Trustees know all about the power of relationships. Whether they are business owners trying to build lifetime customers or community physicians developing their practices, they know that forging enduring relationships is essential to long-term success and sustainability.
Hospitals are no different, which is why attentive boards and management are looking for creative ways to build relationships with one of their most valuable constituents: local employers. By cultivating and nurturing relationships with this audience, hospitals have found a way to attract new patients, build profitable market share and distinguish themselves as the health care destination of choice.
Since the early 1980s, hospitals collectively have spent billions of dollars advertising to increase brand awareness. While such attempts may have been marginally successful, they failed to deliver an acceptable return on investment for one simple fact: in health care, all customers are not equal when it comes to their impact on the bottom line.
Just like everyone on the same flight from New York to Los Angeles is paying a different fare for the same objective, every patient in your hospital represents a different reimbursement rate. And just as that plane needs enough customers to cover fuel costs, so too must hospitals fill a certain percentage of their beds with—and perform a certain percentage of outpatient services on—patients who have a desirable reimbursement profile. That's why boards concerned with both strategic planning and fiscal stewardship are looking not only at census, but also at payer mix. Simply filling beds is not the road to sustainability.
Valuable Relationships
Because a large percentage of Americans' health benefits originate at work, it's logical for a hospital to direct its business development strategy at local employers. On a daily basis, local employers are making purchasing decisions that can impact hospital- and physician practice-revenue growth. Whether interested in reaching commercially insured consumers in the workplace, influencing group health benefits and open enrollment decisions, or gaining access to valuable occupational health customers, targeting local employers intelligently offers the best approach to increase market share and enhance revenue.
Working in partnership with area employers means developing programs that identify employee health risks, both on a cumulative, aggregated basis and also specific to each employee. With this data, hospitals can craft customized early detection, prevention and educational initiatives that help employers mitigate potential health care claims and, in turn, reduce their rising health care costs. This strategy makes the hospital and employers allies in their quest for affordable, accessible health care, and positions the hospital as part of the solution.
ProHealth Care, Waukesha, Wis., is seeing a tangible ROI from launching an employer-focused program. In 2005, it expanded its occupational medicine program into a comprehensive work-site wellness program for employers. As a result, the hospital's net revenues increased by nearly $1.5 million in the first 21 months of the initiative and another $1.3 million in the following 12 months.
Since the program was introduced, ProHealth Care's overall market share in its service area has increased from 43.6 to 46.4 percent. Most importantly, all these new patients are commercially insured, meaning that the hospital isn't just building market share, but is doing so through a targeted, strategic approach that other communication tactics can't match.
Loma Linda (Calif.) University Medical Center has been providing employer-based health management programs for more than a decade. Its program began by identifying the largest and most desirably insured employers in the hospital's catchment area and then collecting data on each employee's health plan participation, physician relationship and health history. Using this information, a personal health report was prepared for each respondent along with specific recommendations for health maintenance or improvement, and directing those at risk to appropriate services offered by the hospital.
For employers, the data was de-identified and aggregated into an overall profile that provided a snapshot of the health issues within a specific workforce. In return, the net revenue generated in 2008 by employees of employer partners exceeded $2.7 million, which accounted for 20 percent of inpatient net revenue and 33 percent of emergency room net revenue.
Baptist Health System, Birmingham, Ala., launched its program in 2008 and today works with nearly 30 local businesses representing 8,000 enrolled employees. About 3,000 lives are Baptist employees because the system faced challenges with rising health care costs. Between the second and third year of the program, Baptist saw its health claims decrease by $1.7 million.
Looking beyond its own walls, Baptist took its primary care physicians to local employers to conduct education programs, hold screenings and participate in many health fairs. Baptist also collected such baseline data as blood pressure, body mass index and cholesterol, and began to educate employees on health risks based on their family history. In doing so, the hospital has built trusting relationships among local employees, the health system and its medical staff.
Win-Win Proposition
Programs like these succeed because all parties benefit. Hospitals drive desirable patient volume to their facilities and medical staffs, and establish themselves as providers of choice in the community. Employers are able to identify employee health risks and implement early-detection initiatives that ultimately reduce insurance premiums, absenteeism and workers' compensation claims.
The Deloitte 2009 Survey of Healthcare Consumers reports that 20 percent of respondents said they participated in a wellness program in the last 12 months, up from 17 percent in 2008. A striking 76 percent of those with a chronic condition said they would participate in a disease-management program.
Clearly, consumers are becoming increasingly prepared to change their behavior and begin to adopt healthier lifestyles. Employers want that, too. Now is the time for hospitals to capture this largely untapped need.
Henry Ross (hross@aegisgroup.com) is CEO of Aegis Health Group, Brentwood, Tenn.
Sidebar - How to Engage Local Employers
