CRM grows up: CRM can transform the role and financial impact of healthcare organizations' marketing initiatives

Health Management Technology, Dec, 2004 by Nancy V. Padisson

When customer relationship management CRM) came on the health scene approximately six years ago, some viewed it with skepticism and primarily saw it as a way to refine rather than reinvent marketing. More progressive marketers adopted the CRM techniques of compiling all patient/consumer and market data into a centralized database and used data mining to more narrowly define target audiences based on health characteristics rather than general demographics.

The goal was more market share, and CRM, unlike advertising or other mass marketing techniques, allowed marketers to personalize direct mail and to track campaign results. However, almost no one was using CRM close to capacity, as a resource that could fundamentally change marketing and its status.

Fast forward to 2005, and CRM is no longer a way to re fine healthcare marketing, but rather to reinvent it. The emergence of new healthcare trends and technology has irrevocably changed the way organizations recruit and retain patients, with CRM as one of the new core competencies.

"CRM has allowed us to think differently about how we can approach one customer at a time," says Lori Mouton, director of marketing and public relations at Port Huron Hospital in Port Huron, Mich. Concentrating on one customer at a time is a hallmark of CRM that has transformed the role and impact marketers can have in their organizations as they relate to the following healthcare trends.

Trend #1: Serious Financial Shortfalls

It has been more than a decade since Hillary Clinton's plan for national insurance was debated and debunked, yet the number of uninsured individuals continues to grow. The most recent Census Bureau report indicates the number of Americans without health insurance increased by 1.4 million between 2002 and 2003, representing 15.6 percent of the population or 45 million people, including 8 million children.

This situation may put healthcare marketers in an interesting and complex position. Many healthcare organizations have a mission to serve any person requiring care or have to provide a certain amount of indigent services each year but don't necessarily promote it. However, because traditional marketing and advertising reach a broad audience, they may bring in more uninsured than insured individuals.

Mouton believes CRM data gives both marketing and planning operations the information necessary to fulfill the organization's mission and business objectives. "As a nonprofit, it is our responsibility to care for all patients regardless of their ability to pay, and our mass marketing and communications efforts help reach everyone in our community. While we primarily use our CRM database to target patients with a higher likelihood of having insurance, we're also considering ways to use the data to help uninsured and underinsured individuals better access our healthcare system."

On the West Coast at Sharp HealthCare, Jared Solomon, advertising and CRM manager explains, "The reality is that to provide community service to the uninsured, healthcare organizations need to attract as many insured patients as possible. CRM allows organizations to target individuals who are insured as well as build loyalty among repeat insured patients, which leads to improved financial performance."

Solomon agrees marketers can use CRM to help educate consumers about treatment options, affordable coverage and state programs for the uninsured. "This proactive approach reduces the demand for expensive reactive care, which is often absorbed by the health system and, ultimately, taxpayers."

Trend #2: Fewer Marketing Dollars, Increased Pressure for ROI

Marketers in almost every industry have been asked to achieve more with less as CEOs and CFOs scrutinize every expense. Some have found that embracing CRM technology can increase marketing efficiency and prove results.

According to Bill Oakes, director of business development at Johnson Memorial Hospital in Franklin, Ind., "Several studies have concluded that traditional retail/ service marketing does not impact healthcare volumes within a specific market or measurably change market share." He also says there is no way to effectively track a return on investment (ROI) to traditional marketing. "In an era of diminishing marketing resources, it is irresponsible for marketing officers to squander hospital resources or allocate resources to marketing actions that cannot be measured for their effectiveness in their impact on hospital volume and revenue." Without bottom line results, marketing becomes a dispensable commodity

Sharp HealthCare's Solomon agrees. "One of the main strengths of instituting a CRM system is providing a causal relationship between marketing campaigns and downstream revenue. By loading mail lists, call center and Web center data, managed care enrollee lists and medical office and hospital encounter information into the CRM system, users can query the database for reports that demonstrate the impact of a particular marketing campaign."

However, he cautions that because organizations vary in structure, some may not perceive the need to measure return on investment in this manner, nor have the resources to invest in a CRM system. Still, Solomon does believe a CRM system makes sense "for most medium- to large-sized healthcare providers, particularly those in highly competitive environments that operate on thin margins."