Thursday, June 25, 2009
As the cost of health care skyrockets, how are hospitals making ends meet? We'll look at the competition for patients and how hospitals market their services to get more people in the door.
MAUREEN CAVANAUGH (Host): I’m Maureen Cavanaugh and you're listening to These Days in San Diego. President Obama and healthcare reform advocates say more Americans must be given access to affordable medical care. But for Americans who already have that access, hospitals are starting to make themselves look better and better. They have all-private rooms, the newest state-of-the-art devices, they have new buildings, and most of all, catchy advertising phrases to distinguish themselves in a very competitive market. The food may not be much better, but the hospital packaging has gotten a lot fancier in recent years. To talk about how this trend has affected San Diego hospitals, my guest is Tom Larson. He's a contributing writer for the San Diego Reader. His feature story, "If We Didn't Advertise We'd Go Broke Treating the Poor," is in this week's issue. And welcome, Tom, to These Days.
TOM LARSON (Contributing Writer, San Diego Reader): Hi, Maureen. Thanks for having me.
CAVANAUGH: In the interest of full disclosure, KPBS Radio has had several hospitals as underwriters for the station. Well, Tom, your story looks at San Diego's four big hospital groups, and just start out by telling us who they are.
LARSON: Well, they are Sharp, Scripps, Palomar-Pomerado, which is in Escondido and Rancho Bernardo, and UCSD Medical Center. A lot of listeners are probably in the HMO Kaiser, which is a member-based organization, but that's a kind of a different group, and my article looks at those four big hospital systems which are not-for-profit but they are huge corporations.
CAVANAUGH: Let me ask you then, do all of the four that you mentioned, are they all competing and advertising now?
LARSON: Oh, yes. Their market shares are rather different. Sharp has the highest market share of 27% and UCSD is down at six. But they all are working roughly a one to two million dollar advertising marketing budget each year, trying to, you know, go after consumers, patients, customers, however you want to define them, at different parts of their health lives. And, yes, it's – they're becoming more aggressive with their advertising and the competition is fierce.
CAVANAUGH: And just to place this conversation in context, we must remember this is a somewhat recent phenomenon. I mean, there was a time hospitals did not advertise.
LARSON: Yes, neither did doctors, neither did lawyers. A lot of – I don't know what we call this. The personal, the private, the intimate enterprises were off limits to advertising. But, you know, nowadays we live in an age when money is king and keeping these big systems going and open just because the payrolls are so huge. They really feel they have to be in the market. They feel this is the way to grow their share and it all comes down to attracting new patients. That's what they say.
CAVANAUGH: Well, Tom, tell us, from what you learned in doing the research for your article, how are hospitals marketing their services to people? What various things are they doing?
LARSON: Well, of course, they rely on traditional print ads. I think, in the inside of the magazine, of the Reader this week, there's some examples of the print ads and certainly on the cover there's one celebrity spoke – pitch ad, a picture of LaDainian Tomlinson, who signed a two million dollar deal over – payable over five years to promote and brand Palomar-Pomerado. So there's a lot of print advertisement going on. There's also these TV infomercials, which are very interesting. People can see them on late night television, they can see them on the websites of the various hospital groups, and these patient testimonials are very popular these days. I think they exist in kind of – in all kind of forms, whether you're buying a car or you're inquiring about a cancer treatment. And what they are are real life videos about people in distress who've gone to a hospital and gotten good care and they want to testify about it in these videos. And, of course, we live in an age of personal disclosure in which talking about your very intimate details in public, often via video, is trusted by most people. We sort – we tend to believe them over the doctors and the nurses as far as talking about the benefits of a particular program or hospital.
CAVANAUGH: I'm speaking with Tom Larson, contributing writer for the San Diego Reader, about his feature story about hospital advertising called "If We Didn't Advertise We'd Go Broke Treating the Poor." I'm interested to find out, Tom, what do celebrity spokespeople – what do the hospitals think they contribute?
LARSON: Well, all of the hospitals are interested in branding themselves and each of them go about this differently. UCSD has a tag phrase called 'the power of academic medicine' and they like to associate research and a university institution with medical research, and that association is going to give you good care. Other hospitals, which don't necessarily have that connection, go out and find celebrity spokespeople, and they found L.T., LaDainian Tomlinson, and he signed up with this sort of five-year contract to not just be in their ads but to go to schools, to promote health, to do print ads. He does the foundation dinner each year where they raise an awful lot of money. That's another way hospitals need to market themselves, is toward donors and through foundations to get monies to make the bottom line. But, you know, it's like anything, it's not a beer commercial per se that the celebrity is associating himself with, it's more often this notion of a trusted figure in the community who wants to lend his name from his success in one area to the proposed success in terms of the hospital. And this ad campaign with L.T. is all about the hospital of the future. Palomar-Pomerado is building this one billion dollar expanded hospital and – in Escondido, and the thing is costing them a billion dollars. It was approved in a recent ballot initiative because this is one of these public not-for-profit hospitals, which is, in part, owned by the taxpayer. Not everybody agrees that a celebrity pitch works. A lot of people think that we should just concentrate on patients and talking about people, not about so much image and so that's a kind of a controversy in the world of marketing.
CAVANAUGH: Well, talk – Let's talk about the marketers for a minute. These marketers in the hospitals, I would imagine, are not medical personnel and I'm wondering what do the doctors and the healthcare workers think about all this?
LARSON: Well, I think we're all sort of under the gun of the marketers. I mean, we're all subject to it. They're the ones who are responsible for whatever organization we work with and its public image. And so, consequently, you know, the doctors and the nurses and so on, the hospital staff, really have to go along with the marketers. I know at Sharp, they created this thing called "The Sharp Experience," which is their way of branding, you know, this sort of personal healthcare, in other words the individual patient has this experience at Sharp which they later come back and talk about in a print or a video ad. And they enlist the doctors and the nurses in these ads. It's very interesting that the doctors are sort of there to talk about the procedures they did and, often, in these testimonials, you know, everyone gets obviously emotional about a particular saving angioplasty – an angioplasty that saved someone's life, and there's the doctors and the nurses, the family, even the patient, very affected by the care they've received. And so the doctors are really part of this. I think they have to buy into it. You know, there's probably some that don't want to but there's a lot who are very savvy. This is the way they're going to, you know, pay for these programs and certainly pay for the salaries of specialty doctors.
CAVANAUGH: Now we know what the hospitals are trying to get out of this. They are, of course, trying to compete in the marketplace and have more people use their services. I'm wondering, though, did you find that any of this marketing is actually helpful to consumers, that they become aware of what kind of healthcare is available?
LARSON: Well, these are things – this is the toughest question of all to try to answer: What is the connection between a particular marketing program and its outcome. And the marketers were hazy about this at best. I mean, they could – their bottom line is new patients. You know, how many more – how much are we growing the market share? And how many new patients are they getting? So one fellow told me that it's – they do a lot of outreach to women, especially young women who are looking around for a place to – if they're pregnant when young or at whatever age, they want to choose a hospital system to go into for prenatal care, birth care, or postnatal care, etcetera. And the marketers, you know, so they target these women and they say, well – you know, with health fairs and advertisements and so on. And yet it's very hard for them to measure whether or not that woman came into the system via some kind of outreach program and if she becomes a sort of loyal patient for the next five or ten or twenty years. So they're dealing with these kinds of intangibles and outcomes and they often don't like to talk about these things because they – I think it's more of an art than a science, in terms of marketing. I think what they're really after is just constant presence in whatever media environment they can crack, whether it's print or video or television or radio. A lot of these ads are on radio. And they just want to be in our consciousness as consumers and patients and they want to sell us this association between their – the image of their care and the actuality of their care and, for a lot of people, there's a big gap between those two things.
CAVANAUGH: Now, Tom, the title of your article in the Reader is "If We Didn't Advertise We'd Go Broke Treating The Poor." Is that basically, fundamentally the reason that this marketing is taking place?
LARSON: No. It's – You know, all titles are misleading, I think, in a sense because they're there to kind of hook a reader and bring us into perhaps a controversial element of this. But no place is going broke, you know, presently because they're just treating, you know – the costs of the poor are so high that they're going under. That's not true. A couple of them did talk about how much the poor cost and, you know, I heard President Obama on "Nightline" last night and he said that for every American, we spend a thousand dollars a year of our medical premiums and payments on the care for uninsured. So it's probably somewhere between ten and twenty percent that this – that the poor are charging. So – But this is just one element of about why they're marketing and who they're targeting. They're really going after people with money, people with healthcare, young people who they want to be loyal to their hospital system, and those people with conditions that, for example, the heart programs, there's a lot of heart patients these days who are getting a lot of good help. I'm actually one of them. I've had a couple heart attacks myself, and I had great care at Scripps. So they realize that that's a service that they can offer to people, and it's a growth industry. More and more people are – have heart conditions in America, for whatever reason, and we need treatment. We also need prevention. But the hospital is there primarily to help people who are in distress.
CAVANAUGH: I want to ask you, in my last question, and, again, from the context that hospitals didn't always used to do this, did you find any ads that you were surprised by?
LARSON: Well, you know, I think just some of the ads about the weight loss surgery really surprised me, in part because very few people qualify for these kind of bariatric or lap band surgeries, which I discuss in the article in depth. And I was kind of surprised that, for example, UCSD was paying somewhere around $80 to $120,000 a year advertising this surgery. I don't know if they're on the cutting edge of, excuse me, you know, of weight loss surgery, etcetera. But it seemed to me to be a little big egregious and this, perhaps, is, from their point of view, is a kind of a niche which they feel they can do a good job with and maybe they'll get more doctors to recommend the surgery and more health insurers to pay for it. So sometimes we – I wondered about how much they were selling the procedure versus how much they were selling the actual care, you know, the real person-to-person quality of healthcare, which is really what we want.
CAVANAUGH: Well, thank you so much for talking with us, Tom.
LARSON: Great, yes, it's been a pleasure.
CAVANAUGH: I've been speaking with Tom Larson and his feature story, "If We Didn't Advertise We'd Go Broke Treating the Poor," is in this week's issue of the San Diego Reader. Stay with us as These Days continues in a moment.