With the changes in reimbursement practices and competition among hospitals gaining in importance in the last few years, it has become increasingly evident that hospitals of all sizes require marketing expertise.


Many hospitals have met this need by adding marketers to their staffs. Many small and midsize hospitals, however, aren't financially able to add specialized staff members. This is where consulting services offering short- and long-range planning are able to assist these hospitals.

Some consulting firms make use of comparative data to develop plans for individual hospitals. One such Michigan-based firm, which works primarily, but not exclusively with small and midsize hospitals in non-urban areas, uses an on-line strategic information management system. With the system's many databases, the firm can assist hospitals with questions such as: Is there a need for another orthopedic surgeon in our service area? What is our market share? Should we continue to treat a specific DRG?

A spokesperson for the firm, one of the founders and senior consultants, says "Nationally, many institutions are shifting to planning from a marketing viewpoint because of increasing competition and changes in regulations and reimbursement. Health care facilities are given access to our services and information systems based on the scope of the hospital's problems and the strengths of its planning and management team."

By using accessible data from IDS and its own original algorithms, the firm has developed a process which integrates market research to plan for in-patient and out-patient services in the future. Other products include medical staff planning through the identification of primary care service areas and referral networks and public opinion research. They also offer services including needs assessment, feasibility studies, program evaluation, forecasting and analysis, market analysis, marketing, public relations, certificates of need application, and licensure and accreditation.

Two of the larger Michigan hospitals this consulting firm works with are Mercy-Memorial Hospital in Monroe and Bay Medical Center in Bay City. In addition to current contracts with more than 40 Michigan hospitals, the firm also works with nursing homes, home health care providers, agencies such as the Area Agencies on Aging in Michigan, and other health-related groups.

"Many hospitals have experienced a decline in admissions in the past few years, which causes concern," according to the spokesperson. "They need to know the real picture. The best way to approach this is to look at their market share information, perform a historical analysis of market trends, and then use these to develop a projection for the future.

"Each hospital we work with is different. We use the same basic algorithms we have developed but make adjustments to reflect the unique circumstances for the specific hospital. Then we present a number of scenarios to them."

The first scenario is what will happen if the hospital does nothing different. The firm takes the results of its reports and projects the hospital's future if it continues on its current path. If the hospital's present course is correct, the firm recommends continuing. If the course is negative, then the consultants recommend various courses of action.

The scenarios recommending change may vary from a minimum correction to plans for all out effort.

"The consultants contract for all types of studies," says the spokesperson, "from comprehensive studies like long-range plans to special studies such as identifying the feasibility of providing a new service or determining if a product line needs to be enhanced."

When completing a long-range plan, the first phase completed by the consultant includes: A historical analysis of market share via IDS and the online information management system; a hospital specific analysis using the hospital's own data; a public attitude survey; and focus groups for community leaders. The second phase includes medical staff planning, environmental analysis, and a needs assessment. The final phase is the strategic marketing plan: Guidelines for future development, market strategies and recommendations, and the marketing action plan.

The consultant says that the main reason for using IDS is the availability of the state health care database. The firm often does comparisons of similar hospitals, using its own data and data it obtains from IDS. According to the firm, hospital administrators often know their own statistics, but they need to know how they stand in their environment, they need to know their competition and how to react to it.

The firm has developed a very popular project with small hospitals. With the use of demographic data and data from the on-line system and IDS, consultants have created a large model plan which gives the client a complete medical staff planning report.

Besides working extensively with hospitals in Michigan, the firm is expanding its services outside the state. In doing so, they rely heavily on the on-line system to give them access to the various databases they need. The consultant for this on-line system has agreements with many state hospital associations allowing access to several state health care databases, just as they do with Michigan. The on-line system's databases also include demographics data such as population statistics by zip code, length of stay and fatality norms and other customized data.

"The focus of our market-based planning is on the relationship that exists between health care resources and the needs and trends of the community' adds the spokesperson. "And the end result of the plan is an increase in the effectiveness of service in the community."

Editor's note: Background information for this article was supplied to Quirk's Marketing Research Review by the Commission on Professional & Hospital Activities which is the developer of BaseLine, the on-line strategic information management system. The Michigan-based consulting firm referred to in this article is Arbor Associates, Inc., Petoskey, Mich. Arbor accesses the many databases included in BaseLine through the Michigan Hospital Assn.'s Interactive Data Base IDS).