Hospitals form a part of the healthcare industry that has long endured without relying on sophisticated marketing tools. This is quite understandable; for the past decades hospitals have counted on two main drivers of patient traffic: doctors and health insurance (or HMOs).
Each hospital needs a good stable of doctors, as this determines the number of patients they (doctors) can refer for hospital services and confinement. In this way, hospitals capture patients who are very loyal to their physicians, especially those who still keep their “family doctors”. Such doctors bring in generations of family members to their respective hospitals.
HMOs, on the other hand, bring in patients who do not have preferred doctors. Usually, a hospital prioritizes accrediting and maintaining good relations with HMOs providers, big or small. That’s because HMOs carry with them their membership that potentially leads to conversions. With an HMO penetration rate of four percent, HMOs can potentially bring in as many as 4 million patients to more than 1,000 private hospitals in the Philippines today.
This customer referral system has led many hospitals to focus more on strengthening doctor and HMO partnerships, instead of marketing directly to would-be patients. In some cases, major tertiary hospitals have also invested in public relations, mostly by having their doctors appear in health news or medical talk shows. These initiatives, however, are more meant to add prestige to their institutions and, to an extent, keep their doctors happy by providing a semblance of fame to their practice.
Profound changes, however, are taking place in medical institutions in the country today, and hospital boardrooms are starting to notice this in their financial statements.
More hospitals are being put up, leading to stiffer competition for doctors and the patients they bring in. Hospitals are also getting less of the love from HMOs, who are themselves feeling the heat from competition. Nowadays, HMOs are competing over many big-ticket client companies that would often move from one HMO provider to the next, depending on which one offers the cheapest premium.
Once HMOs offer lower premiums, the only way for them to churn out profits is to control utilization. To do that, they find ways to steer members toward establishments willing to charge less for medical services. The marching orders for many HMOs today? Get the best discounts—or better yet pay less to hospitals—while keeping their members happy.
This situation is very much felt by older hospitals that feel the most heat from competition. Many mistake this as a sign that their wells are drying up. Well, it’s drying up because of the scenario discussed above—not because of a lack of potential patients.
The Philippines’ population continues to grow, even as the booming economy gives Filipinos greater spending power. Subsidies received through PhilHealth, the government’s universal health care program, allow more people to enjoy the benefits of private medical care.
The analogy of the well drying up is not applicable. We think this is more of a case of having someone move the cheese, so to speak. As change dawns on the hospital sector, what looks like a bumpy ride ahead is also a journey towards exciting opportunities.
Generations ago, people thought photography would bankrupt painters. Instead, it liberated painters and turned them into artists. The recent changes in the country’s hospital sector will bring about the same outcome for their marketing teams: more than anything, it will force many hospitals to switch to more pro-active, even aggressive, marketing campaigns.
So the logical questions now are these: How do we make sense of these changes and what are the next steps to rise above the competition? Before we do so, we have to examine what to avoid if you want your marketing efforts to go to the next level. Our next post, titled Common marketing pitfalls of hospitals in the Philippines, provides more insights on this subject.