Sunday, March 12, 2017

Provider’s, calculating RMOI on your marketing efforts? No, well here’s how.

With so many changes in the healthcare market and resource constraints in hospitals, it’s a wonder they attempt any marketing at all. As much has healthcare has changed, provider marketing just hasn’t kept up. In hospitals saying your brand awareness is up is essentially a waste of marketing resources.

Big deal.

Your outcomes, patient satisfaction, price, experience and preventable death rate tell another story which negates the undifferentiated all about you feel good marketing. The healthcare consumer and patient isn’t dumb you know. They see the numbers and can figure it out.

What must I do?

To do Return on Marketing Investment analysis, you must market something that is measurable. Surprise!  Brand ads just won’t do it. It won’t tell you what to sell and how, as that is not the focus of the blog post. If you can’t figure it out then maybe it’s time for a different profession.

Moving forward.

Below is an example of an actual ROMI computation for a multi-hospital organization. I am assuming that you can identify and pull down the information that you need across many platforms of the organization to produce such a result.  If you can’t measure, then broaden your technological capability and move towards a higher level of computerization and system integration that you already experience.

The role finance plays.

Work with your finance department. They are a great source of information. With a high degree of collaboration and understanding their viewpoints and perspectives regarding marketing, you can lead and make a difference. By answering questions, concerns and opinions with solid data, you can move the discussion from marketing does “stuff’ to marketing is a financial contributor to the organization.

The formula and method.

The way forward below can be adapted to any campaign and provides you with the data fields, and logical analysis one needs.  This is an actual RMOI calculation on a physician referral campaign and call center.

PRCC ROI

An analysis was undertaken to look at the ROI of the Physician Referral Call Center. The study matched a database of call center name records for the period to financial records which had already been downloaded.  The data produced the following results:

*      9,102 call records were matched with utilization and financial data.
*      9,102 calls led to a total of 9,121 encounters in the ER, Inpatient and Outpatient categories of service.
*      751 contacts were ER
o   177 returning encounters
o   573 first time encounters
*      1,105 contacts were Inpatient
o    530 returning encounters
o    699 first time encounters
*      7,267 were Outpatient
o   2,014 returning encounters
o   5,253 first time encounters
*      Total charges for all encounters equaled $22,522,649
*      Charges for new encounters all services totaled $16,085,198 or 71 percent of the total charges
*      Average charge per ER Encounter  $1,304
*      Average charge per  Inpatient Encounter $13,581
*      Average charge per Outpatient Encounter  $903
*      Gallup measures loyalty at 68 percent (would return for service) which means that for every 100 patients 32 would not return for care- therefore:
o   ED- 57 returning encounters captured that would not have returned
o   Inpatient – 170 returning patients that would not have returned
o   Outpatient- 645 returning visits that would not have returned
*      Incremental charges counted returning consumers not loyal
o   ER - $74,337
o   Inpatient- $2,308,851
o   Outpatient-  $582,505
o   Subtotal charges counted:  $2,965,693
*      Overall market share in primary and secondary service area is 14.53 percent. The number of first-time encounters has utilized us above market presence is, therefore:
o   ER 573 first time visits,  83 not countered, 490 counted –
o   Inpatient – 699 first time admissions, 101 not used,  598 admissions used
o   Outpatient – 5,253 first time encounters, 763 encounters not counted, 4,490 counted
*      Based on an overall market share of  14.5  percent the  incremental charges counted for new  encounters, not because of market presence:
o   ER - $638,960
o   Inpatient – $8,121,438
o   Outpatient –  $4,054,470
*      Total Charges counted: $12,814,868
*      Discount from gross charges for Medicare, Medicaid, Managed Care, Bad Debt and Charity Care @ 65% is $8,326,644
*      Net Revenue:  $4,488,224
*      PRCC program costs:  $233,410
*      Net contribution:  $4,254,814
*      ROI 18.22:1

Much is written and made of the importance of calculating a Return on Marketing Investment (ROMI) for healthcare organizations.  Most often regulated to producing brochures and other items, healthcare marketing departments need to exercise a leadership position and talk the financial language of senior management.

Otherwise, marketing is just a cost center and not an organizational asset.

Michael is a healthcare marketing business, marketing, and communications strategist and thought leader.  As an internationally followed healthcare marketing strategy blogger, his blog, Healthcare Marketing Matters receives over 20,000 page views a month and read in 52 countries.  He is a Fellow, American College of Healthcare Executives, Professional Certified Marketer, American Marketing Association and HubSpot Academy- Email Marketing, Inbound Marketing & Inbound Sales Certified. Post opinions are my own.


For more topics and thought leading discussions like this, join his group, Healthcare Marketing Leaders For Change, a LinkedIn Professional Group.

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