Written Assignment 3 – Health services organizations place and price decisions – worth 20% of the grade Overview:
Your third assignment will be an analysis of the place and price
decisions of a health services organization as covered in Week 5 and
6. You may use the same organization that was your focus on Written
Assignment 2, or pick another health services organization with which
you are familiar. Be sure you understand the marketing concepts
discussed during Weeks 5 and 6 and can apply them to your organization. You
might have to seek out some information on the organization by visiting
its website, or if it is an employer interviewing someone who has
knowledge of the pricing and distribution decisions. After you have
completed your research, answer each of the following questions in turn
following all the general guidelines or written assignments posted in
the syllabus. Brief overview of the organizations service/products and a description of their target market. This is important to ensure that your analysis considers the needs of the target market in evaluating their pricing and channel decisions.How do you think the organization arrives at its price? Refer to the Week 6 Overview for a framework of some of the pricing considerations and discuss those that appear relevant to your organization. Do you think the pricing strategy is appropriate? Can it be improved to better meet its customer’s needs?Is the organization hindered or helped in their pricing decisions by government or payer restrictions. If so, how do these restrictions impact their pricing strategy?What kind of value delivery network does the organization employ, e.g. horizontal or vertical, and what is their distribution strategy, e.g. exclusive, intensive or intensive? What factors influence the distribution strategies of this organization? Are they customer-focused? If possible, outline all of the channel members and what function they perform to serve the customer?Can you recommend any changes to the value delivery network that would serve customer needs better? Please in-text citations and APA references are needed for this assignment.
hmgt_335_week_5_overview.pptx
hmgt_335_week_6_overview.pptx
Unformatted Attachment Preview
WEEK 5
Designing the Marketing Mix
Product Decisions
HMGT 355
Health Services Marketing
University of Maryland University College
1
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Week 5 readings
• Journal Articles:
– Love, Karen. “The Affordable Care Act: Positive Impact For Quality Improvement.”
Geriatric Nursing 32.4 (2011): 282-284. AgeLine. Web. 14 Mar. 2014.
– Lind, Alice. “Coming To Consensus: Developing An Approach To Measuring Quality
Of Integrated Care Programs.” Generations 37.2 (2013): 54-61. CINAHL Complete.
Web. 14 Mar. 2014.
– Needham, Brian R. “The Truth About Patient Experience: What We Can Learn From
Other Industries, And How Three Ps Can Improve Health Outcomes, Strengthen
Brands, And Delight Customers.” Journal Of Healthcare Management 57.4 (2012):
255-263. Business Source Complete. Web. 14 Mar. 2014.
• Online Text: Core Concepts in Marketing
– Chapter 7, “Introducing and managing the product”
2
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Week 5 Objectives
Product: First of the Four P’s in the Marketing Mix
By the end of the week you should be able to
1.
define a health services product
2.
develop or refine health services products
3.
map the patient experience
4.
differentiate health services products
5.
build quality into health services products
6.
decide on a brand and the product mix
3
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
1. Define a Health Services Product
• physical goods
A product is anything that can be
offered to a market to satisfy a want
or need.
Product can be any of the following:
• services
• experiences
• events
• places
• properties
• organizations
• information
• ideas
4
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Classifications of Health Services Products
Health services products can be classified based on degree of durability, tangibility, and service:
•
Nondurable goods. Tangible but only used once or a few times, e.g., bandages, drugs
•
Durable goods. Have tangible aspects to them and used many times, e.g., MRI, hospital bed,
crutches, wheelchairs, artificial knees, pacemakers
•
Services. Both nondurable and intangible, e.g., hospital stay, doctor’s office visit
Frequently, a patient/client/consumer will buy all three types of health services products to meet the
same need or want. For example, a patient needing a new knee will buy the physician’s services, the
prosthetic knee for implant, and the drugs needed to survive surgery.
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HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Difference Between a Health Service and a Consumer Good
• High quality health service is assumed and not part of the
consumer’s decision making process
• Health care services can’t be touched, harder to convey the
quality and other benefits of the health service
• The health service organization is inseparable from the health
service provider—a bad doctor’s appointment will reflect
poorly on the entire practice
6
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
2. Developing New Health Services or Refining Existing
Health Services
The Patient Experience
Beryl Institute
7
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
All health services products, whether new or
improvements to existing services, should begin
and end with the patient’s or client’s perspective.
What need does the service fill and how can the
service be structured to best fill that need in a
quality and efficient manner?
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HMGT 335 – HEALTH CARE MARKETING – WEEK 5
3. Mapping the Touch Points in the Patient Experience
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HMGT 335 – HEALTH CARE MARKETING – WEEK 5
4. Differentiating Health Services Products
To be competitive, patients/clients/customers must understand how and why your health service
is different from competitive offerings
• Product differentiation: if health service includes a physical product, can differentiate on form,
features, quality, durability, reliability, style, design
• Service differentiation: adding value to the patient experience with ordering ease, delivery
methods, training, consulting
• Personnel differentiation: a more satisfied workforce has higher productivity and conveys a
better image
• Channel differentiation: have more convenient locations
• Image differentiation: uniqueness of health service organization’s image, brand that delivers
emotional value
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HMGT 335 – HEALTH CARE MARKETING – WEEK 5
5. The Quality Factor in Health Services
• Patient/client will assume the health service is quality until proven
otherwise
• Factors influencing patient/client’s perception of a quality health service
o amenities: physical representation of quality in factors such as cleanliness, parking,
landscaping, interior design of facility
o service: those factors that affect the patient’s outcome such as hospital meals,
appointment scheduling, response time, appointment timeliness,
o technical proficiency: training of the health service professionals and execution of
the technical aspects of the health service
11
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
6. Branding and Other Product Decisions
• A brand is a name, term, design, symbol, or any other feature
that identifies one seller’s good or service as distinct from those
of other sellers.
• Examples of health services brands that have achieved
distinction
o Mayo Clinic
o Blue Cross/Blue Shield
o Cancer Treatment Centers Of America
o Betty Ford Center
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HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Product Mix Decisions
• A product mix is the full set of products offered for sale by an
organization. The product mix includes all product lines and categories.
• Product mix decisions include
o Product width. How many different products? Weight Watchers, product
lines include the meetings, online tools, food products, cookbooks, and a
magazine.
o Product depth. How many products within each product line? Cancer
Centers of America offers services for adults, children, and specialized
services for women.
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HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Week 5 additional sources
• Check out a patient experience
mapping toolkit. See if it has
application to your health services
organization.
• Check out this article on health
care branding.
• Available online at:
• http://www.brandtoolbox.com/wpcontent/uploads/2011/03/health_c
are_branding.pdf
• http://www.patientvisitredesign.co
m/docs/Visit_Mapping_ToolKit_2.p
df
• Available online at:
14
HMGT 335 – HEALTH CARE MARKETING – WEEK 5
Activities for Week 5
• Review this overview and post questions in the LEO
discussions
• Leo discussion topics
o focus on quality issues from the week’s readings
o practice mapping a patient experience
o identifying and describing a health services brand
15
Week 6
Designing the Marketing
Mix:
Price and Place Decisions
HMGT 335
Health Services Marketing
University of Maryland University College
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
Week 6 Readings
• Journal Articles:
– ALEXANDER, SHERI. “Next Steps And New Tools: Transparency And
Reference-Based Pricing.” Employee Benefit Plan Review 68.5
(2013): 20-21. Business Source Complete. Web. 23 Mar. 2014.
– Lambert Paul. Haggard, Mary, “Develop your distribution strategy”,
Managed Healthcare Executive. May 15, 2013. Available online at:
http://managedhealthcareexecutive.modernmedicine.com/manag
ed-healthcare-executive/news/develop-your-distributionstrategy?page=full
• Online Text: Core Concepts in Marketing
– Chapter 9, “Pricing the product”
– Chapter 10, “Channel concepts, distributing the product”
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
Week 6 Objectives
1.
Second and third element in the marketing mix
– “P”rice – copayments, deductible, per diem, fee
– “P”lace – pathways of services or benefits from producer or provider to end user
2.
Setting a price for a health service
3.
Identify ways consumers evaluate health services prices
4.
Identify the role of government and private payers in the pricing of health
services
5.
Understand how health services prices adapt to meet needs of the customer
6.
Define a marketing channel system and value network
7.
Design a health care delivery channel
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
1. Setting a price for a health service
• What is the lowest price we can charge? This is the price floor
and based on a break-even analysis
• What is the highest price we can charge? This is the price ceiling
based on the consumer’s perceived value of the service and may
be significantly higher than break even.
• The price point will be somewhere in between these two
extremes factoring in other variables such as:
•
Third party payer negotiated prices, copays and deductibles
•
Competition or lack of competition
•
Organization’s expectation for return on investment
•
Government guidelines
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
2. How consumers evaluate health services prices
• Consumers seek utility from their purchases
– Time utility – Timeliness of health service
(emergency room services, urgent care center, one
day teeth whitening, for example.
– Possession utility – the ability to own the health
service or product, drugs, medical equipment,
nutritional products, for example.
– Place utility – Convenience of the health service,
convenience of getting to and from the health
service
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
3. Role of government and private payers in pricing
health services
• Reference-based pricing – payers develop a set of standard
prices in a geographic area and establish a cap on that amount.
• Affordable Healthcare Act, most significant change to health
service pricing ever!
•
Incentivizes consumers to chose providers who charge at or below
the reference price
•
Punishes consumers who chose providers who charge more than
the reference price
• Federal Drug Administration (FDA) approves price of proprietary
prescription drugs
• Other government agencies can impact all four marketing mix
elements
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
4. Adapting pricing strategy to meet needs of the
health services customer
•
Prices can vary based on regional demand and costs, target market requirements, timing,
order levels, frequency, guarantees, contracts and other factors
•
Price adaption strategies include:
•
Geographic pricing – based on specific regions
•
Discount pricing– giving a discount based on a consumer behavior such as early payment
•
Promotion pricing – a short-term discount of a product/service for purposes of stimulating extra
demand.
•
Differentiated pricing – Different prices for different customer groups, different prices for volume of
purchase
•
Image pricing – Brand name or generic product/service
•
Channel pricing – Based on the number of members in the value delivery network before service gets
to customer
•
Time pricing – based on calendar events such as day of the week
•
Location pricing – Services provided in high cost facilities will require a higher price than same service
elsewhere
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
5. Channel systems and value delivery networks
▪ Marketing channel: An organized network (system) of agencies
and institutions which, in combination, perform all the functions
required to link health service organizations with end customers
to accomplish the marketing task.
▪ Value delivery network: A marketing channel including the
organization, suppliers, distributors and customers who partner
with each other to ensure ultimate delivery of customer value to
meet and exceed customer expectations.
▪ Channel design begins with understanding the consumers’
needs. All members in the value delivery network strive to meet
the customer’s needs most efficiently and effectively.
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
6. Designing a health services value delivery network
▪ What does the customer of the health service need?
▪ Examples of health services customer needs
▪
▪
The right number of units
▪
The shortest wait time
▪
Access to information
▪
Variety of services
▪
Ease of purchase
▪
Ease of payment
▪
After purchase service
Ideal channel will match the channels with the customer needs
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
How many channel members are needed to meet
customer needs?
•
Direct channel: Service provider or product manufacturer directly meets the
customer’s needs. Internet sales can be direct channel (e.g. Weight Watchers
Online)
•
Indirect channel: More than one channel involved.
•
Exclusive distribution: Useful for services and products requiring a high level of technical
and medical knowledge, usually involve patented products. Few channel intermediaries.
•
Selective distribution: Service or products available at a few specially picked distributors.
Useful for specialized health services that have some diffentiated feature from
competitors, e.g. Mayo Clinic brand image differentiation, Lasik Eye product
differentiation. Select number of channel intermediaries.
•
Intensive distribution: Service or products are relatively the same in the eyes of the
consumers and are available wherever such products or services would be expected to be
found. Over the counter drugs and health aids and equipment, weight loss programs.
Many channel intermediaries.
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
Which channel members should be included?
▪ Include only those organizations and intermediaries that
absolutely need to be included in a system to deliver the
customer’s perceived value, and
▪ Include only those organizations and intermediaries who share
the organization’s commitment to providing a quality
patient/client experience.
▪
If quality control and cost containment are important, might chose a vertical
channel system where organization controls all or most channel functions (e.g.
wholly owned health networks or franchise systems)
▪
If specialized expertise or market coverage are important, might chose a horizontal
channel system where health service organization partners with other organizations
that have the expertise to perform a specific channel function (pharmacies contract
with drug manufacturers and logistics providers)
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
Week 6 additional sources
• Check out this article
on 10 characteristics
of effective pricing for
health care products
for transparency
• Available online at:
• http://www.beckersh
ospitalreview.com/fin
ance/10characteristics-ofeffective-healthcareprice-transparencytools.html
Example of health care channels
HMGT 335 – HEALTH CARE MARKETING – WEEK 6
Week 6 Activities
• Review the overview and ask questions in the LEO
discussion
• Participate in LEO discussions on this week’s
journal articles on pricing transparency,
referenced based pricing and distribution strategy
• Prepare and submit Written Assignment 3
…
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