One increasingly common market scenario for health and human service organizations is competing for consumers whose treatment services are reimbursed on a fee-for-service basis by health plans. This is probably the most difficult scenario for financial sustainability – dependent on a high volume of low-cost units of service. While marketing doesn’t deal directly with the unit cost issue (except in contracting), the volume component of sustainability is all marketing.
This is a tricky marketing situation – one that requires payer contracts and consumer selection. Two very different marketing skills – push marketing for payers and pull marketing for consumers (and sometimes a referral source in the middle). I wrote about this model earlier this year in my piece, Best Practice Provider Marketing? Think Push & Pull all members. In each step of this equation, there are some “rules of the road” that make marketing strategies more effective.
Payer “Push” Marketing Strategy – First and foremost, the payer and managed care contracting piece – the push marketing plan. Success involves three elements:
Getting ‘in the door’ with the payer to get a contract
A contract for services at a unit payment rate that is higher than your unit cost
A reasonable opportunity to get a volume of referrals needed to support your unit cost
The payer relationship piece is a tactical plan in and of itself – with market mapping and a strategy playbook for each payer. The unit cost issue is straight forward – it’s not just direct cost of service, but also overhead and administrative costs, cost of financing late payments, reporting requirements, and more. My colleague, Gary Humble, gave some great advice for payer contracts in his piece, Congratulations! You’ve Contracted With Your Local MBHO! (Now What?) A Practical Approach to Operational Issues of New Contracts , including having an ‘evergreen’ provision, mutual ‘no cause’ termination, mutual indemnification, etc.
Consumer “Pull” Marketing Strategy – These days, consumer marketing is all about reputation and endorsements – whether you’re marketing online (a ‘must’ in most markets these days) or in one-on-one community outreach… but I will go into this in much greater detail later this week. (And, for some resources in the meantime, check out The Internet Has Killed Marketing: A New Paradigm For Health & Human Services and You’re Being Rated – Like It Or Not all members.)
Referral Source “Push/Pull” Marketing Strategy – Finally, in most market situations, there are a range of referrals sources. Schools, primary care docs, jails, religious leaders, and more. The question – how to get referral sources ‘on board’ and managing those referral relationships. My colleague Aida Porras has written and presented extensively on optimizing those referral relationships. For more on the tactical approaches you need to maximize your investment in referral development, check out her presentations Optimize Your Residential Referrals: Best Practices In Referral Marketing & Development and Improving The ROI Of Your Payer Referral Marketing Program .
If your organization is looking ahead to working more with third-party payers, these market approaches are a key to sustainability in a fee-for-service world. Think you can’t afford it? The reality is, it’s an investment and not an expense. You won’t get the contracts, the referrals, and the consumer volume without the marketing investment. The key is the right marketing strategy and execution to get the return you need on that investment.
For another free resource, see: Marketing Is Always The Key To Success all members