Psychiatric Annals

Strategic Planning and Marketing of Mental Health Services

Robert W Gibson, MD

Abstract

Most health professionals are suspicious if not disdainful of marketing. They equate marketing with commercialism and high pressure selling. Professional associations have considered any kind of selling activity, direct solicitation, or advertising unethical.1 The physician fears that any involvement in marketing will be interpreted to mean that he is motivated primarily by money rather than service to patients.2 This reasoning reflects a misunderstanding of marketing: that marketing is the same as selling or advertising.

Kotler provides us with a concise definition: Marketing is the analysis, planning, implementation, and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives. It relies heavily on designing the organization's offering in terms of the target markets' needs and desires, and on using effective pricing, communication, and distribution to inform, motivate, and service the markets.

Hospitals and related health care institutions, in contrast to private practicing psychiatrists, have for many years been involved in public relations and development. Both public relations and development use techniques that are integral components of the marketing mix. The public relations departments of hospitals have generally been reactive to inquiries from the media while development has been directed toward raising funds for bricks and mortar. In more recent years, hospitals have begun to promote the service programs they provide. Development is no longer limited to fund-raising campaigns but has been expanded to include the establishment of a broader base of group and individual support. As health care has shifted into a free and competitive market, hospitals have established departments and employed consultants with professional training and experience in marketing. Community mental health centers have utilized marketing techniques.4 Areawide and national professional associations have recognized and become directly involved in marketing.

Interest in marketing in psychiatry is growing. Pardes and Pincus have noted the challenge to psychiatric departments as well as academic medical and health services centers.5 They believe that departments of psychiatry are at risk because of: smaller numbers of students entering the field, changing patterns of allocating resources within academic centers, and the reimbursement policies that shift resources away from psychiatric departments. In proposing a marketing approach to these problems, they state, "Although we acknowledge some uneasiness with the commercial connotations of the marketing concept, we suggest the model as a means of planning realistically and comprehensively the future course of academic psychiatry." To the degree that the marketing approach can help overcome the problems confronting academic psychiatry, the authors believe that such leadership will permit psychiatrists to better serve the mentally ill.

Because it is a highly visible and controversial activity, marketing often becomes the center of attention, sometimes even the lightning rod of stormy debate. In actuality, marketing is really the less important step in a two-phase process. No marketing effort can be successful unless it stands on a solid base of strategic planning. For purposes of this discussion: "Strategic planning . . . determines the overall mission and goals of the institution and the public image to be exhibited, identifies competitive and pinpoints potential markets, which when developed can contribute significantly to hospital growth and fulfillment of community needs."6

Although there is considerable interplay and overlap, marketing takes up where strategic planning leaves off. Marketing of health care services consists of activities designed to retain and attract potential new patient populations by serving and satisfying their needs by providing appropriate services in a manner that is consistent with professional standards of practice and is financially viable.7 Such strategic planning and marketing has thus far been conducted primarily by hospitals,8 but even associations such…

Most health professionals are suspicious if not disdainful of marketing. They equate marketing with commercialism and high pressure selling. Professional associations have considered any kind of selling activity, direct solicitation, or advertising unethical.1 The physician fears that any involvement in marketing will be interpreted to mean that he is motivated primarily by money rather than service to patients.2 This reasoning reflects a misunderstanding of marketing: that marketing is the same as selling or advertising.

Kotler provides us with a concise definition: Marketing is the analysis, planning, implementation, and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives. It relies heavily on designing the organization's offering in terms of the target markets' needs and desires, and on using effective pricing, communication, and distribution to inform, motivate, and service the markets.

Hospitals and related health care institutions, in contrast to private practicing psychiatrists, have for many years been involved in public relations and development. Both public relations and development use techniques that are integral components of the marketing mix. The public relations departments of hospitals have generally been reactive to inquiries from the media while development has been directed toward raising funds for bricks and mortar. In more recent years, hospitals have begun to promote the service programs they provide. Development is no longer limited to fund-raising campaigns but has been expanded to include the establishment of a broader base of group and individual support. As health care has shifted into a free and competitive market, hospitals have established departments and employed consultants with professional training and experience in marketing. Community mental health centers have utilized marketing techniques.4 Areawide and national professional associations have recognized and become directly involved in marketing.

Interest in marketing in psychiatry is growing. Pardes and Pincus have noted the challenge to psychiatric departments as well as academic medical and health services centers.5 They believe that departments of psychiatry are at risk because of: smaller numbers of students entering the field, changing patterns of allocating resources within academic centers, and the reimbursement policies that shift resources away from psychiatric departments. In proposing a marketing approach to these problems, they state, "Although we acknowledge some uneasiness with the commercial connotations of the marketing concept, we suggest the model as a means of planning realistically and comprehensively the future course of academic psychiatry." To the degree that the marketing approach can help overcome the problems confronting academic psychiatry, the authors believe that such leadership will permit psychiatrists to better serve the mentally ill.

Because it is a highly visible and controversial activity, marketing often becomes the center of attention, sometimes even the lightning rod of stormy debate. In actuality, marketing is really the less important step in a two-phase process. No marketing effort can be successful unless it stands on a solid base of strategic planning. For purposes of this discussion: "Strategic planning . . . determines the overall mission and goals of the institution and the public image to be exhibited, identifies competitive and pinpoints potential markets, which when developed can contribute significantly to hospital growth and fulfillment of community needs."6

Although there is considerable interplay and overlap, marketing takes up where strategic planning leaves off. Marketing of health care services consists of activities designed to retain and attract potential new patient populations by serving and satisfying their needs by providing appropriate services in a manner that is consistent with professional standards of practice and is financially viable.7 Such strategic planning and marketing has thus far been conducted primarily by hospitals,8 but even associations such as the American Psychiatric Association (APA), have begun to explore the potential benefits of strategic planning coupled with marketing for the individuals within their organization.

In this article, the elements and steps of the strategic planning process will first be outlined and the elements and techniques of marketing will be described. Strategic planning and marketing for health care institutions, particularly psychiatric, have special characteristics. Nevertheless, general principles do prevail often more than we like to think. The focus of this article will be on the broad spectrum of services provided by a psychiatric hospital. The principles apply to any organized system of health services and the strategic planning process and marketing approach described could easily be adapted by an APA District Branch or group practice.

Strategic planning must be long-term oriented. m this context, long term is relative. Twenty -five years ago, long-term planning for psychiatric institutions meant planning for the next five to ten years. Currently, five years would be the outside limit with two to three years being more realistic. Although strategic planning is a process, it cannot be completed in a single sequence; rather, it is an iterative process. For example, as opportunities and threats are recognized and alternative strategies planned, it is necessary to go back and check the validity of key assumptions and reappraise organizational strengths and weaknesses. Collapsing the time frame from five to two years makes it difficult to distinguish operational from strategic planning on the basis of timing. More important are the questions to be answered. Strategic planning asks, "What shall we do?" Operational planning asks, "How shall we do it?"

Strategic planning is a systematic approach that leads to setting organizational goals and directions. Accomplishing this requires a rigorous examination of: 1) environmental changes and trends; 2) an analysis to test the validity of the key assumptions under which the organization operates; 3) an appraisal of the strengths and weaknesses of the organization; 4) identification of opportunities and threats; 5) the formulation of alternative strategies to achieve organizational goals; and 6) plans for the implementation of specific strategies including feedback mechanisms to monitor progress.

ENVIRONMENTAL ANALYSIS

Strategic planning begins with an examination of external factors - an environmental analysis. Leaders of the institution must ask such questions as: Who are the patients we serve? What are their needs? Do they need long-term intensive treatment? Do they need short-term crisis intervention? Is the patient population shifting toward adolescents? Is the need for psychiatric services for the elderly increasing? Is the increasing emphasis on acceptability of treatment for alcoholism creating a greater demand for such services? These questions barely scratch the surface but should give a sense of the issues which must be addressed.

Beyond the specific needs of patients, it is important to identify societal changes. Is there a change in the acceptance of the need for psychiatric services? Does stigmatization lead patients to avoid hospitalization? Do patients want to be treated in a different community? Is a general hospital more acceptable? All of these questions are related to the needs and attitudes of the patients to be served.

The environmental analysis must include the sources of funding, particularly third-party reimbursement. Recent cutbacks by Blue Cross, Federal Employees Health Program, and Civilian Health and Medical Program for the Uniformed Services (CHAMPÚS) excluding the coverage of treatment beyond 60 days are significant environmental forces. Indications that similar reductions in extended coverage for long-term treatment will be instituted by commercial third-party payors compounds the situation. Prospective payment systems for diagnostic-related groups (DRGs) have not as yet been applied to free-standing psychiatric hospitals and larger units of general hospitals. Congress has, however, mandated the Department of Health and Human Services to study and provide recommendations by 1985 for the inclusion of all psychiatric hospitals under the DRG system. DRGs, if applied as now currently structured, would eliminate funding of all long-term psychiatric treatment. The generic issue is the affordabifity of services. This is a critical question for all health care organizations and indeed, any business or industry.

The question of competition has been studiously avoided by health professionals despite dramatic shifts in patterns of care.9 For example, the state hospitals in Maryland five years ago handled about 60% of admissions; general hospital units handled 30%; and private psychiatric hospitals 10%. Now, Maryland state hospitals admit only 30% while the general hospital admissions have increased to 60%; private psychiatric hospitals are still at 10%. Nationally, the trend is the same. Despite this major increase in general hospital units, beds, and admissions, there has been no open acknowledgment that general hospital units and private psychiatric hospitals may become competitors as psychiatric admissions shift from the public state hospitals to the private sector. The individual hospital must determine its position in the market and decide if this is acceptable or if some change should be sought.

In office practice, psychiatrists have been concerned about the increase of other mental health practitioners, such as psychologists and social workers. In some areas, this has changed the pattern of practice so that psychiatrists receive fewer referrals. Psychiatrists can no longer be as selective; they must now treat more severely ill patients who are likely to need medications. The political lobbying by various professional associations quite openly reveals the competition. Lawyers and lobbyists use more strident language than most professionals. Even though overstated, the polemics of these legislative debates often present a truer situation than collegial discussions. An environmental analysis requires a no-holds-barred examination of the competitive issues.

The environmental analysis provides the underpinnings of a long-range plan. In the case of private psychiatric hospitals, for example, it is generally assumed that fewer individuals can now afford long-term hospital treatment. The best estimates are that two years ago, 20 to 25 million individuals had the financial ability to pay for treatment beyond 90 days. With the current cutbacks by government and private insurers, it is expected that within the next year or two, the number of people who can pay for long-term treatment will be negligible - two to five million. If accepted, this assumption that within two years practically no one will be able to afford treatment beyond 60 to 90 days becomes a critical element of strategic planning with profound implications for the private psychiatric hospital that provides long-term treatment.

ANALYSIS OF THE ORGANIZATION

Having completed the environmental analysis which identifies the external forces, the next step is an analysis of the relative strengths and weaknesses of the organization. Service and programmatic elements of a hospital must be assessed. A private psychiatric hospital may have a strong tradition, a staff, and a physical plant that is designed specifically to treat inpatients and may have relatively little capability for outpatient or day treatment programs. Identifying strengths and weaknesses of the basic resources - personnel, physical facilities, and funding - is essential in strategic planning, as it provides the basis for a plan of action. An analysis of any organization includes not only its basic resources but the assumptions under which it operates and the type of patients that have been customarily treated. For example, is the hospital known for the treatment of particular psychiatric problems - substance abuse, long-term chronic patients, adolescents, geriatric, or others? In general, it is much easier to strengthen existing services than to develop entirely new ones.

Particularly difficult is the examination of the explicit and more importantly the implicit assumptions under which the organization operates. Selfanalysis is never easy. Particularly troublesome are implicit assumptions. Despite their powerful influence, implicit assumptions are not openly shared and do not appear in the formal hospital mission statement. For example, there may be significant differences in opinion about the role and functions of the various disciplines. To avoid open confrontation, this difficult topic is often ignored. Unspoken disagreements about the basic hospital mission are often avoided. When implicit assumptions are strongly supported by staff members, they can have a more decisive influence on organizational thinking than the formal mission statement, insofar as possible, the environmental analysis should make implicit assumptions explicit.

Of critical importance is the staff reaction to change. How do they feel about the development of a new service? Does the staff have the skills needed to develop a new service? Even more important, is the staff receptive or resistant to change? The staff is the most important resource of any health care facility. Sixty percent to 75% of the expenditures of a hospital are for the cost of personnel. For that reason, any analysis of an organization must examine the composition, background, experience, and commitment of the personnel of the institution.

Increasingly, the physical plant has become an important concern. Psychiatric hospitals do not have the problem of the general hospital in keeping up with advancing and expensive technology. Under pressure of regulatory requirements, most hospitals have been forced to meet higher physical plant standards. Escalating building costs require astronomical expenditures to bring hospital plants up to codes that seem irrelevant for psychiatric patients. Most of the funding must come exclusively from patient revenues. Are funds, such as endowments, grants, contractual services, available? Is fund-raising possible?

The analysis of a hospital is usually plagued by the lack of quantifiable measures. It is difficult to say how much of any service is enough for adequate psychiatric treatment. On the other hand, it is possible to establish a benchmark of where the organization is at a given moment so that at least a comparison can be made over time to see if changes that have been instituted have achieved the desired result.

Probably the most important part of the analysis of the organization is the appraisal of the goals, philosophy, and mission of the organization. Funds may have been restricted; a longstanding tradition may be hard to change; attitudes of the governing body and influential staff members may be inflexible. Strategic planning should identify the constraints that arise from the formal mission statement as well as the informal beliefs and value systems of all the forces of the organization. In particular, one must look for unassailable beliefs. All organizations have their sacred cows. They must be challenged. No organization should tolerate beliefs that cannot be examined.

STRATEGY DEVELOPMENT

The development of a strategy should be based on an assessment of the competitive position of the organization. Presumed strengths must be critically examined; it is generally more effective to exploit strengths of an institution than to shore up weaknesses. For example, a hospital that has developed superior services for adolescents can readily expand the number of beds and the range of services. On the other hand, a hospital that has not treated adolescents would be hard pressed to develop a totally new service foreign to community perception and referral sources.

In developing new services, a realistic appraisal of the degree to which the organization can change is essential. Some organizations are limited because of staff attitudes, community perception, and existing facilities. Others have a higher degree of freedom because they are in a state of transition and are not limited by physical and other constraints. Once identified, the opportunities for change must be rank ordered in terms of the benefit to the patients, organization, and the resources required.

Typically in strategic planning, many more ideas are developed than can possibly be implemented. Aspirations must be tempered by the goals, philosophy, and mission as well as staff readiness. There must be a reasonable balance between mission and reality including the assessment of risk. Some 20 years ago, a new service might be tried, allowed to evolve, permitted a relatively long period for development, and supported even though it represented a serious drain on resources. This is no longer true. The risks must be carefully assessed against the needs of the total institution.

SETTING OBJECTIVES

Having developed various proposals that arise out of the analysis of the environment and the organizational strengths, specific objectives must be established. Such objectives must include tentative goals that can be quantified and refined on the basis of the constraints on resources as well as the potential risks. In setting such objectives, a system for measurement of progress must be set up in advance to track performance against expectation.

Having set the objectives, strategic planning moves to operational planning. Operational planning spells out the specifics of the budget, recruitment of staff, space for the services, program content, etc. Specific operational plans must be tied together so that the total process supports institutional needs. Although this may seem self-evident, it is not always easy to achieve in practice. The planning of a specific program or new service often takes on a life of its own. Staff once committed may lose sight of the needs of the total institution. The sense of staff ownership is understandable and must be respected. On the other hand, achieving the goals that have evolved from the strategic planning process must be the driving force rather than satisfying staff needs.

In summary, strategic planning requires members of an organization to answer several questions:

1. Do the goals and mission statements of the institution accurately reflect the current thinking of the governing body and top management? Are they well-defined? Are they appropriate?

2. Have environmental trends been adequately assessed?

3. Have the consequences of environmental trends been properly investigated and identified for the institution?

4. Have key assumptions been fully identified? In particular, have the implicit assumptions been thoroughly discussed and made explicit? Have unassailable assumptions been challenged?

5. Does the plan achieve a good match between the needs and the wants of those served and the services provided?

MARKETING

Once these questions are answered, strategic planning moves into marketing. The most critical issue for the marketing of health care organizations is the distinction between a marketing orientation and a product or service orientation. ,0 Health professionals characteristically think about patients in terms of the services that they want to deliver. ' ' This service orientation focuses on internal organizational needs. It satisfies the belief system of the staff that the services they wish to provide are needed. Such a service orientation is based on an implicit assumption that the recipients of the service have the same value system as the staff. It takes for granted that there will be little variation in the needs of patients. The service is looked at in terms of the providers' interest rather than the patients' needs.

A marketing orientation is oriented toward perceived needs. Under present economic pressures, this must include the caveat that the services are not only needed but that funds are available so that they can be paid for, whether this be by the patient, third-party payor, government, private grant, or other. Marketing is externally oriented and looks at what is happening outside of the institution. Rather than focusing on the values attributed by staff to the particular services, it looks at the specific benefits as they are perceived by the patients. Having once identified patient needs that are reasonably congruent with the institutional mission, the communication techniques of marketing can be utilized.

Focusing on the needs of specific groups of patients instead of maintaining a global approach that meets the needs of all is an effective marketing technique. For example, the emphasis could be on the alcoholic patient, or the elderly, or short-term crisis intervention, or at the other extreme longterm rehabilitative services. Virtually all patients feel that their problems are unique and require special treatment approaches. A targeted program will be more attractive to patients than a diverse program seemingly designed to meet the needs of all.

Once established, the benefits of a program must be identified and communicated. This can be done through personal contact, presentations at professional meetings, and media advertising. The various skills and specialized techniques of advertising constitute a professional discipline in their own right. Mental health professionals are uneasy about all forms of advertising. In particular, they fear that potential benefits may be overstated. They are troubled by descriptions of treatment programs that seem to oversimplify what they are doing. The potential patient, however, needs an understandable description of the nature of the treatment, character of the institution, potential benefits, and the cost. These must be stated in clear terms. All the nuances cannot be covered. A compromise must be achieved between the needs of the patient and what staff consider to be reasonable.

The referrer will want details about admission procedure, aftercare, specific services available, etc. An approach that is largely educational and directed toward assisting the referrer as opposed to the hard-sell of benefits is best. Attitudes about advertising are changing. A few years ago, for example, if a hospital placed an advertisement in a professional journal, it was interpreted to mean that the hospital was in trouble and had moved in the direction of crass commercialism. Such advertisements have become commonplace and are utilized by reputable institutions and misinterpretations have diminished. The guiding principle is that advertising in whatever form is a means of communicating what services are available rather than selling them.

All communication approaches are expensive so it is important to determine which ones achieve the greatest cost benefit. Does the message reach the intended receiver? How is it received? Does it make a difference? Sometimes, this can be measured directly by the immediate response to a particular communication. For example, the number of inquiries and actual referrals would be an indication of effectiveness of media communication techniques, lust as important but more elusive is discovering which communications may inadvertently have created a negative image or response. Anecdotal response are usually about the only indicators available of the negative response.

CONCLUSION

Professionals fear that strategic planning and marketing techniques have the potential for manipulation. It is true that behavior can be influenced by techniques designed to meet the organizations' needs rather than the needs of patients. Exaggerated promises, capitalizing on the latest fad, exploiting fears and ignorance have no place in health care. The goal of marketing is to help patients make informed decisions in meeting their needs. The definition of strategic planning stressed that the goal is the "fulfillment of community needs." Marketing activities to identify patient populations and satisfy their needs must be directed toward "providing appropriate services in a manner that is consistent with professional standards of practice." With these as guiding principles, strategic planning and marketing can be used to improve the care of the mentally ill.

REFERENCES

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2. Kotier P, Connor RA Jr: Marketing professional services, iournal of Marketing 1977; 41:71-76:

3. Koller P: Marketing for Nonprofit Organizations. New lersey. Prentice-Hall. Ine, 1975.

4. Ferniany IW, Garove WE: Marketing and community mental health centers. Administration in Mental Health 1983; 10:162.170.

5. Pardes H. Pineas HA: Challenges to academic psychiatry. Am / Psychiatry 1 983; 140:1117-1126.

6. Domanico L; Strategic planning vital for hospital long-range development. Hospital and Health Sen'ices Administration 1981 ; 26:25-50.

7. Ireland RC: Using marketing strategics to put hospitals on target. Hospitals 1977; 51:123-132.

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9. Beckham D: Marketing strategies, or. It wouldn't be competition with competitors. Trustee 1983; 36:36-40.

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11. 7homas DRE: Strategy is different in service businesses. Harvard Business Review 1978; 56:158-165.

10.3928/0048-5713-19841201-06

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