Chapter 1 - Jones & Bartlett Learningsamples.jbpub.com/9781284094312/9781284098495_TG… · Web...

TRANSITION GUIDEThis transition guide serves to outline the updates and new content found in Essentials of Health

Care Marketing, Fourth Edition.

Chapter 1

Marketing has now been recognized as an integral functional component of the healthcare

environment since its first introduction in the hospital setting in the United States in the middle

of the 1970s. In this chapter revision, there is are updates in several areas with a greater emphasis

on the meaning of a marketing culture of an organization and the hallmarks of what such a

culture consists. Additionally, the importance of marketing is now underscored for hospitals with

the introduction of HCAHPS as presented to students early it this chapter as a financial issue.

More of a historical perspective is provided in terms of how advertising was at one time

considered the meaning of marketing in health care.

As healthcare is evolving into an era of managing patient health, this is woven into the

discussion of the prerequisites of marketing specifically in that of ‘exchange’ and the issue of

social marketing in which the consumer must exchange an action (behavior that may be

negative) for a positive outcome (improved health).

The “Four P” discussion begins to highlight some of the more interesting, in-depth

content issues that are presented in greater depth in the specific chapters on each aspect of the

individual Four P areas. For example, in the initial presentation of Price, the movement toward

price transparency is discussed. And, the more recent trend that health care costs have actually

begun to slow after several years of steady increases. However, in spite of these slower cost

increases, it has not prevented alternative payment approaches such as pay-for-performance

models.

Copyright © 2017 by Jones & Bartlett Learning, LLC, an Ascend Learning Company

In both the ‘Place’ and ‘Promotion’ element of the marketing mix, there are brief introductions to

the important influence that technology is now having on these marketing mix variables.

Throughout the remaining chapters and particularly in the marketing mix specific chapters, the

influence of technology are interwoven throughout the discussion to a far greater extent than the

previous edition.

In this edition a new section has been added entitled “The Hallmarks of a Market Driven

Planning Approach” to underscore the difference for students between a market driven and a

non-market driven approach. In this way it draws to the student’s attention the key differences

between each approach. And underscores where the assessment of the market occurs and the

essential need for a customer driven differential advantage in having a market success.

In the section on ‘Organizing for Marketing’ greater detail has been provided in the section on

Product line marketing. This sub-section itself has been renamed more in-line with the industry

norm to be called service line organization. But, there has evolved three different approaches to

service line structures within health care organizations and they are now presented in this edition

of the text; matrix structures, direct line structures, and clinical co-management structures.

Chapter 2

Chapter 2 has been revised in two significant ways. There has been the addition of much new

content and there has been a restructuring of some of the material from the previous edition into

a more logical framework for presentation to the students. And, as the health care environment is

shifting in terms of its focus, there are many areas within this chapter where that new perspective

is highlighted within this chapter such as early on in the comparison of two organization’s

mission statements shown in Exhibit 2-1. Students will see the broad mission of UnityPoint

Clinic, part of Unity Health System based out of Des Moines, Iowa, the fifth largest health

system in the United States.


In this new edition a new section has been added to this chapter entitled “Avoiding Marketing

Myopia,” which is an increasingly relevant topic as health care organizations move to a more

value-based and population health management perspective from a purely reimbursement,

volume driven orientation.

Instructors will also note in the SWOT discussion two interesting examples are presented in

terms of barriers to entry being presented for technological innovations such as telemedicine as

well as for human capital in the form of alternative medicine providers and nurse practitioners.

Since a key aspect of developing a strategic plan and an effective marketing plan is developing a

competitive differential advantage, this section has been enhanced with several updated

examples. However, the issue of recognizing where an organization’s completion may be coming

from has required the addition of a new section entitled “Disruptive Innovation and New

Competition.” This section explains the concept of disruptive and sustaining innovations and

provides several health care examples.

The section on “Determining Organizational Strategy” was restructured from the previous

edition. In the third edition, this section contained two models, the BCG Portfolio matrix and the

GE Matrix. The Five Forces model proposed by Porter was originally discussed within a separate

sect in entitled “analyzing the Competitive Market.” In this new edition, three models are now

presented in a section entitled “Determining Organizational Strategy.” As before there is the

BCG matrix. However unlike the previous edition, the GE matrix has been replaced with a more

recent discussion of what is referred to as “Blue Ocean” strategy. And this is also discussed

along with the Five Forces Model. Restructured all in this one section is more coherent in that

these three approaches provide alternative perspectives that are useful to companies in crafting

their strategies. In the Five Forces Model, of course, the “Power of Buyers” discussion does call

attention to the prosed merger of the major insurance companies and the opposition that has been

noted by the American Hospital Association as might be expected in this framework. The


addition of the “Blue Ocean” model is useful as this new edition describes in that unlike the

Porter Five Forces model if considers what an organization must do to achieve high performance

in uncontested market space as opposed to existing market conditions. Some tie is also made in

this discussion then to the concept of some disruptive innovations.

Chapter 3

The environment of healthcare has changed dramatically since the previous edition. As a result

much of the content in this chapter has been updated along with some new sections.

Instructors will note from the beginning of the chapter that the initial section on “Inflation and

Health Care” has had to be updated. While this revision put the health care costs in the United

States in an international context, the reality of the slowdown in health care costs healthcare

costs since the last decade has now been noted. Although still a significant proportion of the

G.D.P, the reasons of the slowdown are not all attributed to the Accountable Care Act as

economists have noted.

In the section on “Technology”, the previous edition identified three areas in which

technology impacted healthcare (quality, cost, and behavior). In this edition, a fourth area,

information, has been added given all the changes with EHRs and the like within health care

systems and the improvements this has led to in terms of process gains and patient care. In the

quality section, the dilemma of technology as a cost driver in health care is noted and the work of

Skinner and Chandra and their concept of the three bins of innovation are presented in terms of

the work in health care.

In the discussion of Transparency, there is significant updates on the CMS work in terms

of the websites on hospitals, medical groups as well as other segments of the healthcare industry

which was not in the earlier edition.

The section on Demographics has been updated as necessary. A new section has been

added entitled “Healthcare Organization Responses to an Aging Population.” This section is to


help the students take the statistical data and further underscore the importance of how healthcare

organizations need to respond to this rapidly burgeoning market segment. An interesting

segmentation perspective provided by J. Walter Thompson to the mature market is presented

along with many examples of health care organizations are implementing programmatic

responses in terms of marketing strategies to the mature market segment. This new section also

underscores the needed shift of responding to this growing senior segment in terms of

restructuring the health system strategies in terms of population health management.

A major change within the hospital segment of the industry is the decline of urban

hospitals. Data that was not presented in the previous edition are now provided in this chapter

revision. The Geographic Shift section has been revised and the hospital industry changing

location movement is discussed I this context as new hospitals open in the wealthier suburbs.

As the data has been updated on women in the workforce, a more detailed look is

presented with regard to women in the health professions. Disconcertingly but not surprisingly,

information is presented similarly to other professions that show women in the health professions

are also receiving a lower percentage of compensation compared to their male counterparts in

similar health professions . This disparity even exists in nursing, a historically female dominated

profession.

The section on health care competition has been revised. Instructors should note the quote

in this edition by the CEO of Lancaster. This is very useful to further underscore the discussion

and focus through the text to population health management and a non-hospital centric approach

to care and marketing strategies. Data is provided on the growth of accountable care

organizations in this edition. And, there is a new section in this edition entitled “Healthcare.gov”

which presents the concept of health exchanges.

In the previous edition the issue of medical tourism was discussed. In this edition it has

been broadened to include not just foreign medical tourism, but the concept of domestic medical

tourism. Examples are provided of companies establishing contracts with health systems here in


the United States and providing incentives for their employees to seek care outside their market

area. Additionally, the issue of reference pricing (a fuller discussion in presented in Chapter 9-

Pricing) is highlighted as a factor that may well affect foreign medical tourism.

In the section of regulation, some updates have been provided. Unlike the previous

edition where mergers and acquisitions were slowing down, the opposite has occurred since that

last edition. And, the increasing activity of the Federal Trade Commission (F.T.C.) is described

along with an interesting case that has occurred in Idaho. And, because we live in the digital age,

a new sub-section has been included within the section of regulations regarding distribution

pertaining to telemedicine. Several state medical boards viewing this as either a competitive

threat or having concerns for patient safety have attempted to pass legislation to put restrictions

on telemedicine activities that are now described within this revision.

Chapter 4

Chapter Four focuses on understanding the consumer from both the consumer and organizational

buying behavior perspective. This chapter has been updated along several perspectives. In the

consumer discussion users of earlier editions will notice significantly greater examples of health

care relevance in terms of applications to the “decision-making model”. Additionally, in this

chapter a new discussion has been included entitled “Factors affecting The Search Process” that

focuses on elements that affect how much a consumer will actively engage in an active search for

information which is particular relevant in this age of the WEB. Again significant attention

within the external search process is paid to relevant health care situations and research.

The discussion of Consumer decision Models has been restructured. In the precious

edition, there was a presentation of the Fishbein multi-attribute attitude model. This edition still

presents that model, however, in a more appropriate framing of that model, it is discussed within


the category of compensatory decision approaches. A second category of non-compensatory

decision models is now also discussed in this edition.

The post-purchase evaluation stage of consumer decision making is presented now in a

way to include a discussion of HCAHPS and the forthcoming (2017)(CG-CAHPS) for medical

groups.

The discussion of “complex decision making” has been revised to include to increasingly

relevant environment of social communities that have grown for diseases such as cancer and

diabetes. Within this discussion, then is presented the concept of “collective intelligence” or

“wisdom of the crowds” which for the web is based on the architecture of participation. This

aspect of complex decision-making was not discussed in the previous edition.

In the industrial buyer behavior section, it is important to call attention to the buying

center discussion in which two new concepts are presented. First, in terms of members of the

buying center beyond the groups that were identified in the previous edition has been added the

“initiator” as someone or some people in the organization that first suggest the need for a product

or service acquisition.

Secondly within the discussion of “deciders” take note of the concept of the PPI,

physician preference items and the interesting financial implications for health care

organizations.

Chapter 5

The Marketing Research chapter has been updated in several areas with new content and

important structural changes as will be noted by users of previous editions. As can be seen early

in this chapter, in the discussion of secondary data it is now more appropriately delineated into

the categories of internal, regulatory and commercial as the three sources that can be utilized.


Most importantly, now in this chapter, there is a new section on “Big Data” which has been an

increasingly important topic within health care and it is coupled with the discussion of data

mining. Several examples are provided in the discussion of these two important topics. This

section also reviews the legal attempts to limit the amount of data mining that has been

undertaken by the pharmaceutical industries and the Supreme Court’s decisions to negate these

states’ attempts.

The structural revision has occurred in a significant way in the section on Data

Collection, This section now better clarifies the distinction between qualitative and quantitative

research and the research methods are now sub-divided within these distinctions. Thus there are

the tool discussions of observational research, focus groups, personal interviews and social

media within this category.

Users of this edition compared to previous editions will note the new addition of “Social

Media” as a qualitative research method which has become a recent use by researcher with the

advent of sentiment or opinion analysis that is now a new addition to the presentation of this

edition.

The quantitative research tool section now includes appropriately for the students

understanding: experimental research, telephone surveys, mail surveys and on-line surveys.

As a final note an interesting example is presented in terms of sampling frame regarding the U.S.

news and World report “Best Hospitals” issue that might be useful as a class discussion as to

whether students might still believe this is the ideal way to get the “Best Hospitals” in the United

States.

Chapter 6


This chapter has been updated and revised in several areas. As organizations now explore

concentration strategies, technology allows them to develop micromarketing approaches to

segmentation. This edition now has a section which describes this approach.

In the “Lifestyle” segmentation section, a recent approach identified by Deloitte in terms of

health care consumers has also been presented that shows the relevance of lifestyles and cohort

groups. Closely related to this is a new section entitled the “PathValue graphic Segments in

Healthcare” which is a nine segment typology based on attitudes and values that has been

suggested to lead to greater efficiency in the utilization of healthcare resources. These two new

segmentation schemata are both enhancements to this edition that make market segmentation

more relevant to students of health care.

Chapter 7

This chapter contains several significant enhancements. In an era of accountable care

organizations, pay for performance plans, and population health management health developing

customer loyalty is of increasing importance. Thus in addition to the updating of the examples,

there is greater depth with new concepts in several important areas.

An explanation is provided in terms of the level of customer bonds that can be created in the

drive to create loyalty. There are four levels of customer bonding that can occur from strangers

to acquaintances, friends to the key level of partnerships.

Tied to this discussion now, this chapter now includes a new addition of the areas in which an

organization can go to create those bonds. It can be financial, social, or to create stronger bonds

with customer it can be through customization or ideally with significant structural change as

presented in this chapter.

Because now the Joint Commission mandates responses to patient complaints, and in an

age of social media all organizations and providers have a heightened sense of awareness of


complaining behavior (or should have) there is significant new depth of discussion in the

Customer recovery portion of this chapter. First, added to this chapter is a new section on the

forms of justice that an organization can take and that individual expects. There are basically

three dimensions of justice as are explained in this chapter: outcome fairness, procedural

fairness, or interactional fairness.

Additionally this chapter now describes the six steps in an effective complaint

management process.

Finally, as this enhanced and expanded chapter closes, it is important to recognize that

not everyone is a loud and active complainer and will go viral will a complaint of dissatisfaction.

A typology of complainers is presented for students and practitioners to consider.

Chapter 8

Chapter 8, Product Strategy has received major enhancements in this revision. At the beginning

of the chapter, a new perspective I presented regarding the complexity of product in terms of

considering the core, actual and augmented product perspective and the elements of each of these

dimensions of a product.

Throughout this chapter there is a stronger attempt to integrate actual health care

examples in the concepts that are presented. This is immediately apparent in the discussion of the

five I’s of services that separates services from products.

The product life cycle discussion has been updated to focus on one of the most recent and

on-going advances in health care service today, proton beam therapy. This emerging technology

in the United States is the underlying example through the life cycle discussion as the previous

example has moved to a later life cycle stage and is still referenced but has relatively limited

application.


In the discussion of factors that can affect the length of the product life cycle, greater attention is

paid in this edition to the effect of reimbursement. A detailed example is provided to students in

terms of hospital based sleep tests and the impact on hospital business as well as outpatient

centers when disruptive innovations entered and third party reimbursement dropped in light of

home sleep testing possibilities.

The discussion of product modification has been revised and enhanced in several areas.

The issue of “more frequent usage” which in the previous edition was discussed in terms of an

ethical dilemma is now framed slightly differently depending on the area that is being considered

for more frequent use. In an area of population health management more frequent behavior for

better health might well be appropriate and such examples are now provided.

In a similar vein, the discussion of “Finding new users” has received a more detailed

treatment. This area has been extended with regard to off-label use of pharmaceutical products

and the interesting dilemma it poses from a promotion perspective.

In the branding discussion greater depth has been provided to draw the important

distinction in health care services and a traditional product-based business. The concept of

principal/agent theory was introduced, a theory that was not presented in previous edition but

should be discussed. It is important to underscore to students that a health care brand cannot be

separated from the professionals and non-professionals behind the brand. In addition, because of

the greater frequency of co-branding strategy, several new examples are now provided for

students to consider.

Finally, in the diffusion of innovation discussion another important barrier to adoption

included—risk. The risk barrier is discussed along two dimensions financial and social.

Chapter 9


In the health care environment of today, price has become an increasingly more relevant aspect

of the marketing mix and of marketing strategy. This revised chapter begins with anew added

section on the “Trends in Pricing” that specifically highlights three important areas affecting the

pricing environment for marketing; price transparency, consumer response , and organizational

response to this new health care environment on pricing,. Specifically highlighted is how some

health care provider organizations are moving to provide cost estimators and requesting pre-

payments from consumers.

A second new section to this chapter is entitled “Price or reimbursement”. This section is to

briefly provide a perspective to students who may not have had a prior coursework in health care

finance or have experience in healthcare. It is to bridge the health care reimbursement

vocabulary with the traditional business vernacular or pricing and the strategies discussed within

this chapter that are now being increasingly utilized within this industry. Thus, there is a brief

description of cost-based reimbursement, fee-for-service, Diagnostic related groups, capitation,

Pay-for performance and HCAHPS.

The discussion of pricing strategies has been enhanced in several areas. In the discussion of cost

and volume relationships the addition of indirect costs is added to have a more complete

presentation of the costs presentation. In discussing price lines, this area has been focused in

terms of today’s health exchanges and the types of plans now being offered on the exchanges as

examples of price lines (Bronze, Silver, Gold, Platinum) as well as a discussion of components

of the plan benefits. The Bundled pricing discussion has been explained as the utilization of this

approach has also become far more common with the greater use of reference pricing strategies

in recent years and the significantly greater interest in bundled pricing by companies.

Chapter 10


Chapter 10 begins by underscoring that the distribution or place component of the marketing mix

may well be the most significant or dynamic element or marketing where change is occurring.

Throughout this chapter several updated examples are provided where the direct distribution of

care is now being introduced with novel telemedicine or virtual access links from providers such

as Teladoc, American Well and others for consumers to access care.

As a result, this increasing focus on distribution has led to a significant revision of this

chapter as the discussion of the functions are discussed in regard to what is performed in the

channel. Considering the time element, the introduction of the concepts of asynchronous and

synchronous value utility is now presented with regard to health care. There is an expanded

discussion of possession utility, to reflect the changes with higher deductibles.

Significant change has occurred in recent years among employers with regard to the

concept of functional shifting, a concept that was discussed and presented in earlier editions of

this text. Several new examples are provided in this edition and should be noted as a major

change in the health care market to students. And, it is also being represented by the onset of new

competitors for traditional providers (an inter4sting discussion to tie into the earlier chapter

within the Porter framework of the Porter model) by the functional shifting discussion of

pharmacists) and iPhone apps.

This revision of the text also introduces two new distribution concepts not presented in

earlier editions of the text: disintermediation and reintermediation. These concepts are now

relevant with the appearance of ever more relevant virtual health strategies by health care

providers and intermediaries appearance in the channels of distribution.

The section on Channel Conflict has been significantly enhanced. As it seems, conflict

has become more relevant and more frequent within the healthcare environment. Several

concepts have been provided to further aid students to understand the environment. The three

broad areas of goal, domain, and perceptual conflict have been presented.


Chapter 11

This chapter has been enhanced in several ways. An important new discussion occurs within the

section of the “THE EVOLVING COMMUNICATION MODEL: MOVING TO A WEB 2.0

WORLD.” As this new edition notes based on research from Pew Research Center, people look

on-line for individuals with similar health issues. Four attributes are presented of this changing

web environment.

There is an expanded discussion on the use of comparative messages as well as emotional

appeals in messaging with new health care related examples. A new section has been included

entitled “THE INTEGRATED MARKETING COMMUNICATIONS” along with a presentation

of owned, earned and paid media.

Chapter 12

Although the basic structure of the chapter remains as the previous edition, users of the previous

edition will notice changes throughout the chapter. Initially, the chapter begins differently by

putting advertising in somewhat of a historical context for students who may not appreciate that

advertising itself has not always existed in the healthcare provider sector.

This chapter does have examples and a discussion throughout at is pertains to several

sectors within healthcare; the provider sector, pharmaceutical, and devices. All three engage in

advertising to different segments and in varying levels. Research and examples are brought into

the discussion in different sections of this chapter.

In the discussion of the development of an advertising campaign, an interesting example

is used in terms of the Awareness campaign from the Brattleboro Retreat regarding “mental

health,’ Instructors should also look at the “End of Chapter” question #3 that has students look

on YouTube for the video advertisements that accompanied this campaign. It can lead to an


interesting class discussion on a sensitive health issue around advertising and how it was

implemented by one well-known health organization.

This chapter also has provided more examples as to how digital media is being integrated

into advertising campaigns as is demonstrated in the discussion of a unique approach to increase

interest of residents to enter Nephrology residency programs in the discussion of Interest

Objectives. Such integration of digital media is now woven throughout this chapter.

A new section has been added to this chapter in terms of how digital media is valued and

describes the three alternative ways in which it is commonly done; cost per mille; cost per click;

an cost per action.

The discussion of each media vehicle has been significantly revamped and updated not

only has new data been provided where relevant but more recent examples have been provided

throughout. The dramatic shifts in newspaper and outdoor media have led to major changes in

these two sections. Because of the potential of geo-targeting there has been a new section added

on Streaming Media. A new addition with a section on Inbound Marketing versus Outbound

Marketing has been included.

The Web 2.0 and Social media portion of this chapter has changed along with the

dramatic use among hospitals from the previous edition as is noted in this revised chapter. A

more extensive discussion is included with greater examples in most of the sites that are

described.

A modification has been made in the Advertising Agency portion of the chapter to

discuss the shifting of compensation system of agencies to a more performance based system

from the fee based and commission based approaches of the past.

Finally, the Chapter closes with a look at how medical society and health care marketing

and strategy professional organizations are attempting to place guidelines on an ethical approach

to communication and promotion to the marketplace and relevant stakeholders in an aspect of


marketing that receives great question as to its suitability and appropriateness in a cost sensitive

industry to the public.

Chapter 13

This chapter has changed significantly since the previous sedition. While personal sales

representatives have been long common among durable medical equipment supplies and pharma,

it is now also a function that is represented in the provider segment. Technology has also

affected the sales process and this chapter discussed the role of e-Sales and e-detailing. And the

three broad forms of e-detailing techniques. Also added to this chapter is a new section entitled

“The Legal Challenges to Sales” that discusses some of the concerns that have been raised

regarding academic detailing issues.

Every aspect of the sales process has been impacted by technology. As you review the

sales process, you will note a revised discussion as to how social media impacts the

“prospecting” process and even the “presentation” and “close” stage.

Chapter 14

This chapter has been revised in with the addition of a new section regarding the monitoring of

investments in digital and web-based investments. There are several metrics that are utilized to

monitor and assess the returns that are utilized and have been presented in recent years to

determine the worth of the dollars spend in these allocations.

The second major enhancement and revision to this chapter is in the section of the

Marketing Audit. Previous users of earlier editions of this text will note that there is a significant

revision to the audit questions that are updated to today’s health care environment. Additionally

several more topical and relevant questions reflecting the environment have been added to the


audit that would be relevant to the audit reflecting organization’s internal structure, financing,

reimbursement and population health challenges.


Chapter 1 - Jones & Bartlett Learningsamples.jbpub.com/9781284094312/9781284098495_TG… · Web...

Documents

Transcript of Chapter 1 - Jones & Bartlett Learningsamples.jbpub.com/9781284094312/9781284098495_TG… · Web...