1. A Prognosis For The Future Presented by: Karen W. Endresen, Ph.D. The Endresen Institute at The Jackson Organization Healthcare Marketing:

2. Research Objectives  How important is the role of healthcare marketing?  On which customer segments are marketing activities focused?  How do healthcare marketing professionals spend their time?  How is “success” measured?  What does the future hold? What market conditions will impact our profession?  What can marketers do to be more effective in their organizations?

3. Methodology  Web-based survey  Healthcare marketing/strategy development professionals from across the United States  Conducted in Summer 2005  266 respondents

4. Who Responded? ( n =266) Work setting: Number of hospital beds:

5. Who Responded? ( n =266) Are you located in:Is your position:

6. In your opinion, is the IMPORTANCE of the role that marketing/strategy development plays in the healthcare industry in America: In your organization (or your client’s), how do you think the role of marketing strategy development will CHANGE in the next 2-3 years? Will it:

7. In your organization, how much do you focus on each of the following:

8. How Has That Focus Changed?

9. Most Important Customer Segment Of those, which segment is MOST important? (First Response) NOTE: In 2002, respondents were only asked about “physicians” in general and where not asked about PCP and specialty care physicians individually.

10. How Have Segments Changed In Importance?

11. High “Focus”Activities How much are you expected to “focus” on each of the following activities?

12. Moderate “Focus”Activities How much are you expected to “focus” on each of the following activities?

13. Low “Focus”Activities How much are you expected to “focus” on each of the following activities?

14. Which two are most important in measuring success?

15. Performance Success Measures Which of the following performance success measures are used consistently in evaluating the success of your marketing and strategy development? (Percentage of “Yes” responses)

16. Expected Change in Measures of Success In the next 2-3 years, do you think your “measures of success” will:

17. Anticipated Changes in Market Success Measures

18. Evaluation of Organization Performance Terrible, major improvement needed Absolutely outstanding, could not be better

19. How would you rate your organization’s performance compared to others in your marketplace?

21. Marketing and Strategy’s Influence on Market Dynamics Market Dynamics Major Influence Minor Influence No Influence Demographic Issues such as the growth of the “baby boomer” population segment, longer life expectancy, increase in chronic care populations, lower retirement age and an increase in uninsured/underinsured patients 77%20%3% Consumer Issues such as increased consumer involvement in healthcare decisions, improved access in healthcare info, “report cards” and published quality measures 75%25%-- Physician Issues such as competition from physicians, physician shortages in key specialties, medical malpractice/legislation and disenchanted medical staff 64%31%5% Technology Issues such as the use of electronic medical records, healthcare web sites and healthcare communications via the Internet 60%38%2%

22. Marketing and Strategy’s Influence on Market Dynamics (Continued) Market Dynamics Major Influence Minor Influence No Influence Innovation and Discovery Issues such as new less invasive treatments, the promise of genomics, new drugs and stem cell research 49%41%9% Operational Issues such as lack of capital, pressure to reduce costs, demonstrating ROI and expansion/renovation costs 45%47%8% Management Issues such as workforce shortage, low employee morale, lack of visionary leadership and constraints of being part of a “system” 40%52%8%

23. Which one will healthcare marketing impact MOST?

24. Which one will healthcare marketing impact LEAST?

25. How can healthcare marketers be more effective?

26. How can healthcare marketers be more effective? (Continued)

27. Performance Analysis What segments do you focus on? % Major Focus Segment Focus? High Performer Low PerformerDifference Employee/Staff67%37%30% Board432716 Primary Care Physicians725913 Patients/Families817110

28. Performance Analysis How do you spend your time? % Major Focus Profession Activities? High Performer Low PerformerDifference Defining the strategy for the brand66%46%20% Developing successful advertising/PR625111 Improve service line market share72639

29. Performance Analysis How do you measure success? % Yes Performance Measures? High Performer Low PerformerDifference Employee Satisfaction483711 Physician Satisfaction584810 Revenue Growth66748

30. Performance Analysis How can marketers be more successful? % Very Effective Effective Strategies High Performer Low PerformerDifference Getting marketing and strategy to “have a seat” at the executive table 82%66%16% Understanding the motivations and preferences of the leadership 645014 Making marketing and strategy more strategic rather than tactical 766313

31. Greatest Difference Between High and Low Performers Research Items Difference between High and Low Performers Focus on Employees/Staff30% Spend their time defining brand strategy20 Think it is effective to get marketing to “have a seat” at the executive table 16 Making marketing and strategy more strategic rather than tactical 13

32. How Important is the role of marketing to the healthcare industry in America  More than four out of five respondents say the importance of the role of marketing in American healthcare is increasing  84% say that healthcare marketing activities in their organization in the coming years will increase  WE ARE OPTIMISTIC ABOUT OUR FUTURE!

33. On which customer segments are marketing activities focused?  As in the previous research Patients/Families + Consumers are a “major focus” (76% and 64%) AND the proportion has remained exactly the same  Segments with increased focus since the previous study are: Employee/staffUp 20% Referring physiciansUp 12% Staff physiciansUp 8%  Consumers at large are less frequently selected as the most important segment (18% in 2005 compared to 29% in 2002)

34. How do healthcare marketers spend their time?  Top named activities are: 1.Growing patient volume 2.Increasing market share 3.Increasing selected service line market share  The most important “success” measures used in determining annual compensation are similar 1.Increasing market share 2.Growing patient volume

35. How do healthcare marketers evaluate their organization’s performance  On a 10 point scale, the average performance rating was 6.3 or “Good”, up a statistically significant margin from the 5.6 rating obtained in 2002  A majority of respondents rate their organization’s performance as “Higher than their competitors” for market share, employee satisfaction, and patient volume  69% Know their net operating margin and 59% say it has increased from last year

36. How is “success” measured? What performance measures are used consistently?  The most frequently and consistently used measures of success are: –Market share (85%) –Patient volume/occupancy (82%) –Consumer awareness (78%)  Lowest on the list are: –Internal customer satisfaction (40%) –Employee satisfaction (43%) –Physician satisfaction (54%)  Two out of three respondents expect success measures to “change a little” (53%) or “a lot” (31%) – many in areas related to ROI and more sophisticated metrics

37. What does the future hold? How can healthcare marketers have a positive impact given market dynamics?  Healthcare marketers will be most effected in responding to marketing dynamics related to consumer and demographic issues  They can expect to have little impact in responding to operational issues, management, and innovation/discovery issues  WE SHOULD SPEND OUR TIME WHERE WE CAN DO THE GREATEST GOOD

38. Budget Changes