Five Forces that will Change Healthcare Marketing

Karen Corrigan

Corrigan Partners LLC

@karencorrigan

corriganpartners.com

The basis for competition in the health industry is rapidly changing . . .

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• Restructuring markets and intensifying competitor activities in anticipation of reform and other industry pressures

• New reimbursement methods and care delivery models that require greater emphasis on customer engagement to optimize profitability

• Transformation of marketing practice through web, social and mobile technologies

5 forces marketers must watch

1. The new economics of healthcare reform

2. Market restructuring and emerging delivery models

3. Evolution of brand in physical and virtual environments

4. Technologies that disrupt and transform

5. Growing, graying, connected consumers

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“The federal budget is on a dangerous, unsustainable path. Federal debt will rise to unmanageable levels, which will endanger our prosperity… we must take immediate steps to reduce the unsustainable debt

that will be driven by the aging of the population and the rapid growth of healthcare costs.”

The National Commission on Fiscal Responsibility and Reform, November 11, 2010

Market force #1:

The new economics of healthcare reform

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23% of Medicare Patients

5 of more chronic conditions

12 different physicians

50 prescriptions per year

68% of Medicare costs

Volume vs. value economics Today providers are rewarded for volume based transactions on individual patients. Reform models reward value based on episodes of care and outcomes:

Bundled payments

Pay for performance

Accountable care

Medical homes

Coordination of care

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• National debt issues are not going away

• Health care expense growth rate is too high

• Labor shortages for physicians, nurses will happen

• State budget deficits will reduce Medicaid payments

• Downward pressure on Medicare rates will continue

• Payers will reimburse providers based on cost and quality

• CMS quality payment initiatives in place

Regardless of reform mandates . . .

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Focus of the CMO Help your team understand changing

economics in the health industry and the implications for marketing strategy.

Understand not only the top line revenue implications of customer acquisition, but also the bottom line impact of key segments.

Help hospitals and health systems better understand, prepare for and relate to consumers under new delivery structures.

Build high-performing, future ready marketing operations with more sophisticated segmentation, targeting, positioning, brand building, customer acquisition and customer retention strategies.

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Market force #2:

Market restructuring; new delivery models

Accountable care models and organizations

Hospital and health system mergers & acquisitions

Physician integration, employed medical practices

Ambulatory, post acute and retail diversification

Academic, technology and business partnerships

Multi-market, multi-state expansion initiatives

Enterprise IT/EHR/website strategies

Co-branding/co-marketing relationships

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New players on the primary care front Vision – “Well Experience”

Become America’s first choice for health and daily living

5 Key Strategies

Transform stores to retail health and daily living destinations

Advance pharmacy to play a greater role in health care through integration and expanded services.

Deliver outstanding customer experience through enhanced employee engagement.

Expand across new channels and markets, particularly through investments in e-commerce and mobile technology.

Reinvent the cost structure through continuous improvement and innovation.

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Source: Walgreens; Shareholders Hear Strategy for Growth and Value Creation During Walgreens 2012 Annual Meeting; January 2012; Fast Company March 2012.

Inside the Walgreens corporate-care clinic at Disney World, employees enjoy a pharmacy, EKG and digital

radiology machines.

Walgreens “Well Experience” blueprint

Enhanced, state-of-the-art pharmacy designed to encourage greater interaction between pharmacists and patients – bring pharmacists out from behind the counter

Take Care Clinic offering a wide range of health care services including vaccinations, health tests, physicals and treatments for common illnesses and minor injuries – more tightly integrate retail clinics and pharmacies to create health centers

Upmarket Café featuring a juice bar and fresh hand-rolled sushi – provide greater access to healthy foods

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Source: Fast Company March 2012.

“We have heard from key stakeholders across the health care landscape – including CEOs of health plans and major employers – who have visited our ‘Well Experience’ stores. The

No. 1 comment I hear is, ‘This is exactly what we need. How fast can you do this?’” Gregory D. Wasson, CEO, Walgreens

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"It's acute episodic care now, but it's moving to full primary care. The dream is to expand into chronic-disease management. That's a huge part of the cost of health care.

We haven't figured it out yet, but we will." Hal Rosenbluth, president of Walgreens Health and Wellness

Strategic intent is clear . . .

"Whatever does or doesn't happen is good for us. If reforms are adopted they're going to need providers. We're a provider. And if a new health-care law doesn't pass, there

will be more people in need. And we're affordable, even when paying cash." Hal Rosenbluth, president of Walgreens Health and Wellness

Source: Fast Company March 2012.

Focus of the CMO Use data and strategic insight to inform business

strategy, focus growth initiatives and build core “system” competencies.

Step up brand building to strengthen competitive leverage for partnering, contracting, talent, customer acquisition and retention.

Be a catalyst for innovation; push for and support care delivery and service innovations.

Understand the marketing requirements of new lines of business, and develop growth and marketing management strategies, structures, skills and systems to support multiple markets, facilities, SBUs.

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The underlying basis of competition is changing – taxing even well established healthcare brands.

Market consolidation and expansion, service diversification and strategic partnering are on the rise – fueled by reform and accountable care clinical management structures.

Web, social and mobile technologies are changing everything! How we learn, how we shop, how we manage, how we engage, how we . . . . . . . .

Market force #3:

Evolution of brands in physical and virtual worlds

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One of the Most Powerful Forces in Brand Building is

Focused Alignment – in the ‘Bricks and Mortar’

World as Well as the Digital One

Core

Purpose

Strategic

Vision

Brand Value

Proposition

Brand

Alignment

Customer

Experience

Value

Innovation

Fundamental reason we exist.

How we intend to compete.

The unique reason our brand

matters to customers.

How we link our business strategy to customer experience.

How we satisfy customer

needs and wants.

How we sustain

competitive advantage.

© Corrigan Partners LLC

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Brandscaping

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Physical Virtual

The central challenge with brand building is getting a complex

organization to execute a simple idea.

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Focus of the CMO

Build knowledge and understanding across the health system about brand as a strategic asset to drive growth and better business performance

Develop a comprehensive, long-view brand strategy to create a powerful, relevant and defensible position and strengthen factors that drive differentiation

Build solid strategies for multi-facility, multi-services and multi-market systems

Orchestrate business, clinical and marketing alignment to deliver consistent brand experiences across all branded facilities, services and environments

Align brand identity and experience across web, social & mobile environments, including health IT/EMR/patient, physician and employee portals

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Market force #4:

Technologies that disrupt and transform

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A comprehensive web, social and mobile capability, integrated with clinical IT systems such as EMR and patient portals, and embedded in physical environments, is no longer optional for

organizations that want to remain relevant.

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Diagnosis

Social Support

Medical Record

Treatment

Resources

Monitor Health

Caregiver Support Other

• 52 years old

• Breast cancer

“Fighting breast cancer is a

24/7 job. Treatment doesn’t

just happen in the clinic.”

The newly integrated health & social ecosystem

Digital media fluency is essential

Web, social and mobile technologies require new skills.

• Integrated, multi-channel strategies

• Web development/management

• Content marketing

• Integrated CRM/contact center

• Mobile media development & marketing

• Content ecosystem management

• Digital brandscaping

• Social commerce

• Community management

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Adapted from http://costaricacloseup.com/designstudios/

Content is strategy; not just promotion

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Decision Cycle Provider Goals Keywords Social Topics Content Channels

Awareness • Stimulate demand

Interest • Drive preference

Consideration • Differentiate brand/offer

Trial • Customer acquisition

Retention • Customer satisfaction

Advocacy • Brand commitment

Content Strategy Map ©Corrigan Partners

Patient Needs

• Health Information and advice

• Routine screenings

• Convenient care when ill

• Chronic care management

• Self care support

• Caregiving support

CREATE

CURATE

INFLUENCE

Success requires a thorough understanding of how consumers discover, consume and share information on-line; and the role of search and social interaction across the buying cycle.

Focus of the CMO Help hospitals and health systems understand that

consumers today no longer have purely offline or online experiences but weave technology through nearly every point of contemplation, purchasing and use of products and services.

Understand the adoption patterns of technologies that support care delivery and care management; and explore opportunities for creating points of differentiation in access, timeliness, convenience and customer service.

Master integrated search, social and content marketing – strategy, planning, execution, management.

Build digital media capabilities and fluency – full speed ahead!

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Market force #5:

Growing, graying, connected consumers

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• 2011 was significant in that it marked the first year that baby-boomers began turning 65; and for the next 15 to 20 years, about 10,000 people will turn 65 years old every single day.

Boomers will be the driving force for healthcare services in the coming decades . . .

. . . not just for “what” is delivered but “how” it will be delivered

The first wave of the boomer generation is generally satisfied with their lives and optimistic about the next third of life

And they also have age-related health concerns similar to their parents when they were 65

However, in some very important ways boomers turning 65 are different from their parents — particularly when it comes to ideas about retirement, expectations about customer service, taking control of their own destiny, and connectedness to information and resources.

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Social networking isn’t new, just different

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• The impact of web, social networking and mobile technologies cannot be underestimated in its influence on how growing, changing, graying Americans access information, communicate, and connect with brands and services.

• Aging Americans have unprecedented access to information about health care, and growing expectations for the service conveniences of on-line appointment setting, communications with physicians and personal medical records.

Not just a Florida and Arizona issue

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People 65 and Older

• 39.6 million in 2009, representing 12.9% of the U.S. population – 1 in every 8 Americans

• Darker areas on the map are regions where the percentage of people over 65 exceed the average

• By 2030, there will be about 72.1 million older persons, more than twice their number in 2000 and will count for nearly 20% of the population.

Implications for the workforce

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Younger Workers 25 - 44

Older Workers 45 - 65

Dramatic Shift in Age of Workforce – 2000 to 2010

Focus of the CMO Move front and center in the realm of customer

intelligence, and dig deeper to gain meaningful insights into aging consumer needs and behaviors.

Assess aging trends and demand implications in your marketplace and help leaders understand both the opportunities and challenges of these developments.

Define aging segments and growth opportunities, identify wants and needs, and drive niche strategies, services, and program development.

Help your organization understand that the new “senior” will demand more choices, be less tolerant of bad service and inconveniences, won’t necessarily follow doctor’s orders, believe that 70 is the new 50 . . . and expect to be treated accordingly.

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Embrace change, then drive transformation

Questions. Comments. Discussion.

Karen Corrigan Founder/CEO Corrigan Partners karen@corriganpartners.com P 757.288.2480 @karencorrigan blog @ karencorrigan.com