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 Marketing
List Execution Appointment setting

Operations
Net Appointments Slots Throughput Facility ops

Follow Up - Reporting
Margins & Referral Patterns Facility
PCP PCR Management
Op Margin - Splitters
Out migration factors Managed care
Marketing Value Chain

Compelling Determine Work back Creative Ample Operations

value communications dates and planning
time lines times
proposition Compelling Project owner
channels offered
Cost / Advertising offer
Efficient production Response Call Center
benefit Attention coordination
Appropriate Staff projections
Relevant getting Ease of
target training Non-holiday appointments
Timely Clear call to
demographic Event action Morning Site
coordination slots
planning
Weekends 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
Internal Data External Data

Health Risk 3rd Party

Billing Encounter Call Assessment / Geodemographic Other Data
Data Data Center Personally Overlay Sources
Collected Data

Data Hygiene

Marketing
Access & Reporting Tools
Database
Segmentation System
Segmentation Scoring

Consumers

Direct Mail

Positive
Consumer Response

Call Center

Billing Data Clinical Services Facility Screening

 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 Bypass screening

offer May go directly Related clinical service
to physician for evaluation of delivered at hospital
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

*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: $181,162

(Includes: Radio, creative, production, planning)

Responses: 1058 completed calls

Appointments set: 179
Net screens: (if known) 54
Screens needed to B/E: 798
 Hospital A
Vital Statistics

Marketing costs: $16,167

Quantity mailed: 21,985
Responses: 323
Appointments set: 346
Net screens: (if known) 307
Visits/discharges: 54
Gross revenue: $574,266
Net revenue: $189,508
EBITA : $36,006
Marketing profit/loss: $19,839
(EBITA Marketing Costs)
 Hospital B
Vital Statistics

Marketing costs: $24,959

Quantity mailed: 40,000
Responses: 403
Appointments set: 286
Net screens: (if known) 200
Visits/discharges: 165*(incl. medical records)
Gross revenue: $75,273
Net revenue: $13,620
EBITA: $2,302
Marketing profit/loss: ($22,657)
(EBITA Marketing Costs)
Creative and Offers
Creative and Offers