AHP Connect Articles

Introduction

The health care environment is full of uncertainty—most notably, the impact of the U.S. Affordable Care Act, the impact of mergers and acquisitions and continuing concerns of slow economic growth. However, at least two things are certain:

1. Philanthropy will continue to be more important than ever in bringing capital to health care organizations to fund new and replacement equipment and facilities as well as important programs; and

2. Working as efficiently and cohesively as possible to reach our constituencies is more critical than ever to assure the success of health care organizations.

Philanthropy, marketing and business development have long focused on similar if not the same constituencies, including patients, potential patients, community leaders and businesses. However, these functions do not always work in harmony or toward the same goals in many health care organizations. The result can be mixed messages in the community and confusion as to the organization’s goals. With a need to accomplish goals with fewer resources, working together is more important than ever.

Marketing and business development

Marketing was introduced to the health care industry back in the 1970s. Before that time, it was seen as either unnecessary or inappropriate for health care. Over the last 30 years, marketing in health care has developed to resemble marketing functions within other industries.

Health care marketing establishes the brand messaging and oversees the consistent delivery of the message in the market. However, most health care marketing efforts are promotional in nature— product development and sales are usually a function of business development and pricing comes from the finance department.

Marketing’s work is very important in health care, as it lays the foundation for business or philanthropic development by establishing awareness and a positive brand perception in the marketplace. Without effective marketing, our work in philanthropy is much more difficult.

Business development is an extension of strategic planning in most health care organizations. Health care business development efforts are generally focused on a discreet service or program, not on the overall enterprise. Business development also is typically responsible for selling the brand to the market, often though relationships with referring physicians and some direct contracting with employers.

Philanthropy, marketing, and business development are all primarily focused on external constituencies. If there is not coordination between these groups, there is a great risk that messaging will not be consistent. Delivering the same organizational story to all constituencies is a critical function of these three departments in any health care organization. It also is important to tailor the message to the specific audience, but it shouldn’t deviate from the overall brand and goals of the organization.

Marketing usually focuses communications on a positive message: what the organization has to offer and how it differs from the competition. Philanthropy focuses on what the organization needs to succeed or meet a community need. These two different objectives and approaches should be carefully managed in order to avoid confusion in the public’s mind.

Most hospitals can no longer rely on equity financing for 100 percent of their capital needs. Including philanthropy executives in the planning process for capital projects can avoid a crisis and coordinate efforts to raise funds at the start of a project, rather than somewhere downstream. It can be difficult to solicit gifts for a project that already is financed and even more difficult to solicit gifts for a building that already is built or equipment that is already purchased.

Models that work

Ideally, the functions of philanthropy, marketing/public relations and business development would be jointly managed by one executive in a health care organization. This is the best approach to assuring there is alignment and coordination between these important functions.

This model is seen most commonly in academic organizations where advancement is viewed as a single, bundled entity. However, in most large health care organizations, the functions of marketing/public relations, business development and philanthropy are managed separately by different executives—usually all reporting to a chief operating officer of chief executive officer of the organization.

This model requires formal and informal communication systems in order to assure that the objectives of each department are met. It requires the CEO of the organization to be the ultimate coordinator these three functions and it is his/her responsibility to align activities. However, busy CEOs often are unaware of potential conflicts that may arise from competing campaigns and projects in philanthropy, marketing and business development. Inter-departmental meetings and regular communication about projects and campaigns are the only means of avoiding negative outcomes.

Smaller health care organizations often will have one person responsible for two or more of these externally focused activities. Although this decreases the difficulty of coordination, it still is important to be aware of the differences between desired outcomes of each function.

Case studies: Business development and philanthropy

Baylor Scott & White Healthcare-Hurd Regional Medical Center

The largest nonprofit health care system in Texas—and one of the largest in the United States— Baylor Scott & White Health was born from the 2013 combination of Baylor Health Care System and Scott & White Healthcare.

Known for exceptional patient care for more than a century, the two organizations serve adjacent regions of Texas and operate on a foundation of complementary values and similar missions. Baylor Scott & White Health includes 43 hospitals, more than 500 patient care sites, more than 6,000 affiliated physicians, 34,000 employees and the Scott & White health plan.

It has become common for small communities within our service area to approach Scott & White regarding their needs for medical services. A group of community leaders from Marble Falls, in the Hill County area of Texas, approached Scott & White almost seven years ago asking for a hospital in their community. This is a community built around several lakes and the population is both a haven for retirees and the tourist business. Many of the communities are designed to appeal to high-

wealth individuals. However, as planning advanced through the business development department, there was some concern about the ability of the population to sustain even a small hospital. Although the area was growing and does have some high-wealth communities, it appeared that building a hospital might not be feasible in the near-term.

The Scott & White Foundation was brought into the discussion and asked to conduct a feasibility study to determine if a significant portion of the project costs could be raised through philanthropy. A goal of $25 million was established and the campaign was organized in a traditional manner with a campaign steering committee. The committee worked to identify prospects and leadership gifts through cultivation activities and collateral materials telling the story of the need for medical services.

Throughout the following years, despite the recession, progress on the project was made by the foundation and the business development department—working closely to plan the project and then to guide the fundraising process. Phase I of the project, a 60,000 square foot multi-specialty clinic, was opened in June 2013. At that point, almost $8 million toward the goal had been raised and excitement over this visible progress in the community led to increased giving to the $25 million goal. Hospital construction began in October 2013 with an expected opening date of August 2015. As of February 2015, $14.5 million has been raised from 286 donors through current and deferred gifts and pledges for an average gift of $50,700.

One excellent example of how business development and the foundation worked together on this project is the securing of a grant from the local Economic Development Corporation (EDC). Although this might be seen as purely the responsibility of the business development staff, the foundation was integral to putting together the application and case for support together—which resulted in a $2.4 million grant from the EDC.

Pomona Valley Hospital Medical Center

Founded in 1903, Pomona Valley Hospital Medical Center (PVHMC) is a 453-bed, acute care, nationally accredited nonprofit medical center serving eastern Los Angeles and western San Bernardino counties. PVHMC is one of only four hospitals in California to be named a recipient of the HealthGrades Outstanding Patient Experience Award for five consecutive years. The hospital was recognized by Thomson Reuters in 2011 as a 50 Top Cardiovascular Hospital and it’s a four- time recipient of the 100 Top Hospitals in the nation in the past 16 years.

In 2012, the president and CEO of Pomona Valley Hospital Medical Center, Richard E. Yochum, FACHE, asked the radiologists at the hospital if there was a more advanced technology for imaging of the breast than the current 2-D units that the hospital had been using in its four breast imaging centers. They came back to him with an answer: 3-D Tomosynthesis imaging was the future.

This new technology allows radiologists to better see the size, shape and location of any irregularities—which allows for the detection of smaller tumors while producing fewer false positives. It is considered a significant leap in breast imaging and the hospital’s radiologists consider it to be one of the most important, life-saving screenings the hospital provides.

However, with no capital budget to purchase the four imaging units necessary to replace the existing 2-D units, the hospital board requested that the Pomona Valley Hospital Medical Center Foundation purchase the new units out of the foundation’s current unrestricted cancer fund and future fundraising with a goal of $1 million. The foundation board agreed to designate the $1.8 million necessary for the purchase in August of 2012 and the first imaging unit was installed and operational in October 2012.

With the marketing department and PVHMC Foundation led by Vice President of Development James Dale, a marketing plan was developed with marketing agency Healthcare Success Strategies to roll-out this exciting new technology. In addition, a fundraising plan was developed to raise $1 million toward the purchase. The goal of each plan was to educate the public that PVHMC had this new 3-D technology and that it had replaced all of its 2-D units so that “every patient, every time” would receive a 3-D mammogram. The hospital’s objective was to introduce 3-D mammography into the regional market and differentiate PVHMC as the only hospital in Southern California that had replaced all of its 2-D units.

Through a multimedia and multichannel integrated marketing and fundraising plan, the hospital not only generated a volume of mammograms that exceeded the budget for these procedures, but the foundation achieved its $1 million fundraising goal. The marketing and foundation plans resonated with patients and donors. During the period of April 1, 2013, through August 31, 2013, screening mammogram volume grew by 12.4 percent over the same period in 2012. In addition, the screening recall rate fell by 28.6 percent in that same comparison period. Through philanthropy, the foundation was able to raise $1.3 million from 562 donors, with the largest gift being $466,000.

In addition, the marketing plan was so successful, the Healthcare Public Relations and Marketing Association awarded the hospital its coveted Gold Award for outstanding marketing of a new service in 2012.

Summary

The constituencies for philanthropy, marketing and business development often are similar, if not identical, for most hospitals. It is mandatory in our increasingly complex industry of health care that those responsible for these functions develop a working relationship and agreement to share information, at a minimum. In the event that single-executive management of these functions is not possible, the CEO of the organization must be brought into the loop and made a full partner in the process of coordination and alignment of these critical externally-focused functions. By working together, philanthropy, marketing and business development can propel the organization toward higher goals than if each department works in isolation.