marketing strategies

marketing strategies.

Overview

In this Assessment, you will read the four case studies and respond to the corresponding tasks related to evaluating marketing strategies. 

Professional Skills: Written Communication, Technology, and Critical Thinking and Problem Solving are assessed in this competency.

To complete this Assessment:

• Download the Academic Writing Expectations Checklist to use as a guide when completing your Assessment. Responses that do not meet the expectations of scholarly writing will be returned without scoring. Properly formatted APA citations and references must be provided, where appropriate.
• Be sure to use scholarly academic resources as specified in the rubric. This means using Walden Library databases to obtain peer reviewed articles. Additionally, .gov (government expert sources) are a quality resource option. Note:  Internet and .com sources do not meet this requirement. Contact your coach or SME for guidance on using Library Databases.
• Carefully review the rubric for the Assessment as part of your preparation to complete your Assessment work.

This Assessment requires submission of two (2) files. Save your files as follows:

• Submission one will include the written reports required in Part I and III. Save this file as FM002_PartI_III_firstinitial_lastname (for example, FM002_PartI_III_ J_Smith).
• Submission two will include the presentations required in Part II and IV. Save this file as FM002_PartII_IV_firstinitial_lastname (for example, FM002_PartII_IV_J_Smith).

When you are ready to upload your completed Assessment, use the Assessment tab on the top navigation menu.

 

 

 

Instructions

Before submitting your Assessment, carefully review the rubric. This is the same rubric the assessor will use to evaluate your submission and it provides detailed criteria describing how to achieve or master the Competency. Many students find that understanding the requirements of the Assessment and the rubric criteria help them direct their focus and use their time most productively.

Rubric

Access the following to complete this Assessment:

• Hospital Consolidation Case Study, (pp. 1–5)
• Market Management Case Study, (pp. 55–63)
• Palomar Heart Hospital Case Study, (pp. 123–127)
• Intermountain Healthcare Case Study, (pp. 161–173)

Cellucci, L. W., Wiggens, C., & Farnsworth, T. J. (2014). Healthcare marketing: A case study approach. Chicago, IL: Health Administration Press.

This assessment has four-parts.  Click each of the items below to complete this assessment.

 

 

Academic Writing Expectations Checklist

The faculty Assessor will use this checklist to evaluate whether your written responses adhere to the conventions of scholarly writing.  Review this checklist prior to submitting your Assessment to ensure your writing follows academic writing expectations.  Click the links to access Writing Center resources:

Sentence-Level Skills

Constructing complete and correct sentences Note: See an explanation of sentence components and how to avoid sentence fragments and run-ons.

 

Using and spelling words correctly Note: See a list of commonly misused words and information on MS Word’s spell check.

Using punctuation appropriately Note: See the different types of punctuation and their uses.

Using grammar appropriately Note: See a Grammarly tutorial to catch further errors.

Paragraph-Level Skills

Using paragraph breaks Note: See a description of paragraph basics.

Focusing each paragraph on one central idea (rather than multiple ideas) Note: See an explanation of how topic sentences work.

Use of Evidence

Using resources appropriately Note: See examples of integrating evidence in a paper.

Citing and referencing resources accurately Note: See examples of citing and referencing resources in a paper.

Paraphrasing (explaining in one’s own words) to avoid plagiarizing the source Note: See paraphrasing strategies.

Formatting Written Assignments

Using appropriate APA formatting, including title page, margins, and font Note: See APA overview and APA template from the Writing Center.

 

 

 

Part I: Kimball Hospital and Tanner Medical Center Merger Report

Read the case study “Hospital Consolidation,” pages 1–5, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are Dallin Call, chief executive officer (CEO) and chief marketing manager of Kimball Hospital. You have considered all of the factors, and it is time to make a recommendation regarding a merger of Kimball Hospital with its chief rival, Tanner Medical Center.

Create a 5- to 7-page report to present to the Kimball community-based board that addresses the following:

1. Explain the potential long-term impacts of a merger on the following stakeholders. Analyze issues, such as access, cost, and quality, and what concerns each of the following stakeholder groups might have regarding consolidation.
2. Analyze the potential impacts of a merger on Kimball Hospital and Great Western Hospital Corporation (GWHC). Explain the impact of this merger in a way that the Kimball community-based board can understand.
3. Recommend strategies to balance organizational and community interests as you make the important decision of whether or not to merge with Tanner Medical Center.
4. Justify whether you would or would not recommend the merger. Use information about industry issues and trends to inform your explanation. In addition, explain how the Kimball Hospital mission, vision, and strategic plan would influence your recommendation.

Hospital Consolidation Case Study, (pp. 1–5)

 

This real-life case invites students to consider the dynamic relationship healthcare providers have with their local and regional market and to appreciate the need to balance organizational and community interests when making important decisions that affect the healthcare market- place. Participant and facility names and various numerical values have been modified to pre- serve anonymity and accentuate points of learning. The case also encourages students to consider the long-term impact certain strategic ini- tiatives have on healthcare organizations and their stakeholders, including patients, physicians, payers, and the public, and to actively consider stakeholder expectations in connection with these decisions. Finally, this case introduces students to important healthcare industry issues and trends, including forces that shape a healthcare organization’s mission, vision, and market- based strategies for growth and development, as discussed in Part I of this text. IntroduCtIon In many ways the 2001 holiday season was no different than any other. Dallin Call—chief executive officer of Kimball Hospital—genuinely enjoyed the traditional music, decoration and seemingly endless social gatherings characteristic of the time of year. It was dissimilar in one respect, however: Dallin was full of anxiety and could not shake it. Three months earlier, Dallin’s Rocky Mountain–based healthcare system—Great Western Hospital Cor- poration (GWHC)—initiated merger/consolidation talks with the county-based operators of his hospital’s chief rival, Tanner Medical Center, and a December 31 deadline to for- mally initiate negotiations or walk away was looming. Dallin understood that his personal recommendation to his corporate supervisors and community-based board would greatly influence their eventual decision to press ahead with consolidation talks or continue the more than 40-year practice of offering competitive but duplicative healthcare services to the community. Dallin’s recommendation and the ultimate decision to consolidate or not would be the most important local healthcare market decision in a generation or more and would greatly impact the lives of numerous healthcare professionals and the nature and quality of healthcare services for area residents for years to come. Merger and ConsolIdatIon trends In general, the local market mirrored the healthcare issues and challenges observed nation- ally, including a trend toward hospital mergers, acquisitions, and consolidations brought about by myriad organizational and market forces (Cuellar and Gertler 2003; Haleblian et al. 2009). In the decade preceding Kimball Hospital’s deliberations, the healthcare indus- try underwent a wave of consolidations that transformed the hospital marketplace. By the mid-1990s, hospital mergers and acquisitions had increased by nearly tenfold the rate observed only five years earlier (Vogt and Town 2006). From his readings and observations, Dallin noted that some of the more important advantages to hospital mergers and consolidations included much needed access to capital and elimination of non-value-added duplication of expensive healthcare services. Mindful that consolidation was rarely a panacea, however, Dallin identified a handful of concerns and potential disadvantages, including the potential for higher costs and prices and lower quality following reduced competition (Tenn 2011; Vogt and Town 2006).

 

the loCal Market and deMograpHICs

 Prattville’s high desert community of 50,000 generally supported two competing hospitals for more than 70 years. About 75 percent of one hospital’s clinical programs and services were duplicated by its cross-town rival, and local citizens traveled to out-of-area hospitals to receive roughly $40 million per year in healthcare services either not provided or poorly delivered by local hospitals. From early 2000 through mid-2001, important changes in the leadership and governance of Prattville’s rival hospitals set the stage for the important talks that soon followed. Among these leadership changes was the appointment of new hospital board chairmen, new hospital administrators/CEOs, new Blade County commissioners, and new regional and systemwide leadership at GWHC. Moreover, each hospital’s respective plans to introduce an even greater array of duplicate services or expand on existing duplicate services prompted Dallin to ask himself three important questions: Was his hospital’s mis- sion focused on what was right and best for the Prattville community or GWHC? Would a consolidation of hospital operations improve Prattville area residents’ access to services and the cost and quality of healthcare? And which organization—Kimball Hospital (GWHC) or county-owned/operated Tanner Medical Center—was best positioned to assume leader- ship, ownership, and management of the community’s hospital/healthcare system? Mindful of the sea change in local and central office leadership and increasingly troubled by an awareness that each hospital’s strategic plan called for more and more non- value-added duplication of hospital services, Dallin contacted his immediate supervisor and suggested the time might be right to revisit the idea of hospital cooperation—even consolidation. The most recent serious attempt at merger/consolidation talks failed in 1983, and authorities revisited the idea in 1990 without success. When merger/consolida- tion talks resurfaced in 2001, GWHC was ever mindful of its longstanding, publicly stated commitment to the community. Yet GWHC was cognizant of important political and marketplace realities. A profile of key ownership, market, financial, operating, and political dimensions of Prattville’s hospital/healthcare community is presented in Exhibit 1.

 

 

otHer provIder and CoMMunIty ConsIderatIons

 Since its inception in 1975, GWHC had established a system of more than 20 hospitals in three neighboring states with highly sophisticated central office support services, includ- ing health information technology, central purchasing, laboratory, laundry, marketing/ advertising, physician recruitment, quality/risk management, and more. By implementing evidence-based medicine, the system had reduced costs and improved quality and received national acclaim for its remarkable focus on this initiative. Because of its local ownership and control, employees and supporters of Tanner Medical Center touted the hospital’s ability to chart its own course and make its own decisions, independent of out-of-state officers who may or may not have shared the com- munity’s healthcare goals and views. Tanner Medical Center enjoyed a measure of “sys- tem” support through its affiliation with Voluntary Hospitals of America (VHA), the nation’s largest not-for-profit hospital association. Importantly, and for a combination of reasons, local physicians generally favored and supported Tanner over Kimball, reflected by a nearly 2:1 ratio of annual patient admissions to Tanner over Kimball. Many supposed that notwithstanding Kimball’s/GWHC’s reputation as a high-quality, lower-cost provider, area physicians resisted the corporation’s centralized, systematic approach to planning and

 

 

exHIbIt 1 Select Financial, Operating, and Other Indicators:

 Kimball Hospital and Tanner Medical Center (Fiscal Year 2000) Hospital ownership and control Ownership type Licensed beds Total patient days—trend (1998/1999/2000) Average daily census Annual gross patient services revenue Annual net patient services revenue Market share Annual marketing/ advertising budget Net operating income percentage—trend (1998/1999/2000) Total debt Financial reserves (savings) Employed physicians Percentage of local physi- cians whose first loyalty was to this hospital Services unique to hospital in local market Percentage of physicians who favored hospital consolidation Public preference for local (versus out of area) owner- ship and control Kimball Hospital GWHC 501(c)(3) corporation 110 10,150/10,925/12,775 35 $49 million $31.5 million 26% $141,000 3%/5%/3% N/A (consolidated with GWHC) $2.3 billion (GWHC) 8 35% Cardiology, acute rehabilitation Tanner Medical Center Blade County Government/county 150 24,240/25,380/23,725 68 $97 million $54.6 million 52% $310,000 2%/4%/6% $73 million $9 million 0 65%

 Pediatrics, neonatal level II, cancer 80% (based on fall 2001 survey of Kimball/Tanner medi- cal staffs) 68% (based on spring 2001 Kimball Hospital community telephone surve

 

delivering patient care. Indeed, many physicians relocated to Prattville because of the region’s laissez-faire approach to medicine, including a lack of managed care and other insurance mechanisms that limited physician reimbursement and autonomy. a tIMe For deCIsIon As CEO, Dallin was also chief market manager and promoter of his hospital/healthcare organization. Positioning his organization for immediate and long-term growth and finan- cial success was an ever-present mandate; orchestrating a well-balanced, integrated, com- munity-wide healthcare system to improve access, cost, and quality of care to the entire Prattville community was no less important. In his heart, Dallin believed the time was right to consolidate or merge the community’s two competing hospitals, and the leader- ship, financial, and other strengths of his company made Kimball Hospital/GWHC the preferred owner/operator of the new entity. Yet, Dallin knew of his community’s underly- ing preference for local ownership and control and of the physician community’s long- standing reluctance to embrace his company’s philosophy and approach to organizing and delivering care. Although Dallin’s organization and community board leaders were independent, critical thinkers, they looked to him for guidance in this matter.

 

 

Part II: Community Medical Center Presentation

Read the case study “Market Management,” pages 55–63, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are Lindsey Chadwick, director of strategic planning and marketing at Community Medical Centers (CMC), a large healthcare organization in central California. You have been tasked with updating the CMC marketing plan in response to important changes in the local and regional markets. Your assistant, Rachel, has taken the first step in performing an environmental assessment.

Based on Rachel’s environmental assessment, create a 12- to 15-slide presentation with extensive notes for CMC’s board of directors that includes the following:

1. Present an analysis of CMC’s strengths, weaknesses, opportunities, and threats (a SWOT analysis).
2. Present findings from the situational analysis that include an overview of the most critical issues facing CMC in regard to its physicians, payers, patients, and public customers.
3. Present a market strategy. Identify the target market for increasing services at CMC and how you propose to reach this market.
4. Present a detailed plan for promoting CMC’s services to existing and new patients using four different marketing techniques.

 

Market Management Case Study, (pp. 55–63)

 

Feature Case: Market ManageMent This real-life case invites students to analyze and prioritize various kinds of information common to a dynamic and competitive healthcare marketplace as part of an organization’s strategic mar- keting process. It presents the unique and important issues and challenges a regional healthcare provider (Community Medical Centers) had to face as it attempted to engage patients, physi- cians, payers, and the general public in a politically sensitive environment. This case reinforces the material introduced in Part II of this text by asking students to assume the role of assistant director of strategic planning and marketing and to analyze, synthesize, and prioritize findings from Community Medical Centers’ recent environmental assessment to position the organization and promote its services to area physicians, patients, payers, and the general public. Information included in this case was derived from the California Health Care Almanac, a publication of the California HealthCare Foundation (2009). Although the information about the Fresno, California, healthcare market is true to fact, modifications have been made to names, roles, settings, and numerical values to preserve anonymity and accentuate points of learning 

Twenty-three-year-old Rachel McKee completed her undergraduate degree in healthcare administration with an emphasis in planning and marketing. To her delight, she was offered the position of assistant director of strategic planning and marketing at Commu- nity Medical Centers (CMC), a large healthcare organization in central California. Rachel was ambitious and eager to make an early impact. She was pleased that her new boss and mentor, Lindsey Chadwick—a seasoned healthcare veteran—seemed confident in Rachel’s ability to process complex information and assume increasingly important responsibilities. Lindsey understood the intricacies of CMC and the local healthcare market. Her supervisor and members of the board had put her in charge of updating the organiza- tion’s strategic marketing plan in response to important, ongoing changes in the local and regional markets. Lindsey assigned Rachel the important task of performing an environ- mental assessment and using the results to complete a strengths, weaknesses, opportuni- ties, and threats (SWOT) analysis and draft a summary of the organization’s core strategic initiatives. From these important documents, Lindsey and Rachel would update CMC’s strategic marketing plan. From the outset, Lindsey advised Rachel to gather and assess relevant market infor- mation from various sources, including noted health industry publications; organization, statewide, and other publicly available databases; and interviews with executives, physician groups, insurance companies, regulators, and others. Like an investigative reporter, Rachel was directed to probe and dig for important and useful information that would ultimately provide a framework and justification for the organization’s marketing plan. From her coursework in college, Rachel remembered that a marketing plan must include timely and accurate information about a market’s healthcare providers—notably hospitals and local physicians. She knew that a summary of key market demographics, including patient, employer, and insurance company profiles, was essential. A broad yet detailed understand- ing of the public at large and the political dynamics among the provider community also was vital. Finally, she needed to gain an overview of key industry trends. After four months of diligent study, networking, and thoughtful analysis, Rachel presented her environmental assessment to Lindsey. Her assessment included the following highlights

 

  Fresno Market baCkground

  With a total population of 1.6 million people, the greater Fresno area had seen strong growth over the past decade—up 22 percent compared to 14 percent statewide. It was one of the poorest communities in California; the incomes of nearly half of the Fresno area population were below 200 percent of the federal poverty level. Educational attainment was also well below the state average; only 22 percent of adults held a college degree. Approxi- mately 50 percent of the market population were Latino, 37.5 percent were white (non- Latino), and 20 percent were foreign born. The health status of local/regional residents  was generally not good; approximately 20 percent self-reported fair or poor health status, and more than 27 percent were living with asthma, diabetes, or both. The unemployment rate in the area was high and continuing to rise; 15.5 percent of the population was out of work (up 5 percent over the previous year and 5 percent higher than the statewide aver- age). Although agriculture was a vital part of the local and regional economies, the largest employers in the market were public-sector organizations, including Fresno County, the City of Fresno, and the Fresno school district. Two major healthcare systems—CMC and Saint Agnes Medical Center—were among the area’s largest private employers (California HealthCare Foundation 2009).

 

HospItal/HealtH systeM provIders

 Most of the hospitals in the region were not-for-profit or government/district hospitals. The Fresno community had an acute care bed capacity of 173 per 100,000 (slightly less than the statewide average of 182) and an occupancy rate of 68 percent (greater than the statewide average of 59 percent). The major hospitals ran near capacity at certain times of the year. The major hospital systems in Fresno County were CMC (800 beds across three hospitals), Saint Agnes Medical Center (more than 400 beds), and Kaiser Permanente Fresno Medical Center (165 beds). These hospital systems represented roughly 50, 30, and 10 percent of the hospital market, respectively. CMC and Saint Agnes served a large geographic area and enjoyed a referral base from several outlying counties. Historically, the relationship between CMC and Saint Agnes had been characterized by little collaboration and intense, long-standing competition bordering on animosity. While Saint Agnes was located in the more affluent part of north Fresno and was often described as the “cash cow” of its 40-hospital parent corporation, CMC’s 500-bed flagship facility was located in the heart of Fresno and, with its nine outpatient clinics, served as Fresno County’s primary safety net provider.1 Financial losses at CMC’s flagship facility were largely offset by highly profitable operations at its two sister hospitals located in more affluent communities to the north and northeast. In recent years, CMC had reversed its negative financial performance and had become modestly profitable. Reports from the Office of Statewide Health Planning and Development indi- cated an increasingly unfavorable payer mix across all Fresno area hospitals—an indication of the community’s high levels of poverty, lack of insurance, and Medi-Cal (similar to Medicaid) coverage. The Saint Agnes payer base was approximately 25 percent Medi-Cal. CMC—with its more than 30-year contract with Fresno County to provide indigent care—reported that nearly 40 percent of its patients were covered by Medi-Cal. Major initiatives at CMC included the recent opening of 160 new beds at its flagship hospital, including 56 neonatal intensive care beds. After opening a new patient tower, Saint Agnes added 36 neurosurgery and critical care beds. In some cases, new hospital construction was a response to both capacity issues and compliance with state seismic standards. Both CMC and Saint Agnes also added new programs to stem the exodus of patients to out-of-area providers of services not previously offered within the community. Survey respondents’ characterizations of the quality of care at Fresno area hospitals ranged from poor to good. Many opted to leave the area when they got “really sick”; a study showed that patients sought nearly $500 million in medical care services outside the greater Fresno area annually for a variety of reasons, notably long wait times, physician shortages, and concerns about the quality of care provided by area hospitals. In recent years, area hospitals aligned themselves with academic teaching programs to support clini- cal/medical training programs, improve the quality of care, enhance their reputations, and recruit more physicians to the market. Notable associations included CMC’s formal affili- ation with the University of California, San Francisco, and Saint Agnes’s affiliation with Stanford University for cardiology and neurosciences. Although Saint Agnes was widely regarded as the premier hospital in the market, highly publicized recent outbreaks of methicillin-resistant staphylococcus aureus (MRSA) infections and Legionnaires’ disease had raised questions about its patient care and quality.

 

pHysICIan and allIed HealtH CoMMunIty

 The greater Fresno area suffered from a notable shortage of primary care and specialist phy- sicians, with 45 primary care physicians per 100,000 residents versus 59 statewide and 118 physicians overall per 100,000 residents versus 174 statewide. An aging physician work- force led market observers to expect shortages to worsen. Nurses and other allied health personnel were also in short supply, causing the federal government to classify most of the market as a health professional shortage area. Primary and specialty physician shortages invariably resulted in long appointment wait times—a key reason many insured patients sought medical care outside the local market. Wait times for dermatologic appointments, for example, were reportedly 9 to 12 months. Other specialists in short supply included neurosurgeons, general surgeons, cardiologists, gastroenterologists, oncologists, otolaryn- gologists, ophthalmologists, and psychiatrists. Recruiting new physicians to the Fresno area was challenging because of various factors, including poor payer mix, poor reimbursement, ongoing hospital call coverage obligations, and quality-of-life considerations. Although many physicians already estab- lished in the market were overworked, they were apprehensive about losing market share and thus had little interest in recruiting. Many respondents reported that the physician shortage would have been even more acute if it were not for the many foreign-born physi- cians practicing in the Fresno area, notably natives of India and Pakistan. Many of these physicians were attracted by the area’s sizable ethnic communities and focused their prac- tices on patients from their own ethnic background. For various reasons, Fresno had few large physician practices. Most physicians opted to practice solo or in small groups of fewer than five physicians, and single-specialty rather than multispecialty groups were the dominant practice type. Although many com- munity physicians maintained admitting and practice privileges at multiple hospitals, they generally concentrated their practice at one hospital. For years, emergency call coverage had been a source of friction between area hospitals and physicians due to the expensive stipends hospitals had to pay to get physicians to provide call coverage. Unlike in many markets in California and elsewhere, formal integration between physicians and hospitals was limited. Relationships generally were marked by strain and distrust. In recent years, CMC’s relationships with its primary physician groups had improved, whereas Saint Agnes’s hospital–physician relationships had deteriorated. Hos- pitals’ efforts to attract and align area physicians were focused on joint ventures, many of which failed. Area physicians’ lack of loyalty to area hospitals was evidenced by the extensive movement of various services—including imaging, orthopedics, plastic surgery, and endos- copy—out of hospitals and into physician offices or physician-owned facilities. Many reports suggested that physicians’ ongoing dissatisfaction with area hospitals was the basis of this activity.

 

payer/InsuranCe CoMMunIty

 In contrast to other California markets, the greater Fresno area only modestly embraced managed care. Even at their peak in the mid-1990s, health maintenance organizations (HMOs) and their variants never achieved dominance in the Fresno area, and their pres- ence shrank from roughly 30 percent in 2000 to 25 percent today. According to one report, the absence of a strong HMO/managed care presence meant that health system fea- tures common to other communities—formation of large multispecialty physician groups, close hospital–physician alignment, provider familiarity with performance measurement and reporting, and aggressive care and utilization management—were not pervasive in the Fresno market. Only 46 percent of area residents (compared to 59 percent statewide) had private medical insurance, and 16 percent were uninsured. Medi-Cal enrollment was high in the Fresno area, at approximately 30 percent. Fresno’s safety net was generally considered weak, fragmented, and inadequate for the needs of the population. Indeed, healthcare was considered a low priority for many of the area’s county governments. Blue Shield of California and Anthem Blue Cross were the leading health insurers in the greater Fresno market. As in other regional markets, these health plans were under high pressure to moderate premiums. Many believed that doing so would be extremely challenging in the face of escalating hospital costs. Because some hospitals—notably Saint Agnes and CMC’s Clovis Community Medical Center—were considered “must haves” by employer purchas- ers, these hospitals had strong negotiating leverage with area health plans

 

tHe Future oF HealtHCare:

 key Industry trends Rachel recognized that healthcare is a dynamic and ever-changing industry whose future is difficult to predict. Her assessment summarized the key trends that would likely define healthcare’s immediate future. tHe eConoMy Although the economy was slowly improving, it was expected to remain fragile due to continued high unemployment in the United States and Europe. The national economy was expected to impact both demand and supply dimensions of the healthcare industry (Valentine and Masters 2012). HealtHCare reForM Various elements of the Affordable Care Act were implemented on schedule, including ventures into bundled payment, accountable care organizations (ACOs), and value-based purchasing activities. State health insurance exchanges loomed around the corner; many were in active development. This trend—with its focus on benefits and network develop- ment—needed to be monitored (Valentine and Masters 2012).

 

HospItal–pHysICIan alIgnMent

 Physician employment was expected to remain the preferred approach to hospital– physician alignment. Some physician/medical groups would still favor independence, and most hospitals/health systems would need to balance a dual approach to meeting the needs of both independent and employed physicians. The need to clinically integrate employed and independent physicians would remain critical if hospitals/health systems expected to respond effectively to healthcare reform (Valentine and Masters 2012). revenues and expenses Per unit revenues (e.g., average net revenue per procedure or per patient day) were expected to increase at a rate slower than cost trends over the next 12 to 24 months. Medicare pay- ments would increase by less than 2 percent, and most states were expected to hold the line on Medicaid payments (or even reduce reimbursement rates). Commercial payers would likely limit rate increases to 4 to 6 percent. Some payers, including Medicare, were expected to tie certain rate increases to documented quality improvements. Value-based purchasing, bundled payments, readmission rate reductions, ACOs, and other risk-based arrangements would present opportunities for greater financial reward for low-cost, high-quality providers. Reducing costs would remain a top priority in the coming fiscal years. Simultaneously, it was expected that patient throughput and occupancy levels would need to increase in both acute care/hospital-based and outpatient settings to maximize economies of scale (i.e., reduction of per unit cost resulting from high volume) and use of resources (Valentine and Masters 2012). aCCess to CapItal Access to capital (funds) would continue to be a key catalyst for mergers, sales, affiliations, and other alliances among hospitals. Capital was expected to be more difficult to obtain in the immediate future due to the weak economy, lower patient volumes, and deteriorating payer mix. Most independent hospital boards would continue to ask whether they could remain independent and, if so, whether they should (Valentine and Masters 2012). InForMatIon teCHnology Useful data that could inform clinical and financial decisions in real time would become key to increasing revenues and managing expenses more effectively. Information technol- ogy systems and strategies would need to be sufficiently robust to capture large volumes of data that could be readily integrated into decision making (clinical and financial) and marketing efforts (Valentine and Masters 2012). ConsolIdatIons, Closures, allIanCes, and Mergers The healthcare reform agenda was expected to continue, with 5 percent of acute care hospi- tals closing by 2020. Further consolidation and alignment of hospitals and medical groups was expected as these entities joined together to improve access to capital, form ACOs, and achieve cost reductions through economies of scale (Valentine and Masters 2012).

 

ClInICal IntegratIon and Care delIvery redesIgn

 Processes associated with clinical integration and care delivery redesign were within the “golden triangle” of cost containment, quality improvement, and financial performance. Future success factors for clinical integration and care delivery redesign included attention to all points of the care continuum: coordination of primary care, acute care, and post– acute care (Valentine and Masters 2012).

 

 WorkForCe

 Issues Pressure to reduce operating costs from 10 to 20 percent over the next three to five years was expected to continue. The enormity of this reduction would mandate further reducing nonclinical staffing, outsourcing functions to less costly vendors, and reducing wages or holding wages flat and adjusting benefit plans. Backlash from organized labor (i.e., unions) was expected (Valentine and Masters 2012). sMart groWtH Inpatient and selective outpatient use rates were expected to decline in the immediate/ intermediate future because of continued high unemployment, shifting the costs of health- related benefits from employers to employees, increased price shopping among patients seeking to obtain health services at the lowest cost, and postponing nonessential medical care. Accordingly, healthcare leadership teams would need to identify ways to selectively grow their organizations’ market share in areas that would improve their profitability (Val- entine and Masters 2012). next steps Lindsey was pleased with the substance and quality of Rachel’s environmental assessment. The task of analyzing, synthesizing, and prioritizing these findings—including developing a summary of strategic issues and marketing plans—lay ahead.

 

 

Part III: Palomar Heart Hospital Report

Read the case study “Palomar Heart Hospital,” pages 123–127, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are the director of marketing at Palomar Heart Hospital (PHH). Russell Taylor, Lincoln Healthcare System’s new executive vice president and chief operating officer, has called you in for a meeting as he begins the strategic planning process to turn PHH’s dismal financial performance around. Russell has tasked you with updating some aspects of PHH’s marketing plan.

Create a 5- to 7-page report that addresses the following requests from Russell:

1. Describe the marketing techniques you would employ to raise the profile of PHH in the community and increase patient volume. Name two mass-marketing techniques and two target-marketing techniques you would use in this scenario.
2. Recommend at least two marketing techniques you would use to market PHH to payers to increase the proportion of the population able to access PHH’s services.
3. Recommend at least two ways you would utilize social media to drive new business at PHH.
4. Explain whether PHH should amend its mission, vision, and/or scope of services offered. Explain the organizational and marketplace realities that justify your decision.

 

Palomar Heart Hospital Case Study, (pp. 123–127)

 

Feature Case: paloMar Heart HospItal This real-life case introduces students to common healthcare marketplace issues and contro- versies related to specialty hospitals and hospital–physician joint ventures. It also exposes stu- dents to examples of interpersonal and interprofessional conflict, inadequate and poorly aligned organizational communication strategies, and inept leadership and teamwork that often lead— as in this case—to poor organizational performance. Participant and facility names and various numerical values have been modified to preserve anonymity and accentuate points of learning. This case challenges students to consider organizational and marketplace realities when pursuing strategic initiatives, including the need for proactive insurance/managed care contract- ing, sound financial and business modeling, and credible marketing strategies and plans. The material presented in Part III of this text focuses on helping students effectively manage conflict, improve their leadership skills and teamwork, communicate the right messages to the commu- nity, and address other important strategic marketing question

 

speCIalty HospItal pros and Cons

 Advocates argue that specialty hospitals provide higher-quality care at lower per unit costs by concentrating physician skills and other hospital/medical resources on managing com- plex diseases (Nallamothu et al. 2007). Critics contend that specialty hospitals focus largely on low-risk patients and shift the financial burden of uncompensated care to competing general hospitals. Opponents further argue that physician ownership of specialty hospitals incentivizes physicians to refer patients to their own facilities, cherry-pick low-risk and well-insured patients, and induce demand for certain services (Al-Amin et al. 2010). ratIonale For HospItal–pHysICIan JoInt ventures The overarching goal of a hospital–physician joint venture is to create a clinical and eco- nomic entity that benefits patients and the physicians and hospital(s) participating in it. Patient/community benefits include improved processes of care, services, and outcomes. Potential benefits for participating physicians include opportunities for increased revenues, more efficient use of time, and greater control over operational matters affecting patient care and physician convenience. Benefits for the participating hospital include the main- tenance of profitable revenue streams if physician investors sign covenants not to invest in competing facilities (Cohn et al. 2005).

 

paloMar Heart HospItal Palomar Heart Hospital (PHH

), a provider of cardiology-related services to patients living in and around the Central Valley of California, opened its doors in 2003. The opening of this $50 million state-of-the-art facility was consistent with the nationwide proliferation of physician-owned and hospital–physician joint-ventured specialty hospitals in the early 2000s (Barro, Huckman, and Kessler 2006). PHH was a 51/49 joint venture between Lincoln Healthcare System (LHS) and Central Valley area cardiologists and cardiothoracic surgeons, respectively. Russell Taylor joined LHS as executive vice president/chief operating officer (EVP/ COO) the same month PHH opened its doors. Russell was the third EVP/COO hired in the past 24 months to lead a systemwide financial turnaround of the ailing vertically and horizontally integrated four-hospital healthcare system. Notwithstanding the PHH facility’s physical attractiveness and first-rate technol- ogy, PHH lost between $700,000 and $1.1 million per month during its first six months of operation. Expected monthly losses/gains during this period ranged from −$150,000 to $250,000. Losses at PHH not only far exceeded LHS’s worst expectations but also contributed significantly to the continued overall underperformance of LHS. After corpo- rate management’s repeated but unsuccessful attempts to persuade Phil Surrowitz, PHH’s founding CEO, to adjust and improve PHH’s marketing and staffing plans and better manage overall expenses, the decision was made to replace him. Although Russell’s span of control stretched across LHS, he knew that stopping the financial hemorrhage at PHH was his first and highest priority. In consultation with other LHS executives, physicians, and trusted staff, Russell identified the central issues leading to PHH’s woeful financial and operating performance: ◆ PHH’s leaders were ineffective and neither willing nor able to make the difficult decisions needed to improve the hospital’s marketing and operations. ◆ Conflict existed among area cardiologists and cardiothoracic surgeons. From the outset, jealousies and hard feelings among several of the seven founding physicians/surgeons (each of whom had a substantive ownership interest in PHH) led certain cardiologists to refuse to refer patients to their fellow PHH heart surgeons and vice versa. ◆ Teamwork among key PHH and LHS personnel was poor. Notwithstanding its 49 percent physician ownership, PHH was an important member of the LHS family of hospitals and related healthcare facilities. Yet PHH’s managers resisted assistance and oversight from LHS’s corporate personnel, including finance/accounting, marketing/planning, and insurance contracting specialists who were able and willing to assist.

◆ PHH had insufficient and inappropriate contracts with health insurance plans. Although PHH’s managers had been given more than two years’ advance notice to negotiate managed care/insurance contracts to ensure adequate patient volumes, roughly 40 percent of the area population was unable to use PHH’s services because their HMO or commercial insurance plan had not yet negotiated terms with PHH. ◆ PHH’s cost structure was suffocating. Because of its first-rate construction, technology, costly furnishings, rich staffing mix, and highly paid staff, the hospital needed to perform 45 invasive surgeries/procedures and 280 outpatient procedures per month and maintain an average daily census of 30 patients just to break even financially. In light of competing hospital- based cardiology programs and long-standing strained relations among PHH physicians and surgeons, Russell wondered if other services, including general, bariatric, and colorectal surgery; endoscopy; and other medical/surgical services should be added to PHH’s repertoire to increase patient volume and revenues and offset overhead expenses. The idea of adding non-cardiology services to this premier regional heart hospital was not well received by the cardiologist and cardiac surgeon owners. Board members, employees, and other LHS managers questioned the wisdom of adjusting the facility’s mission and core scope of services so soon after opening, while a growing chorus of dissenters argued otherwise. ◆ PHH had ineffective marketing plans. Phil Surrowitz enjoyed “good old boy” standing among many of the area’s cardiologists, so he did not consider using traditional marketing methods to attract the attention and ultimate business of insurers, primary care physicians, and patients. ◆ PHH’s key managers, physicians, and surgeons had poor financial literacy. Although the CEO and senior financial officer understood the hospital’s financial picture, few other managers and employees—including the physician owners—fully appreciated the financial dynamics and nuances. A summary of select projected and actual financial and operating indicators from PHH’s first six months of operation is provided in Exhibit 1. next steps Russell knew he needed to provide an overview of PHH’s performance to date and a compelling plan for improvement at the upcoming meeting of the LHS board. Because various board members still questioned LHS’s specialty hospital strategy and the purpose of the PHH joint venture, an overview of the pros and cons of specialty hospitals and hospital–physician joint ventures in general was also in order

com exHIbIt 1 Palomar Heart Hospital: Select Operating and Financial* Data Average daily census1 Invasive surgeries/ procedures2 Jan Feb Mar Apr May Jun YTD Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected 12 24 14 28 15 28 16 30 17 30 17 32 15.2 28.6 18 30 19 35 19 40 22 45 32 50 31 55 141 255 Outpatient 130 225 139 240 119 265 137 280 167 305 169 330 861 1,645 procedures3 Medicare 66 65 67 65 63 65 65 65 69 65 67 65 66 65 percentage (discharges) Net revenues4 Total expenses5 Net operating income6 $750 $1,810 $960 $1,991 $1,066 $2,091 $1,242 $2,195 $1,592 $2,327 $1,798 $2,475 $7,408 $12,889 $1,850 $1,960 $2,010 $2,091 $2,016 $2,141 $2,117 $2,195 $2,442 $2,202 $2,523 $2,225 $12,958 $12,814 ($1,100) ($150) ($1,050) ($100) ($950) ($50) ($875) $0 ($850) $125 ($725) $250 ($5,550) $75 Days cash on 93 95 90 96 86 97 82 98 78 99 75 100 75 100 hand (LHS)7 *In thousands of dollars. 1. Average daily census (ADC) is a measure of inpatient volume. It is a function of both discharges and length of stay. In today’s fixed payment systems, increases in ADC ideally should come from increases in discharges rather than from increases in length of stay. 2. Invasive surgeries/procedures include coronary artery bypass surgery, angioplasty, atherectomy, cardiomyoplasty, radiofrequency oblation, stent procedures, and more. 3. Outpatient procedures include treadmill testing, electrocardiography, 24-hour holter monitoring, nuclear cardiology, pacemaker and defibrillator checkups, and more. 4. Net revenues are approximately 37 percent of gross revenues. 5. Total expenses are the sum of all labor and nonlabor expenses, including corporate overhead. 6. Net operating income includes total net revenues less total expenses. 7. Days cash on hand (LHS) measures the number of days LHS could pay for its average daily expenses with the cash and marketable securities it has. It is an important measure of total liquidity.

 

Park IV: Intermountain Healthcare Presentation

Read the case study “Intermountain Healthcare,” pages 161–173, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are the new director of marketing for Intermountain Healthcare and are working with the entire marketing department to update the organization’s marketing plan. To kick off the project, you have been tasked with presenting an overview and analysis of Intermountain’s current marketing operations and opportunities.

Create a 10- to 12-slide presentation with extensive notes for an internal retreat with the Intermountain marketing department.

1. Illustrate Intermountain’s engagement with each of its customers (patients, the public, physicians, and payers) in pursuit of its organizational mission and vision.
2. Illustrate Intermountain’s three most significant strategic advantages. Explain how they could be utilized in the new marketing plan to advance the organization’s mission.

 

Intermountain Healthcare Case Study, (pp. 161–173)

Feature Case: InterMountaIn HealtHCare This case is descriptive rather than decision oriented and requires analysis to understand the dynamics of the situation but does not require any recommendations for action to be made. It profiles various elements of a model healthcare organization and invites students to consider a number of questions and topics addressed in the text and brought to light in the story of Inter- mountain Healthcare. Information for this case was derived from Intermountain’s website at www.intermount ainhealthcare.org. IntroduCtIon After its founding in 1975, Salt Lake City, Utah–based Intermountain Healthcare evolved from 15 loosely affiliated not-for-profit hospitals in Utah, Idaho, and Wyoming to a fully integrated healthcare delivery system widely recognized as one of the finest healthcare organizations in the world.

CoMpany overvIeW Through the years, Intermountain came to own and operate 22 hospitals, 185 clinics, and various health insurance plans from SelectHealth and brought together more than 1,000 physicians and clinicians in the Intermountain Medical Group. Intermountain Healthcare was the largest healthcare provider in the Intermountain West, with more than 33,000 employees serving the healthcare needs of Utah and southeastern Idaho residents. (A numerical overview of Intermountain Healthcare is provided in Exhibit 1.) Excellent clinical care was the basis of Intermountain’s mission and the organization’s greatest con- cern. Whether through its high-tech/high-touch clinical programs or by improving the treatment of certain chronic diseases, all three parts of Intermountain Healthcare (i.e., hospitals, medical group, and insurance plans) contributed in essential ways to the sharing of best medical practices—and raising the standards of clinical excellence.

 

IbIt 1 Intermountain Charity cases/care 239,195/$252 million 22 Healthcare by the Numbers (2012) Hospitals Clinics Clinics owned/supported for uninsured/low-income patients Acute hospital admissions Acute patient days Emergency room visits Inpatient surgeries Ambulatory surgeries Births Patient visits to low-income clinics (owned or supported) Employees Affiliated physicians Employed physicians SelectHealth members Source: Intermountain Healthcare (2013a). Copying and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com 185 18 140,141 519,407 482,013 41,002 107,587 30,873 260,817 33,000 2,500 1,000 600,000

 

MIssIon and purpose From its earliest years, the mission of Intermountain Healthcare was “excellence in the pro- vision of healthcare services to communities in the Intermountain region.” Excellent service to patients, customers, and physicians was the company’s most important consideration. vIsIon stateMent Intermountain’s formal vision statement emphasized its intent to be a model healthcare system by continually learning and providing extraordinary care in all its dimensions (Intermountain Healthcare 2013b): • Clinical Excellence: We will deliver the best clinical care in a consistent, integrated way. • Patient Engagement: We will provide a compassionate healing experience, and we will engage patients in decisions about their health and care. • Operational Effectiveness: We will be wise and careful stewards of our resources to enable Extraordinary Care. • Physician Engagement: We will create systems and processes that help our physi- cians best serve their patients. • Community Stewardship: We are committed to serving the diverse needs of the Intermountain region and to providing generally available medical services to all residents, regardless of ability to pay. • Employee Engagement: We value our employees as our most important resource

Core values The company’s values, publicly posted and widely embraced, were as follows (Intermoun- tain Healthcare 2013b): • Mutual respect: We treat others the way we want to be treated. • Accountability: We accept responsibility for our actions, attitudes, and mistakes. • Trust: We act with integrity and can count on each other. • Excellence: We do our best at all times and look for ways to improve

 

CoMpany etHICs

 Every day, patients, health plan members, and their families came to Intermountain in need, trusting the system’s providers to deliver the very best medical care and service. Intermountain’s employees were committed to honoring their trust by providing excellent clinical care and superior service with the highest standards of integrity. This commitment applied to every aspect of the company’s work—and was fundamental to its mission, vision, and values. Intermountain expected every one of its employees, clinicians, trustees, vendors, contractors, and volunteers to understand and follow the rules and requirements that applied to their work. General Ethics Standards 1. WearecommittedtoIntermountain’svaluesofTrust,Excellence,Accountability, and Mutual Respect. 2. Weperformourjobsandassignmentswiththehigheststandardsofhonestyand integrity. We treat each other, our patients and members, business partners, ven- dors and competitors fairly. 3. Weknow,abidebyandunderstandthespecificlaws,policiesandproceduresthat apply to our jobs and assignments, and to us as individuals. 4. Wespeakupwithconcernsaboutcomplianceandethicsissues.Specifically,we report observed and suspected violations of laws or policies, and we agree to report any requests to do things we believe may be violations. Furthermore, we cooperate with any investigation of potential violations. 5. Werecognizethatourdailyworkgivesuseachtheopportunitytoseeproblems in our local areas before they become apparent to others or to management. We are empowered and responsible to raise questions about potentially noncompli- ant or unethical practice

  6. Ifwehavequestionsaboutasituation,weaskforhelp.Wemaytalktooursuper- visor or director, the facility/entity compliance coordinator, a company attorney, the Corporate Compliance Officer, or call the 24-hour Compliance Hotline at (800) 442–4845.  Source: Intermountain Healthcare (2011).  InterMountaIn’s Integrated approaCH  Intermountain’s evolution into an integrated system was completed in phases. When the organization was founded in 1975, it comprised 15 hospitals. By 1985, it was a multi- hospital system that granted its facilities such a degree of autonomy that they actually competed with each other. SelectHealth (then called IHC Health Plans) had recently been created, but it existed as a satellite business and interacted little with other parts of Inter- mountain. Nearly all the physicians who practiced at Intermountain were independent. â—† The first phase of integration (1985–1992) was the integration of Intermountain hospitals. The hospitals were reorganized into regions, and their governing boards followed suit. Management was consolidated and took on regional responsibilities. Intermountain hospitals began to cooperate instead of compete with each other. â—† The second phase of integration (1992–present) was system integration. By the mid-1990s, Intermountain had all the pieces in place to make vertical integration work: hospitals, the Intermountain Medical Group of employed physicians, and SelectHealth.

 

beneFIts oF HealtH systeM IntegratIon In the mid-1980s and early 1990s, much had been written about the need for and benefits of integrating the sometimes disparate components of hospitals and healthcare systems. From Intermountain’s perspective, the internal and marketplace benefits of integration included the following: ◆ Clinical quality. As stated at the beginning of this case, whether through its clinical programs or by improving the treatment of certain chronic diseases, all three Intermountain divisions—Hospitals/Health Services, SelectHealth, and the Intermountain Medical Group—contributed in essential ways to the sharing of best medical practices and raising the standards of clinical excellence. For example, in treating diabetes, SelectHealth helped educate all its enrollees about the causes, dangers, and warning signs of diabetes. Members diagnosed with diabetes were contacted regularly by SelectHealth through educational materials and reminders about tests they needed to help manage their disease. At the primary care level, through the Intermountain Medical Group, Intermountain offered its Diabetes Care Management program, in which care managers worked directly with patients with diabetes to help them adhere to their care plans and access the many resources available through Intermountain. For patients with diabetes who required hospitalization, the handoff between the primary care physician and the secondary care physician and hospital team was seamless. The entire Intermountain team, from health plan to hospital, communicated and worked together to ensure the patient received the best possible care.

 

◆ Service quality. One example of the way integration helped improve service quality was via SelectHealth’s Member Advocates service, which health plan members called if they needed help accessing various Intermountain services. In addition, patient billing was simplified, and programs (such as My Health) enabled patients to access both their SelectHealth information and their medical records online. ◆ Lower costs. In the vertically integrated Intermountain organization, costs were not reduced just through economies of scale and efficient management. The really significant cost reductions were achieved by improving the total process of medical care. By identifying and implementing best medical practices, Intermountain not only provided quality healthcare; it also achieved lasting improvements in cost structures. Moreover, those savings helped Intermountain maintain the financial strength required to provide free care to those unable to pay. ◆ Prevention. The incentives and resources of Intermountain’s doctors, hospitals, and health plans were aligned to help people stay well. ◆ Scope of service. With hospitals, physician clinics, health plans, home health agencies, occupational medicine clinics, and other services, Intermountain provided a seamless continuum of care. Over the years, healthcare leaders throughout the world called on Intermountain for technical support and education on clinical research and process management

patIent FoCus Intermountain Healthcare declared that every person who came to Intermountain for care was unique. Its patients were individuals in the physical sense, of course, but also in terms of life stories, outlooks, and personalities. Intermountain employees recognized that the healthcare they provided needed to be carefully designed with each patient’s special needs in mind. Over time, Intermountain created a culture of healing connections and developed many systems to help physicians, nurses, and other caregivers provide the most effective treatments for each patient: ◆ Research. Through its clinical programs and services, Intermountain made the benefits of the latest research available to clinicians. The company’s board of trustees established annual goals that targeted continual improvements in healthcare quality.

 

◆ Information systems. Intermountain developed advanced clinical information systems that equipped caregivers with sophisticated decision-support and communication tools. ◆ Support for patient health. Intermountain established prevention, wellness, and care management programs to help patients live more satisfying lives and supported them as they followed the treatment programs prescribed by their doctors. relatIng to tHe pHysICIan CoMMunIty From the beginning, Intermountain recognized that it needed to build strong relationships with physicians. In the 1980s, Intermountain began to engage physicians more meaning- fully in the organization’s operations and governance. On the basis of a recommenda- tion by a joint Intermountain–physician task force, the Intermountain Medical Group (originally called the IHC Physician Division) was established in 1994. The task force highlighted a number of important tenets: ◆ Quality improvement and utilization management. Physicians direct patient care in hospitals and are critical to their efforts to improve care processes, manage utilization, and develop clinical programs. ◆ Prevention. Physicians can do more than treat and manage disease. They can also help their patients prevent illness and help reduce or even prevent hospitalizations. ◆ Security. Managed care plans are able to direct their members to certain

◆ Practice management. Intermountain brings financial and administrative resources to Medical Group physicians, who are then free to focus on patient care. They also are freed of most of the administrative work associated with a solo or group practice. Furthermore, they benefit from Intermountain’s investment in new, computer-based clinical information systems that help take patient care to higher levels. ◆ Physician recruitment. The Intermountain area community benefits when the Medical Group creates new physician clinics located close to the patients they serve

 

relatIng to tHe payer CoMMunIty: InterMountaIn’s Foray Into HealtH InsuranCe Until 2006, SelectHealth was known as IHC Health Plans and was presented to the public as an aspect of the Intermountain Healthcare brand. However, research showed public confusion and misperceptions about Intermountain, so as part of Intermountain’s larger rebranding, IHC Health Plans was relaunched as SelectHealth. Like its parent company, SelectHealth was organized as a nonprofit, which made it accountable to the community rather than to shareholders. Intermountain launched its first health plan in 1984. Named Health Choice, the plan was a PPO, and the first enrollees were Intermountain’s own employees. By the end of 1985, 93 companies were offering Health Choice to their employees and more than 38,000 people were covered by the plan. A second product, an HMO called IHC Care, was introduced in July 1985 and had 11,000 members by year-end. In recent years, SelectHealth offered a broad range of plans to more than 500,000 members. In summary, SelectHealth advanced Intermountain’s mission in several ways: ◆ Through SelectHealth, the entire Intermountain organization remained sensitive to the financial pressures faced by those who paid healthcare bills: employers, plan members and patients, and government. Through quality improvement and prevention, Intermountain focused on ways to keep those costs as low as possible

  â—† SelectHealth supported disease management programs that promoted health. For example, as part of Intermountain’s Diabetes Care Management program, members of SelectHealth who had diabetes received reminders to take advantage of special benefits, such as diabetes counseling, free glucometers, and free clinics. SelectHealth wanted to keep its members healthy for the long term because doing so increased members’ quality of life and reduced cost.  â—† SelectHealth directed a predictable flow of patients to Intermountain physicians and hospitals, which helped keep the organization and its stakeholders financially secure and able to emphasize quality improvement and prevention. Through SelectHealth, Intermountain was able to work directly with many patients and customers rather than exclusively through the mediation of third-party insurance companies.  relatIng to tHe publIC at large  Since its founding, Intermountain actively engaged the community, and its family-ori- ented image and sponsorship were present at many and varied events, including the 2002 Olympic Games, for which the company served as official medical provider. Through the years, conventional media campaigns including print advertisements, television, radio, and  billboards were widely used. In light of market research in the mid-2000s that suggested Intermountain’s image as a large healthcare corporation seemingly undermined its focus on high quality and cost-effective care, the company changed its longtime name from Intermountain Health Care—widely referred to as IHC—to Intermountain Healthcare. The company’s logo was also changed to reaffirm Intermountain Healthcare’s mission to provide excellent care. In recent years, Intermountain began implementing social media and developed a robust presence on Facebook, Twitter, YouTube, and Foursquare. Intermountain’s most difficult and prolonged legal and public relations challenge arose in the 1990s, when some county governments determined that Intermountain hospi- tals should pay property tax because of the increasing business orientation of the healthcare industry in general. Intermountain ultimately survived this challenge and continued as a 501(c)(3) charitable organization on the basis of its numerous gifts to the community. Foremost among these gifts was nearly $300 million annually in charitable care to patients unable to pay.

Community Benefit Department The vision of Intermountain’s Community Benefit Department was to improve health- care for low-income families and individuals in the community. Staff members worked with community nonprofit agencies, government entities, and healthcare providers to find ways to improve the delivery of healthcare received by uninsured, low-income patients. Partnerships, school and community clinics, collaborations, donations, and other gifts to the community made up the Community Benefit Department’s wide array of projects and initiatives. As a not-for-profit healthcare system, Intermountain annually reported its com- munity benefits to the counties in which Intermountain facilities were located. Inter- mountain’s Community Benefit Department helped with this reporting and also worked to improve healthcare for low-income families and individuals. Over time, improvements were made in such areas as access, delivery, funding, and the establishment of clinics. strategIC partnersHIps tHat Made a dIFFerenCe Over the years, Intermountain Healthcare collaborated with key organizations to bring the best of their worlds together for the benefit of the patients it served

 

Huntsman–Intermountain Intermountain Healthcare and Huntsman Cancer Institute at the University of Utah joined forces to give patients the best chance of winning the fight against cancer. Conse- quently, at most Intermountain hospitals, patients had access to Huntsman’s outstanding research and Intermountain’s renowned best-practice methods and patient care.

 

GE Healthcare Intermountain partnered with GE Healthcare to create a new clinical information system based on the latest research about medical best practices. The Enterprise Clinical Informa- tion System was designed to transform the world of healthcare delivery. FInanCIng extraordInary Care Caring about people required Intermountain to be careful about money. Intermountain Healthcare’s mission of providing high-quality care at an affordable cost guided company leaders in making important financial decisions. Intermountain provided charity care and other community benefits because it was financially strong and prudently managed. At the same time, the company strived to keep its charges affordable.

 

bIllIng and ColleCtIons Issues Intermountain believed that no one should go without needed care because he/she feared the cost. In addition to providing high-quality care at affordable rates, Intermountain offered charitable assistance programs and billing policies that helped patients focus on getting well rather than worrying about how they would pay for care. ◆ Charity care policy. Through the years, Intermountain offered financial assistance on a sliding scale to families and individuals with incomes up to 500 percent of the federal poverty level. ◆ Low interest rate. For patients who needed to make payments on their bill, Intermountain’s interest rate was significantly lower than typical rates for unsecured loans. Patients with a demonstrated financial need could set up a zero-interest payment plan. Patients willing and able to have their monthly payments automatically debited from their accounts qualified for a reduced interest rate. ◆ Uninsured discounts. Uninsured hospital patients who did not qualify for other assistance programs (e.g., Medicaid, CHIP) received an automatic 25 percent discount on their bills. These patients also received an additional 15 percent off their bills if full payment was made before service was provided (for a total discount of 40 percent) or an additional 5 percent off their bills if full payment was made within 30 days after service was provided (for a total discount of 30 percent).

Widely publicized assistance policy. Over the years, Intermountain informed patients and the community through a variety of means that charitable financial assistance was available, including signs, brochures, and counselors in facilities; information about charity care on billing statements; information about charitable assistance on the outside of billing envelopes; the Intermountain website; and information in Intermountain publications. buIldIng neW FaCIlItIes As a not-for-profit healthcare system, Intermountain returned all money it earned to the community in the form of improved facilities, improved services, and lower charges. In Intermountain’s first 20 years, it invested more than $1 billion in replacing and upgrading its facilities. It was anticipated that Intermountain would spend approximately $2.3 bil- lion on capital improvements to this ambitious construction program between 2011 and 2016, all while keeping charges low. Intermountain Healthcare did not build new facilities to expand its presence. New facilities were intended to help the organization keep pace with the growing population and changing community needs and to serve underserved populations

 

aWards and reCognItIons Over much of the past decade, Intermountain was rated by IMS Health (a company that provided technology-based analytics and services for the global health community) as the number one integrated healthcare delivery system in the United States (or among the top four). US health policy experts and political leaders from across the political spectrum, including President Barack Obama and former Speaker of the House Newt Gingrich, singled out Intermountain as a model healthcare organization. Other notable recognitions were made by the following organizations: ◆ The College of Healthcare Information Management Executives and the American Hospital Association recognized Intermountain Healthcare for its leadership in information technology. The award also recognized Intermountain’s extensive use of data mining—integrated with decision support in clinical information systems—to directly improve patient outcomes. ◆ The Gallup Organization chose Intermountain Healthcare as one of 27 companies worldwide to earn the Gallup Great Workplace Award for 2012. The award recognized these excellent companies for their extraordinary ability to create an engaging workplace culture

 

◆ The annual Most Wired survey sponsored by Hospitals & Health Networks, the journal of the American Hospital Association, named Intermountain one of the nation’s most technologically savvy hospital systems in 12 of the 13 years the survey was conducted. ◆ Gartner, Inc., a Connecticut-based information technology research and consulting group, ranked Intermountain’s Supply Chain Organization among the best in the nation. regIonal perForManCe As one of the leading healthcare providers in the Intermountain region, Intermountain Healthcare contributed to the region’s performance by providing high-quality, affordable healthcare (Intermountain Healthcare 2012): ◆ Utah was lowest in the nation in terms of healthcare costs (Centers for Medicare & Medicaid Services, 1991–2009 data). ◆ Utah was best in the nation in terms of “avoidable hospital use and costs” (Commonwealth Fund, 2009 scorecard). ◆ Utah was lowest in the nation in terms of infant mortality (Commonwealth Fund, 2009 scorecard). ◆ Utah was second lowest in the nation in terms of “mortality amenable to healthcare” (Commonwealth Fund, 2009 scorecard)

 

◆ Three metropolitan areas in Utah—Ogden, Salt Lake, and Provo—were in the lowest fourth percentile in the United States in terms of healthcare costs (Thomson Reuters, 2009 data). suMMary Important lessons addressing key dimensions of strategic healthcare marketing are brought to light by understanding and reflecting on the story of Intermountain Healthcare. Among these lessons are the importance of mission, vision, and values in setting strategic direction and establishing organizational culture; effectively communicating an organization’s devel- opment and improvement initiatives; identifying and relating to patient, physician, payer, and community stakeholders; developing strategic partnerships; and linking financial goals and plans to an organization’s mission, vision, and values.

 

 

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