The idea of a hospital trying to drum up business may seem antithetical to its mission; the only “good day” in such an establishment is arguably the one when no one shows up. But at a time when so many Americans are uninsured and healthcare costs are so high, the pressure to grow business – with the right kind of patient – is a fact of life for hospitals as much as it is for real estate agents.
“Hospitals today have so many uninsured patients and end up writing off so much un-reimbursed care, that they need to do things to balance or optimize their payer mix,” said Darrin Lee, director of healthcare account services for Cohorts, a market segmentation specialist. “That means attracting patients who are well insured or capable of self-paying to balance the care they write off.”
St. Vincent’s HealthCare, a hospital in Jacksonville, FL, was feeling the weight of these problems in 2006. That year, the US Census bureau reports that 46,995,000 people – 15.8 percent of the population – weren’t covered by private or government health insurance, up from 15.2 percent in 2005. In Florida, more than 21 percent of the population was uninsured. St. Vincent’s enlisted Denver-based Cohorts in December 2006 to help it identify, in its region, candidates most likely to need a number of services.
“They had some specific initiatives -including a joint replacement/therapy program – they wanted to promote,” said Lee. “They wanted to identify the right audience for those promotions, really target them.”
Cohorts took the names and addresses of people who had been patients at St. Vincent’s over a two-year period and classified individuals into 30 pre-existing categories based on consumer behavior, demographics and lifestyle. The categories, designed by Cohorts, note such information as age, marital status, wealth and interests. Segmenting customers into distinct, named identities can also be known as persona-based marketing.
Cohorts gathers information about individuals in each category via regular, national surveys, which ask for general demographic information as well as detailed personal information, including insurance type, favorite activities and buying patterns. The company claims 90 percent coverage of the US population.
“Persona-based marketing is a methodology of understanding a group,” explains Michele Fitzpatrick, CMO for data-based marketing solutions at Harte-Hanks. “It’s applying the concept of segmentation in a broad way. Persona-based marketing really came out of a lot of work on Web site design, where companies were creating a Web site so that different groups of visitors would have a more positive experience on the site. [For example], existing customer[s] would see a different page and have a different experience than prospects.”
For St. Vincent’s, Cohorts grouped people based on age, marital status, insurance status and other demographic factors that would help the hospital locate promising patients. For the hospital, “promising patients” for joint-replacement therapy were those who were in the age group most likely to need the treatment and who could afford it.
The majority of St. Vincent’s patients fit into the following four Cohorts categories: Burt and Marilyns, couples in their late 60s with an annual income of $60,000 to $65,000; Minnies, grandmothers on a fixed income; Alex and Judiths, affluent empty-nesters around age 60 with an annual income of about $145,000; and also Elwood and Willamaes, elderly couples on a fixed income.
“The purpose of persona-based marketing is to identify segments of customers who are different enough that they want, need and expect different things,” Fitzpatrick says. “The persona carries through segmentation – [it affects] how [people are] treated on the call center and what information is shown on the Web site.”
Fitzpatrick cites Best Buy as an example of persona-based marketing taken to the extreme. The electronics giant has re-designed stores around personics. While persona-based
marketing is not an industry standard just yet, Fitzpatrick recognizes its growing prominence. “It’s too early to say where it wouldn’t work,” she says. “It’s on the rise, and more and more companies are looking at it. I would be hard-pressed to find a place where it wasn’t appropriate to at least look at [using persona-based marketing].”
Cohorts, which was acquired by IXI Corp. in August of this year, has been using its 30 proprietary persona groups since 1991. Health information privacy laws prohibited Cohorts from targeting individuals using specific patient data from St. Vincent’s’ records. But the company’s name and address-based persona information can help St. Vincent’s target its ad campaigns by area.
“We found that St. Vincent’s has an older population, but a very well insured population,” Lee says. “From a healthcare standpoint, those are good patients to have. It’s a good place for them to promote joint replacement therapy and orthopedic in general.”
Using this information, St. Vincent’s began locally promoting selected orthopedic educational events in May of 2007. In June, it launched a multi-pronged ad campaign utilizing local newspapers, community magazines, billboards, and television and radio, with different messages targeted to the four primary persona groups. The use of local media allowed St. Vincent’s to address specific regions and neighborhoods, where its potential patients lived, using media that appealed to the distinct persona categories.
To strengthen its media push, St. Vincent’s also purchased Cohort-encoded mailing lists. These lists helped the hospital select specific segments for direct mail pieces. For example, mailings for the Burt and Marilyns, and the Alex and Judiths, focused on the active lifestyle to which well-off Americans in their 60s aspire, but which they may be unable to fulfill due to medical ailments.
Lee says many of the orthopedic educational events were standing-room-only. Results for the ad campaign launched in June are not yet available, though Kim Deppe, VP of marketing and communications for St. Vincent’s HealthCare says in a released statement: “Cohorts has made the entire customer acquisition process, including planning, media placement and creative development of our marketing materials, more efficient and effective. While Cohorts is rich and deep with data and insights, it is surprisingly simple – and manageable – to understand and apply to our marketing efforts across the entire organization.”
Customer databases are increasingly being recognized as a key to business growth. The idea of recognizing best customers and developing relationships with them is essential to success in all business categories.
“Customer development within a database is an absolute must within direct marketing,” says Michael Fisher, VP of sales for North America at Alterian Inc. “If it’s a once-and-done effort, you won’t grow your business.”
Fitzpatrick agrees. “If a database is designed right, and if information is gathered right, that database will become the center of customer truth,” she says. “You’ll have a 360 degree view of the customer in terms of how they respond to offers and how they interact with the company and the products. Without a database, you can’t get that view of the customer. It’s a way to bring all the information together in a meaningful way.”
David Katz, an insight consultant for the decision sciences group at Experian Marketing Services, says, constructing this 360 degree view of the consumer is a main reason why marketers turn to persona-based targeting. “Personas are essentially pictures that are descriptive about who the customer is, and [personas] are critical [in helping] marketers wrap their head around the targets they’re trying to develop relationships with,” he says. “[Personas] help marketers understand attitudes and behaviors, to build relationships and grow those relationships over time. Demographics are really the social markers that offer marketing people clues to household demography and composition and, ultimately, insights to spending value and potential.”
However, other factors can play an important role in targeted marketing. Katz explains that marketers often neglect to consider the total market size and market penetration of consumers by segment. Customers’ share of spending is another detail that Katz feels is too often overlooked. “If market penetration in 30 percent, but your customers’ share of spending is only 8 percent compared to their competitor, that’s a higher level of knowledge that marketers need to take into account,” he says.
Other possible mistakes in database marketing include over-marketing – a drawback both Fisher and Fitzpatrick point out. While acquiring a brand new customer usually costs much more than keeping an old one, it’s still possible to over-spend on marketing to existing customers.
“It [does not] make sense to send [an existing customer] 12 pieces of direct mail and e-mail when [that customer does not respond] after the fifth one,” Fisher says. “I can use a customer database to make that determination, and I can set up sophisticated business rules to develop appropriate contacts.”
According to Cohorts president Scott Schroeder, hospitals have been slightly behind other types of businesses in the adoption of CRM and database marketing techniques. Certainly, a part of this may have to do with HIPAA (Health Insurance Portability and Accountability Act) rules, which prohibit many of the marketing techniques that use patient data.
“Under HIPAA, there can be a very thin line between a marketing activity that is flatly prohibited and other activities like disease management and healthcare operations that are allowed,” explains privacy law specialist Bob Gellman.
John Volanto, VP, support services and chief information officer at Nyack Hospital in Nyack, NY, agrees that data mining can be a legally tricky business for hospitals. He says that Nyack focuses on regionally targeted campaigns, rather than specific patient characteristics. For instance, Nyack has seen that breast cancer rates are very high in a particular county, so breast health mailings are sent to that county.
“The information always belongs to the patient,” Volanto emphasizes. “It’s a fine line, and hospitals have a lot of latitude because of who we are and because we are trying to treat patients. You just have to be careful; you really can’t focus in on a specific patient.”
By generalizing patient personae with Cohorts’ database, St. Vincent’s has managed to both respect patient privacy and to get its message in front of the right groups of people.