Internet marketing: software for the hard sell - Includes related article on Mapping the market: managed care and geographic systems - Industry Trend or Event

Health Management Technology, Oct, 1998 by Karen Sandrick

Once considered unprofessional in the hallowed halls of hospitals, health care marketing has new life. Tools like the Internet and geographic systems help produce valued-added services and develop customer loyalty.

While the health care industry has been highly competitive for the last ten years, competitive forces are intensifying.

So health care providers and managed care organizations must market actively today to offset collapsing markets and tight money.

The goal: find, please, and retain customers.

In many cases, they are turning to the Internet to make quick and inexpensive personalized connections with current customers and prospects.

Ernst & Young principal and former health care CIO Steven Ummel explains, "Customers can become partners with health care providers in maintaining their good health or in trying to reach a higher level of health status. Technology can take them there and keep them there," he says.

While some may disagree, Ummel believes that Internet marketing can lead to customer loyalty.

"Look how Americans buy other products and services," he says. "Image is everything, convenience is everything. We like repetitiveness, predictability, affordability, and we like brands.

"So if the Internet provides a repetitive corporate identity and easy access, then yes, I think customers might form a quick bias to choose that health care provider," he says.

Increased competition

Understanding how to effectively use technology for marketing requires understanding why marketing has become a necessity.

There are several reasons, according to Ummel

* changing customer expectations;

* managed care;

* too much capacity; and

* fragmented services.

"Ultimately, customers want more value," he says.

"Their expectations are changing. Whenever there is a changing customer expectation level, everyone begins competing to find a new answer, a new solution, a better product -- a better mousetrap, as it were. Providers, therefore, are scurrying around, merging and improving their operations. That fosters more improvement opportunities and more competition."

Managed care has, of course, been an impetus to competition within the provider community, Ummel says.

"Managed care reduces the use of services; it also reduces the level of payment for the reduced level of service delivery. That kind of assault on your core business gives rise to competition for a shrinking dollar and even a shrinking market share," he says.

The health care industry also has too much capacity -- too many physicians, too many hospitals, too many expenditures -- and its services are too fragmented and uncoordinated, Ummel says.

"As a result, opportunists are forming upstart companies that enter traditional markets and compete against well-established providers. These are the niche players that try to woo a hospital's doctors into some kind of joint venture and in the process cause a lot of disruptive, rippling effects," Ummel says.

But while other industries think nothing of responding to competition with more aggressive marketing, health care providers have not been entirely comfortable with it.

"From the time marketing erupted -- maybe in the 1980s -- doctors and hospitals have considered it to be unprofessional.

"It is a management competence that is utterly foreign to them," Ummel adds.

Internet marketing

But providers are beginning to find that the Internet is a relatively painless way to dip their toes into marketing by empowering their customers.

"Technology takes health care information outside of the confines of forbidding hospitals and makes it more accessible for people as they move around in society. Having this technology in their homes makes people less dependent on one hospital or doctor for access to information," Ummel says.

Increasing the independence of health care consumers might seem to work against marketing's objectives, which are, of course, to increase and support a consistent customer pool.

There has, in fact, been a steady growth in the use of the Internet for marketing purposes, according to a 1997 survey of 311 hospitals and health care organizations by Daniel Douglas Norcross, a marketing, communications, and interactive technology consulting firm in Chattanooga, Tenn.

The survey found that 32 percent of hospitals were using the Internet in some way in their marketing efforts. Similar surveys in 1995 and 1996 indicated fewer than 20 percent of hospitals were using the Internet in marketing.

Interest in the Internet marketing indeed is quite fresh: 46 percent of hospitals have been doing it for only one or two years and 48 percent for a year or less.

More than 70 percent of the respondents in the survey, however, said that the Internet was an important marketing tool now and it would continue to be, at least for the next five years.

Larger hospitals -- those with 400-plus beds and bigger budgets -- are more on the cutting edge of Internet marketing.

Still, even these hospitals are at what Danny Fell, marketing consultant and partner in Daniel Douglas Norcross, calls "stage one Web presence" -- showing who they are and what they do.