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ORIGINAL ARTICLE

by John M. R igby and Allen M . Backman

Abstract Marketing has bad reputation

among Canadian health managers, even though marketing solutions

orkers and client es that are desir-

kely occur if the true enefits of health ser-

ely communicated. The

eed for marketing dir-

ents outside the

fundamental problem facing health care managers is that A they must respond to multi-

ple, often interconnected, constituents and stakeholders. Given the many demands and restrictions on modern health management practice, it seems impossible for managers to satisfy everyone's needs. In fact, though, if one looks to management disciplines outside of mainstream health care, problem-solving tools and approaches to assist health care managers do exist.

One way to picture the problem is to think of a great gap existing between health care managers and their constituents. This gap is composed of macro and micro level problems and issues that must be overcome for health managers to fulfil their mandate successfully. At the macro, or environmental level, these managers are facing changing demographic patterns, shifting population densities , decreasing revenues and a health care para- digm that is moving from a focus on restoring the sick to health to an emphasis on promot- ing and maintaining health.

At the micro, or individual level, there will be considerably more variation between situa- tions as to the precise nature of the separating factors. Nonetheless most micro problems have in common underlying attitudes and per- ceptions on the part of constituent members that are out of harmony with what the health manager is attempting to accomplish. For example, a community may perceive the replacement of a small hospital with a com- munity health clinic as a decline in available

health services when, in fact, it represents a more appropriate mix of health services for that community. Micro level problems include logistical problems in the delivery of a particular service to a specific area or indi- vidual. They would also include a host of complicating factors arising from the personal situation of the user of the health services (for example, time constraints, transportation problems, difficulties in following a treatment regime).

The task facing health care managers is to reach across the gap separating them from their constituents in order to provide services to the constituents and elicit desired behav- iour from them in exchange for the services provided. It is a significantly complicating fact that each of the health manager's con- stituents requires different services from the health system, and that the health manager, in turn, is attempting to elicit different behaviour from each constituent. For example, govern- ment wants fiscal prudence, statistical report- ing, adherence to standards and, often, safe- guarding from criticism. In exchange, health care organizations want funding for existing and new programs. Physicians desire support- ive and convenient environments for the prac- tice of medicine, appropriate remuneration and retention of an acceptable amount of power. In exchange, health care organizations want to ensure high quality services at reason- able cost and the ability to coordinate and plan services. In the regionalization that is emerging in most provinces, it is expected that long term, acute care, and community-based

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programs and facilities will demand funding power and priority from district boards. Labour, other health care providers, suppli- ers and other stakeholders, all want to promote their own exchanges. And all this before we begin to deal with the compli- cated exchanges demanded from health care consumers.

If the task facing health care managers is conceptualized in terms of exchange, a complete discipline becomes available to aid problem solving and understanding. That discipline is mar- keting. Although marketing activity is generally thought to be the domain of profit-seeking enterprises, it is hardly a new insight that many marketing approaches, tools and perspectives can be applied directly to not-for-profit organizations, including health care. In 1976, a leading marketing scholar, observed:

Sadly, most administrators of nonprofit organizations and many academicians in other areas still do not perceive that many problems of nonprofit organizations are basically mar- keting in nature, and that there is an extant body of knowl- edge in marketing academia and a group of trained market- ing practitioners that can help resolve these problems.

In the 20 years that have elapsed since this comment was made, much progress has been made in making marketing con- cepts more understandable and accessible to managers of not- for-profit organizations. However, Hunt’s observation still holds true for many such organizations, and for health care administra- tion in Canada in particular.

There are many reasons why health care managers do not understand or overtly avoid marketing principles. This is partly due to an incomplete understanding of what marketing is truly about (despite some preliminary Canadian work on the i s ~ u e ~ ? ~ ) . Marketing is often associated with various sales tactics. Perhaps nothing captures the common perception of marketing better than the plaid-wearing character Herb from the old situation comedy “WKRP in Cincinnati“: fast talking, highly suspect ethi- cally, terminally shallow and, at the end of the day, really not very bright.

In fact, while marketing can include sales, advertising and promotions (all of which are methods of communicating with client groups) these are only a few of the tools of marketing and not the essence of marketing as such. Although it is undeniable that these and other marketing tools have been used in unfortu- nate ways, nothing in the root understandings of marketing nec- essarily lead to questionable ethical dealings with client groups. Indeed, if managers take the underlying philosophies of market- ing seriously, just the opposite outcome should be realized. Kotler and A n d r e a ~ e n ~ b . ~ ~ ) argue that, “Much of what is unat- tractive about marketing practice today is the result of a lack of appreciation of the proper way to go about doing marketing.”

The Definition of Marketing and Its Implications Marketing is defined by the American Marketing

Associations as “the process of planning and executing the con- ception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organiza- tional objectives.” The definition, though brief, contains several key thoughts: (1) marketing applies to a wide range of organizations

and situations; (2) marketing is a process; and (3) marketing i, designed to create and facilitate exchanges.

1. Marketing’s Wide Applicability: Marketing principles have been applied to a host of organizational settings. Kotler and Andreasen4 and Lovelock and Weinberg6 have refined the implications of marketing approaches for non-profit organizations in general. The unique problems associated with marketing services themselves have also received increasing a t t en t i~n .~ -~ Those problems include issues such as intangibility, perishability, difficulty of evaluation and wide fluctuations in demand.I0

Virtually all the problems identified in marketing services will also be present when considering the more specific problem of marketing of health care services. Kotler and Fox’ have discussed marketing’s appropriateness for uni- versities. Similarly, Shawchuck et a1.12 b2’) have addressed the more delicate question of appropriate marketing efforts within churches and other religious organizations. They argue that marketing does not need to become the end goal of the organization and supplant its mission, but that it can be a means of accomplishing that mission more effectively. If marketing approaches can be sensitively applied to uni- versities and church organizations without warping their missions, they can also be applied to health care organiza- tions without distorting their underlying missions. Indeed, marketing understandings should allow the health care man- ager to accomplish his or her organizational goals more effectively and efficiently.

2. Marketing As Process: Marketing is an ongoing activity. To think of marketing as a “once-a-year” activity that pro- duces a marketing plan and can subsequently be given little thought is a serious mistake. The exchanges that health organizations wish to undertake are constantly happening. Marketing activity must also be constantly happening. Further, marketing is not carried out in isolation from the organization’s environment or other activities: as the organi- zation undergoes change, marketing plans must be adjusted; as the organization’s environment shifts to reveal new real- ties, again the marketing plans must be revised.

3. Marketing As Exchange: According to the definition, the central goal of marketing is to create and facilitate exchanges. Four important implications flow from this understanding:

Marketing approaches demand that health care managers truly and deeply understand their service and that their understanding reflects the view of the user; that is, what benefits are being offered up in exchange to the constituent groups?

Marketing approaches demand that the “price” of health care services be understood from the perspective of the user. What are health system users required to give up in exchange for the services they receive? As a beginning, it must be understood that the total cost to the patient will go far beyond simple out-of-pocket expenses.

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There must be communication between the health care provider and the user. Again, this communication must con- sider what the user wants to know as well as what those in the health care system think the user should know.

Finally the health care service must be made available when and where it is required if the desired exchange is to take place.

These four basic tasks of marketing - designing the service, pricing the service, communicating its benefits to a constituent group, and delivering it to that group - are usually referred to as the “marketing mix.” The design of the marketing mix is complex. When done well, it will have synergistic results, with the whole being more valuable and stronger than the sum of its parts. Conversely, a poorly balanced marketing mix could con- ceivably result in a net loss of value, with the whole being less valuable than the sum of its parts.

The principle that underlies all marketing mix decisions, and that becomes the heart of appropriate marketing activities in practice, is that these issues must be understood, not from the perspective of the health manager, or even necessarily from an objective understanding of what is correct and should be done. Rather, they must be understood from the perspective of the con- stituent groups that the health manager serves - What is their understanding? What issues do they see? What needs do they feel? What are they trying to accomplish?

Marketing principles do not insist, though, that one must and ought to ignore “reality” and blindly pander to the expressed, often misinformed or unrealistic whims of each constituent group. Nonetheless, what marketing thinkers hold as undeniable is that to design and communicate programs and services with- out understanding and responding in some way to the con- stituents’ felt needs, in the absence of pure good fortune will invariably result in resistance and failure. The response may, in fact, take the form of (for example) a communications campaign that attempts to correct misperceptions. But whatever the response, it must begin with the perspective and understanding of the constituents.

Understanding Your Service When considered from a marketing perspective, understand-

ing the service provided by the health system goes beyond sim- ply understanding the technical aspects of a particular procedure or where a service fits in the overall service offerings of a health district. Rather, the service must be understood in terms of the benefits perceived by the constituent group. The broadest state- ment of a particular health district’s service might be “commu- nity health.” In fact, although that statement is obviously tremen- dously important, it understates, and in some cases misstates, the benefits sought and enjoyed by constituent groups. For example, the provincial government would see a benefit, or wish to see a benefit, of efficiency of health care delivery. The referral popu- lation, while seeing health as a benefit, might take it for granted and see “increased understanding of medical problems” as of more immediate benefit. In contrast, an elderly single-again community member might see the main benefit of a community education program as relief from routine and an opportunity for companionship. If so, that person would be disappointed, and

less likely to continue participating in such a program, if no time was set aside for tea or coffee and informal socializing.

Rejuvenating the health system can be extremely problematic if these peripheral benefits begin to dominate the referral popula- tion’s desired benefits. Some health districts in Saskatchewan, where the regionalization of health care services is most advanced, are facing serious difficulties changing the focus of their health service delivery from acute care facilities to commu- nity-based care. Much of the resistance is based on the negative economic impact the conversion will have on communities rather than on any convincing argument that acute care facilities are needed whereas community health centres and other commu- nity-based services are not. This example is not intended to imply that the Saskatchewan health districts concerned should cancel their plans and begin to build more small rural hospitals, but rather that they are more likely to meet with success if they understand the true source of resistance to their plans. Further, successful realignment of health services in these circumstances will necessarily involve extensive communication with the community - it will not be sufficient to simply impose a more rational model on community members without addressing their underlying fears and concerns.

More generally, all services, and health services specifically, can provide monetary, time, sensory, psychic, social and, of course, physical benefits. Aside from the obvious physical bene- fit of being cured of whatever ailment they suffer from, when people seek health care they may also obtain psychic benefits such as reassurance that their suffering can be alleviated, valida- tion that there is, indeed, something wrong, information from an important resource person, and hope; social benefits such as the attention of the practitioner for the lonely patient and the interac- tion of other patients; or time benefits that can be provided by walk-in clinics or satellite clinics in rural areas.

Understanding Your Price When understood strictly in monetary terms, Canada’s health

care system, by design, costs the individual user virtually noth- ing other than his or her contribution through taxes or flat rate fees. However, the monetary price of a service is only one aspect of its total cost, and in some instances the least significant. Health managers are familiar with the notion that there are other costs paid by health care consumers. Marketers must be aware when designing and delivering a service that sensory, time, psy- chic and social costs parallel the benefits described above. Within the context of health care, physical costs should also be considered as a counterpoint to the fact that many of the health benefits are physical.

Sensory costs refer to anything to do with the five senses. Examples of sensory costs would range from an unpleasant physical examination, to poorly prepared food in a long term care facility, to unattractive decor in a prenatal classroom. All of these sensory experiences increase the cost of a service (and lower the likelihood that it will be used in the future).

Time costs are the subjective values that individuals place on the time they lose because of their encounter with the health care system. A busy executive working to a deadline, or a farmer dur- ing harvest, is unlikely to engage with the system for anythmg they do not believe represents an immediate danger to their well-being.

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Time costs are increased by inefficient service delivery, long waits for attention in a professional’s office, inconvenient prac- tice locations, and queuing to wait for elective surgery.

Psychic costs relate to the mental equilibrium of the client. Encounters that cause fear and uneasiness (for example, exploratory surgery, perhaps to diagnose possible cancer; or a retiree’s mental competency test) result in psychic costs to the client. These costs may lead some patients to avoid seeking ser- vices, even if it is in their overall best interest to undergo a test or assessment. Psychic costs can be reduced in some instances by simply explaining to the client what is being done, why it is being done, and what different outcomes might imply.

Finally, social costs are the “attacks” on an individual’s social status that might result from an encounter with the health system (for example, being paraded about the outpatient department wearing nothing but an insubstantial gown; having to attend a sexually transmitted disease clinic). Similarly, many clients are reluctant to accept even basic home care services because they fear doing so would represent loss of independence and, conse- quently, social status.

The true price to the consumer of a health care service can be extremely high and extremely difficult for the health care provider to fully appreciate. Nonetheless, if valuable community health services are to have their full positive impact, health care providers and managers must strive to understand the price of those services from the perspective of those whose health needs they are seeking to meet.

Communication of Health Services For the marketer, communication, the final element of the

marketing mix, is a deeper concept than simply advertising. Communication tools also include publicity, special promotional campaigns and personal communication. More fundamentally though, as Kotler and Levy observe in a seminal arti~le:’~@.’~)

Everything about an organization talks. Customers form impressions of an organization from its physical facilities, employees, officers, stationary, and a hundred other com- pany surrogates. Only when this is appreciated do the mem- bers of the organization recognize that they are all in mar- keting, whatever else they do.

The implication of the quotation is that constituent groups, at all times and in all ways that they interact with the health sys- tem, are drawing conclusions and gleaning information about the system. The manager practising marketing, therefore, will care- fully consider and coordinate the messages that those various encounters are delivering.

Distribution of Health Services The appropriate delivery of health services has been receiving

a great deal of attention in the past while. Many of the changes that health managers are attempting to make involve readjusting delivery points and programs from institutions to communities, multiskilling personnel, and changing programs and services to respond to needs assessment. These changes affect health care delivery, or more precisely in marketing terms, distribution. In addition, an extensive body of marketing literature exists on

distribution that can be applied successfully to health delivery problems. For example, Backman et al.14 applied retail location the-ory to the problem of how to efficiently locate community health centres. In addition to providing technical tools, the strate- gies that marketers employ as they make distribution decisions can provide helpful insights to health care managers.

Understanding Internal Marketing Traditionally, marketing activity has focused directly on the

end user of a service. It has become increasingly clear though, that while concentrating one’s marketing activity directly at the end user is complicated enough, the marketing of services is even more subtle in that marketing activity must also be directed inward at staff and employees within the health system.

There are two distinct reasons for this expanded focus. The first issue is that the manager must recognize that for most con- sumers of health care, the physicians, nurses, professional staff and other workers are the health care system. The interaction with these individuals is indistinguishable in most people’s minds with interaction with the health system per se. The impli- cation is that if health care managers are concerned about the quality of the public’s interaction with the system, they must necessarily be concerned with the quality of the public’s interac- tion with individuals within the system. One cannot improve the nature of the user’s experience with the health system without improving the experience with the people who make up the health system. This point becomes especially important in an environment of health reform when the types of services offered and their modality of delivery are in constant flux. If health care providers do not understand and lay claim to service changes, it is unlikely they will inspire acceptance or confidence in their patients and clients.

Influencing professional staff and workers implies a consis- tent communication effort with them. It implies understanding their needs and objectives, their concerns and difficulties. In short, it involves developing a marketing program just for them.

The second issue revolves around the need for a consistent message to be presented to the general public as to the goals and quality of the system. Many services, and health care services especially, are virtually impossible for the end user to evaluate meaningfully. Users simply do not know, sometimes even after the fact, whether the service they received was of high quality or poor quality, or indeed, if it was even necessary. These types of services are said to be high in credence q~a1ities.l~ Recognizing their own dearth of knowledge, many consumers of health care will seek to supplement their understanding from personal sources. Often, “personal sources” translates into someone they know who is connected with the health care system in some way. That person could be almost anyone, from highly trained health care professionals to housekeeping staff. If they work within the system they are perceived to have expertise, and that expertise will be solicited by at least some members of the com- munity. In effect then, all employees and staff within the health system become the voice of health care in their communities.

If employees and staff are the voice of health care, it is evi- dent that health care managers should be concerned about what those voices are saying. Obviously, one cannot dictate or coerce workers’ opinions - to attempt such oppressive control would

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inevitably have precisely the opposite result of that intended: workers would be alienated and bitter and would communicate those feelings to the community at large. What health care man- agers can do though, is consciously market the health care agen- cy’s position, strengths and abilities to their own staffs. Even non-professional staff should understand, and hopefully agree with, the long term goals and directions of health care in their area. At some point, they will be asked their opinions about those goals - and may even be called upon to articulate and defend them. They should also be fully aware of the capabilities of their health care agency to be able to respond accurately to the inevitable casual inquiries. For example, employees of a rural hospital will field questions from friends, neighbours and family. Their answers may influence whether a potential patient uses a local service or heads off to a major centre, thus underusing the local facility and leaving its viability at risk. Further, health care managers need to ensure that people working within a particular health care facility have an accurate understanding of the quality of care that the facility provides. If the people who work in a facility feel that the care provided is below par, the community will think so as well (in fact, this could be an indication that the facility does indeed provide second-rate care). Little undermines a patient’s confidence in a health care agency more than an employee’s disparaging remark about the agency or the service it provides.

Marketing activity directed toward the employees and staff of an organization is referred to as internal marketing. It forms part of a triangle, illustrated in figure 1, that includes external mar- keting - marketing interaction between the system and the pub- lic; internal marketing - marketing interaction between the agency and its employees; and interactive marketing - the interaction between the agency’s employees and the general pub- lic. If managers want to be sure of affecting perceptions, atti- tudes and ihe client’s overall satisfaction, they must consider and manage all three arms of the triangle.

External Constituents

/ Health Care Agency Internal Constituents

Internal Marketing

Source: Adapted from Kotler (1994)

Health Care Management Lessons and Implications

The discipline of marketing invites and demands that health care managers examine three major areas of present and future endeavour. First, and most basically, marketing invites an exam- ination of one’s attitudes, world view and organizational culture. Marketing is more than a technique, process or skill, although

marketing clearly involves all of these aspects. But more than these, marketing is a particular mind set, a particular approach to problem solving.

A common thread of this discussion has been that correct marketing thinking always begins with the constituent group. From well-baby clinics to quaternary cancer care, the starting point for problem solving should be the effect a decision will have on the constituent groups involved. These attitudes should extend to more than patients. When dealing with government, the public, and health care workers and professionals, health managers must question what it is that people value, and how tasks can be formulated so as to recognize, accept and address the needs of these groups. These considerations need not be undertaken in a manipulative or scheming way. Rather, health managers should be constantly aware of the needs and goals of the constituent groups they encounter. Only by recognizing and responding to their needs can managers hope to accomplish their own goals and objectives.

Marketing thinking and marketing attitudes lead naturally to marketing research, for the second area that marketing invites us to examine is constituent groups. A sincere desire to address and satisfy the needs of one’s constituent groups can only be frustrat- ing unless one has well-defined, research-based concepts of what those needs are. Marketing research is gaining prominence in health care. The predilections toward total quality management, utilization review and evidence-based medicine, all indicate that managers must develop better measurement and research skills.

Finally, marketing invites health care managers to examine critically their own long range plans and strategies. When man- agers are firmly committed to marketing thinking, and the needs, goals and composition of constituent groups are understood, there is then an obligation to consider the current marketing approaches as they relate to constituents. Managers must evalu- ate how well those approaches are meeting the needs of the con- stituent group and the goals of the health facility or agency. In the end, with due consideration of resources, the environment and macro trends, a coherent strategy must be developed to improve the organization’s performance over time.

Figure 2 represents a model of a market-oriented health care unit. The unit itself comprises a research section and a planning section - conceptually if not in fact. The research section moni- tors the variables that tend to separate the unit from its con- stituents and the attitudes and felt needs of the constituents themselves. The research unit identifies trends, emerging prob- lems, needs and opportunities. The planning unit then takes the information gathered by the research unit and, by using planning variables, develops an appropriate marketing mix and workable long range plans with which to bridge the gap separating the unit as a whole from its constituents.

Marketing is not a panacea for health managers. Marketing approaches will not guarantee that the general public is always completely satisfied with their interactions with the health sys- tem; will not assure that cash flows are perpetually uninterrupted; will not relieve the health care manager of dealing with difficult, sometimes contentious issues. What a marketing approach will do, however, is help managers understand external and internal constituents’ needs, concerns and goals; supply a context for decision making; provide communication tools to aid managers

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Market Driven Health Care

Research Planning Unit Unit

Separating Variables: Macro (Environmental)

Economic Political

Technological Cultural

Competitive Micro (Personal)

Perceptions Lack of information

Attitudes Time Contraints

/ Constituents \ External Patients

Government

Accreditors General Public

Internal

Volunteers

Cost Constraints Distancenransience

/ . Internal Marketing Planning Variables

Price Distribution Communication Money Community-Based Publicity Time Physician vs. Nurse vs.

Product/Service Promotion Sensory Allied Health Core benefits Advertising Psychic Telemedicine Peripheral benefits Personal Selling Social Satellite Clinics

Adapted from: Kotler & Zaltman, “Social Marketing: An Approach to Planned Social Change, ’’ 1971

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explain decisions and directions; and furnish an externally focused forward-looking perspective as managers guide their health agencies into the future. Properly understood and prac- tised, marketing can be part of the innovative solutions health care managers develop and apply as they deal with the difficult challenges facing them in Canada’s current health care environ- ment. @

References and Notes 1. Hunt SD. The nature and scope of marketing. Journal of Marketing

2. Kindra GS. A marketing prescription for Canadian health care. In: Kindra GS, Lloyd-Jones J, editors. Marketing strategies for the health Care administrator. Ottawa: Canadian Hospital Association; 1990.

3. Kindra G, Witkorowicz M. Promoting responsible health care con- sumption in Canada: issues, prospects and strategies. In: Ogden HJ, edi- tor. Proceedings of the Annual Conference of the Administrative Sciences Association of Canada, Marketing Division. Vol. 16; Whistler (B.C.): Administrative Sciences Association of Canada; 1995.

4. Kotler P, Andreasen A. Strategic marketing for nonprofit organiza- tions. 4th ed. Englewood Cliffs (NJ): Prentice Hall; 199 1.

5. AMA Board approves new marketing definition. Marketing News 1985 Mar;l:l.

6. Lovelock CH, Weinberg CB. Marketing for public and nonprofit managers. New York John Wiley and Sons; 1984.

7. Shostack GL. Breaking free from product marketing. Journal of Marketing 1977 Spring;4:73-80.

1976 J~1;40:17-28.

8. Parasuraman A, Zeithaml VA, Berry LL. A conceptual model of ser- vice quality and its implications for future research. Journal of Marketing 1985 Fa11;49:41-50.

9. Lovelock CH. Services marketing. Upper Saddle River (NJ): Prentice Hall; 1996.

10. Zeithaml VA, Parasuraman A, Beny LL. Problems and strategies in services marketing. Journal of Marketing 1985 Spring;49:33-46.

11. Kotler P, Fox KFA. Strategic marketing for health care organiza- tions. Englewood Cliffs (NJ): Prentice-Hall; 1985.

12. Shawchuck N, Kotler P, Wrenn B, Rath G. Marketing for congrega- tions to serve people more effectively. Nashville: Abingdon Press; 1992.

13. Kotler P, Levy SJ. Broadening the concept of marketing. Journal of Marketing 1969 Jan;33:10-15.

14. Backman AM, Rigby JM, Rice MD, Rivers LM. Locating commu- nity health centres in rural Saskatchewan: the case of the Living Sky Health District. Healthcare Management FORUM 1995;8(1):52-61.

15. Zeithaml VA. In: Donnelly JH, George WR, editors. Marketing of services. Chicago: American Marketing Association; 198 1.

John M. Rigby, PhD, and Allen M. Backman, MSc, are Associate and Assistant Professors, respectively, of the Department of Management and Marketing, College of Commerce, University of Saskatchewan. Both are also members of the Health Organisation and Policy Research Unit (Hopru). Please address all correspondence to Allen M. Backman.

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