Expanding Service Lines, Broadening Brands … Yet Shrinking Marketing Budgets

 In Improving Satisfaction Scores, Preparing for the Future

As the healthcare landscape continues to shift, Transcend Strategy Group would like to share some insights we see continuing to build this year – and how they affect the marketing opportunities and challenges for our clients coast-to-coast as well as Transcend.

This blog entry is the third and final in a series that looks at hospice organizations contending with the changing healthcare and marketing environments.

Tighter Marketing Budgets. Even though many hospice and palliative care organizations are adding entities they should be promoting, most are faced with the pressure to spend more on clinical care and operations – and less on marketing.

The first blog entry in this series discussed growing service lines beyond hospice care and the need to educate audiences about new services. The second post in this series looked at mergers, acquisitions and affiliations with the strong potential they hold for creating new brands or a need for rebranding.

So how do you balance a need to promote a growing list of services or brands with the reality of budget constraints? And how much should you be budgeting for marketing purposes anyway?

Since the vast majority of hospice organizations would be considered small businesses in the corporate sense, consider this: The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in “sales” and your net margin — after all expenses — is in the 10 percent to 12 percent range. Some marketing experts advise that start-up and small businesses allocate between 2 and 3 percent of revenue for marketing and advertising, and up to 20 percent if you’re in a competitive industry.

Thus, it’s apparent that your marketing budget depends on a variety of factors but should certainly be no less than 2 percent of your gross revenue.

Regardless, there’s a demand for marketing strategies to work harder and smarter. Let’s remember a significant role of strategy is to prioritize needs and decide what NOT to include as well as what to focus on.

Two major considerations for deciding which entities to market are: (1) Your expectations for ROI and (2) A realistic timeframe to generate that return on your marketing investment. For example, if an organization introduces a new palliative care service line, how should they invest to promote it? With the current weak reimbursement for palliative care, short-term ROI would be nearly impossible. But if palliative care creates earlier conversion to hospice care and substantially longer hospice LOS, the ROI in hospice revenues may be very rewarding in the long run.

Another determining factor is deciding to whom a particular service should be marketed. Palliative care, for instance, may not be suitable for broad marketing to the consumer audience, but sustained by controlled marketing to select physicians and hospitals. These highly targeted niche audiences may be reached much more cost-effectively than a broader mass media campaign.

Many other questions and challenges exist when it comes to developing a smart, strategic marketing plan with strict budget constraints. Transcend can help give perspective to an approach that makes sense for your goals. Contact Jon Marker, business development manager, to begin the conversation.

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