FM002 Marketing Strategies

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WORD DOCUMENT BEGINS HERE;

Part I: Kimball Hospital and Tanner Medical Center Merger Report

Read the case study “Hospital Consolidation,” pages 1–5, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are Dallin Call, chief executive officer (CEO) and chief marketing manager of Kimball Hospital. You have considered all of the factors, and it is time to make a recommendation on how to market the merger of Kimball Hospital with its chief rival, Tanner Medical Center.

Create a 1 to 2-page report to present to the Kimball community-based Board of Directors that addresses the following:

1. Analyze the potential impacts of a merger on Kimball Hospital and Great Western Hospital Corporation (GWHC). Document the impact of this merger in a way that the Kimball community-based Board can understand and focus on how to market to the following stakeholders.

2. Describe at least four potential long-term risks/impacts of a merger on the following stakeholders. Include in this description a justification of whether you would or would not recommend the merger. In addition, explain how the Kimball Hospital mission, vision, and strategic plan would influence your recommendation. Analyze issues, such as access, cost, and quality, and what concerns each of the following stakeholder groups might have regarding consolidation.

· Patients

· The public

· Physicians

· Payers

3. Explain four to six communication (marketing) strategies you would recommend to the Board that will balance the organizational and community interests of the stakeholder groups as you make the important decision of whether or not to merge with Tanner Medical Center. Use information about industry issues and trends to inform your explanation/ communication to stakeholders and the Board.

Part III: Palomar Heart Hospital Report

Read the case study “Palomar Heart Hospital,” pages 123–127, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are the director of marketing at Palomar Heart Hospital (PHH). Russell Taylor, Lincoln Healthcare System’s new executive vice president and chief operating officer, has called you in for a meeting as he begins the strategic planning process to turn PHH’s dismal financial performance around. Russell has tasked you with updating some aspects of PHH’s marketing plan.

Create a 4 to 5- page report that addresses the following requests from Russell:

1. Describe the marketing techniques you would employ to raise the profile of PHH in the community and increase patient volume. Name two mass-marketing techniques and two target-marketing techniques you would use in this scenario.

2. Recommend at least two marketing techniques you would use to market PHH to payers to increase the proportion of the population able to access PHH’s services.

3. Recommend at least two ways you would utilize social media to drive new business at PHH.

4. Explain whether PHH should amend its mission, vision, and/or scope of services offered. Explain the organizational and marketplace realities that justify your decision.

SLIDE PRESENTATION BEGINS HERE BELOW

Part II: Community Medical Center Presentation

Read the case study “Market Management,” pages 55–63, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are Lindsey Chadwick, director of strategic planning and marketing at Community Medical Centers (CMC), a large healthcare organization in central California. You have been tasked with updating the CMC marketing plan in response to important changes in the local and regional markets. Your assistant, Rachel, has taken the first step in performing an environmental assessment.

Based on Rachel’s environmental assessment, create a 10-12-slide presentation with extensive notes for CMC’s board of directors that includes the following:

1. Present an analysis of CMC’s strengths, weaknesses, opportunities, and threats (a SWOT analysis).

2. Present findings from the situational analysis that include an overview of the most critical issues facing CMC in regard to its physicians, payers, patients, and public customers.

3. Present a market strategy. Identify the target market for increasing services at CMC and how you propose to effectively reach this market.

4. Present a detailed plan for promoting CMC’s services to existing and new patients using four different marketing techniques.

Part IV: Intermountain Healthcare Presentation

Read the case study “Intermountain Healthcare,” pages 161–173, from Healthcare Marketing: A Case Study Approach (Cellucci, Wiggens, & Farnsworth, 2014).

You are the new director of marketing for Intermountain Healthcare and are working with the entire marketing department to update the organization’s marketing plan. To kick off the project, you have been tasked with presenting an overview and analysis of Intermountain’s current marketing operations and opportunities.

Create a 6 to 8-slide presentation with extensive notes for an internal retreat with the Intermountain marketing department.

1. Illustrate Intermountain’s engagement with each of its customers (patients, the public, physicians, and payers) in pursuit of its organizational mission and vision.

2. Illustrate Intermountain’s three most significant strategic advantages. Explain how they could be utilized in the new marketing plan to advance the organization’s mission.

FM002: Marketing Strategies: Evaluate marketing strategies to ensure they enhance the organization’s competitive
position and align with its mission and social responsibility.

Assessment Rubric

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
Part 1: Kimball Hospital and Tanner Medical Center Merger Report
Learning
Objective 1.1:

Analyze the
potential impacts of
a merger on
hospitals.

Report does not provide or provides
a vague or inaccurate analysis of the
potential impacts of a merger on
hospitals.

Report provides a clear and
accurate analysis of the
potential impacts of a merger
on hospitals.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report clearly and
accurately describes one
argument in support of
Kimball Hospital assuming
ownership of the
community’s hospital and
one argument in support
of Tanner Medical Center
doing the same.

Learning
Objective 1.2:

Analyze the
potential long-term
risks/impact of
issues (i.e., access,
cost, and quality)
related to mergers
on various
stakeholder groups.

Report does not explain, explains
fewer than four, vaguely or
inaccurately explains at least four
potential long-term risks/impact of a
merger on stakeholders including
such issues as access, cost, quality
and concerns the stakeholder
groups (patients, the public,
physicians, and payers) might have
regarding consolidation.

Report clearly and accurately
explains at least four potential
long-term risks/impact of a
merger on stakeholders
including such issues as
access, cost, quality, and
concerns the stakeholder
groups (patients, the public,
physicians, and payers) might
have regarding consolidation.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report explains one pro
and one con of the issues
related to the merger from
the perspective of each of
the four stakeholder
groups.

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
Report explains the potential

risks/impact of a merger on some
but not all issues indicated (access,
cost, quality) and/or it explains the
concerns of some but not all
stakeholders (patients, the public,
physicians, and payers).

Report does not include references
to academic/professional resources,
or the resources are not relevant.

Report includes references to
relevant
academic/professional
resources.

Learning
Objective 1.3:

Justify decisions
related to mergers
using information
about industry
issues and trends.

Report does not provide or provides
a vague or illogical justification of the
decision related to the merger,
and/or the justification does not use
information about industry issues
and trends to inform the justification.

Report provides a clear and
logical justification of the
decision related to the
merger. Report uses relevant
information about industry
issues and trends that inform
the justification.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report addresses the
alternative perspective in
its justification of the
decision.

Learning
Objective 1.4:

Explain how
mission, vision, and
strategic plan
impacts important
decisions that
affect the

Report does not provide or provides
a vague or illogical explanation of
how the mission, vision, and
strategic plan impacts important
decisions that affect the healthcare
marketplace.

Report provides a clear and
logical explanation of how
mission, vision, and strategic
plan

impacts important
decisions that affect the
healthcare marketplace.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report provides an
example from an authentic
healthcare setting that
illustrates how mission,
vision, and strategic plan

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
healthcare
marketplace.

impacts important
decisions that affect the
healthcare marketplace.

Learning
Objective 1.5:

Recommend
strategies to
balance
organizational and
community
interests during a
potential merger.

Report does not recommend or
vaguely or inaccurately recommends
strategies to balance organizational
and community interests during a
potential merger.

Or recommendations are illogical or
irrelevant.

Report recommends clear,
accurate, logical, and relevant
strategies to balance
organizational and community
interests during a potential
merger.

Response demonstrates
the same level of
achievement as “Meets,”
plus the following:

Report accurately
describes the respective
interests of the
organization and the
community in relation to
the hospital merger.

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations

Part 2: Community Medical Center Presentation
Learning
Objective 2.1:

Apply a SWOT
analysis to an
organization.

Presentation does not apply or
incompletely or inaccurately applies
a SWOT analysis of an
organization’s strengths,
weaknesses, opportunities, and
threats.

Response does not include
references to academic/professional
resources, or the resources are not
relevant.

Presentation effectively and
comprehensively applies a
SWOT analysis of the
organization’s strengths,
weaknesses, opportunities,
and threats.

Response includes
references to relevant
academic/professional
resources.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation notes
accurately analyze the
purpose and limitations of a
SWOT analysis.

Learning
Objective 2.2:

Apply a situational
analysis to an
organization.

Presentation does not include or
includes a situational analysis that is
illogical or that omits an overview of
the critical issues facing one of the
stakeholder groups.

Presentation includes a
comprehensive situational
analysis, including an
overview of the most critical
issues CMC faces regarding
physicians, payers, patients,
and public customers.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation incorporates
an analysis of key industry
trends and corresponding
impacts on CMC and its
stakeholders.

Learning
Objective 2.3:

Describe a
marketing strategy
for an organization.

Presentation does not offer or offers
a vague or illogical marketing
strategy or offers a marketing
strategy that does not accurately
identify the target market for
increasing services at the
organization.

Or the presentation does not
propose or vaguely proposes how to
effectively reach this market.

Presentation offers a clear
and logical marketing
strategy that accurately
identifies the target market
for increasing services at the
organization as well as
proposes how to effectively
reach this market.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation offers more
than one marketing
strategy or targets more
than one market.

Learning
Objective 2.4:

Develop a plan of
marketing
techniques to
promote services to
new and existing
patients.

Presentation does not offer or offers
a vague or inaccurate plan of four
different marketing techniques for
promoting organizational services to
existing and new patients.

Or presentation offers a plan of
fewer than four different marketing
techniques for promoting
organizational services to existing
and new patients.

Presentation offers a clear
and accurate plan of at least
four different marketing
techniques for promoting
organizational services to
existing and new patients.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation offers growth
strategies for each of the
four different marketing
techniques.

Rubric Criteria Needs Improvement Meets Expectations Exceeds Expectations

Part 3: Palomar Heart Hospital Report
Learning
Objective 3.1:

Describe marketing
techniques used to
raise the profile of
an organization.

Report does not describe or
describes fewer than two mass-
marketing techniques and/or fewer
than two target-marketing
techniques to raise the community
profile of a healthcare organization
and increase patient volume.

Report includes at least two mass-
marketing techniques and at least
two target-marketing techniques but
the description of each is vague or
inaccurate.

Report does not include references
to academic/professional resources,
or the resources are not relevant.

Report clearly and accurately
describes at least two mass-
marketing techniques and at
least two target-marketing
techniques to raise the
community profile of a
healthcare organization and
increase patient volume.

Report includes references to
relevant
academic/professional
resources.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report identifies an
additional relevant mass-
marketing and target-
market technique.

Learning
Objective 3.2:

Recommend
marketing
techniques
targeting payers,
which will increase
access to an
organization.

Report does not recommend,
vaguely or inaccurately
recommends, or recommends fewer
than two target-marketing
techniques targeting payers to
increase the proportion of the
population able to access a
healthcare organization’s services.

Report does not include references
to academic/professional resources,
or the resources are not relevant.

Report clearly and accurately
recommends at least two
target-marketing techniques
targeting payers to increase
the proportion of the
population able to access a
healthcare organization’s
services.

Report includes references to
relevant
academic/professional
resources.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report recommends at
least one additional
relevant marketing
technique that targets
payers and can potentially
increase access to
healthcare.

Learning
Objective 3.3:

Recommend the
use of social media
to drive new
business.

Report does not recommend,
vaguely or inaccurately
recommends, or recommends fewer
than two ways to utilize social media
to drive new business to a
healthcare organization.

Recommendation of how social
media can be used to drive new
business is inaccurate or illogical.

Report clearly and accurately
recommends at least two
ways social media can be
used to drive new business to
a healthcare organization.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report includes an
additional social media
resource and the target
audience for this medium.

Learning
Objective 3.4:

Justify whether an
organization should
amend its mission,
vision, and/or
scope of services
offered.

Report does not offer a justification
for whether an organization should
amend its mission, vision, and/or
scope of services offered, or the
justification does not demonstrate a
consideration of organizational and
marketplace realities.

Report clearly justifies
whether PHH should amend
its mission, vision, and/or
scope of services offered.
Justification demonstrates a
consideration of
organizational and
marketplace realties.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report incorporates an
accurate and thorough
description of PHH’s
operating and financial
data (Exhibit 1) to support
the justification.

Rubric Criteria Needs Improvement Meets Expectations Exceeds Expectations

Part 4: Intermountain Healthcare Presentation
Learning Objective
4.1:

Illustrate an
organization’s
engagement with
customers in pursuit

Presentation does not illustrate or
incompletely or inaccurately
illustrates how Intermountain’s
engagement with customers is in
alignment with its mission and
vision.

Presentation completely and
accurately illustrates how
Intermountain’s engagement
with patients, physicians, and
payers is in alignment with
the organization’s mission
and vision.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation incorporates
an accurate analysis of

of its organizational
mission and vision.

how Intermountain links its
financial goals to its
mission and vision.

Learning Objective
4.2:

Illustrate an
organization’s
strategic
advantages.

Presentation does not illustrate,
unclearly or inaccurately illustrates,
or illustrates fewer than three
strategic advantages.

Presentation clearly and
accurately illustrates three of
Intermountain’s most
significant strategic
advantages.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation identifies one
of Intermountain’s
weaknesses.

Learning Objective
4.3:

Explain how
strategic
advantages can be
used in a marketing
plan to advance the
organization’s
mission.

Presentation does not explain,
unclearly or inaccurately explains,
or explains fewer than two ways
Intermountain’s strategic
advantages can be used in a
marketing plan to advance its
mission.

Presentation clearly and
accurately explains at least
two ways Intermountain’s
strategic advantages can be
used in a marketing plan to
advance its mission.

Presentation demonstrates
the same level of
achievement as “Meets,”
plus the following:

Presentation explains at
least one additional way
Intermountain’s strategic
advantages can be used in
a marketing plan to
advance its mission.

· Cellucci, L. W., Wiggens, C., & Farnsworth, T. J. (2014). Healthcare marketing: A case study approach. Health Administration Press https://www.ache.org

Hospital Consolidation Case Study, (pp. 1–5)

Market Management Case Study, (pp. 55–63)

Palomar Heart Hospital Case Study, (pp. 123–127)

Intermountain Healthcare Case Study, (pp. 161–173)

Healthcare M arketing: A Case Study Approach

and seeminglyendlesssocialgatheringscharacteristic of the time of year. It wasdissimilar
in one respect,however: Dallin was full of anxiety and could not shake it. Three months
carlier, Dallin’s Rocky Mountain-based healthcare systemGreat Western Hospital Cot-
poration (GWHC) initiated merger/consolidationtalks with the county-basedoperators
of his hospital’s chief rival, Tanner Medical Center, and a December 31 deadline to for-
mally initiate negotiations or walk awaywas looming. Dallin understood that hispersonal
recommendation to his corporate supervisors and community-based board would greatly
influence their eventual decision to press ahead with consolidation talks or continue the
more than 40-year practice of offering competitive but duplicative healthcare servicesto
the comnmunity. Dallin’s recommendation and the ultimate decision to consolidate or not
would be the most important local healthcare market decision in a generation or moreand
would greatly impact the lives of numerous healthcare professionals and the nature and
quality of healthcareservices for arearesidents for years to come.

MERGER AND CONSOLIDATION TRENDS

In general, the local market mirrored the healthcare issues and challenges observed nation-
ally, including a trend toward hospital mergers, acquisitions, and consolidations brought
about by myriad organizational and market forces (Cuellar and Gertler 2003; Haleblian et
al. 2009). In the decadepreceding GWHC% deliberations, the healthcare industry under-
went a wave of consolidations that transformed the hospital marketplace. By the mid-
1990s, hospital mergers and acquisitions had increased by ncarly tenfold the rateobserved
only five ycars earlier (Vogt and Town 2006).

From hisreadingsandobservations, Dallin noted that some of the more important
advantages to hospital mergers and consolidations included much needed access to capital
and elimination ofnon-value-addedduplication ofexpensivehealthcareservices.Mindful
that consolidation was rarely apanacea, however, Dallin identified a handful ofconcerns
and potentialdisadvantages, including the potential for higher costs and prices andlower
quality followingreducedcompetition (Tenn 2011; Vogt and Town 2006).

THE LOCAL MARKET AND DEMOGRAPHICS

Pratville’s highdesertcommunity of50,000generally supported two competinghospitals
for more than 70years. About 75 percent of one hospital’s clinical programs andservices
were duplicated by its cross-town rival, and local citizens traveled to out-of-area hospitals
to receive roughly $40 million peryear in healthcareservices either not provided or poorly
delivered by local hospitals.

From early 2000 through mid-2001, important changes in the leadership and
governance of Prattville’s rival hospitals set the stage for the important talks that soon

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Part I:Foun dations of Healthcare Marketing

followed. Among these leadership changeswas the appointment of new hospital board
chairmen, new hospital administrators/CEOS, new Blade County commissioners, and new
regional and systemwide leadership at GWHC. Moreover, each hospital’s respective plans
to introduce an even greater array of duplicate services or expand on existing duplicate
services prompted Dallin to ask himself three important questions: Was his hospital’s mis-
sion focused on what was right and best for the Prattville community or GWHC? Would a
consolidation of hospital operations improve Prattville arearesidents’accessto services and
thecostand quality ofhealthcare?And which organization-Kimball Hospital (GWHC)
or county-owned/operated Tanner Medical Center was best positioned toassumeleader-
ship, ownership, and management of the community’s hospital/healthcare system?

Mindful of the sea change in local and central office leadership and increasingly
troubled by anawareness that each hospital’s strategic plan called for more and more non-
value-added duplication of hospital services, Dallin contacted his immediate supervisor
and suggested the time might be right to revisit the idea of hospital cooperation-even
consolidation. The most recent serious attempt at merger/consolidation talks failed in
1983, and authorities revisited the idea in 1990 without success.When merger/consolida-
tion talksresurfacedin 2001, GWHC wasever mindful of its longstanding, publicly stated
commitment to the communiy. Yet GWHC was cognizant of important political and
marketplacerealities. A profile ofkeyownership, market, financial, operating, and political
dimensions of Prattville’s hospital/healthcare community is presented in Exhibit 1.

OTHER PROVIDER AND COMMUNITY CONSIDERATIONS
Sinceits inception in 1975, GWHC hadestablishedasystemof more than 20 hospitals in
three neighboring states with highly sophisticated central office support services, includ-
ing health information technology, central purchasing, laboratory, laundry, marketing/
advertising, physician recruitment, quality/risk management, and more. By implementing
evidence-based medicine, the system had reducedcosts and improved quality and received
national acclaim for its remarkable focus on this initiative.

Because of its local ownership and control, employees and supporters of Tanner
Medical Center touted the hospital’s ability to chart its own course and make its own
decisions, independent of out-of-state officers who may or may not haveshared the com-
munity’s healthcare goals and views. Tanner Medical Center enjoyed a measure of “sys-
tem” support through its afiliation with Voluntary Hospitals of America (VHA), the
nation’s largest not-for-profit hospital asociation. Importantly, and for a combinaion of
reasons, local physicians generally favored and supported Tanner over Kimball, reflected
by a nearly2:1 ratio of annual patient admissions to Tanner over Kimball. Manysupposed
that notwithstanding Kimball’s/GWHC’s reputation asa high-quality, lower-cost provider,
area physicians resisted the corporation’s centralized, systematic approach to planning and

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4 Healthcare Marketing: A Case Study Appro ach

EXHIBIT 1

Select Financial,
Operating, and

Other Indicators:
Kimball Hospital

and Tanner
Medical Center

(Fiscal Year 2000)

Kimball Hospital Tanner MedicalCenter
GWHC Blade CountyHospital ownership and

Control

Ownership type

Licensed beds

Government/county

150

24,240/25,380/23,725

501(c)3) corporation

110

10,150/10,925/12,775Total patient days-trend
(1998/1999/2000)

Average daily census

Annual gross patient
services revenue

$97 million

$54.6 million

s2%

$310,000

2%/4%/6%

$49 million

Annual net patient services $31.5 million
revenue

26%

$141,000

3%/5%/3%

Market share

Annual marketing/
advertising budget

Net operating income
percentage-trend
(1998/1999/2000)

Total debt $73 millionNJA (consolidated with
GWHC)

$2.3 billion (GWHC) $9 millionFinancial reserves
(savings)

Employed physicians 8

Percentage of local physi-
cians whose first loyalty
was to this hospital

35% 65%

Services unique to hospital
in local market

Cardiology, acute
rehabilitation

Pediatrics, neonatal level

II, cancer

Percentage of physicians
who favored hospital
consolidation

80% (based on fall 2001 Survey of Kimball/ Tannermedl
cal staffs)

Public preference for local
(versus out of area) owner-
ship and control

68% (based on spring 2001 Kimball Hospitalcommunity
telephone survey)

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Part l: Foundations of Healthcare Marketing 5

delivering patient care. Indeed, many physicians relocated to Prattville because of the
region’s laissez-faire approach to medicine, including a lack of managed care and other
insurance mechanisms that limited physician reimbursement and autonomy.

A TIME FOR DECISION

As CEO, Dallin was also chief marketing manager and promoter of his hospital/health-
care organization. Positioning his organization for immediate and long-term growth and
financial success was an ever-present mandate; orchestrating a well-balanced, integrated,

community-wide healthcare system to improve access, cost, and quality of care to the
entire Prattville community was no less important. In his heart, Dallin believed the timne
was right to consolidate or merge the community’s two competing hospitals, and the lead-
ership, financial, and other strengths of his company made Kimball Hospital/GWHC the
prefered owner/operator of the new entity. Yet, Dallin knew ofhis community’s underly-
ing preference for local ownership and control and of the physician community’s long-
standing reluctance to embrace his company’s philosophy and approach to organizing
and delivering care. Although Dallin’s organization and community board leaders were
independent, critical thinkers, they looked to him for guidance in this matter.

DISCUUSSION OUESTIONS

1. What key organizational and marketplace issues reopened the door to a potential

2. In what ways could Dallin balance the interests of the community with the interests

3. From a patient and community perspective, what might be some of the pros and cons

4. From this case, can you identify and describe some of the forces that shape a

5. Who are the key decision makers and other stakeholders (individuals and groups) in

hospital merger/consolidation?

of his employer/corporation?

to consolidating the community’s hospitals?

hospital’s mission, vision, culture, growth, and development?

this case? What issues and concerns do they have about consolidation, and what are
their relative positions of power and influence in Prattville’s healthcare community?
Would you recommend consolidation of Prattville’s two community hospitals? Why or
why not?
If you would recommend consolidation, which organization should assume
ownership/control? Why? What would be the strategic marketing implications of your
decision?

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6
Healthcare Marketing: A Case Study Approach

REFERENCES

Cuellar, A. E., and P.J. Gertler. 2003. “Trends in Hospital Consolidation: The Formation of

LocalSystems.”Health Affairs (Millwood) 22 (6):77-87.

Haleblian, )., C. E. Devers, G. McNamara, M. A. Carpenter, and R. B. Davison. 20o9. “Taking

Stock of What We Know About Mergers and Acquisitions.” Journal of Management 35
(3): 469-502.

Tenn, S. 2011. “The Price Effects of Hospital Mergers: ACase Study of the Sutter-Summit

Transaction.” International Journal of theEconomicsofBusiness18(1) 65-82.

Vogt, W. B., and R.Town. 2006. “How Has Hospital ConsolidationAffected the Price and Qual-

ity of Hospital Care?” RobertWoodJohnsonFoundationResearchSynthesis Report No.
9. Published in February. www.rwjf.org/content/dam/farm/reports/issue_briefs/2006/
rwjf12056/subassets/rwjf12056_1.

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PART I

FOUNDATION$ OF
HEALTHCARE MARKETING

FEATURE CASE: HOSPITAL CONSOLIDATION

This real-life case invites students to consider the dynamic relationship healthcare providers
have with their local and regional market and to appreciate the need to balance organizational
and community interests when making important decisions that affect the healthcare market-
place. Participant and facility names and various numerical values have been modified to pre-
serve anonymity and accentuate points of learning.

The case also encourages students to consider the long-term impact certain strategic ini-
tiatives have on healthcare organizations and their stakeholders, including patients, physicians,
payers, and the public, and to actively consider stakeholder expectations in connection with
these decisions. Finally, this case introduces students to important healthcare industry issues
and trends, including forces that shape a healthcare organization’s mission, vision, and market-
basedstrategies for growth and development, asdiscussed in Partl of this text.

INTRODUCTION
In many ways the 2001 holiday seasonwas no different than any other. Dallin Call chief
executiveofficer of Kimball Hospital- genuinely enjoyed the traditional music, decorations,

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.Te:

PART UU

THE FIVE Ps OF
HEALTHČARE İMARKETING

FEATURECASES MARKETMANAGEMENT

This real-life case invites students to analyze and prioritize various kinds of information common
to a dynamic and competitive healthcare marketplace as part of an organization’s strategic mar-
keting process. It presents the unique and important issues and challenges a regional healthcare
provider (Community Medical Centers) had to face as it attempted to engage patients, physi-
cians, payers, and the general public in a politically sensitive environment. This case reinforces
the material introduced in Part Il of this text by asking students to assume the role of assistant
director of strategic planning and marketing and to analyze, synthesize, and prioritize findings
from Community Medical Centers’ recent environmental assessment to position the organization
and promote its services to area physicians, patients, payers, and the general public.

Information included in this case was derived from the California Health Care Almanac, a
publication of the California HealthCare Foundation (2009). Although the information about

the

Fresno, California, healthcare market is true to fact, modifications have been made to names,
roles, settings, and numerical values to preserve anonymity and accentuate points of learning.

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56 Healthcare Marketing: A Case Study Appro ach

INTRODUCTION
Twenty-three-year-old Rachel McKee completed her undergraduate degree in healthcare
administration with an emphasis in planning and marketing. To her delight, she

was

offered the position ofassistantdirector of strategic planning and marketing at Commu-
nity Medical Centers (CMC), a large healthcare organization in central California. Rachel
was ambitious and cager to make an early impact. She was pleased that her new boss and
mentor, Lindsey Chadwick-a seasonedhealthcare veteran-seemed confident inRachel’s
ability toprocesscomplex information andassume increasingly important responsibilities.

Lindsey understood the intricacies of CMC and the local healthcare market. Her
supervisor and members of the board had put her in charge of updating the organiza-
tion’s strategic marketing plan in response to important, ongoing changes in the local and
regional markets. Lindsey assignedRachel the important task of performing an environ-
mental assessment and using the results to complete a strengths, weaknesses, opportuni-
ties, and threats (SWOT) analysis and draft a summary of the organization’s core strategic
initiatives. From these important documents, Lindsey and Rachel would update CMCS
strategic marketing plan.

From the outset, Lindsey advised Rachel to gather andassess relevant market infor-
mation from varioussources, including noted health industry publications; organization,
statewide, and other publicly availabledatabases;and interviews with executives, physician
groups, insurance companies, regulators, and others. Like an investigative reporter, Rachel
was directed to probe and dig for important and useful information that would ultimately
provide a framework and justification for the organization’s marketing plan. From her
coursework in college, Rachel remembered that a marketing plan must include timely and
accurate information about a market’s healthcare providers -notably hospitals and local
physicians. She knew that a summary of key market demographics, including patient,
employer, and insurance company profiles, wasessential. A broad yet detailed understand-
ing of the public at large and the political dynamics among the provider community also
was vital. Finally, sheneeded to gain an overview of key industry trends. After four months
of diligent study, networking, and thoughtful analysis,Rachel presented her environmental
assessmentto Lindsey. Herassessment included the following highlights.

FRESNO MARKET BACKGROUND

With a total population of 1.6 million people, the greater Fresno area had seen strong
growth over the past decade-up 22 percent compared to 14 percent statewide. It waso

of the poorest communities in California; the incomes of nearly half of the Fresnoarea
population were below 200 percent of the federal poverty level. Educational attainment was
also well below the stateaverage; only 22 percent of adults held a college degree. Approxi-
mately 50 percent of the market population were Latino, 37.5 percent were white (non-
Latino), and 20 percent were foreign born. The health status of local/regional residents

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Part I|: The Five Ps of Healthcare Ma rketing 57

wasgenerally not good; approximately 20 percent self-reported fair or poor health status,
andmore than 27 percent were living with asthma, diabetes, or both. The unemployment
rate in theareawas high and continuing to rise; 15.5 percentof the population was out of
work (up 5 percent over the previous year and 5 percent higher than the statewide aver-
age). Although agriculture was a vital part of the local and regional economies, the largest
employers in the market were public-sector organizations, including Fresno County, the
City ofFresno, and the Fresno school district. Two major healthcare systems-CMC and
SaintAgnes Medical Center-were among thearea’slargest private employers (California
HealthCare Foundation 2009).

HOSPITAL/HEALTH SYSTEM PROVIDERS

Most of the hospitals in the region were nor-for-profit or government/district hospitals. The
Fresno community had an acute care bed capacity of 173 per 100,000 (slightly less than the
statewideaverage of 182) and an occupancy rate of 68 percent (greater than the statewide
averageof 59 percent). The major hospitals ran near capacity at certain times of the year.

The major hospital systems in Fresno County were CMC (800 beds across three
hospitals), Saint Agnes Medical Center (more than 400 beds), and Kaiser Permanente
Fresno Medical Center (165 beds). These hospital systems represented roughly 50, 30,
and 10 percent of the hospital market, respectively. CMC and Saint Agnes served a large
geographic area and enjoyed a referral base from several outlying counties. Historically, the
relationshipbetween CMC and SaintAgnes hadbeencharacterizedby litle collaboration
and intense, long-standing competition bordering on animosity. While Saint Agnes was
located in the more affluent part of north Fresno and was often describedas the cash cow’
of its 40-hospital parent corporation, CMCS 500-bed flagship facility was located in the
heart of Fresno and, with its nine outpatient clinics, served as Fresno County’s primary
saferynet provider.’ Financial lossesat CMC’s lagship facility were largely offset by highly
profitable operations at its two sister hospitals located in more affuent communities to the
north and northeast. In recentyears, CMC hadreversedits negative financial performance
and had become modestly profitable.

Reports from the Ofhce of Statewide Health Planning and Development indi-
catedan increasingly unfavorable payer mix acrossall Fresnoarea hospitalsan indication
of the community’s high levels of poverty, lack of insurance, and Medi-Cal (similar to
Medicaid) coverage. The Saint Agnes payer basewas approximately 25 percent Medi-Cal.
CMC -with its more than 30-year contract with Fresno County to provide indigent
care- reported that nearly 40 percent of its patients were covered by Medi-Cal. Major
initiatives at CMC inluded the recent opening of 160 new beds at its fagship hospital,
including 56 neonatal intensive care beds. After opening a new patient tower, Saint Agnes
added 36 neurosurgery and critical care beds. In somecases, new hospital construction was
aresponse to both capacity issues and compliance with state seismic standards. Both CMC

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58 Healthcare Marketing: A Case Study Appro ach

and Saint Agnes also added new programs to stem the exodus of patients to out-of-area
providers ofservicesnot previouslyoffered within the community.

Survey respondents’ characterizations of the quality of care at Fresnoareahospitals
ranged from poor to good. Many opted to leave the area when they got “really sick’; a
study showed that patients sought nearly $500 million in medical careservicesoutsidethe
greater Fresno area annually for a variety of reasons, notably long wait times, physician
shortages, and concerns about the quality of care provided by area hospitals. In recent
years, arca hospitals aligned themselves with academic teaching programs to support clini-
cal/medical training programs, improve the quality ofcare, enhance their reputations,and
recruit more physicians to the market. Notable associations included CMC’s formal affili-
ation with the University of California, San Francisco, and Saint Agnes’s affiliation with
Stanford University for cardiology andneurosciences.

Although Saint Agnes was widely regarded as the premier hospital in the market,
highly publicized recent outbreaks of methicillin-resistant staphylococcusaureus(MRSA)
infections and Legionnaires’ diseasehad raised questions about its patient care andquality.

PHYSICIAN AND ALLIED HEALTH COMMUNITY

The greater Fresno area suffered from a notable shortage of primary care and specialistphy-
sicians, with 45 primary care physicians per 100,000 residents versus 59 statewide and 118
physicians overall per 100,000 residents versus 174 statewide. An aging physician work-
force led market observers to expect shortages to worsen. Nurses and other allied health
personnel were also in short supply, causing the federal government to classify most ofthe
market as a health professional shortage area. Primary and specialty physician shortages
invariablyresulted in long appointment waittimes a keyreasonmanyinsuredpatients
sought medical care outside the local market. Wait times for dermatologic appointments,
for example, were reportedly 9 to 12 months. Other specialists in short supply included
neurosurgeons, general surgeons, cardiologists, gastroenterologists, oncologists, otolaryn-
gologists, ophthalmologists, and psychiatrists.

Recruiting new physicians to the Fresno area was challenging because of various
factors, including poor payer mix, poor reimbursement, ongoing hospital callcoverage
obligations, and quality-of-life considerations. Although many physicians alreadyestab-
lished in the market were overworked, they were apprehensive about losing marketshare
and thus had little interest in recruiting. Many respondents reported that the physician
shortage would havebeeneven more acute if it were not for the many foreign-born physi-
cians practicing in the Fresnoarea, notably natives of India and Pakistan. Many ofthese
physicians were attracted by the area’ssizable ethnic communities and focused their prac-
tices on patients from their own ethnic background.

For various reasons, Fresno had few large physician practices. Most physicians
opted to practice solo or in small groups of fewer than five physicians, andsingle-specialty

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Part ||: The Five Ps of Healthcare Marke ting 59

rather than multispecialty groups were the dominant practice type. Although many com-
munity physicians maintained admitting and practice privileges at multiple hospitals, they
generally concentrated their practice at one hospital. For years, emergency call coverage
had been a source of friction berween area hospitals and physicians due to the expensive
stipends hospitals had to pay to get physicians to provide call coverage.

Unlike in many markets in California and elsewhere, formal integration between
physicians and hospitals was limited. Relationships generally were marked by strain and
distrust. In recent years, CMC’s relationships with its primary physician groups had
improved, whereas Saint Agnes’s hospital-physician relationships had deteriorated. Hos-
pitals efforts to attract and align area physicians were focused on joint ventures, many of
which failed.

Area physicians’ lack of loyalty to area hospitals was evidenced by the extensive
movement ofvariousservices- -incuding imaging, orthopedics, plasticsurgery, and endos-
copy–out of hospitals and into physician offces or physician-owned facilities. Many
reportssuggested that physicians’ ongoing dissatisfaction with area hospitals was the basis
ofthis activity.

PAYER/INSURANCE COMMUNITY
In contrast to other California markets, the greater Fresno area only modestly embraced
managed care. Even at their peak in the mid-1990s, health maintenance organizations
(HMO)) and their variants never achieved dominance in the Fresno area, and their pres-
ence shrank from roughly 30 percent in 2000 to 25 percent today. According to one
report, theabsence of a strong HMO/managed carepresence meant that health system fea-
turescommon to other communities formation oflarge multispecialty physician groups,
close hospital-physician alignment, provider familiarity with performance measurement
and reporting, andaggressivecare and utilization management–were not pervasive in the
Fresno market.

Only 46 percent of area residents (compared to 59 percent statewide) had private
medical insurance, and 16 percent were uninsured. Medi-Cal enrollment was high in the
Fresno area, at approximately 30 percent. Fresno’s safery net was generally considered
weak, fragmented, and inadequate for the needs of the population. Indeed, healthcare
was considered a low priority for many of thearea’s county governments. Blue Shield of
California and Anthem Blue Cross were the leading health insurers in the greater Fresno
market. As in other regional markets, these health plans were under high pressure to
moderate premiums. Many believed that doing so would be extremely challenging in the
face ofescalating hospital costs.Becausesomehospitals -notably SaintAgnes and CMC’*
Clovis Community Medical Centerwere considered”musthaves by employer purchas-
ers, these hospitals had strong negotiating leverage with area health plans.

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Healthcare Marketing: A Case Stu dy Ap proacho

THE FUTURE OF HEALTHCARE: KEY INDUSTRY TRENDS
Rachel recognized that healthcare is a dynamic and ever-changing industry whose futurg
is difficult to predict. Herassessmentsummarized the key trends that would likely def.
healthcare’s immediate future.

expe
care.
perine

Ac
Ac
an

THE ECONOMY

Although the economy was slowly improving, it was expected to remain fragile due to
continued high unemployment in the United States and Europe. The national economy
wasexpected to impact both demand and supply dimensions of the healthcare industry
(Valentine and Masters 2012).

the

pa
rer

HEALTHCARE REFORM IN
Various elements of the Affordable Care Act were implemented on schedule, including
ventures into bundled payment, accountable care organizations (ACOS), andvalue-based
purchasing activities. State health insurance exchanges loomed around the corner; many
were in active development. This trend-with its focus on benefits and network develop-
mentneeded to be monitored (Valentine and Masters 2012).

HOSPITAL-PHYSICIAN ALIGNMENT

Physician employment was expected to remain the preferred approach to hospital-
physician alignment. Some physician/medical groups would still favor independence, and
most hospitals/healthsystems would need to balance a dual approach to meeting theneeds
of both independent and employedphysicians. The need to clinically integrate employed
and independentphysicians would remain critical if hospitals/health systemsexpectedto
respondeffectively to healthcare reform (Valentine and Masters 2012).

REVENUES AND EXPENSES

Per unit revenues(e.g.,average net revenue per procedure or per patient day) were expecteacted
to increase at a rate slower than cost trends over the next 12 to 24 months. Medicare pay
ments would increasebyless than 2 percent, and most states were expected to hold the line
on Medicaid payments (or even reduce reimbursement rates). Commercial payers would
likely limit rateincreasesto 4 to 6 percent. Somepayers, including Medicare, wereexpecteded

to tie certain rateincreasesto documented quality improvements. Value-based purchasıng
bundledpayments, readmission rate reductions, ACOS, and other risk-basedarrangement
wouldpresentopportunities forgreaterfinancial reward for low-cost, high-quality providers.
Reducingcosts would remain a top priority in the coming fiscalyears. Simultaneously, itWa

was
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Part ||: The Five Ps of Healthcare Marketing 61

expectedthat patient throughput and occupancy levels would necd to increase in boch acute
care/hospital-basedand outpatient settings to maximize economies ofscale(i.e., reduction of
per unit cost resulting from high volume) anduseofresources(Valentine andMasters 2012).

ACCESS TO CAPITAL

Accessto capital (funds) would continue to be a key catalyst for mergers, sales, affiliations,
and other alliances among hospitals. Capital was expected to be more difficult to obtain in
the immediate future due to the weak economy, lower patient volumes, and deteriorating
payer mix. Most independent hospital boards would continue to ask whether they could
remain independent and, if so, whether they should (Valentine andMasters 2012).

INFORMATION TECHNOLOGY

Useful data that could inform clinical and financial decisions in real time would become
key to increasing revenues and managing expenses more effectively. Information technol-
ogy systems and strategies would need to be sufficiently robust to capture large volumes
of data that could be readily integrated into decision making (clinical and financial) and
marketing efforts (Valentine and Masters 2012).

CONSOLIDATIONS, CLOSURES, ALLIANCES, AND MERGERS

The healthcare reform agenda was expected to continue, with 5 percent of acute care hospi-
tals closing by 2020. Further consolidation and alignment ofhospitals and medical groups
wasexpectedas these entities joined together to improve accessto capital, form ACOS, and
achievecost reductions through economiesof scale (Valentine and Masters 2012).

CLINICAL INTEGRATION AND CARE DELIVERY REDESIGN

Processesassociated with clinical integration and care delivery redesign were within the
golden triangle” of cost containment, quality improvement, and financial performance.
Fururesuccessfactors for clinical integration and care delivery redesign included attention
to all points of the care continuum: coordination of primary care, acute care, and post-
acute care (Valentine and Masters 2012).

WORKFORCE ISSUES

Pressure to reduce operating costs from 10 to 20 percent over the next three to five years
wasexpectedto continue. The enormity of this reduction would mandate further reducing
nonclinical stafing, outsourcing functions to less costly vendors, and reducing wages or

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62 Healthcare Marketing: A Case Study Approach

holding wages flat and adjusting benefit plans. Backlash from organized labor (i.e, unions)
was expected (Valentine and Masters 2012).

SMART GROWTH

Inpatient and selective outpatient use rates were expected to decline in the immediate/
intermediate futurebecauseof continued high unemployment, shifting thecosts ofhealth-
related benefits from employers to employees, increased price shopping among patients
seeking to obtain health services at the lowest cost, and postponing nonessential medical
care. Accordingly, healthcare leadership teams would need to identify ways to selectively
grow their organizations’ marketshare inareasthat would improve their profitability (Val
entine and Masters 2012).

NEXT STEPS

Lindsey waspleased with thesubstanceand quality of Rachel’s environmental assessment.
Thetask ofanalyzing, synthesizing,and prioritizing these findings including developing
a summary of strategicissuesand marketing plans -lay ahead.

NOTE

The term safety net provider generally refers to providers (including hospitals and
physicians) who offer government-financed programs that enable people to receive
healthcare services when they cannot pay for them due to a lack of private resources.
For example, Medicaid becomes a safety net for long-term care services after a
patient has exhausted his/her private funds.

DISCUSSION QUESTIONS

According to Rachel’s environmental assessment, what were CMC’s most important
strengths, weaknesses, opportunities, and threats?
ldentify and describe CMC’s most important strategic issues.
In what ways should CMC’s strategic issues have driven the development of a
strategic marketing plan?

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Part I|: The Five Ps of Healthcare Marketing 63

the foremost issues Rachel and Lindsey should haveconsideredas they
4. Wha

positioned
thegeneral public?

CMC and promoted its services to area physicians, patients, payers, and

ompleting the environmental assessment-including theSWOTanalysis and
Aftercom

5- summaryofoketing plans to advance the organization’s strategic initiatives. In yourjudgment,
sof strategic issues-Lindsey and Rachelneeded to develop business and

whatare the mentsor
racteristics ofa valid marketingplan?

REFERENCES

(alifornia HealthCare Foundation. 2009. “Fresno: Poor Economy, Poor Health Stress an

AlreadyFragmented System.” California Health CareAlmanac regional markets issue

brief,July. www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/A/PDF%20Alma-

nacRegMktBrieffresnoo9 .

Valentine,S. T., and G. M. Masters. 2012. “For Board Members Only: 10 Trends That Will
Define Healthcare in 2012.” Governance Institute E-Briefings g (1). Published in Janu-

ary.www.governanceinstitute.com/ResearchPublications/ResourceLibrary/tabid/185/
CategoryiD/63/List/1/Level/a/ProductlD/1219/Default.aspx?SortField=DateCreated+D

ESC%2cDateCreated+DESC.

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NERPERSONAL SKILShealth
FOR THEHEALTHCAREics: An
MIARKETER

myof

ment
Press

itics:

Prac-

FEATURE CASE:

PALOMAR HEART HOSPITAL

Thisreal-life case introduces students to common healthcare marketplace issues and contro-
versiesrelated to specialty hospitals and hospital-physician joint ventures. It also exposes stu-
dentstoexamples of interpersonal and interprofessional conflict, inadequate and poorly aligned
Organizationalcommunication strategies, and inept leadership and teamwork that often lead-
s ntnis case-to poor organizational performance. Participantand facilitynamesandvarious
amerncalvalues have been modified to preserve anonymity and accentuate points of learning.

ddle

-org

vgn

pursuin Strategic initiatives, including the need for proactiveinsurance/managedcarecontract-

materialMatpresentedin Part Ill of this text focuses on helpingstudentseffectivelymanageconflict,

Iniscase challenges students to consider organizational andmarketplacerealitieswhen

ouna hnancial and business modeling, and credible marketing strategies and plans.The

improvetheir leadership
nity.:

eadership skills and teamwork, communicate the rightmessagesto thecommu-

uress other important strategic marketingquestions.
E

123

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4 Healthcare Marketing: A Case Study Appro ach1 2

SPECIALTY HOSPITAL PROSs AND CONS

Advocates argue that specialty hospitals provide higher-quality care atJowee
by concentrating physicianskills and other hospital/ medical resources on
plexdiseases(Nallamothu etal. 2007). Critics contend that specialty bosnis.
on low-riskpatientsand shift the financial burden of uncompensated cae
generalhospitals.Opponents further argue that physician ownership ofspecisl.
incentivizesphysicians to refer patients to their own facilities, cherry-pick lo

unitcosts
nagingcom-
ocuslargely

care tocompe

spitals
K andwell-insuredpatients,and induce demand for certain services (A-Amin et al.2010).

RATIONALE FOR HOSPITAL-PHYSICIAN JOINT VENTURES

The overarchinggoalof a hospital-physician joint venture is to create a clinicalandA..
nomic entity thatbenefitspatientsandthephysiciansand hospital(s) participatingini
Patient/community benefits include improved processes of care, services, andoutcome
Potentialbenefits for participating physicians include opportunities for increasedreven
more efficient use of time, and greater control over operational matters affectingpatient
care and physician convenience. Benefits for the participating hospital include themain-
tenance of profitable revenuestreams if physician investors sign cOvenants not toinvestin
competing facilities (Cohn et al. 2005).

eco-

tcomes.

enues,

PALOMAR HEART HOSPITAL

PalomarHeart Hospital (PHH), a provider of cardiology-related services to patientsliving
in andaroundtheCentral Valley of California, opened its doors in 2003.Theopeningof
this $50 million state-of-the-art facility was consistent with the nationwideproliferation
ofphysician-ownedand hospital-physician joint-ventured specialty hospitals in thecaty
2000s (Barro, Huckman, andKessler 2006). PHH was a 51/49 joint venturebetwt
Lincoln HealthcareSystem (LHS) and Central Valley area cardiologists andcardiothorsurgeons, respectively.

tween
cic

ng officer(EVP/
hiredin

and

RussellTaylor joined LHSasexecutivevice president/ chief operating on
COO) thesamemonth PHH openeditsdoors.Russellwas the third EVP/COOmi
thepast 24 months to leadasystemwide inancial turnaround of the ailing verti
horizontally integrated four-hospital healthcaresystem.

hno-

its first sixmonths
nged from -$150,0

Notwithstanding the PHH facility’s physicalattractiveness andhrst-fau
ogy, PHH lostbetween$700,000and$1.1 million per month duringitS
ofoperation.Expectedmonthlylosses/gainsduring this periodranged
to $250,000.Lossesat PHH not only far exceeded LHS’s worst expec
contributedsignificantlyto thecontinuedoverallunderperformanceo
ratemanagement’srepeated but unsuccessful attempts to perslaIf

xpectations butalso
anceof LHS. Aftercorpo

owitz,PHH

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. Int erpersOnal Skills for the He althcare Marketer
Part Il: Ini

125

CEO, to adjust
overallexpenses, the

Istretche

adiust and improve PHHS marketing and staffing plans and better
the decision was made to replace him. Alhough Russell’sspan

cross LHS, he knew that stopping the financial hemorrhageat PHH
consultation with other LHSexecutives,physicians,

Bussell identified the central issues leading to PHH’s woeful financial

foundin

ofcontrolshisfirstandhighestpriority, In
andtrustedstaff
andoperatingpertormanc

nce:

DHH%leaders were ineffective and neither willing nor able to make the

d
:fcult decisionsneeded to improve thehospital’smarketingandoperations.

Colict existed among area cardiologists andcardiothoracicsurgeons.From
rheoutset, jealousies and hard feelings amongseveral of theseven founding
physicians/surgeons (each of whom had asubstantive ownership interest in
PHH) led certain cardiologists to refuse to referpatients to their fellow PHH

heartsurgeons and vice versa.

Teamvworkamongkey PHH and LHS personnelwaspoor. Notwithstanding
its49 percent physician ownership, PHH wasan important member of the
LHS family ofhospitals and relatedhealthcarefacilities.Yet PHH’ managers
resistedassistanceand oversight from LHS’s corporatepersonnel, including
financelaccounting, marketing/planning, and insurance contractingspecialists

whowereable and willing toassist.

• PHHhad insufficient and inappropriatecontractswithhealthinsurance
plans. Although PHHS managers had been given more than twoyears’
advancenotice to negotiate managed care/insurancecontracts to ensure
adequatepatient volumes, roughly 40 percent of theareapopulation was
unableto use PHH’s servicesbecause their HMO or commercial insurance

planhad not yet negotiated terms with PHH.
PHH’scoststructurewassuffocating.Becauseof itsfirst-rateconstruction,
technology,costly furnishings, rich stafing mix, and highlypaid staf,
thehospital needed to perform 45 invasivesurgeries/proceduresand 280
oupatient procedures per month and maintain anaveragedailycensusof

Upatientsjust tobreakevenfinancially.In lightofcompetinghospital-
base cardiology programs and long-standing strainedrelations among PHH

revenuesand offsetoverheadexpenses.Theideaof addingnon-cardiology

Paysiciansandsurgeons,Russellwondered if otherservices,includinggeneral,

servicesshould be added to PHH’Srepertoire toincreasepatient volume and
ariatric, and colorectal surgery; endoscopy; and other medical/surgical

servicesto this pre
to this premier regional heart hospitalwas not wellreceivedby the

rdiologist and cardiac surgeon owners. Boardmembers,employees,and

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126 Healthcare Marketing: A Case Study Appro ach

facility’smision
otherLHSmanagersquestionedthewisdom ofadjustingthe f

while a growingchorusof
and corescopeof servicesso soon after opening, while a
dissenters argued otherwise.

PHH hadineffectivemarketingplans. Phil Surrowitzenjoved
standingamong many of the areascardiologists, so he did not
traditional marketing methods to attract the attention andultinmars
ofinsurers, primary carephysicians, and patients.

PHH’S keymanagers, physicians, and surgeons had poor financial liters.
Although the CEO and senior financial officer understood thehospiral’:
financial picture, few other managers and employees-including thephue
owners -fully appreciatedthe financial dynamics andnuances.

goodoldboe did notconsider
using

Itimatebusines

eracy.

physician

A summary ofselect projected and actual financial and operating indicatorsfrom
Irom

PHHS firstsixmonthsof operation is provided in Exhibit

NEXT STEPS

Russell knew he needed to provide an overview of PHHS performance to dateanda
compelling plan for improvement at the upcoming meeting of the LHS board.Because
various board members still questioned LHS’s specialty hospital strategy and thepurpose
of the PHH joint venture, an overview of the pros and cons of specialtyhospitalsand
hospital-physician joint ventures in generalwasalso in order.

DISCUSSION QUESTIONS

pitals
Whataresome of the apparent advantages and disadvantages of specialtynosp
froma patient/familyperspective?Froma physician/hospital perspective:rcommunity perspective?

Whataresomeadvantagesof participating in hospital-physician jointventue
terms ofa hospital’s or health system’s overall strategy?

Whatplanning and marketing techniques could Russell and his team useO
the financialand operating performance ofPHH?

Inyourjudgment, is it too soon to amendthe mission, vision, and/orsoop
servicesoffered byPHH?Why or why not?

Whatsourcesof conflict contributed toPHH’Spoor performance?What
andteamworkstrategieswouldyou employ to addressthese contlctperformance?

WhatstepscouldRusselltake to addressthe interpersonal contiicts

From a
2.

improve
4.

pe of
5.

tleadership

the interpersonal conflicts withPHHH?

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Part ||: Tnterpersonal Skİlls for the Healthcare Marketer 127

! !:
b

T
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ACTIONSSTRRATEGIC
FTHEHEALTHCARE
MARKIETER

FEATURECASE: INTERMOUNTAIN HEALTHCARE

sCaseisdescriptive rather than decision oriented and requiresanalysis to understand

the

eS orthesituation but does not require anyrecommendationsforaction to bemade. It

ariouselementsof a model healthcare organization andinvitesstudents to considera
Mo uestions and topics addressed in the text and brought to light in the story of Inter-

mOuntain Healthcare.

ormation for this case
was derived from Intermountain’s website at www.intermount

ainhealthcare.org.

INTRODUCTION

Afierisfoundingi6n 1975,SaltLake City, Utah-basedIntermountainHealthcareevolvedfrom
o-tor-profit hospitals in Utah, Idaho,and Wyoming toafullyintegrated15Doselyaffliated not-for

system widely recognizedasone of thefinesthealthcareorganizationsin thehealthcaredelivery s)
world.

161

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162

Healthcare Marketing: A Case Study Appro ach

COMPANY OVERVIEW 185 clinics,

and varioushealth insuranceplans from SelectHealth and brought together
1,000physiciansand clinicians in the Intermountain Medical Group. Inrernse
Healthcarewasthelargesthealthcareprovider in the lntermountain West, with m.
33,000employeesservingthehealthcareneedsof Utah andsoutheastern Idabo o
(AnumericaloverviewofIntermountainHealthcareisprovidedinExhibit ) Et
clinical carewas thebasis of Intermountains mission and the organization’s greatest

Through theyears, Intermountain came to own and operate 22 hospitalsher1omore than

mountair
than

Idahoresidents
Kcellent

t con-

cern.Whether through its high-tech/high-touch clinical programs or by improvinothe
treatmentofcertain chronicdiseases,all three parts of Intermountain Healthcare (;.(.e.,
hospitals,medicalgroup, andinsuranceplans) contributed in essential ways to thesho:aring
ofbestmedicalpractices–and raisingthestandards of clinical excellence.

EXHIBIT 1

Interm

untain

Healthcare by the
Numbers (2012)

Charity cases/care 239,195/$252 million

Hospitals

Clinics

Clinics owned/supported for uninsured/low-income patients

Acute hospital admissions

Acute patient days

Emergency room visits

Inpatient surgeries

Ambulatory surgeries

Births

Patientvisits to low-income clinics (owned or supported)
Employees

185

140,141

519,407

482,013

41,002

107,587

30,873

260,817

33,000

2,500

1,000

600,000

Affiliated physicians

Employed physicians

SelectHealth members

Source: Intermountain Healthcare (2013a),.

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Part IV: Strategic Actions of the Healthcare Marketer 163

MISSION AND PURPOSE

From Intermountain’s earliest years, its mission was excellence in the provision of health-
careservices to communities in the Intermountain region.” Excellent service to patients,

customers, and physicians was the company’s most important consideration.

VISION STATEMENT

Intermountain’s formal vision statement emphasized its intent to be a model healthcare

system by continually learning and providing extraordinary care in all its dimensions
(Intermountain Healthcare 2013b):

Clinical Excellence: We will deliver the best clinical care in a consistent, integrat

way.

Patient Engagement: We will provide a compassionate healing experience, and we
will engage patients in decisions about their health and care.

•

• Operational Efectiveness: We will be wise and careful stewards of our resources

to enable Extraordinary Care.

Physician Engagement: We will create systems and processes that help our physi-

cians best serve their patients.

• Community Stewardship: We are committed to serving the diverse needs of the
Intermountain region and to providing generally available medical services to all

residents, regardless of ability to pay.

Employee Engagement: We value our employees as our most important resource.

CORE VALUES

The company’svalues, publicly posted and widely embraced, wereas follows (Intermoun-
tain Healthcare 2013b):

Mutual respect: We treat others the way we want to be treated.

Accountability: We accept responsibility for our actions, attitudes, and mistakes.

Trust: We act with integrity and can count on each other.

Excellence: We do our best at all times and look for ways to improve.

•

•
•

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164 Healthcare M arketing: A Case Study Approach

COMPANY ETHICS

Every day, patients, health plan members, and their families came to Intermo
need, trusting thesystem’sproviders to deliver the very best medicalCare .
Intermountain’semployeeswere committed to honoring their trust by providi
clinical careand superiorservice with the higheststandards of integrity. This
applied to everyaspect of the companys workand was fundamental to
vision, andvalues. Intermountain expectedevery one of its employees, clinicians
vendors, contractors, and volunteers to understand and follow the rules andreauies
that applied to their work.

in
service.

y providingexcellen

itment
itsmission

nents

General Ethics Standards

1. We are committed to Intermountain’s values of Trust, Excellence,ACCOuntability

2. We perform our jobs and assignments with the highest standards of honesty

and

and Mutual Respect.

integrity. We treat each other, our patients and members, business partners,ven-
dors and competitors fairly.

3. We know, abide by and understand the specific laws, policies and proceduresthat
apply to our jobs and assignments, and to us as individuals.

4. We speak up with concerns about compliance and ethics issues. Specifically, we
report observed and suspected violations of laws or policies, and we agreeto
report any requests to do things we believe may be violations. Furthermore,we
cooperate with any investigation of potential violations.

5. We recognize that our daily work gives us each the opportunity to seeproblems
in our local areas before they become apparent to others or to management.We
are empowered and responsible to raise questions about potentially noncompli-
ant or unethical practices.

6. If we have questions about a situation, we ask for help. We may talk to our super
visor or director, the facility/entity compliance coordinator, a company attorney
the Corporate Compliance Officer, or call the 24-hour Compliance Hotline at(800)
442-4845.

Source: Intermountain Healthcare (2011).

INTERMOUNTAIN’s INTEGRATED APPROACH

Intermountain’s evolution into an integrated systemwas completed inphases.w
organization was founded in 1975, it comprised 15 hospitals. By 1985, it was a
hospital system that granted its facilities such a degree of autonomy that tney

the

multi-
ctually

When

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Strategic AActions of the He althcare Marketer
part V: Strat 165

ypypercdwithcac

eted,butit

calth (then called HC HealthPlans)hadrecentlybeen
business and interacted little with other parts of Inter-cachother. SelectH

edas a satellite busine
butitexisted
in.Nearlyall the

rhe physicians who practiced at Intermountain wereindependent.

mouncain.Near

Thefirstphaseof
Intermountain ho
theirgoverningboards followed

ofintegration
bospitals. The hospitals were reorganized into regions, and

85-1992) wastheintegrationof

ng boards followed suit. Managementwasconsolidatedand

tookonregional responsibi
insteadofcompetewith eact

lities. Intermountain hospitals began to cooperate
ach other

od nhase of integration (1992-present) wassystemintegration. By
Thesecondphase

• aid-1990s,Intermountainhad allotion work: hospitals, the IntermountainMedicalGroup ofemployed
the pieces in place to make vertical

integrationwork:
physicians,and SelectHealth.

BENEFITSOF

lathen
onlntermountain’sperspective, the internal and marketplacebenefits of integration

indudedthe following:

OF ALTH SYSTEM INTEGRATION

id-1980sand early 1990s,
-ring the sometimes disparate components of hospitals andhealthcaresystems.

much had been written about theneed for andbenefits

Clinicalquality. As stated at the beginning of thiscase,whether through its
clinicalprograms or by improving the treatment ofcertainchronicdiseases,
allthree Intermountain divisionsHospitals/Health Services,SelectHealth,
andthe Intermountain Medical Group-contributed inessentialways
tothesharing of best medical practices and raising thestandards of
clinicalexcellence. For example, in treating diabetes,SelectHealth helped
educateall its enrollees about the causes,dangers, and warning signs of
diabetes.Members diagnosed with diabetes werecontacted regularly by
SelectHealth through educational materials and reminders about tests they

heededto help manage their disease. At the primary carelevel, through the
emountain Medical Group, Intermountain offereditsDiabetesCare

Manageme
wit diabetes to help them adhere to their careplans andaccessthe many

andtheseondary care physician and hospital teamwasseamless.The entire

ment program, in which caremanagers
workeddirectlywithpatients

ces availablethroughIntermountain.Forpatientswithdiabeteswho
guired hospitalization, the handoff berween the primarycarephysiCian

Inter
workedtogether to

ntain team, from health plan tohospital,communicatedand
ensure the patient received the bestpossiblecare.

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166 Healthcare Marketing: A Case Study Approach

Service quality One example of the way integration helped improveservice
quality was via SelectHealth’s Member Advocates service, which health plan
members called if they needed helpaccessingvarious Intermountainservices.
In addition, patient billing was simplified, and programs (such as My Health)
enabled patients toaccess both their SelectHealth information and their
medical records online.

Lowercosts. In the vertically integrated Intermountain organization, costs
were not reduced just through economies ofscale and efhcientmanagement.
The really significant cost reductions were achieved by improving the total
process of medical care. By identifying and implementing best medical
practices, Intermountain not only provided quality healthcare; it alsoachieved
lasting improvements in cost structures. Moreover, those savings helped
Intermountain maintain the financial strength required to provide freecareto
those unable to pay.

Prevention. The incentives andresources of Intermountain’s doctors,hospitals,
and health plans were aligned to help people stay well.

Scopeofservice. With hospitals, physician clinics, health plans, homehealth
agencies, occupational medicine clinics, and other services, Intermountain
provided aseamless continuum of care.

Over the years, healthcare leaders throughout the world called on Intermountain
for technical support and education on clinical research and process management.

PATIENT Focus

Intermountain Healthcare declared that every person who came to Intermountain forcare
was unique. Its patients were individuals in the physical sense, of course, but also interms
of life stories, outlooks, and personalities. Intermountain employees recognized thatthe
healthcare they provided needed to be carefully designed with each patient’s specialneeds
in mind. Over time, Intermountain createda culture of healing connections anddeveloped
many systems to help physicians, nurses, and other caregivers provide the mosteffective
treatments for each patient:

Research. Through its clinical programs and services, Intermountain made
the benefits of the latestresearchavailable to clinicians. The company’sboard
oftrusteesestablished annual goals that targeted continual improvements in
healthcare quality.

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V. Strategic Actions of the Healthcare Marketer
Part IV:

167

ntermountaindevelopedadvancedclinical information
formationsystems.

systems that equipped caregivers with sophisticated decision-support and

Communicationtools.

Supportfor patient health. Intermountainestablishedprevention,wellness,
andcare management programs to help patients live more satisfying lives and
supDorted them as they followed the treatment programsprescribed by their

doctors.

RELATINGTO THE PHYSICIAN COMMUNITY
Fromthebeginning, Intermountain recognized that itneededto build strongrelationships
withphysicians. In the 1980s, Intermountain began toengagephysicians more meaning-
fully in the organization’s operations and governance. On the basis of a recommenda-
tion by a joint Intermountainphysician task force, the Intermountain Medical Group
(originallycalled the IHC Physician Division) wasestablished in 1994. The task force

highlighteda number of important tenets:

Qualiry improvement and utilizationmanagement.Physiciansdirect patient
care in hospitals and are critical to their efforts toimnprovecareprocesses,

anage utilization, and develop clinical programs.
Prevention. Physicians can do more than treat and managedisease.They
canalso help their patients prevent illness and help reduce or even prevent

hospitalizations.
Security. Managed care plans areable to direct their members to certain
hospitals and physicians. In the 1990s, manyphysicianssaw an alliance with
Intermountain asa way of securing bothreasonablereimbursement levelsand

patients.
Practicemanagement. Intermountain brings financial and administrative
resources to Medical Group physicians, who are then free to focus on patient
care.Theyalsoarefreed of most of the administrative workassociatedwith
asolo or group practice. Furthermore, they benefit from Intermountain’s
investment in new,computer-basedclinical information systemsthat heln

take patient care to higher levels.
Pbysician recruitment. The Intermountain area community benefits when the
Medical Group createsnew physician clinics located close to the patients they

serve.

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168 Health care M arketing: A Case Study Approach

RELATING TO THE PAYER COMMUNITY: INTERMOUNTAIN’S FORAY INTO HEALTH
INSURANCE

Until 2006, SelectHealth was known as IHC Health Plans and was presented to thepublic
as an aspect of the Intermountain Healthcare brand. However, research showed public
confusion and misperceptions about Intermountain, so as part of Intermountain’s larger
rebranding, IHC Health Plans was relaunched as SelectHealth. Like its parent compan,
SelectHealth was organized as a nonprofit, which made it accountable to the community
rather than to shareholders.

Intermountain launched its first health plan in 1984. Named Health Choice,the
plan was a PPO, and the first enrollees were Intermountain’s own employees. By the
end of 1985, 93 companies were offering Health Choice to their employees andmore
than 38,000 people were covered by the plan. A second product, an HMO called IHC
Care, was introduced in July 1985 and had 11,000 members by year-end. In recentyears,
SelectHealth offered a broad range of plans to more than 500,000 members.

In summary,SelectHealthadvancedIntermountain’smissioninseveralways:

Through SelectHealth, the entire Intermountain organization remained
sensitive to the financial pressures faced by those who paid healthcare bills:
employers, plan members and patients, and government. Through quality
improvement and prevention, Intermountain focused on ways to keepthose
costs as low as possible.

SelectHealth supported disease management programs that promoted health.
For example, as part of Intermountain’s Diabetes Care Management program,
members of SelectHealth who had diabetes received reminders to take
advantage of special benefits, such as diabetes counseling, free glucometers,
and free clinics. SelectHealth wanted to keep its members healthy for the long
term because doing soincreased members’ quality of life and reducedcost.

SelectHealth directed a predictable Aow of patients to Intermountain
physicians and hospitals, which helped keep the organization and its
stakeholders fnancially secure and able to emphasize quality improvement
and prevention. Through SelectHealth, Intermountain was able to work
directly with many patients and customers rather than exclusively throughthe
mediation of third-party insurancecompanies.

RELATING TO THE PUBLIC AT LARGE

Since its founding, Intermountain actively engaged the community, and its family-
oriented image and sponsorship were present at many and varied events, including the
2002 Olympic Games, for which the company servedas official medical provider. Through
theyears, conventional media campaigns including print advertisements, television,radio,

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Part V: Strategic Actions of the Healthcare Marketer 169

odbillboardswere widely used. In light of market research in the mid-2000s that sug-
mested Intermountains image as a large healthcare corporation seemingly undermined its
focuson high quality and cost-effective care, the company changed its longtime name
fromIntermountain Health Carewidely referred toas IHC-to Intermountain Health-
are.The company’s logo was also changed to reaffirm Intermountain Healthcare’s mission
roprovide excellent care. In recent years, Intermountain began implementing social media
anddeveloped a robust presence on Facebook, Twitter, YouTube, and Foursquare.

Intermountain’s most difficult and prolonged legal and public relations challenge
arosein the 1990s, when some county governments determined that Intermountain hospi-
talsshouldpay property tax because of the increasing business orientation of the healthcare
industry in general. Intermountain ultimately survived this challenge and continued as a
501(c)(3) charitable organization on the basis of its numerous gifts to the community.
Foremostamong these gifts was nearly $300 million annually in charitable care to patients
unable to pay.

Community Benefit Department
Thevision of Intermountain’s Community Benefit Department was to improve health-
carefor low-income families and individuals in the community. Staff members worked
with community nonprofit agencies, government entities, and healthcare providers to find
waysto improve the delivery of healthcare received by uninsured, low-income patients.
Partnerships,school and community clinics, collaborations, donations, and other gifts to
the community made up the Community Benefit Department’s wide array ofprojectsand
initiatives.

As a not-for-profit healthcare system, Intermountain annually reported its com-
munity benefits to the counties in which Intermountain facilities were located. Inter-
mountain’s Community Benefit Department helped with this reporting and also worked
toimprove healthcare for low-income families and individuals. Over time, improvements
weremade in such areas asaccess, delivery, funding, and the establishment of clinics.

STRATEGIC PARTNERSHIPS THAT MADE A DIFFERENCE

Overtheyears, Intermountain Healthcare collaborated with key organizations to bring the
bestof their worlds together for the benefit of the patients it served.

Huntsman-Intermountain
Intermountain Healthcare and Huntsman Cancer Institute at the University of Uah
joined forces to give patients the best chance of winning the fight against cancer. Conse-
quently, at most Intermountain hospitals, patients hadaccessto Huntsman’s outstanding
researchand Intermountain’s renowned best-practice methods and patient care.

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170 He althcare Marketing: A Case Study Approachv

GE Healthcare

Intermountain partnered with GE Healthcare to create a new clinical informa:
basedon thelatestresearchaboutmedicalbestpractices.TheEnterpriseClinical I nforma-tion Systemwasdesigned to transform the world of healthcare delivery.
FINANCING EXTRAORDINARY CARE

Caring about people required Intermountain to be caretul about money. Intermo-
Healthcare’smission of providing high-quality care at an affordable cost guided comr
leaders in making important financial decisions. Intermountain provided charitycare
other community benefitsbecauseitwas financially strong and prudently managed.Ar th.
same time, the company strived to keep its charges affordable.

ountain
and

BILLING AND COLLECTIONS ISSUES

Intermountain believed that no one should go without needed carebecausehelshefeared
the cost. In addition to providing high-quality care at affordable rates, Intermountain

offered charitable assistanceprograms and billing policies that helped patients focuson
getting well rather than worrying about how they would pay for care.

Charitycarepolicy Through theyears, Intermountain ofered financial
assistanceon a sliding scale to families and individuals with incomes up to
500 percent of the federal poverty level.

Low interestrate. ForpatientsSwho needed to make payments on their bill,
Intermountain’s interest ratewas significantly lower than typical rates for
unsecured loans. Patients with a demonstrated financial need could set up a
zero-interestpayment plan.Patients willing and able to have their monthly
payments automatically debited from their accounts qualified for areduced
interest rate.

Uninsureddiscounts.Uninsured hospital patients who did not quality for
otherassistanceprograms(e.g., Medicaid, CHIP) receivedan automaticZ
percent discount on their bills. These patients also received an additional 1>

ercent off their bills if full paymentwasmadebeforeservicewasproviaeo
(foratotaldiscountof 40percent)or an additional5 percentoff their biIS1
full paymentwasmade within 30daysafterservicewas provided (tor aodiscount of30percent).

if
total

Collectionspractices.Intermountain did not use the courts to collect anu
medical bill unlesstherewasevidence of fraud. unpaid

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V: Strategic Actions of the Healthcare Marketer

pubicizedassistancepolicy Over theyears, Intermountain informed

P
171

W
patieoients and the community through a variety ofmeansthat charitable
Caancialassistancewas available, including signs, brochures, and counselors
in facilities; information about charity care on billing statements; information
ahout charitableassistanceon the outside of billing envelopes;the
Inrermountain website; and information in Intermountain publications.

BUILDING NEW FACILITIES
nnt-for-profit healthcaresystem, Intermountain returned all money it earned to the

Asommunity in the form of improved facilities, improvedservices,and lowercharges. In
Iorermountain’sfirst 20years, it invested more than $1 billion in replacingand upgrading
isfacilities. It was anticipated that Intermountain would spendapproximately $2.3 bil-
lionon capital improvements to this ambitious construction program berween 2011 and
2016,all while keepingchargeslow. Intermountain Healthcare did not build new facilities
roexpand its presence. New facilities were intended to help the organization keep pace
with the growing population and changing community needs and to serve underserved

populations.

AWARDS AND RECOGNITIONS
Overmuch of the pastdecade, Intermountain was rated by IMS Health (a company that
provided technology-based analytics and services for the global health community) as the
numberone integrated healthcare delivery system in the United States(or among the top

four). US health policy experts and political leaders from across the political spectrum,
includingPresident Barack Obama and former Speaker of the House Newt Gingrich,
singledout Intermountain asa model healthcare organization. Other notable recognitions

weremade by the following organizations:

The College of Healthcare Information ManagementExecutivesand the
American Hospital Association recognized Intermountain Healthcare
for its leadership in information technology. The awardalsorecognized
Intermountain’sextensiveuse ofdata mining-integrated withdecision
support in clinical information systems-to directly improvepatient

outcomes.
Ihe Gallup Organization chose Intermountain Healthcareasone of 27
companies worldwide to earn the Gallup GreatWorkplaceAward for 2012.
Ihe awardrecognizedtheseexcellentcompanies for their extraordinary ability

to createan engaging workplace culture.

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172

Healthcare Ma rketing: A Case Study Approach

TheannualMostWiredsurveysponsoredbyHospitals&Healeh Ne.

journaloftheAmericanHospitalAssociation,namedlntermountain
thenation’smosttechnologicallysavvyhospitalsystemsin 12 of the12

the surveywasconducted.

the

years

Gartner, Inc., aConnecticut-based information technology researchand
consultinggroup,rankedIntermountain’s Supply Chain Organizario

thebest in the nation.

Organization among

•

REGIONAL PERFORMANCE
As one of theleadinghealthcareproviders in the Intermountain region, Intermounr
Healthcarecontributed to theregion’sperformance by providing high-quality, affordabl.

healthcare (Intermountain Healthcare 2012):

untain

Utahwaslowestin the nation in termsof healthcare costs (Centers for

Medicare & MedicaidServices,1991-2009 data).

Utahwasbestin the nation in terms of “avoidable hospital use and costs”

(Commonwealth

Fund, 2009 scorecard).

Uahwaslowestin thenation in termsof infant mortality (Commonwealth

Fund, 2009 scorecard).

Utahwassecondlowestin the nation in terms of “mortality amenable to

•

healthcare (Commonwealth Fund, 2009 scorecard).

Threemetropolitanareasin Utah–Ogden, Salt Lake, and Provo-were in
thelowest fourth percentile in the United States in terms of healthcarecosts

(Thomson Reuters, 2009 data).

SUMMARY

Importantlessonsaddressingkeydimensions of strategic healthcare marketing are brought
to light byunderstandingand refecting on the story of Intermountain Healthcare. Among
theselessonsarethe importance of mission, vision, and values in setting strategic direction

andestablishingorganizationalculture; effectively communicating an organizations
opmentandimprovement initiatives; identifying and relating to patient, physician, payet,
andcommunitystakeholders;developingstrategic partnerships; and linking hnancauIgoas

organizations devel-

and plans to an organization’s mission, vision, and values.

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Part IV: Strategic Actions of the He althcare Marketer 173

DISCUSSION QUESTIONS

DescribeIntermountain Healthcare’s attitude toward the individual patient..1.
In what ways did Intermountain engage the public at large?

2. Describe Intermountain’s approach to engaging the physician community.
A Howdid Intermountain relate to the insurance community?
5. Describe two or more of Intermountain’s strategic alliances. How could these

partnerships be marketed for maximum impact?
Howmight you describe Intermountain’s approach to leadership and teamwork?
Howdid Intermountain link its financial goals to its organization-wide mission?7:

8. In what ways did Intermountain use market and other research to fulfill its mission?
9. Whatwere Intermountain’s most important strategic advantages? How would you

marketthese advantages to advance the organization’s mission?

REFERENCES

Intermountain Healthcare. 2013a. Engaging All of Us in Healthcare: Intermountain
Healthcare Annual Report 2012. http:|/intermountainhealthcare.org/about/overview
lannual-report-2012/Pages/home.html.

2013b. “Mission, Vision, Values.” http://intermountainhealthcare.org/about
/overview/Pages/mission.aspx.

mountain HealthcareAnnualReport2011. http://intermountainhealthcare

.org/about/overview/annualreport2011/Pages/home.html.

o11. Code of Ethics. Created February 23; modified August 31. http://intermount
ainhealthcare.orglabout/overview/Documents/IntermountainCodeOfEthics .

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ACTIONSSTRRATEGIC
FTHEHEALTHCARE
MARKIETER

FEATURECASE: INTERMOUNTAIN HEALTHCARE

sCaseisdescriptive rather than decision oriented and requiresanalysis to understand

the

eS orthesituation but does not require anyrecommendationsforaction to bemade. It

ariouselementsof a model healthcare organization andinvitesstudents to considera
Mo uestions and topics addressed in the text and brought to light in the story of Inter-

mOuntain Healthcare.

ormation for this case
was derived from Intermountain’s website at www.intermount

ainhealthcare.org.

INTRODUCTION

Afierisfoundingi6n 1975,SaltLake City, Utah-basedIntermountainHealthcareevolvedfrom
o-tor-profit hospitals in Utah, Idaho,and Wyoming toafullyintegrated15Doselyaffliated not-for

system widely recognizedasone of thefinesthealthcareorganizationsin thehealthcaredelivery s)
world.

161

Created with Scanner Pro

162

Healthcare Marketing: A Case Study Appro ach

COMPANY OVERVIEW 185 clinics,

Through theyears, Intermountain came to own and operate 22 hospitalsher1omore than

mountair
than

Idahoresidents
Kcellent

t con-

EXHIBIT 1

Interm

untain

Healthcare by the
Numbers (2012)

Charity cases/care 239,195/$252 million

Hospitals

Clinics

Clinics owned/supported for uninsured/low-income patients

Acute hospital admissions

Acute patient days

Emergency room visits

Inpatient surgeries

Ambulatory surgeries

Births

Patientvisits to low-income clinics (owned or supported)
Employees

185

140,141

519,407

482,013

41,002

107,587

30,873

260,817

33,000

2,500

1,000

600,000

Affiliated physicians

Employed physicians

SelectHealth members

Source: Intermountain Healthcare (2013a),.

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Part IV: Strategic Actions of the Healthcare Marketer 163

MISSION AND PURPOSE

From Intermountain’s earliest years, its mission was excellence in the provision of health-
careservices to communities in the Intermountain region.” Excellent service to patients,

customers, and physicians was the company’s most important consideration.

VISION STATEMENT

Intermountain’s formal vision statement emphasized its intent to be a model healthcare

system by continually learning and providing extraordinary care in all its dimensions
(Intermountain Healthcare 2013b):

Clinical Excellence: We will deliver the best clinical care in a consistent, integrat

way.

Patient Engagement: We will provide a compassionate healing experience, and we
will engage patients in decisions about their health and care.

•

• Operational Efectiveness: We will be wise and careful stewards of our resources

to enable Extraordinary Care.

Physician Engagement: We will create systems and processes that help our physi-

cians best serve their patients.

• Community Stewardship: We are committed to serving the diverse needs of the
Intermountain region and to providing generally available medical services to all

residents, regardless of ability to pay.

Employee Engagement: We value our employees as our most important resource.

CORE VALUES

The company’svalues, publicly posted and widely embraced, wereas follows (Intermoun-
tain Healthcare 2013b):

Mutual respect: We treat others the way we want to be treated.

Accountability: We accept responsibility for our actions, attitudes, and mistakes.

Trust: We act with integrity and can count on each other.

Excellence: We do our best at all times and look for ways to improve.

•

•
•

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164 Healthcare M arketing: A Case Study Approach

COMPANY ETHICS

in
service.

y providingexcellen

itment
itsmission

nents

General Ethics Standards

1. We are committed to Intermountain’s values of Trust, Excellence,ACCOuntability

2. We perform our jobs and assignments with the highest standards of honesty

and

and Mutual Respect.

integrity. We treat each other, our patients and members, business partners,ven-
dors and competitors fairly.

3. We know, abide by and understand the specific laws, policies and proceduresthat
apply to our jobs and assignments, and to us as individuals.

Source: Intermountain Healthcare (2011).

INTERMOUNTAIN’s INTEGRATED APPROACH

the

multi-
ctually

When

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Strategic AActions of the He althcare Marketer
part V: Strat 165

ypypercdwithcac

eted,butit

calth (then called HC HealthPlans)hadrecentlybeen
business and interacted little with other parts of Inter-cachother. SelectH

edas a satellite busine
butitexisted
in.Nearlyall the

rhe physicians who practiced at Intermountain wereindependent.

mouncain.Near

Thefirstphaseof
Intermountain ho
theirgoverningboards followed

ofintegration
bospitals. The hospitals were reorganized into regions, and

85-1992) wastheintegrationof

ng boards followed suit. Managementwasconsolidatedand

tookonregional responsibi
insteadofcompetewith eact

lities. Intermountain hospitals began to cooperate
ach other

od nhase of integration (1992-present) wassystemintegration. By
Thesecondphase

• aid-1990s,Intermountainhad allotion work: hospitals, the IntermountainMedicalGroup ofemployed
the pieces in place to make vertical

integrationwork:
physicians,and SelectHealth.

BENEFITSOF

lathen
onlntermountain’sperspective, the internal and marketplacebenefits of integration

indudedthe following:

OF ALTH SYSTEM INTEGRATION

id-1980sand early 1990s,
-ring the sometimes disparate components of hospitals andhealthcaresystems.

much had been written about theneed for andbenefits

heededto help manage their disease. At the primary carelevel, through the
emountain Medical Group, Intermountain offereditsDiabetesCare

Manageme
wit diabetes to help them adhere to their careplans andaccessthe many

andtheseondary care physician and hospital teamwasseamless.The entire

ment program, in which caremanagers
workeddirectlywithpatients

ces availablethroughIntermountain.Forpatientswithdiabeteswho
guired hospitalization, the handoff berween the primarycarephysiCian

Inter
workedtogether to

ntain team, from health plan tohospital,communicatedand
ensure the patient received the bestpossiblecare.

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166 Healthcare Marketing: A Case Study Approach

Prevention. The incentives andresources of Intermountain’s doctors,hospitals,
and health plans were aligned to help people stay well.

Scopeofservice. With hospitals, physician clinics, health plans, homehealth
agencies, occupational medicine clinics, and other services, Intermountain
provided aseamless continuum of care.

Over the years, healthcare leaders throughout the world called on Intermountain
for technical support and education on clinical research and process management.

PATIENT Focus

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V. Strategic Actions of the Healthcare Marketer
Part IV:

167

ntermountaindevelopedadvancedclinical information
formationsystems.

systems that equipped caregivers with sophisticated decision-support and

Communicationtools.

doctors.

highlighteda number of important tenets:

Qualiry improvement and utilizationmanagement.Physiciansdirect patient
care in hospitals and are critical to their efforts toimnprovecareprocesses,

anage utilization, and develop clinical programs.
Prevention. Physicians can do more than treat and managedisease.They
canalso help their patients prevent illness and help reduce or even prevent

take patient care to higher levels.
Pbysician recruitment. The Intermountain area community benefits when the
Medical Group createsnew physician clinics located close to the patients they

serve.

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168 Health care M arketing: A Case Study Approach

RELATING TO THE PAYER COMMUNITY: INTERMOUNTAIN’S FORAY INTO HEALTH
INSURANCE

In summary,SelectHealthadvancedIntermountain’smissioninseveralways:

RELATING TO THE PUBLIC AT LARGE

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Part V: Strategic Actions of the Healthcare Marketer 169

STRATEGIC PARTNERSHIPS THAT MADE A DIFFERENCE

Overtheyears, Intermountain Healthcare collaborated with key organizations to bring the
bestof their worlds together for the benefit of the patients it served.

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170 He althcare Marketing: A Case Study Approachv

GE Healthcare

ountain
and

BILLING AND COLLECTIONS ISSUES

Intermountain believed that no one should go without needed carebecausehelshefeared
the cost. In addition to providing high-quality care at affordable rates, Intermountain

offered charitable assistanceprograms and billing policies that helped patients focuson
getting well rather than worrying about how they would pay for care.

Charitycarepolicy Through theyears, Intermountain ofered financial
assistanceon a sliding scale to families and individuals with incomes up to
500 percent of the federal poverty level.

if
total

Collectionspractices.Intermountain did not use the courts to collect anu
medical bill unlesstherewasevidence of fraud. unpaid

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V: Strategic Actions of the Healthcare Marketer

pubicizedassistancepolicy Over theyears, Intermountain informed

P
171

BUILDING NEW FACILITIES
nnt-for-profit healthcaresystem, Intermountain returned all money it earned to the

populations.

weremade by the following organizations:

to createan engaging workplace culture.

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172

Healthcare Ma rketing: A Case Study Approach

TheannualMostWiredsurveysponsoredbyHospitals&Healeh Ne.

journaloftheAmericanHospitalAssociation,namedlntermountain
thenation’smosttechnologicallysavvyhospitalsystemsin 12 of the12

the surveywasconducted.

the

years

Gartner, Inc., aConnecticut-based information technology researchand
consultinggroup,rankedIntermountain’s Supply Chain Organizario

thebest in the nation.

Organization among

•

REGIONAL PERFORMANCE
As one of theleadinghealthcareproviders in the Intermountain region, Intermounr
Healthcarecontributed to theregion’sperformance by providing high-quality, affordabl.

healthcare (Intermountain Healthcare 2012):

untain

Utahwaslowestin the nation in termsof healthcare costs (Centers for

Medicare & MedicaidServices,1991-2009 data).

Utahwasbestin the nation in terms of “avoidable hospital use and costs”

(Commonwealth

Fund, 2009 scorecard).

Uahwaslowestin thenation in termsof infant mortality (Commonwealth

Fund, 2009 scorecard).

Utahwassecondlowestin the nation in terms of “mortality amenable to

•

healthcare (Commonwealth Fund, 2009 scorecard).

Threemetropolitanareasin Utah–Ogden, Salt Lake, and Provo-were in
thelowest fourth percentile in the United States in terms of healthcarecosts

(Thomson Reuters, 2009 data).

SUMMARY

organizations devel-

and plans to an organization’s mission, vision, and values.

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Part IV: Strategic Actions of the He althcare Marketer 173

DISCUSSION QUESTIONS

DescribeIntermountain Healthcare’s attitude toward the individual patient..1.
In what ways did Intermountain engage the public at large?

8. In what ways did Intermountain use market and other research to fulfill its mission?
9. Whatwere Intermountain’s most important strategic advantages? How would you

marketthese advantages to advance the organization’s mission?

REFERENCES

Intermountain Healthcare. 2013a. Engaging All of Us in Healthcare: Intermountain
Healthcare Annual Report 2012. http:|/intermountainhealthcare.org/about/overview
lannual-report-2012/Pages/home.html.

2013b. “Mission, Vision, Values.” http://intermountainhealthcare.org/about
/overview/Pages/mission.aspx.

mountain HealthcareAnnualReport2011. http://intermountainhealthcare

.org/about/overview/annualreport2011/Pages/home.html.

o11. Code of Ethics. Created February 23; modified August 31. http://intermount
ainhealthcare.orglabout/overview/Documents/IntermountainCodeOfEthics .

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