Marketing for Health and Wellness Programs

James Busbin, Donald Self

• Publisher: Routledge
• Year: 2013
• Topic: Business
• eBook ISBN:
  9781136579714
• Subtopic: Business General
• Index: Business

Learn useful strategies for marketing health and wellness programs. This important new book presents a cross-section of current research and commentary on wellness and prevention issues. The 17 authors--representing 11 different institutions--are some of the most active health care consultants in the academic community. They discuss studies for hospital based programs, workplace programs, and governmental and educational institutions.Important marketing concepts are used to segment the work into several sections. Included are chapters which help to define the actual product lines which should be grouped into wellness and prevention programs, studies that define several important market segments, and chapters on channels of distribution. This timely volume concludes with an analysis of current research efforts and directions for future research.Marketing for Health and Wellness Programs is essential reading for hospital administrators, faculty physicians at teaching hospitals, public health professors, government health service administration employees, corporate managers and personnel administrators, insurance industry managers, independent health and wellness consultants, and staff members of health trade publications.

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PART I:
WHAT IS THE WELLNESS/PREVENTION PRODUCT?

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Market Evolutions in Health Care and the Emergence of Employee Wellness as a New Product Category

James W. Busbin

SUMMARY. Over the next decade employee wellness could grow to be the dominant specialty product in the health care industry. A number of market evolutions, both on the provider side (hospitals) and the receiver side (companies), have influenced this emergence of employee wellness as a substantial new product category. The product category is in the formative stages and in need of marketing contributions; this paper presents the origins of employee wellness as prerequisite information.

INTRODUCTION

Employee wellness has become a popular topic in the general business media lately. The institution of employee wellness programs by some of the country's most noteworthy corporations has apparently captured the imaginations of business correspondents. This is not to say that such occurrences are not newsworthy. However, the journalistic treatment of employee wellness often leaves a reader with the impression that wellness programs may well prove to be the salvation of American industrial productivity and our ailing health care systems as well.

This paper's intentions are not to singularly detract from such enthusiasm but to more objectively consider how wellness health care products have evolved as a new product category. Because (a) the product category is in the formative stages, and (b) neither the providers (e.g., hospitals) nor the receivers (e.g., companies) have a command over the nature of the product, the product category stands to benefit from the systematic application of sound marketing practices at this stage.

As opposed to providing immediate exhortations on how to go about the proper marketing of this product, an examination of the evolution of employee wellness as a product category might be ad visable. The product category has a number of unique characteristics and functions in an atypical market environment. This paper seeks to provide an orientation to the product category which marketers may find necessary before beginning to grapple with the many marketing-specific problems begging for attention here.

The majority of the paper will be devoted to exploring institutional changes in the health care industry and the market phenomenon which brought them about. Employee wellness is one of the new product categories to emerge as a partial byproduct of these institutional changes. The latter part of the paper is then devoted more specifically to the characteristics of employee wellness as a product category.

Introductory Explanation of Institutional Evolutions in the Health Care Market

For decades the prevalent structure at work in the medical products market had three simple elements; hospitals, physicians, and patients; hospitals relied on physicians to generate a patient load. This system was more than sufficient for hospital occupancy remained near capacity.

As health care costs began to rise the U.S. government instituted the Medicare and Medicaid systems to assure all citizens of adequate health services. Health care costs continued to rise while hospitals expanded in response to increased demands for health products, particularly those covered by Medicare and Medicaid. Deregulation in the hospital industry occurred much as it had in other industries. This had substantial effects. For example, the elimination of certificate of need (CON) regulations freed hospitals to expand at will, which they did in the 1970s and early 1980s.

At the same time that hospitals were expanding the consumers of medical products and their intermediary agents (e.g., Blue Cross/Blue Shield) were setting in motion a policy of health cost containment. Health care costs had come to be a financial burden on the government and free enterprise, both of whom were suffering under a sluggish economy.

As a result of these two converging trends, many hospitals found themselves to be supporting excess capacity for their traditional products. For the first time in recent history, hospitals had to begin to function as independent members of the free enterprise system; competition was a concern, satisfying consumer demands became a focus and new products had to be developed in response to it all.

The impact of these health care market changes, on hospitals, has been profound. Managerial structures have even changed to accommodate a marketing orientation and some hospitals have gone so far as to adopt a product line management approach, using formalized portfolio analysis techniques (Malhotra, 1986).

Concomitant with these occurrences was the emergence of company concerns for employee wellness. Many of the same pressures which caused companies to force change in their medical coverage programs stimulated an interest in preventative health measures. Japanese management with its quality circles and other unique practices (including employee wellness) also had become popular media fare. So at the same time that hospitals were in need of new product opportunities corporate America became amenable to what could prove to be the single, largest new product category in recent health care marketing history.

Introductory Explanation of the Occupational Medicine/Employee Wellness Product Category

The combined name of occupational medicine/employee wellness is used here to reflect the individual perspectives of the providers and receivers of the product. Although there are several categories of providers, hospitals will remain pre-eminent due to their capacity to provide the core medical elements of the product.

From a hospital's perspective the product category is most accurately called occupational medicine. It could be defined in this way:

Occupational medicine is the prevention and control of disease, injury or any condition that impairs health and fitness of employees or their dependents enough to cause them to lose time from work or to work at less than full efficiency.

There also are several categories of receivers, for example companies and municipal governments. A common element among receivers is that the product revolves around employment as a focal point; the product benefits have to do with supporting employment as a given condition. Thus, from a receiver's perspective the product could be defined in this way:

Employee wellness is a state of positive well being for the body, mind, and spirit. It is the absence of injury, illness and infirmity thereby allowing employees to reach their full potential in job performance and gratification.

In terms of product development, hospitals have long offered the individual ingredients of an occupational medicine product such as medical screening and rehabilitation. The ingredients were not, however, assembled into a coherent package. Moreover, receivers generally needed to go to the hospital to partake of the services. Hospitals have now begun to package their occupational medicine programs and offer many of them at the receiver's place of business.

Receivers have also played a role in product development. Many companies have constructed on-site wellness facilities and participated with providers in the customizing of a wellness program to suit their particular needs. Also, numerous specialty businesses have materialized to fill vacant niches left in matching hospital and company capabilities.

INSTITUTIONAL RESPONSE TO CHANGES IN THE HEALTH CARE MARKET

For several decades, hospitals enjoyed a growth environment, particularly in the era following the inception of Medicare and Medicaid. However, as has been seen in most other major product categories, cycles occur. As a whole, the hospital industry has reached the maturity phase of its evolution. This was predicted by Goldsmith back in 1980 when he authored “Can Hospitals Survive? The New Competitive Health Care Markett”

What often follows the maturity phase of evolution in a product category is disequilibrium. Shake-outs and institutional restructuring take place as product category members struggle to maintain market share and revenues. Also, power in the system may change hands, perhaps, in part due to the state of market saturation which often accompanies the maturity phase.

Figure 1 depicts the active agents and structures in the American health care industry. There are three primary categories of function: health service providers, health service receivers, and intermediaries who facilitate the transaction. Traditionally, hospitals have served as the dominant providers of health care services; they are presented in the left hand column.

In the right hand column are the primary receivers of health care services. Through the administration of Medicare and Medicaid, the federal government is, by far, the largest consumer of health care in this country, accounting for approximately 40% of product consumption. The bulk of the balance is consumed by various group units, primarily business and industry. Small groups include companies of one hundred employees or less, small municipalities, etc. Medium groups are companies of up to one thousand employees, municipal and county governments, many college and universities, etc. Large groups consist of state and federal government employees, national corporations of several thousand employees or perhaps a national labor union with a common health coverage contract.

FIGURE 1
STRUCTURE AND FUNCTIONS OF THE U.S. HEALTH CARE INDUSTRY

Specialty groups often have no traditional employment ties, for example, group health coverage for the American Association of Retired Persons (AARP).

In the center column are health service intermediaries who facilitate the provision of services and in most cases bear the risk of coverage. The eldest of these are traditional health insurance carriers who sell health insurance policies for a specific term and bear all the risk. Soon after, there came the Blue Cross/Blue Shield network of organizations who function similarly but with the addition of managerial administrative services. Health maintenance organizations (HMOs) and preferred provider options (PPOs) materialized more recently. HMOs and PPOs were the first of the new generation of innovative health care institutions to emerge in response to changing conditions in the health care market. As was noted in Health Care Strategic Managemente:

The U.S. health care industry is undergoing a radical transformation. The consolidation of excess hospital capacity, fierce competition within a shrinking medical marketplace and a growing number of competitive health plans (PPOs and HMOs) are causing a major structural realignment within most health care organizations (HMOs). This realignment has resulted in a much greater reliance upon strategic planning and marketing by HCOs to cope with market-driven competitive strategies. (Boshard, 1986, p. 14)

Stress has come to bear on the American health care delivery system from a collection of sources. When taken together, the impact referred to above can be more easily understood. Among the factors precipitating institutional transformation in the American health care industry are:

1. In response to escalating health care costs, medium and large group customers brought cost reduction pressure to bear on providers and intermediaries. HMOs and PPOs, who also had a vested interest in cost reduction, instituted cost control procedures with providers.

2. After years of under capacity, nearly two-thirds of the nation's hospitals began experiencing over capacity, in terms of beds. This was in part due to (a) intermediaries' cost control procedures such as requiring a second opinion before surgery or allowing only day surgery for certain conditions, (b) advances in medical technology (e.g., one day orthoscopic knee surgery instead of two-weeks hospitalization with conventional invasive surgery), (c) an increasing percentage of employers requiring health cost sharing of their employees which was in part determined by usage levels, (d) the innovation of specialized medical service providers, the foremost three of which being day surgery centers, specialized ambulatory care centers, and free-standing emergency medical stores, and (e) deregulation which made it easier to construct new hospitals and outpatient treatment facilities; after having been artificially restrained for so long too many hospitals overbuilt in response.

3. The shift of intermediaries to the prospective payment system; hospitals were paid according to predetermined rates for each of 467 kinds of diagnosis related groups (DRGs). Under DRG reimbursement the payer predetermines a fixed amount it will pay for a particular diagnosis, and the provider determines what services it will provide for that amount.

4. The increase in intraorganizational competition. The more market aggressive hospitals hoarded business, causing damaging low occupancy rates with competitors.

5. The emergence of preferred provider organizations (PPOs) which provided lower-cost medical services to employees of large organizations.

6. The consuming public has become better educated on medical matters and proactive in demanding quality care at appropriate cost. As copayments and reduced range of insurance benefits have become more widespread, patients have become more judicious in their consumption of medical products.

7. Although health care...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Contents
• About the editors
• About the Contributors
• Preface
• Introduction
• Part I: What Is The Wellness/Prevention Product?
• Part II: Market Segments For Wellness And Prevention Programs
• Part III: Channels Of Distribution
• Part IV: Future Research In Wellness And Prevention