After listening to cries for more affordable prices from companies that buy coverage for their employees in addition to brokers, everyone from pharmaceutical marketers to mammoth hospital companies is intensifying efforts to reorganize for efficiency.
Proposed mergers would create the two largest hospital chains in the U.S. Columbia/HCA Healthcare Corp., Louisville, Ky., agreed Oct. 5 to acquire HealthTrust, Nashville, Tenn., for $5 billion, while National Medical Enterprises, Santa Monica, Calif., agreed Oct. 11 to acquire American Medical Holdings, Dallas, for $3.3 billion.
Columbia would remain the nation's largest hospital chain; National Medical would displace Ornda Healthcorp, Nashville, as No. 2. The expanded chains link 395 hospitals, 125 outpatient centers and $20 billion in revenue.
"There will continue to be an increase in consolidations on the healthcare provider side," said Mark Hurwich, VP at the Wilkerson Group, New York-based healthcare management consultants. "Big healthcare organizations not only have more buying power from their suppliers but, if done right, they can achieve a national identity."
However, some say the marketing emphasis will remain local.
"Healthcare inherently is not a national product. The Toys "R" Us idea of slapping a brand name out there won't work," said Edwin Gordon, VP at Morgan Stanley.
But not everyone agrees.
"Just like we saw a shift to consumer marketing with HMOs, like Humana, more money will probably be spent to establish company identities outside of local boundaries," said Abbott Jones, managing director of AdMedia Corporate Advisors. "But it will be a wait and see thing."
Although National Medical relied on decentralized marketing, plans to rename the new combined entity and perhaps pursue a branding campaign are in the works, said Diana Takvam, corporate communications director.
Columbia's marketing has traditionally been decentralized, said Eve Hutcherson, senior manager-marketing and public affairs. "However, we will be creating a marketing strategy to bring advantages to the local market that will help them reap the benefits of being affiliated with a company this size."
Even though people disagree on the geographic scope of marketing efforts, there are strategies on which most players agree, like customer satisfaction surveys, market research and increased education on medical products.
"It's very necessary to measure a nebulous thing called quality," Mr. Gordon said. "But winning more business comes down to selling quality, access and price for healthcare."
Responding to that exact need, there has been an emergence of private companies that research healthcare-evaluating health providers objectively with data on cost and accessibility, but also on more subjective issues like bedside manner and waiting time.
In Cleveland, hospitals use an agreed on standard survey and the results are published twice a year. "It has become a major quality-driving effort on the part of the hospitals in Cleveland that are not doing well," said Patrick McTigue, president, Corbett Health Connect, Chicago.
"The difference in the equation of the future is the participation of the consumer/patient," said Win Gerson, chairman-CEO, William Douglas McAdams, a New York-based healthcare ad agency.