How to market specialized care

Nursing Homes, April, 1994 by George E. Molloy

Although nursing homes have difficult and hard times during the past 10 years, including devastating budget cuts under Reaganomics, the advent of the D.R.G.'s and the birth of the OBRA regulations, nothing comes close to the challenges facing the Medicaid-supported, chronic care-oriented nursing homes of today. These facilities remind me of dinosaurs standing on some primeval plain. They sniff the wind, sense the chill, but are not quite sure what to do or how to adapt! Meanwhile, their familiar landscape keeps changing, and they mill around trying to reassure one another that they will make it, somehow.

Some will. Some won't.

Survival of the Fittest

Admittedly, not much is mentioned about nursing home care in President Clinton's 1,342-page health care reform plan. Nonetheless, reform will have serious and far-reaching consequences on the way nursing homes operate and market their services. The new order of things will force the industry to reassess and re-evaluate its product (custodial care is "out," specialized care is "in," or soon will be), its marketing strategies (niche marketing is becoming essential) and its customers (not simply residents and families, but managed care executives choosing a facility on the basis of specialized capabilities for meeting the needs of "covered lives"). It's obvious: Long-term care facilities must quickly develop new skills and products to remain competitive.

Here are two survival tips: Nursing homes must develop a specialty product. And they must sharpen their ability to sell it.

How to Develop a Specialty Product

When I was writing my book Marketing Success, I was appalled at how many key nursing home personnel really did not understand their product. This product confusion dates back to the early "Medicare" days. From 1967 to 1972, many nursing homes thought they were selling something called "extended care" because that's the kind of care Medicare reimbursed. In 1972, Congress abolished extended care and created two more labels-"skilled" and "intermediate." Skilled and intermediate care were simply government designations for meeting specific reimbursement and staffing requirements.

In September 1989, I did a marketing consultation for a small chain of nursing homes in Florida. I had 40 of the top managers from different facilities participate in a written quiz, and asked this simple question: "What's your primary product? What are you marketing? What are you selling?" Here's how the top managers in 3 different facilities answered:

Facility # 1        Facility #2         Facility #3
Good care           Good care           Medical services
Service             Care                24-Hour care
Quality of life     Skilled care        Loving health care
Top-notch care      Quality care        Professional health care
Safe Care           A home              Care for elderly

"Homey" atmosphere Best possible care Clean "hemey" place

Personal care

Despite the fact that all 3 facilities were licensed as "skilled" and Medicare-certified, only 1 out of 19 responses even identified "skilled care" as a possible product. This will no longer fly. Nursing homes must not only understand their primary product, but move quickly to create and market a specialty product, too.

Primary Product: The primary product can be defined as generalized convalescent and recuperative care, with medical and nursing supervision on a long- or short-term basis accompanied by necessary support services.

Specialty Product: A specialty product is a specialized medical, nursing, of therapeutic regimen delivered by a competent and well-trained staff to patients with a particular diagnosis that is resolvable.

Specialized care of this type might represent no more than 20 or 30% of the facility's total annual admissions for a year. Otherwise, the facility would no longer be a nursing home, but a specialized treatment center.

Specialized care revolves not so much around the place of the care (the certified section) or the reimbursement for the care (Medicare, Part A), but rather on the competence of the personnel, availability of special equipment and the advanced treatment protocols. Nor does specialized care have to be limited only to the Medicare-certified section. Real Alzheimer's care - not not just custodial supervision - is a specialty product. Unfortunately, some nursing homes think they are already providing specialized Alzheimer's care because they have a locked unit and provide the patients with alarm bracelets. Specialized care involves more than that.

While Medicare-certified nursing homes provide physical therapy, few provide specialized rehab - that is, intensive therapy, with twice-a-day sessions, 7-days-a-week, in a well-equipped equipped therapy department staffed by not only registered physical therapists, but trained therapy assistants as well. Nursing homes that develop specialized rehabilitation capabilities could and should open up an outpatient physical therapy department. This would enable the facility to attract more customers from private insurance, managed care, and the like.