How awards, agencies and annual budgets reinforce wasteful promotional marketing
In Part Two of Our Series on Industry Inertia, we explore Eight forces that prevent health system marketers from putting ServingOverSelling
The formula for ServingOverSelling is fairly straightforward:
A growing affordability crisis in healthcare + health systems’ role in healthcare costs + vast majority of promotional marketing is a waste of money
= health system marketers should reduce or eliminate wasteful promotional marketing however they can.
Not everyone will agree with the formula, but for those who do and who want to proceed with ServingOverSelling, the odds are stacked against you. That’s because industry inertia – the concept we defined in Part One of this series – is extraordinarily powerful. In Part Three we will explore strategies for overcoming industry inertia to pursue ServingOverSelling in health system marketing. But first, it’s important to understand the specific ways inertia presents in our space. In these situations, forces are in play without conscious thought or decision-making – they just “are.” But in part because they just “are” – implicitly impacting so much of what health systems do behind the curtain – they are even more difficult to overcome than the explicit objections to the idea of ServingOverSelling. Here are eight obstacles – embedded in the very DNA of the sector we work within – that hinder our ability to pursue what’s right for our patients, for our organizations, and for ourselves, with ServingOverSelling:
Best Practice Mentality – In the first Joe Public book, one of the bad habits we encouraged breaking was “Me Too Marketing.” It’s understandable that health system leaders and physicians look at competitor marketing around the market or the industry at large and want to copy or better it – the idea of best practices is fundamental to the advancement of medicine itself. But while adopting best practices in medicine helps ensure the most effective and safest procedures are used, applying that approach to health system marketing will cause major issues. Here’s what we wrote back in 2011:
“Of course, just because your rival is pursuing a strategy doesn’t make it right for you. And it doesn’t make it necessarily effective, either. If it holds true that most healthcare organizations aren’t following smart marketing strategies, then ‘Me-too’ marketing simply leads to more bad marketing, or what I like to call ‘inbred’ marketing.”
But good luck fighting back against the Best Practice Mentality: in the 15 years since Joe Public Doesn’t Care About Your Hospital was released, this dynamic has remained firmly entrenched in the health system space. Which makes it extraordinarily difficult to be the first in your market to pull back on promotional marketing and reallocate those resources to more valuable strategies, even if that’s the right move.Visibility Expectations – Thanks to the Best Practice Mentality, and a widespread lack of understanding of how marketing actually works in the health system space, leadership – both administrative and clinical – often values the very promotional marketing many health system CMOs know is wasteful. In our 2014 book, Joe Public II: Embracing the New Paradigm, we talked about how digital and content marketing were rendering the idea that “visibility equals strong marketing” outmoded. We knew that leaders believed that “If I see our marketing, the marketing team is doing a good job. And if I don’t see our marketing, they’re doing a bad job.” Digital marketing, social media, SEM, content marketing, and most importantly, data-driven marketing that allows for hyper-targeted messaging, all prove the opposite: if the CEO or orthopedic surgeon sees your marketing, that’s a failure, because the last people you should be spending money on to see your marketing are your own employees and physicians. Unfortunately, it seems health system leaders didn’t get the Joe Public II memo, as many still equate marketing quality with visibility. And if your leadership values your role as the one who brings visibility through promotional marketing, then it will be much more difficult for you to shift the perceived value of your role to guiding strategies that actually make a much bigger impact on your organization’s reputation, such as the consumer experience, internal engagement or community engagement.
Board Involvement – Boards at health systems shouldn’t be involved in administrative functions such as marketing, but involve themselves they do. And while they bring the same misplaced visibility expectations as health system leaders, they bring their own straws to stir the drink of industry inertia. Many board members at health systems have little to no experience in the business of healthcare – they come from other industries. That’s by design, so they can bring expertise from those industries to help advance healthcare. Not too long ago I presented to a board of directors at a major health system on brand, and the discussion was sidetracked by the revelation that the majority of new patients came to the system from physician referrals, not promotional advertising. This was new news to a number of board members, and we spent half our time explaining that dynamic. This lack of understanding of the business of healthcare becomes a problem when board members lean on their own industry experience to address system challenges, such as believing promotional marketing can drive results like it does in their field. And that often leads them to pressure the CEO and/or CMO to run promotional advertising. Once a CEO feels pressure from a board to run promotional marketing, wasteful or not, the argument is closed.
US News & World Report Rankings – US News & World Report stopped publishing its print magazine in 2010 and stopped its digital weekly publication in 2015. But it’s still around today thanks to its most lucrative business – rankings. US News is most famous for its rankings of universities and hospitals, and every July, when it releases its hospital rankings, the health system space goes bonkers. Champagne bottles are uncorked at those systems who rose in the rankings, and disbelief is shared in hallway conversations in those systems who sank. And that leads to some emotional marketing pressure, to say the least. This year, I spoke to one CMO who shared her planned marketing activities were pushed aside because she had to run a promotional campaign in the wake of her system’s poor rankings, and I spoke to another CMO whose planned marketing activities were pushed aside because he had to run a promotional campaign celebrating his system’s strong rankings. And it’s not just promoting the badges (which of course they have to pay for) – systems across the country spend millions collectively trying to influence physician voters to score their services high to boost the reputational component of the rankings (even though this is a component of the rankings that has decreased in many ways over the years). A few years ago my agency pitched for work to help a large system promote their services to physicians across the country using a $3 million campaign budget. When asked if the goal was to increase physician referrals, or for physician recruitment, the CMO answered, “No, our physicians just believe our rankings are too low and want to convince doctors to vote us higher.” Of course US News isn’t the only outlet to essentially coerce systems to promote its rankings, but it’s the granddaddy of them all. And until health systems begin rejecting the promotion of these rankings en masse, they will continue to fall prey to wasting so, so much money (the idea that US News rankings or other rankings and awards have little influence on patient decision-making is broadly accepted, and we’ll be exploring this more in an upcoming article).
Industry Awards – Each year, health system marketing departments across the country receive awards for their marketing efforts. Often, those awards are used internally to validate the value of the marketing department to leadership, boards and physicians: if those leaders equate “visibility” with “strong marketing,” then what better way to demonstrate your visibility efforts are of value than showing industry recognition from awards? The problem is that the vast majority of those awards are based on classic advertising industry criteria such as “creativity” or “uniqueness,” essentially rewarding the submission for how cool or different the work is. While results are required for most industry awards submissions, few competitions base their winners primarily or even secondarily on the results provided. Further, those results are never validated, letting the marketers, or their agencies, provide often inflated, often unverified results. Finally, while these awards serve as a proxy for “effectiveness” within the marketing community and for many health system leaders, the awards are insular in that they are only celebrating marketing within the parameters of marketing, not within the broader parameters of what actually impacts the business of health systems in a material way. As we’ve laid out before, the promotional marketing of health systems does not make a material impact on the growth of revenues or margin at health systems. So as long as these awards continue to reinforce the lower bar of “cool or different marketing” within our space, it will be hard for marketers to convince their leaders that promotional marketing can in fact be replaced by more effective strategies. While health system marketing departments reinforce the awards façade, health system marketing agencies do the same thing, pursuing ever more industry awards. Why? Because in many cases, they are valued by prospective clients more for the awards they receive than for any results they drive. And the cycle continues.
The Agency Ecosystem – As the health system marketing space has grown over the past four decades, so too has the agency ecosystem supporting it. What was a cottage industry of small- to middle-sized agencies focused on hospital marketing when I joined the fray back in 2000 has become a massive industry that now involves private equity, employs thousands, and is now more than ever committed to ever-higher profits for agencies. Of course marketing and advertising agencies always hoped to turn a profit – this is America after all. The problem is that most make that profit from developing promotional marketing campaigns for their clients – the research, strategy, creative, production and media services most agencies provide represent by far the highest portions of their P&L. To be fair, many agencies advocate for smart client work – I know when I worked at Revive for a decade, including serving as CEO for a year, that was our top priority. Yet for the reasons cited above and below, those agencies were often overruled and asked to create wasteful promotional campaigns anyway. But the truth is, without those campaigns – whether they be brand campaigns, service-line campaigns, performance marketing campaigns – most agencies today wouldn’t survive. As long as the business model of health system agencies of record depends on promotional marketing, it will be difficult for health system marketers to wean themselves off and move to ServingOverSelling.
Annual Budgets – Many of you are smack dab in the middle of planning and budgeting for 2027. We all know that no matter how much time and effort you put into this exercise, your plans will be thrown for a loop throughout the year by unexpected requests, challenges and opportunities. So it’s not quite true that annual planning and budgeting is the most powerful factor driving continued promotional marketing in the health system space despite its ineffectiveness, but boy, is it powerful. Even if you use “zero-based” budgeting and build your plans from scratch, the forces that compel you to repeat the approaches of the past and continue investing in wasteful promotional marketing come from all corners. The service-line leader who is facing a drop in volumes YOY and wants you to promote the service (forget about the impact of changing demographics, lost physician relationships or a deteriorating patient experience on those declining volumes). Or pressure from the board and/or CEO to combat a competitor’s launch of a campaign (see above). Or the desire to defend your budget from decreases by including the biggest ticket item possible – a promotional brand campaign. The need to keep the eye of Sauron off your department – whether that scrutiny is real or imagined – ensures that annual budgeting is a key feeder of industry inertia.
Our Careers – As we discuss throughout the ServingOverSelling platform, CMOs and their teams are still valued for visibility perhaps more than any other deliverable. More than volume increases. More than brand value. More than ROI. No matter what the job description says or the leadership interviews emphasize, we are so often evaluated on the “strength” of our promotional marketing campaigns when applying for a new job. We are hauled before the board not to talk about improving physician relations or the impact of a poor experience on reputation, but to showcase our new brand campaign. When push comes to shove, many of us know our jobs depend on continued, and often high-profile, promotional marketing. We don’t even think twice about this pressure – it is just there. For those of you wanting to pursue ServingOverSelling in a meaningful way, convincing others in the organization that promotional marketing is a waste without risking your standing in the organization may be the greatest hurdle you face. The good news is you have experience, evidence, and a growing movement calling for health systems to prioritize ServingOverSelling on your side.
As a health system marketing leader, it may feel like an impossible task to overcome even one of these forces, let alone all of them. But overcome we must, to do what’s right for our patients, for our organizations, and for ourselves. In Part Three of this series, we’ll explore strategies for just that in our pursuit of ServingOverSelling.