Physician-to-Physician Marketing:Quickest Channel to Volume Growth

May 19, 2010

Alvis R. Swinney

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Agenda

• Physician marketing and the referral “Echo System”• The value of primary care referral sources• The revenue driving relationship for hospitals: the specialist• Should physicians be marketing to referral sources, and why aren’t they?

Larry Ginsberg, Manager of Loyalty Marketing Programs Meridian Health

• The Meridian Health experience

Hughes Bakewell, President, PracticPlus LLC

• The “WordOut” physician communications and referral marketing solution

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Why Physician Marketing is Important

“While there are good reasons to include prospective patients in hospital marketing efforts, the degree to which the industry has been focused on this segment of the customer base is, arguably, inappropriate.”

“While consumer assertiveness does, of course, vary across service lines and patient demographics, all indications are that physicians are the ones who (by a wide margin) typically determine where a patient ends up receiving hospital treatment.”

The Advisory Board, 2005

Source: Advisory Board Study: “Next-Generation Physician Marketing, IncreasingHealth System Leverage Across the Referral Chain,” 2005, page 3.

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Physician Eco-System (Referral Model)

MedicalOncologist

RadiationOncologist

MedicalOncologist

MedicalOncologist

MedicalOncologist

OB/GYN

MedicalOncologist

FamilyPractice

InternalMedicine

FamilyPractice

OB/GYN

FamilyPractice

OB/GYN

MedicalOncologist

InternalMedicine

OB/GYN

FamilyPractice

InternalMedicine

FamilyPractice

InternalMedicine

FamilyPractice

InternalMedicine

OB/GYN

Hospital-Based

Community-Based

Community-Based

20-30 20-30

5-6

5-6

5-6

5-6

2-3

5-6

5-6

2-3

2-3

2-3

2-3

2-3

2-3

0-1

2-3

0-1

Consumers

Consumers Consumers

Consumers

Hospital-Based

Referrals

Referrals

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Primary Care to Specialist Relationship

Referrals Per 100Primary Care Physician

1,365 Cardiology

1,960 Gastroenterology

2,686 General Surgery

3,587 Orthopedic Surgery

2,047 Otolaryngology

1,423 OB/GYN

13,069 Grand Total

Source: Advisory Board Study: “Next-Generation Physician Marketing, IncreasingHealth System Leverage Across the Referral Chain,” 2005, page 7.

Referral Drivers Revenue Drivers

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Value of Top 10 Revenue Drivers

Average annual inpatient/outpatient revenue generated per physicians for their affiliated hospitals by specialty – 2007

data

Source: “2007 Physician Inpatient/Outpatient Revenue Survey,” Merritt, Hawkins & Associates.

$1,335,133

$1,413,436

$1,615,828

$1,624,246

$1,947,394

$1,987,253

$2,100,000

$2,240,786

$2,312,168

$2,662,600

Gastroenterology

Obstetrics/Gynecology

Family Practice

Hematology/Oncology

General Surgery

Internal Medicine

Neuro Surgery

Cardiology (Non-Invasive)

Orthopedic Surgery

Cardiology (Invasive)

77

Information Sources Used toSelect a Primary Care Physician

50.3%Friends Or

Family

38.1%Doctor or

Other Health Care Provider

34.7%Health Plan

10.8%Internet

9.0%Other Media

Source: “Word of Mouth and Physician Referrals Still Drive Health Care Provider Choice,” Center for Studying Health System Change: Research Brief No. 9, December 2008; Nationally representative survey sample was 18,000 people in 9,400 families; funded by Robert Wood Johnson Foundation

The Center for Studying Health System Change – 2008

Selection of Primary Care Physician

Categories are not mutually exclusive;respondents could select multiple categories.

88 Source: “Word of Mouth and Physician Referrals Still Drive Health Care Provider Choice,” Center for Studying Health System Change: Research Brief No. 9, December 2008; Nationally representative survey sample was 18,000 people in 9,400 families; funded by Robert Wood Johnson Foundation

Information Sources Used toSelect a Specialist Physician

The Center for Studying Health System Change – 2008

68.5%Referral From

PCP

19.9%Friends Or Relatives

18.0%Another

Doctor Or Health Care

Provider

10.5%Health Plan

Selection of a Specialty Physician

6.8%Internet

4.8%Other Media

Categories are not mutually exclusive;respondents could select multiple categories.

99 Source: “Word of Mouth and Physician Referrals Still Drive Health Care Provider Choice,” Center for Studying Health System Change: Research Brief No. 9, December 2008; Nationally representative survey sample was 18,000 people in 9,400 families; funded by Robert Wood Johnson Foundation

Information Sources Used toSelect a Facility for a Procedure

The Center for Studying Health System Change – 2008

73.9%Doctor

Performing The

Procedure

14.5%Another Doctor

10.0%Friends Or Relatives

7.0%Health Plan

2.5%Internet

2.6%Other Media

Selection of a Facility

Categories are not mutually exclusive;respondents could select multiple categories.

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Specialty Practice Challenges

• Balancing personal life and practice demands – work hours, time pressures and demands of complex patients

• Finding time to focus on practice efficiency (expense management) and productivity (revenue diversification)

• Maintaining practice income in an environment of little, if any, pricing elasticity translates into seeing more patients and working longer hours

. . . It adds up to economic and lifestyle pressures!

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Ways To Improve Practice Economics

• Client Acquisition: Increase number of referring physicians

• Client Development: Increase number of referrals per physician

• Client Retention: Increase duration of physician relationship

• Revenue Diversification: Increase revenues by adding procedural revenues and technical fees

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Typical Specialty Practice Situation

• Specialty practices tend not have programs to support referral development

• Lack the resources, expertise, or time to develop and manage a relationship program

• Practices have the capacity for more volume – incrementally very profitable

• 80/20 rule – 80% of the referrals come from 20% of the market potential

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Question: Are Physicians Ready?

The Meridian Health experiment to develop a physician referral marketing program meant finding out if physicians would…• Understand the value of a referral marketing program?• Agree to pay for marketing services?• Share their practice referral data?• Commit to a one-year agreement?• Sustain the marketing effort and execute 4 – 6 mailings?• Stay engaged in the process?

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Physician Interest in Marketing is High

75%59%

Physicians interested… …but lacking the time

Percentage of surveyed specialists indicating an interest in developing marketing skills

Percentage of surveyed specialists wanting more time to

spend on clinical work

Source: “The Medical Practice Center,” available at www.bizjournals.com, July 10, 2005.

Thank you!

Next Up…The Meridian Experience