Adapting CRM Strategies for the Healthcare Market

Thomas Corry Managing Member

Corry Direct Marketing, LLC

tom@corrydirect.com

Healthcare CRM

What in the world does healthcare CRM have anything to do with my business and why am I here?

Healthcare Marketing is Changing

Hospitals are moving from mass advertising to targeted direct marketing. Hospitals are very competitive. Look at the New York City metro area marketplace. How do you make sure prospective patients come to your facility?

Healthcare Marketing is Changing

Doctors used to be the target of marketing but has changed to direct to consumer. Hospitals are developing customer outreach databases and are using traditional direct marketing techniques. Different offers, creative and techniques are used in direct mail to attract prospects to the facility.

Healthcare has many of the same goals as other consumer marketing companies
Hospitals are no different than consumer driven companies such as BMG, Time, Inc., Boardroom, Pfizer, or Chase, etc. The business acronyms may be different but the goals are the same.

Healthcare marketing is consumer marketing

Patient acquisition: How do I get more patients coming to my facilities? Patient retention: How do I get my patients continuing to use my facilities? Patient winback: How do I bring back patients who havent using my facilities for some period of time? New Movers: How do I attract prospective patients in my facilitys footprint?

Three Components to a Successful Initiative

Filling the Funnel Marketing Targeting - Offer List Execution Appointment setting Operations Net Appointments Slots Throughput Follow Up - Reporting Margins & Referral Patterns PCP PCR Op Margin - Splitters Out migration factors

Marketing

Facility ops Facility Management Managed care

Marketing Value Chain

Compelling value proposition Cost / benefit Relevant Timely

Determine communications channels Efficient Appropriate target demographic

Work back time lines Advertising production Staff training Event coordination

Creative Compelling offer Attention getting Clear call to action

Ample dates and times offered Response projections Non-holiday Morning slots Weekends

Operations planning Project owner Call Center coordination Ease of appointments Site planning Tracking plan

Validate pro forma Key Learnings from Prior Campaign

Volume projections BE analysis ROI

Healthcare CRM

Tenet Healthcares south Florida division analyzed their $60 million in marketing spending and realized they could cut over 75% of that cost. Their spending was for billboards, radio, newspaper and other mass advertising.

Healthcare CRM

Tenet Healthcare tested direct response and database marketing to 3 hospitals in 2000. Based on the tremendous results the program was rolled out to 25 additional hospitals in 2001. An additional 20 hospitals were added in 2002. Two goals from direct marketing: 1. Increase profitability from existing patients 2. Drive prospects to Tenet hospitals.

Database Architecture
Inte rnal D ata
Health Risk Assessment / Personally Collected Data

Exte rnal D ata

3rd Party Geodemographic Overlay

Billing Data

Encounter Data

Call Center

Other Data Sources

Data Hygiene

Marketing Database Segmentation System

Segmentation Scoring

Access & Reporting Tools

Consumers Direct Mail

Positive Consumer Response

C all C enter Billing Da ta Clinica l Service s Facility Scre ening

Tenet CRM Testing Results

Database marketing is profitable for hospitals Profitability varies by payor mix and competitive environment Product lessons: Cardiology most profitable Some product lines work, some dont e.g. sleep disorders, sports medicine Expect eight-week time lag before start of revenue stream Revenue has continued to actualize

Segmentation and Scoring Models Healthcare life-stage (off-the-shelf) Modified healthcare life-stage Disease specific models Predictive models Other models (RFM, loyalty scoring, etc.) Neural Net using hundreds of variables

Segmentation and Scoring Models Solucient uses cluster methodology, along with other data elements. CPM Corp. uses neural net technology to score names by house and prospect and by service line, e.g. cardiology, pulmonary

Segmentation and Scoring Models

CPM Corp. uses two different scoring approaches. Consumer Healthcare Utilization Index (CHUI) and Patient Disease Index (PDI).

Segmentation and Scoring Models

CHUI scores run from 0 999 to identify an individuals propensity to use health care services as defined by the major diagnostic categories (MDC) and specific diseases within the ICD-9 and diagnostic related groups (DRG). The higher the number, the greater the likelihood the individual will need the service. This is used for prospects.

Segmentation and Scoring Models The Patient Disease Index (PDI) is a co-morbidity segmentation system that uses patient data for segmentation. In other words, if someone has pulmonary issues there is a likelihood there are cardiology issues.

Revenue Chain
Product line-specific revenue from a person that was on the original mailing list that did or did not respond to the offer and might have been screened.

Recipient receives offer

Bypass screening Related clinical service May go directly delivered at hospital to physician for evaluation of symptoms, etc. Delivered service and revenue tracked through facility billing system

Results and test plan analysis pro forma validated

Control Group Methodology

21,988 mail quantity of campaign prospects pulled from database 1,161 (5% of total prospect quantity) held back (did not receive mailing) for control group testing $82.47 average profit per prospect individual mailed $15.75 average profit per control group individual $66.72 net profit per individual mailed $66.72 x 21,988 = $1,467,039 adjusted net marketing profit

ROI Calculation
1

Gross charges Net Revenue

PCR

= Net Revenue*
Product Line (if available)

patient to charge ratio

Net Operating Profit %

= EBITA

EBITA

Marketing Costs**

Marketing Profit

*Net Revenue is projected based on PCR ** Marketing costs include: All creative costs, agency fees, letter shop costs, paper, printing and postage.

Revenue Tracking
Billing System/Code Based

Conducted monthly Tracks to a specific set of ICD9 and DRG codes (reviewed by Medical Affairs and Patient Financial Services) Data tracked for 12-month period In direct marketing, matches a mailed-to individual against the codes In direct marketing, control group revenue is also tracked against a mailed-to group

Virtual Colonoscopy
Vital Statistics
(Source: Call Center Reported Data)

Marketing costs: Responses: Appointments set: Net screens: Screens needed to B/E:
(if known)

$181,162 1058 completed calls 179 54 798

(Includes: Radio, creative, production, planning)

Hospital A
Vital Statistics

Marketing costs: Quantity mailed: Responses: Appointments set: Net screens: (if known) Visits/discharges: Gross revenue: Net revenue: EBITA : Marketing profit/loss:
(EBITA Marketing Costs)

$16,167 21,985 323 346 307 54 $574,266 $189,508 $36,006 $19,839

Hospital B
Vital Statistics

Marketing costs: Quantity mailed: Responses: Appointments set: Net screens: (if known) Visits/discharges: Gross revenue: Net revenue: EBITA: Marketing profit/loss:
(EBITA Marketing Costs)

$24,959 40,000 403 286 200 165*(incl. medical records) $75,273 $13,620 $2,302 ($22,657)

Creative and Offers

Creative and Offers