They can also participate in live chats on health topics or Webcasts, subscribe to newsletters, obtain a personal health profile on-line,” Fell says.

Ahead, Fell sees greater use of databases to publish electronic catalogs for medical suppliers.

Just like going to amazon.com and ordering a book, medical suppliers will be helping purchasing directors fill their medical product shopping carts.

“You could use the technology to create a catalog and customize it for individual purchasers. So when a purchasing director goes to the Web site, he doesn’t get just a generic catalog of products. He gets one that is customized for his hospital, with a personal welcome message and a PIN password. He gets a list of the products he buys on a regular basis plus news about products that are relevant to him and that maybe he should try,” Fell says.

Databases also may help capture information. Whenever a customer enters the Web site and requests information, an instant database will be created not only to fulfill the request but to amass marketing information.

The Internet allows you to make a database very dynamic and active; so people can go in and sign up as members of a managed care plan, for example. The information they provide then may be used to create a marketing database that can be segmented and directed to market certain products to identified customers,” Fell adds.

Then there’s direct electronic market research. Online market research may be accomplished in a number of ways.

“The Internet is a vast resource that may be tapped for competitor analysis … You can simply go in and see what your competitors are doing or get instant market research by asking customers to take a simple quiz or a survey. You lose some control over the market research. That doesn’t mean that data is bad; it just may not be as accurate as other traditional forms of research. But it can be used in conjunction with other market research to create the reports you need.”

Future perspectives

The Internet will change the way in which marketers will look at marketing data, Fell predicts.

“In the past we spent a lot of time trying to collect information or dealing with companies that were in the business of collecting and managing information,” he says.

“In the future, it won’t be a matter of how much information we collect but how we use this information to operate our business better. Five years from now, we will have marketing departments that have dedicated interactive marketing people who are responsible for tying their Web site into call centers, triage centers, health maintenance programs.

“They will capture whole markets with targeted information — such as women with AIDS or children with MS [multiple sclerosis], and hospitals and physicians will come together to use this medium efficiently,” Fell says.

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RELATED ARTICLE: Mapping the market: managed care and geographic systems

Without geographic information systems, “I don’t know how managed care organizations could promote their different lines of business or sell their companies to employer groups,” says Jennifer Johnson, health systems analyst with Blue Cross and Blue Shield of Georgia.

BC/BS is the largest HMO in the state of Georgia. It has between 4,500 and 5,000 primary care providers in its network and up to 18,000 in its preferred provider organization.

“It would be a very tedious, manual process, and the reports wouldn’t be nearly as aesthetically pleasing,” says Johnson, who has been using a GIS for almost four years. “I can’t imagine not having a tool like this.

“We’ve been able to increase our membership because we can quickly and efficiently prove to requesting employer groups that we can provide the business,” she says.

When an employer group is interested in getting health insurance through BC/BS, Johnson plugs in the addresses of the employees and their zip codes, pulls down the files of providers, runs the two sets of data in conjunction with GIS software: Out pops a map showing how well the provider network matches.

BC/BS also uses the GIS as an internal management tool.

“We plot our provider networks against our existing membership file to find out if we are weak in an area, if there is an area with poor access, so we can decide whether or not we want to contract with more providers there. And we can be as specific as we want to be. We can look only at OB/GYNs, or at certain access standards, such as the number of providers within one or ten or 30 miles,” she says.

Tom Lauerman, partner and co-founder of GeoAccess, Overland Park, Kan., says that for managed care to be successful, managed care organizations have to address three issues — cost, quality, and accessibility.

“They must have a greater cost benefit ratio than fee-for-service, make sure the physicians in their networks are of good quality, and provide members with reasonable access to those physicians,” he says.

Geographic information systems affect all three: they generate reports and maps that show managed care organizations where gaps in network coverage exist, help select network providers that are convenient for members, and keep costs down.

Geographic information systems are used by oil exploration companies, banks, real estate firms and government planning bodies. In health care, they are used to create data files that match members of managed care organizations with network providers, show how members’ relationships with their providers will be disrupted by switching from one health plan to another, and prepare customized provider directories that are more manageable and less costly.

GIS are especially helpful at contracting time. An employer may want to move its employee health plan from company A to company B. The employer wants to know what will happen to employees who will have to change physicians. With a GIS, a managed care organization can produce maps and reports for sales presentations that highlight where its providers are located in relation to the employees — down to the zip code level — and tabulate how far employees will have to travel to find a provider.

At enrollment time, a managed care plan needs to tell its enrollees who providers are and where their offices are. That typically has been done by producing a thick paper directory. A GIS, however, can produce personalized directories that list only the providers that are near a subscriber. By placing these directories on the Internet, enrollees get the information at a fraction of the cost.”When you figure the costs for storage, postage, and waste, you’re talking about anywhere from $5 to $15 for a printed directory … on the Internet, the cost is well under a dollar per subscriber,” Lauerman adds.

Karen Sandrick is a Chicago-based writer who specializes in health care and technology issues.

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