Focus ROI on Financial and Strategic Outcomes

If marketing is to be valued as a core business investment, then the chief marketing officer must instill a rigorous, results-oriented discipline to set quantifiable goals and demonstrate ROI. Too often, marketing goals are either missing in action or stated in terms too 'soft' to get the CFO's endorsement. Performance measurements are often activity or process oriented, which while important for managing an efficient marketing operation, don't always link expenditures to business outcomes.

The bottom line is this: in the C-suite, only two sets of metrics count -- results related to financial performance and results related to strategic performance. Revenue. Volume growth. Market share. Profitability. Brand loyalty. Differentiation. Competitive sustainability.

We all know the challenges faced by healthcare CMOs when it comes to ROI -- information systems that aren't oriented to customer transactions or purchasing patterns, extensive variations in pricing and reimbursement, complex channel relationships, long buying cycles, etc. -- but, in my experience, the quest for the holy grail of marketing ROI is derailed at three key junctures.

1. Production of marketing plans that are really tactical 'to do' lists confined to marketing department activities

Many a marketing effort falters because actions are created and dollars expended without the strategic underpinning that aligns the organization's growth goals with market opportunities. This happens when marketing is disconnected from growth discussions, then called in after the fact to put a communications spin on the decision-making.

A strategic marketing plan is a derivative of the company's strategic plan -- addressing how the health system intends to grow, what markets it will serve and with what products and services, how it will create differentiation and sources of competitive advantage, how brands will be positioned, how the portfolio will be configured to optimize profitability, how marketing investments will be prioritized, what the expectations are for returns.

2. Marketing investments that overly-emphasize promotions as the primary customer acquisition strategy

At a recent gathering of healthcare marketing executives, the CMO for a well-known, national electronics retailer shared the business analytics that framed his company's marketing strategy and modeled how he could project (with great accuracy) changes in sales and profitability by manipulating various aspects of the brand strategy and marketing mix.

What he demonstrated was how a strategic balance of marketing investments focused on segmentation and targeting, product development, market expansion, channel relationships, pricing, customer experience and, yes, promotion, were required to drive business outcomes.

This means an investment in research methodologies that go beyond the awareness-preference studies so prevalent in our industry, and integrated business, operational, clinical, brand and marketing strategies that encompass more than promotions.

3. Lack of ownership at the executive team level for marketing performance

The nexus of the problem may well reside here if marketing is simply viewed as a functional department and not as a core business discipline and competitive competency of the organization. A marketing orientation is derived from an organizational culture centered on customer needs as well as the sum of organizational activities designed to create profitable exchange relationships by fulfilling those needs.

Marketing department activities have limited utility when access, capacity, pricing, products, customer service, clinical quality, physician relationships and other operational aspects of the business are out of whack. It's critical for the CMO, with the CEO, to drive co-ownership of the marketing goals, strategy and investments - and co-accountability for delivery and performance outcomes - across the entire executive team.

The end game is results

The end game is customer engagement that results in growth, profitability and sustainability. But without full engagement of the organization's leaders in establishing marketing performance targets, strategies and investments - and without agreement as to the strategic and financial metrics that spell success - the CMO is left to defend marketing department activities and expenditures that appear discretionary, rather than essential, to winning in the marketplace.

Karen

St. John's Mercy Physician Clinical Council

A Shared Governance Model for Physician Engagement

Free Webcast - Thursday, September 3, 2009; 12 noon Central

Denny DeNarvez, president and CEO of St. John’s Mercy Health Care in St. Louis, Missouri, is a fan of the Physician Clinical Council (PCC). Which is no surprise when you learn that she first developed a similar shared governance model in 1999 while serving as CEO of the Minneapolis Heart Institute; and again, a few years later, as CEO of Abbott Northwestern Hospital. Now she’s imported the Physician Clinical Council to St. John’s Mercy with significant and positive results.

The PPC concept is based on a simple set of truths, says DeNarvez. “The business decisions of the hospital affect physicians, just as their business decisions impact the hospital. The reality is that patient care is largely directed by physicians who are practicing independently. Doctors and hospitals must work together to ensure quality and efficiency in patient care.”

At St. John’s Mercy, the Physician Clinical Council is a shared leadership model that engages physician leaders in the business side of running a hospital. Ten physicians sit on the council – chosen for their leadership abilities vs. longevity or representational position – and meet every two weeks to discuss and weigh in on issues such as new clinical services, technology acquisitions, business strategies, market dynamics, physician recruitment. Physicians are paired with an executive counterpart and receive coaching on aspects of leadership, conflict management and finance, among other topics.

“Establishing the Clinical Council has been a positive development for the medical staff,” said Dr. Charles Rehm, president of the St. John’s Mercy medical staff. “It created another level of much-needed dialogue and signaled that the CEO really wanted to engage physicians in two-way communications.”

You hear first-hand how the Physician Clinical Council works, as well as steps to take when considering a shared governance structure, when you join our Navvis & Company webcast scheduled Thursday, September 3, 2009 at 12 noon central. The discussion will be led by Denny DeNarvez and Stuart Baker, MD, president of Navvis Consulting. To learn more and register for the webcast go to www.navvisandcompany.com. You can also download a white paper describing the PCC in more detail.

Karen Corrigan

5 Key Areas of Focus when Assessing Physician Need and Alignment Strategies

What health system doesn’t have physician recruitment, integration and alignment at the top of their strategic priorities? Market competition, pipeline shortages, failing practice economics and a growing recognition that they can’t achieve quality and financial goals without physicians at the table, have organizations jockeying to win the race for physician integration and commitment.

A well-planned approach requires superb strategic thinking about possible, probable and preferred futures, and a well-crafted plan to bring vision into reality. The process will be better informed through an analysis about the current state of physicians in the marketplace and how that is likely to change in the future.

However, data is just data unless you use it strategically. 5Rs™ provides a framework and methodology in which to discover and calculate opportunities:

1. Recruitment — Recruitment strategies address physician shortages when both strategic and community assessments indicate a need for physicians in a particular specialty
2. Retention — Top producing physicians are candidates for retention strategies based upon historic commitment of activity to the hospital for inpatient and outpatient service volumes
3. Redirection — Physician candidates for redirection strategies are typically those aligned with competitor hospitals.
4. Redeployment — The goal is to increase practice volumes through better geographic location of the practice or through the presence of multiple practice sites
5. Retirement — Transition planning should be considered for top producing physicians over the age of 55.

Insights from this analysis will launch health systems out of the starting gate and into the field by producing a focused set of tactics to support the overall physician engagement strategy.

Karen Corrigan

Innovation Won't Thrive where Creativity isn't Valued

In Sparking Innovation (Harvard Business Press), Stanford University professor Robert Sutton describes how the ‘hippie’ founders of Lotus woke up one day to realize that a multi-billion dollar company built on creativity was stifling the very innovation that made it successful.

This ‘face the mirror’ moment came when they decided to put the resumes of the company’s creators (under assumed names) through its human resource screening system and discovered that they couldn’t even get a call-back for open positions. As the company grew, it brought in ‘suits and ties’ that could operate the business and sell the products but not create innovations to sustain competitiveness.

Health system CEOs lament the lack of innovation in their organizations and are perplexed as to how quickly innovation initiatives fizzle out. All too often, health system structures, operating systems, policies, culture and hiring practices form the antithesis of innovation. Our business practices, reward systems, hiring and promotions policies support left brain thinking and behaviors. We crave the orderliness of it, find safety in its logical processing, relax in its familiarity.

By contrast, while we love the output of a creative, right-brainer – be it a work of art, a brilliant book, or a breakthrough product innovation – we are mystified, even fearful of the creative process. It’s messy, non-linear, riddled with risk. So, we tend to hire to our safety zone – and end up with a company of smart people that can build organizations, systems, flowcharts and spreadsheets to manage the business, but can’t create the value innovations that drive growth, profitability and future success.

Sometimes “the difference between innovative work and routine work are the types of people who do the work.”

As with most things, the key is to strike a balance. If health systems are to spark the innovations needed to thrive in an industry undergoing massive transformation, they’ll need to address not only ‘how’ to acculturate the creative process but also ‘who’ is sitting around the table.

Karen Corrigan

Running a Hospital is a Blog Worth Following

Running a Hospital (www.runningahospital.blogspot.com) by Paul Levy, President and CEO of Boston’s Beth Israel Deaconess Medical Center, is a blog worthy of following. And a great example of how a social media tool can be used to reach out and create relationships with key audiences. Paul’s blog is followed by employees, doctors, patients, peers, media and many others. As of this writing, his profile alone has been viewed 55,000 times.

You can also follow Paul Levy on Twitter (paulflevy).

Karen

Reprioritize Marketing Investments in a Downturn

We all know the drill. Volumes soften and the first order of action is to slash marketing expenditures. Not that managing costs isn’t important – it’s essential – but reactionary and indiscriminate cost cutting is a mistake according to Harvard Business Review authors John Quelch and Katherine Jocz.

Instead, now is the time to reprioritize your marketing investments – focus on brand building, adjust your product mix, deliver exceptional customer service, and reexamine customer needs. In How to Market in a Downturn, Quelch and Jocz suggest that “companies put customer needs under the microscope and take a scapel rather than a cleaver to the budget.” This means developing a solid understanding of how demand patterns are shifting – both short term and long term – and adjusting strategies, tactics and offerings in response.

The question for healthcare marketers to ponder is whether demand is simply being deferred until better times, or whether consumer values and purchasing behaviors will be more permanently altered by this deep and prolonged recession (think ‘depression era’ consumers). Either way requires focused efforts by marketing executives to identify emerging opportunities and put successful customer acquisition strategies in play.

Karen

CMOs to Explore New Brand Mastery at Fall Innovators' Studio

The Chief Marketing Officers’ Innovators’ Studio will hold its next working session on November 9 and 10, 2009 at the Catalyst Ranch in Chicago, Illinois. The focus of the gathering is The New Brand Mastery, which will address head-on how operational, clinical, business development and marketing alignment can create a powerful, relevant and differentiated brand-driven culture –transforming an organization from one that simply ‘promotes a brand’ to one that ‘delivers the brand.’

Whole Foods marketing executive Maggie Bahler will be a guest catalyst for the Chief Marketing Officers’ Innovators’ Studio brand mastery work session scheduled November 2009. Maggie will engage the group in a discussion about brand as a driver for growth, and share how Whole Foods works to create company-wide alignment to the brand strategy while emphasizing local community connections. She’ll also lead us on a brand excursion to their newest Chicago store where we will experience the brand in action.

Additional catalysts and brand explorations will be announced soon.

Karen

GUEST BLOGGER: MIKE EATON

Flirting with Market Irrelevance?

I visited recently with a senior business development leader for large Midwestern health system. As we talked, he candidly shared a concern that his system might not survive in the market. He noted that repeated growth strategies to reverse a steady decline in market share had been tried, but to no avail. The system was on its third iteration in five years of cost-cutting, eliminating positions, programs and shuttering some underperforming sites.

"We can't cut our way to market relevance," he said, "but nothing else seems to have worked."

The irony of his situation is that the system's decline has come during a period of steady growth in overall demand and technological innovation that has improved the product. Much like the venerable auto brands Oldsmobile, Plymouth and (soon) Pontiac that have disappeared from the market because they were no longer meaningfully different to customers, the decline of my friend's employer begs the question whether there is a coming shake-out of health system brands.

Whether health system reform passes or not, we know that demand will continue to grow and that reimbursement to providers will likely be cut. To balance this dynamic will require payers to allocate resources to those providers who can deliver better outcomes and radically different service at a lower total cost. Some systems will have the leadership, market and performance transformation strategies to make that leap. Many others will not.

So I pose this question: will incremental peformance improvement position your system to survive in a market that will likely demand transformational change? If not, do you have in place the leadership and strategies to become meaningfully different? Those questions ought to be at the forefront of health system thinking. Failing to ask and answer the questions just might relegate a system to the same fate that has beset much of the domestic auto industry.

Mike Eaton is a vice president for consulting with Navvis & Company in St. Louis, Missouri.

Develop Competencies for Brand Leadership

For far too long, health systems have been trying to build brands almost exclusively through communications processes, which waste marketing dollars and undermine competitive performance when the image portrayed is not the experience delivered.

Powerful brands do not happen by accident. They are carefully discerned, purposefully positioned and aggressively managed to create connections that stimulate demand, build customer loyalty, drive growth and improve profitability.

The well-developed competencies underlying great brands include:

• Brand Intelligence – brand leaders employ advanced research and analytic techniques to inform positioning, segmentation, targeting, product design, channel, pricing and promotions decision-making. Real brand intelligence takes more than awareness and preference research.
• Brand Positioning – strategic processes are in place to create a core positioning strategy, articulate the brand value proposition, and formulate integrated operational, clinical, business development and marketing strategies to achieve meaningful competitive differentiation.
• Brand Alignment – strategic processes are in place to unify brand building across the value chain in order to focus design; align operations and organizational policies; build and support effective channels; drive service delivery innovations; create advertising that works; and build staff commitment to ‘live the brand.’
• Brand Portfolio Management – large, diversified, complex health systems are evolving methods for determining, managing, and building brand portfolios, addressing multiple facilities, strategic business units, markets, physician integration, and partnering ventures.
• Brand Evolution – brand leaders measure and track brand performance, and consistently evolve and renew brands to address new opportunities and changing competitive dynamics.

If you want to put rocket-boosters behind your brand, then focus investments to build brand leadership competencies. The payoff is better business performance.

Karen Corrigan

Innovators' Studio Social Media Intensive

A 2-Day Innovators’ Studio Intensive
September 16 – 17, 2009
Catalyst Ranch, Chicago, Illinois

Wrestling with how to incorporate social media into your marketing strategy? How to justify it to senior management? So how do you move beyond the basic tools and tactics of social media to create a comprehensive strategy leveraging innovations in social media to build brands? Manage customer acquisition and retention? Drive service line growth?

Our 2-day deep dive will immerse you in social media, and help you develop a framework and strategy for integrating social media in business, brand and marketing strategies. Learn tools and techniques to create an effective market space for customers. Get practical, quick-to-market ideas to support service line marketing priorities, target high impact consumer segments, build brand equity.

Meet social media experts from other industries and hear from best practice healthcare organizations like the Mayo Clinic, Henry Ford Health System and others. Work side by side with non-competing organizations and test your strategy with the group.

The Innovators’ Studio Social Media Intensive is not a seminar, and definitely not a lecture – it’s a hands-on, working laboratory designed to accelerate the knowledge, adoption and management of social media innovations in health systems. So bring your laptop – pack your smart phone – invite your co-workers – and jumpstart your success in social media.

For more information, or to register, contact Anne Theis at atheis@navvisandcompany.com, telephone 972.304.8389.

Karen Corrigan

CMO Web Meeting to Feature Scott Davis

A Chief Marketing Officers' Innovators' Studio web session is scheduled for September 2, 2009 from 1:30 pm to 3:00 pm EDT. Scott Davis, author of the recently released book The Shift: The Transformation of Today’s Marketers Into Tomorrow’s Growth Leaders, will be our guest catalyst for this virtual working session. For those CMOs that attended July's Innovators' Studio, this is a great opportunity to have your staff learn about marketing's role in driving growth, and, of course, for those CMOs that couldn't make the summer session, this webcast will afford you the opportunity to better understand how to redefine the role of the chief marketing officer and build a future-ready marketing organization. If you are an Innovators' Studio CMO, register by emailing Jody at jcorrigan@navvisandcompany.com or calling her at 540-545-8260.

Advanced Service Line Marketing for Orthopedics

Tomorrow, August 18, 2009, Bill Munley, vice president for professional services and orthopedics at Bon Secours St. Francis in Greenville, SC, will be joining me on a HealthLeaders Media Webcast - "Advanced Service Line Marketing: New Orthopedics Growth Strategies." During this session, we'll talk about trends influencing demand for orthopedics and explore three key initiatives that Bon Secours has undertaken to drive volume and revenue in this category. The session begins at 1:00 p.m. eastern on Tuesday, 8/18. HealthLeaders Media senior managing editor Gienna Shaw will moderate. To hear a brief interview that Bill and I did with with Gienna, click here.

Karen Corrigan

Industry Transformation Requires a Long View Strategy for Health Systems

Over the next decade, the US healthcare system will undergo an unprecedented era of reform and transformation, driven by the tenets of government-led reform. A shift of this magnitude changes the underlying basis for competition and will challenge even the most successful of health systems to stay ahead of the curve.

In the short term, the end point and exact design of health care reform are less important than the wheels being set in motion regarding increased industry consolidation, physician integration, care coordination, cost restructuring and competitive positioning. Over a longer horizon, however, the elements of success for health systems will be dramatically different than today, requiring a vision-driven approach to evolving and transforming the enterprise.

Now is the time for health systems to take a fresh look at their strategic plans, and assess whether they are prepared to compete in a value-based marketplace with increased emphasis on cost, quality and access.

Success will require executives, board members and physician leaders to develop a shared understanding of industry changes, adopt a vision for the future of the health system, anticipate the pace of market transformation and maintain focus through the stages of strategy execution.

Here are 7 key questions to get the conversation going at your next leadership meeting:

• How does the leadership of the health system believe the future is likely to unfold?
• What will be the fundamental requirements of success and how do those differ from today?
• What role do you want to play in that future and what will it take to get there?
• In what businesses and markets should the health system invest its resources, either through ownership or partnership?
• What core competencies will create sources of advantage and market leverage?
• How should the parent company influence and relate to the businesses under its control?
• What changes will be required in the operating and leadership structure to achieve the vision?

A defining characteristic of leadership is the ability to drive strategy-critical change in the face of uncertainty. This is certainly one of those times.

Karen Corrigan

Closing the Brand Equity Gap of Investment and Realized Return

Over the past couple of decades, health systems have made substantial investments in brand building. Many have succeeded in creating stronger brand awareness. Some have improved market position. Only a few, however, have fully realized the substantial, measurable advantage of a fully activated brand strategy.

What these brands leaders have discovered is that:

• Strong brands influence consumer choice
• Strong brands attract and retain the best talent
• Strong brands create contracting, partnering leverage
• Strong brands shape referral patterns
• Strong brands build customer loyalty
• Strong brands better weather economic cycles

The gap between investments in a brand and realized return cannot be closed with brand advertising alone; nor, can it be resolved by customer service, clinical quality, lean operations and other initiatives pursued in isolation of a comprehensive, integrated approach to better leverage the outcomes for market advantage. Greater share. Increased volumes. Better profitability. Customer loyalty.

The only way to narrow the brand equity gap is to effect strategic, operational, clinical, physician and marketing alignment to create and deliver a meaningful, differentiating and durable brand value proposition. Brand alignment builds the brand-driven culture that transforms an organization from one that simply ‘promotes a brand’ to one that ‘delivers the brand.’

Karen Corrigan

Chief Marketing Officers Convene at Innovators' Studio

Last week I had the pleasure of spending time with healthcare marketing executives at the Chief Marketing Officers’ Innovators’ Studio. This group meets three times yearly in ‘deep dive’ working sessions designed to advance the discipline and practice of marketing as a driving force for growth and innovation in health systems. Our July session had a two-fold aim: (1) the evolving role of the marketing executive as chief growth officer and (2) transformation of the marketing operation to that of a strategy-critical business competency.

Over the course of two days, we dissected the current state of marketing in healthcare organizations and created a framework in which to evolve marketing’s role and competencies as the organizational growth engine. We took a hard look at the professional skills requirements for chief marketing executives, the capability requirements of future-ready marketing organizations, and the marketing performance expectations that should be requirements at the C-suite.

How fortunate we were to have Scott Davis, author of The Shift, and Don Friedman, chief marketing officer for CA, as guest catalysts for this work session. Their insights, perspectives and experiences seeded valuable ideas and stimulated much discussion.

Over the coming month, I’ll be blogging on the ‘ah ha’s’, explorations and recommendations from the CMO’s Innovator’s Studio and invite you to join in with your own questions, observations, comments and BIG IDEAS.

Karen Corrigan

Rapidly Restructuring Healthcare Markets Require New Approaches to Brand Management

Ever more complex health system structures, physician relationships, expanding clinical portfolios, new business ventures and expansion into new markets require a proactive, focused and purposeful plan to build and leverage brand equity across the enterprise – across geography – across constituencies.

Today, health systems’ approaches to branding must evolve to address and manage the complexities of:

• Hospital and health system mergers & acquisitions
• Physician integration, joint ventures and owned medical practices
• Ambulatory, post acute and retail diversification
• Academic, technology and business partnerships
• Multi-market, multi-state expansion initiatives
• Enterprise IT/EHR/Website strategies
• Co-branding/co-marketing relationships

This requires more sophisticated methods for determining, managing, and building brand portfolios in diversified health systems, addressing multiple facilities, strategic business units, markets, physician integration, and partnering ventures. Because at the end of the day, the objective isn’t what to call something, it’s market leverage.

Karen Corrigan

Keeping Your Brand Healthy After Physician Integration: Part II

Health systems that ignore the implications of physician integration to the organization’s brand do so at their own peril. Hundreds of doctors in an employed physician structure can produce hundreds of thousands of patient visits in a year – each visit shaping and reinforcing the organization’s brand reputation.

Without an explicit strategy for creating and delivering a brand-defined experience in physician practices, health systems run the risk of developing a brand reputation they don’t want – formed from inconsistency of service, customer indifference, fragmented care, complex processes, poor medical care.

But it doesn’t have to be that way. The key question for health care executives is how to leverage investments in physician integration to increase total brand equity – to build a powerful, differentiated brand presence and to drive growth from a core positioning platform.

To do so, we must first understand brand as a central and foundational underpinning of competitive strategy. Brands are potent business-building assets for driving growth, engaging customers, building profitability. As you develop and evolve the integrated physician structure, key issues regarding brand and business building strategies should be addressed from the beginning.

So how can a health system turn a potential brand liability into an advantage?

• Determine your unique brand value proposition. How you plan to create and deliver value to current and prospective customers through the fully integrated physician practice is fundamental to long term success. What significant customer-centered benefits (more timely appointments, better coordinated care, personalized service, best in class physician talent, etc.) will your patients gain as a result of the integration strategy?
• Agree on brand identity. Names may be about egos, but brands are about business. The right brand identity should, first and foremost, ease the selection process for your customers. Brand identity for the physician group should be chosen in the context of the health system’s strategic positioning and growth goals, as well as its overall brand building strategy.
• Create brand alignment across operating, clinical and marketing systems, and build a discipline to channel investments into those things that matter most.
• Hardwire customer service, operating and patient care processes to ‘deliver’ on the brand. Patient experience is born through brand activation, a process whereby the brand value proposition is translated and transformed into actionable principles, features, service standards and behaviors. Remember that brand reputation is built primarily through customer experience.
• Enhance brand performance. Establish and monitor key metrics regarding growth, revenue, profitability, brand awareness, brand preference, customer advocacy and staff engagement. Identify growth opportunities in key segments, markets, channels. Address barriers that may limit the power of your brand to move market share.

The mantra for health systems seeking leverage from their physician integration investments is simple. Build the brand. Build the business.