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Orthopedic Service Line’s Marketing Plan Essay

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Updated: May 16th, 2021

Executive Summary

The main objective of Rocky Mountain Valley Hospital is to introduce a new product, Orthopedic Service Line, into the market. The marketing plan aims to apply the evidence-based approach in creating a comprehensive way of analyzing key performance indicators, designing care pathways that diminish undesirable differences in care delivery, and increasing patients’ outcomes and satisfaction. Subsequently, the plan would reduce healthcare costs by increasing the effectiveness of healthcare delivery, reducing readmission rates, decreasing the duration of hospital stay, and checking complications.

The attainment of the objective would enable WHS to improve its status and take part in Bundled Payments and Accountable Care Organizations (ACO). Moreover, the plan would enable patients with high-deductible insurance plans to access orthopedic services offered by WHS.

Essentially, the marketing plan of the new Orthopedic Service Line aims to:

  1. Improve patient outcomes and satisfaction through the delivery of patient-centered quality services and collaborative relationships.
  2. Streamline and synchronize processes and operations for nurses, physicians, and orthopedic teams to provide optimal orthopedic services to patients.
  3. Reduce the cost of providing quality healthcare services to patients.
  4. Augment brand awareness and expand the market share of the new service line of WHS.

In streamlining the process of service delivery, the service line categorizes similar services and products for the orthopedic team to synchronize operations and get optimal patient outcomes. The streamlined process and synchronized operations enable WHS to provide quality orthopedic services and boost patient satisfaction. As orthopedics need services from surgical, nursing, physiotherapy, and rehabilitation departments, the service line focuses on developing a comprehensive healthcare product to provide care before, during, and after the provision of orthopedic services to facilitate patients to benefit from the entire treatment cycle. Essentially, the service line is beneficial because its goals are to establish leadership in orthopedic service delivery through the adoption of quality care and increase patient inflow and market share.

In the aspect of actionable programs, WHS ought to satisfy the marketplace by employing adequate healthcare providers, establishing a robust communication system, and expanding the scope of the service line. Another program is the exploitation of competitive advantage by ensuring the expansion of the facility to accommodate an increasing number of patients. Additionally, WHS would reduce costs of supplies by comparing vendors and identifying one that offers affordable rates.

Background

As a famous hospital accredited by the American Osteopathic Association (AOA), Webster Health System has grown over decades as a profit-making organization. Due to its substantial growth, the hospital changed its name from Webster Hospital to Webster Health System (WHS) and affiliated itself with the Osteopathic Hospitals of America, Inc. (OHA). Moreover, WHS enjoys consulting services from healthcare providers from Osteopathic Medical Center (OMC). OHA and OMC support WHS by providing the management system, offering logistic services in the supply chain, and making investments. Currently, WHS has grown and become an ambulatory clinic that offers timely healthcare services.

Lifestyle changes and technological innovation have altered the delivery of orthopedic services in the modern hospital setup. Sedentary life and technological advancement create opportunities for growth in the orthopedic service industry. To enhance the quality of service, organizations must involve all other stakeholders in the service industry through collaborative ventures. Service line managers must adopt good marketing plans in developing strategies to enhance market penetration, collaboration, and cost control. The marketing plan involves the SWOT analysis, the evaluation of economic projections, market assessment, trend analysis, competition and opportunities, organizational objectives, and the action program WHS intends to take to achieve the objectives.

Target Market

To expand its market share and improve service delivery, WHS seeks to create a new Orthopedic Service Line, which targets adults aged between 55 and 75 years. Adults in this target group participate actively in skiing, hiking, cycling, and skating, and thus, prone to sustain injuries that demand orthopedic services. Moreover, these adults are conscious about their health for they understand the essence of physical activity and healthy lifestyles in improving health. Since the annual household income is above $75,000, healthcare services are affordable.

Vision and Mission

The vision of WHS is to be the best provider of orthopedic services in the Rocky Mountains. To achieve its mission, WHS will provide quality healthcare services that are not only affordable but also meet the expectations of patients. The following is the mission statement:-

To be a modern orthopedic center that is well-equipped, adequately-staffed with highly-trained personnel, and effectively-specialized to provide the best orthopedic services to improve patient outcomes and the quality of life.”

SWOT Analysis

SWOT analysis depicts factors that directly contribute to the current WHS’s revenue position and the capacity to respond to the issues surrounding its business activities. From the 2X2 SWOT table below (Table 1), it is apparent that WHS enjoys an already established brand name, adequate expertise, and its urban location as its strengths. However, the shrinking reimbursement from third-party payers has significantly led to losses in the orthopedic service line presenting a weakness, which negatively influences WHS’s future in the orthopedic business. Additionally, threats from the external environment such as intense competition, high-barriers from established collaborative ventures, private clinics, and implementation of regulatory policies on value-based payment models critically affect the orthopedic service industry.

However, the presence of opportunities such as the lack of all-patient-needs one-stop facility, and service line expansion facilitates the delivery of patient-centered and cost-effective high-quality services, making the orthopedic service industry attractive for investment

Table 1. SWOT Analysis.

Strengths

  • An established brand name
  • Human capital
  • Strategic location

Weaknesses

  • The shrinking reimbursement levels from third-party payers with focus on value-based payment such as Medicaid and Medicare
  • The current negative revenue incurred by WHS from orthopedic services

Opportunities

  • Establishing collaborative ventures with vendors, physicians, and other healthcare facilities
  • The lack of all-patient-needs one-stop facility
  • Lack of patient-centered services
  • Service line expansion for before, in-treatment, and aftercare to tap home-based care

Threats

  • Intense competition from established firms such as OHA and its affiliates
  • High barriers to entry in brand promotion emanating from collaborative ventures by OHA and its affiliates
  • Regulatory implementation of new payment models by influential third-party payers under the patient protection act who seek cost-saving opportunities
  • Establishment of private clinics by physicians to offer urgent care

Management Summary

The formulation and adoption of a marketing plan for the orthopedic service line in the facility is a key success factor for the enhancement of the competitive edge and sustained the development of WHS. The strategic objective involves enhancing the market share of WHS through the delivery of patient-centered quality services and collaborative relationships. As a strategic approach, the marketing plan seeks to develop a model to align the orthopedic service program with WHS’s perspective and make it a quality-oriented one-stop facility for all patient needs.

The basic factors driving the development of the marketing plan include price transparency, technological innovations, new revenue opportunities, and controlled management. Price transparency involves the adoption of a value-based payment model in line with the Patient Protection and Affordable Care Act to promote the delivery of economically sustainable healthcare. This model supports the development of quality of care that is commensurate with the cost. Intense competition in orthopedic service delivery has a negative influence on the profitability of WHS. The reduced income of WHS requires the identification of new opportunities to widen the scope of care delivery and expand opportunities for revenue generation.

By adopting the marketing plan, WHS expects to expand its market share, increase revenue, and sustain its growth. By expanding its market share, WHS will adopt collaborative relationships with orthopedic physicians, other hospitals, and vendors in the delivery of quality orthopedic services and ensure mutual financial success. Additionally, to enhance the competitive position and achieve sustained growth, the strategy of WHS aims to implement continuous market analysis and internal evaluation of services to identify specific areas that need improvement and embrace dynamic healthcare needs. Overall, the marketing plan significantly guides WHS to benchmark and establish all-inclusive, quality, and patient-centered services.

Economic Projections

Marketing Cost

Reduction of operational costs is essential to maximizing the profitability of WHS. The provision of orthopedic services faces great challenges involving the existence of a relationship between the quality of service and product marketing. Patients largely depend on the choice of healthcare service, the availability of information on an organization’s service, and the associated cost (Manning et al., 2017). Therefore, the provision of affordable services targets extensive markets and allows patients to choose appropriate services. The medium for the promotion of the service significantly affects the accessibility of information. High cost and low-market reach medium would negatively affect the marketing of the service. Thus, WHS must consider a wide-market, moderate-cost medium to enhance orthopedic service market appeal and projected income.

Population Economic Conditions

Inflation, employment, and social-cultural environment influence the consumption of services within the market. Improvement of population revenue significantly affects the population’s lifestyle and the choice of the communication channel. The rise in social media usage, consumer activism, and diverse demographic characteristics is essential in augmenting the ability of WHS to generate income.

These income characteristics should influence WHS’s choice of marketing channel. Since most of the young working population acknowledges online-based communication, WHS must adopt internet-based marketing strategies to enhance market awareness among this group. Additionally, this population embraces consumer activism in influencing peer choice of service. Consequently, since the young population occupies a large proportion of the target market, the adoption of printed media advertisements would negatively affect the ability of WHS to undertake marketing and generate income.

Expectations of WHS

WHS aims to enhance its competitiveness and revenue generation to expand its market share. Additionally, WHS intends to improve its market share and revenue by targeting lower socio-economic classes whose demand for orthopedic services is highly sensitive to the cost of service. To achieve this objective, WHS must target-present customer composition, access market potential, and evaluate the demographic characteristics of the population. Hence, WHS must adopt aggressive marketing strategies targeting the entire market segment. In essence, an organization’s expectation considerably influences the choice of marketing channels, budget allocation, and the projected income.

Qualitative Analysis of the Market

Outpatient services form the largest component of the orthopedic service industry. Medicare and Medicaid enjoy the largest proportion of 2.3% and 1.1 % of the total 8% medical costs, which comprise the highest third-party payer services for orthopedic patients within the industry. Third-party payers substantially determine the access of patients to care (Badley, Canizaress, Mackay, Mahomed, & Davies, 2013). Hence, the contribution of value-based reimbursement in the orthopedic service industry demands that WHS adjusts and accommodates the needs of all industry stakeholders while maintaining quality care. Other prospects for the service include vendors and orthopedic surgeons. Geographically, patients within the Rocky Mountain region form the primary patient population for the company. However, older patients within these settings are the main target population.

Quantitative Analysis of the Market

It is possible to conduct a quantitative estimate projecting the potential return on investment since most insurance plans provide some coverage for all orthopedic services. The expansion of service lines promotes quality of care in the facility, which is in line with the objectives of third-party payers, such as Medicare. Additionally, during treatment, establishing a one-stop center for all orthopedic and related care needs consolidates all income within one facility and harnesses extra income that would have been lost through referrals to other facilities. Furthermore, adopting a rehabilitation unit and home-based care after treatment expands the scope of the source of income for the facility.

Trend Analysis

The new consumer market commands the main role in shaping inclusive healthcare. Due to technological advancement and social demographics, healthcare information is readily available to the public, which influences the patient role in shaping the quality of service. However, most consumers believe that healthcare service providers barely acknowledge the needs of the patients and associate healthcare services with a one-size for approach (Manning et al., 2017). Despite this notion, contemporary consumers want a personalized, convenient, and value-based service. These consumer demands act as a benchmark that shapes future healthcare services, their measurement, and the adaptability of organizations.

Furthermore, the provision of advanced technology products and quality care continues to form the baseline attributes for consumer preference. Thus, a value-based reimbursement system will continue to act as an appraisal platform reflecting desired outcomes. Other factors shaping orthopedic services and future success include the development of less invasive procedures and biodegradable implants. In this view, WHS ought to align its services with this new breed of customers and develop medical products that fulfill customer needs according to patient preferences. The strategy requires consumer marketing that involves the implementation of quality outcome measures and customer experience training for staff.

The volume of business generated from current services includes income from diagnosis, treatment, and rehabilitation interventions for patients. WHS initially focused on the diagnosis and treatment of orthopedic patients and failed to align care needs with the service line. The high-volume of WHS’s business resulted from outpatient diagnosis and treatment of common medical issues and surgical services (Table 2). However, inpatient care and patient rehabilitation programs, such as joint reattachments of the lower extremities, are among the top ten diagnosis-related discharges. Consequently, the future and success of WHS require the development of an all-needs-patient product before, during, and after the provision of care services to enable patients to benefit from the entire treatment cycle.

Table 2. Trend of Services.

Hospital service 2016 2017 2018 2019
Pediatrics patient days 804 706 687 650
Maternity patient days 2140 1950 1845 1769
Medical-surgical I&II patient days 16911 17338 15890 16911
Intensive care unit patient days 2282 2655 2802 2208
Total patient days 22137 22649 21224 20359
Occupancy percentage 70.5% 73.9% 68.4% 65.6%
Number of beds 86 84 85 85

Competition

The major competitors in the orthopedic service industry include OHA and its affiliated companies such as OMC. OHA and its affiliate companies are nonprofit community organizations that use a joint management program. This program limits the management privileges of affiliated companies, shares patient information with OHA, and makes orthopedic purchases through WHS. However, collaborative ventures widen competitors’ patient area coverage through referrals from OHA and other affiliate organizations. Despite the advantage of patient referrals, the movement of patients through different facility settings in the network affects the quality of service and patient satisfaction. These highlighted limitations of its competitors are essential in modeling the company’s competitive strategy and market penetration.

WHS’s stance is competitive due to the changes in the orthopedic service line it has adopted. These changes include engaging physicians in management, collaborating with high-quality orthopedic device vendors, and expanding and consolidating the patient service care in one facility. The competitors limit their focus on patient care to treatment and sourcing services from affiliate companies.

Therefore, expanding the patient care to include post-treatment and rehabilitation needs would enhance the competitiveness of WHS. Limiting patient movement through different facilities in accessing care needs significantly promotes communication between physicians, resulting in patient-oriented quality care, which influences the patient perception of the choice of organization. Moreover, involving physicians in the decision-making process is essential in promoting patient scale of care, from the consultation to the hospital stay, and finally to therapy and rehabilitation.

Problems and Opportunities

Shrinking reimbursement levels and new payment models from influential third-party payers or employers such as Medicare and Medicaid directly affect the orthopedic service industry. Page, Butler, and Bozic (2013) explain that due to high-growth expectations, payers and providers seek cost-saving opportunities. As a result, the industry develops a dynamic environment in which orthopedic professionals and health systems restructure to optimize outpatient care needs. In line with this industry adjustment, orthopedic physicians engage in private urgent care and after-hour clinics, which in turn lead to intense competition in the industry.

Established organizations such as OHA and its affiliate companies have created high barriers to entry through collaborative ventures in care delivery, which also act as brand marketing channels. These collaborative programs pull a strong customer influence and retention platform, limiting penetration by new health facilities. Additionally, due to value-based reimbursements, third-party payers have significant power in influencing the quality and the cost of service in the industry. However, these service-oriented challenges are essential in shaping the opportunities for growth of new entrants.

Nonetheless, the decline in orthopedic revenue is a critical internal factor affecting the ability of WHS to adjust and adapt to the dynamic needs of patient care. Low revenue generation limits physician recruitment, the establishment of a one-stop facility, and the acquisition of high-quality orthopedic devices. Given physician-patient ratio is essential in meeting the increasing demands for personalized services and wait-time, low recruitment impairs the quality of care.

Opportunities

For WHS, the key success factor involves exploiting the opportunities in the orthopedic service industry. The opportunities include expanding the patient service line of care and consolidating orthopedic care needs within one facility. Consolidating orthopedic services requires collaborating with high-quality orthopedic device industries and staffing service lines by recruiting skilled orthopedic physicians and their assistants. Since most patient care happens outside hospitals, the expansion of patient service lines identifies an opportunity for WHS to grow its business.

Staffing helps WHS to meet extra patient demands in providing additional care to patients while collaborating with high-quality orthopedic device industries is essential in providing quality services. Additionally, expanding the breadth of service gives greater control over the quality of care significant in improving patient recovery, reducing wait-time, and providing personalized patient services. The expansion made WHS lead in the provision of orthopedic services by beating rivals who have continually offered partial care and relied on affiliate centers for additional patient needs such as OHA affiliate companies.

Objectives and Goals

Qualitative

The long-term goal of WHS is to establish its leadership in orthopedic service delivery through the adoption of quality care. To improve its services, WHS intends to modify its care through the expansion of the service line to incorporate both orthopedic needs and other services associated with orthopedics such as cardiac care, trauma, and rehabilitation services in a 3-5 year period. This process is essential in transforming the orthopedic unit of WHS into a one-stop center with the objective of establishing its market as an orthopedic referral center in the region.

The short-term objective is to modify the structure of the orthopedic service line in the first quarter. The modification involves recruiting a balanced physician-patient ratio, involving physicians in management processes, and controlling operating costs. This improvement of service processes positively influences consumer perception (Olson & Mather, 2013). Physician-patient ratio improves of consultancy services essential in the identification of emerging challenges and modification of care to the short-term needs of the external environment.

Quantitative

The goal is to increase patient inflow by 15% in the first quarter and upwardly review this percentage in subsequent quarters based on the current patient population. WHS intends to grow its market share in the industry through the expansion of the service line and the establishment of leadership as an orthopedic referral facility. The process involves quality and patient-centered service delivery. Through service improvement, WHS projects a potential increase in patient volume and facility expansion to accommodate the rise in patient inflow within six months. Growth in patient volume will lead to a growth in revenue.

On the contrary, WHS intends to turn around the negative orthopedic service revenue by controlling its operational expenses. The processes include the involvement of physicians in resource management and the generation of more income from additional patient-oriented care services before, during, and after treatment. According to Olson and Mather (2013), collaborative relationships with orthopedic physicians play a vital role in shaping the health care systems through strategy development, implementation, and improvement of the quality of care. As most patient needs processes are home-based care, the expansion of WHS’s services to include rehabilitation and follow-up services creates an immediate new source of revenue and helps in establishing market leadership.

Action Programs

Satisfy the Needs of the Marketplace

To satisfy the marketplace, within the first quarter, WHS will employ adequate and skilled physicians together with other care assistants, establish a robust communication system, and expand the service line. The market demands act as a roadmap that guides organizational strategic formulation and influences the overall industry profitability (Page, Butler, & Bozic, 2013). Organizational restructuring helps to create a balanced physician-patient ratio, which is crucial in enhancing consultancy services and reducing patient wait time. WHS will also establish a robust communication platform to enhance information exchange between the front-office staff, physicians, and the whole service line. Communication develops a relationship in the setting and accurate exchange of information enhancing proper scheduling of cases, sharing of complete patient records, and improvement of the quality of service.

Secure Advantage over the Competition

To secure an advantage over competitors, the company will ensure completion of the expansion of facility environment within three months to accommodate patients seeking extra care needs introduced in the service line that previously were home-based, such as rehabilitation services. The company must also adopt monthly appraisal of departmental services and staff through sourcing of patient and family member feedback in every step of care. The use of questionnaires, surveys, and online platforms will help identify areas where improvement is required thus shaping healthcare services and improve the quality of care.

Additionally, WHS will engage in web-based and social media advertisements. In conducting online-based advertisements, the company will create an e-book report and encourage voluntary sign-ups by patients and family members during visits. WHS will use this platform in the advertisement, as well as collecting customer feedbacks and suggestions essential in beating its rivals and enhancing its market penetration. The budget makes 5% of the total expected revenue of $530,000 for the year (Table 3). The amount is a positive turnover from current negative revenue.

Table 3. Promotion Budget.

Items Costs
Website $15,000
Social Media $4,000
Print media $500
Branding $,4000
Advertising/Referrals $3,000
Total $26,500

Create Profit

The company will reduce supply costs by comparing vendors and limiting the number of suppliers. This process helps to identify a quality device vendor at an affordable cost, leading to a reduction in expenses. Besides, the company will collaborate with an implant device company to carve out device reimbursement in third-party payments.

Conclusion

Reforms in the orthopedic service industry continue to shape customer needs and the quality of care. The component of reforms requires collaboration amongst hospitals, vendors, and orthopedic surgeons. To keep up with the pace in the industry, organizations must carefully develop and implement strategies to involve comprehensive care, identify areas for improvement, and reduce the cost of operation and patient charges. Action programs aim to satisfy the needs of the market, enhance competitive advantage, and create profits for WHS.

References

Badley, E., Canizares, M., MacKay, C., Mahomed, N., & Davis, A. (2013). Surgery or consultation: A population-based cohort study of the use of orthopedic surgeon services. PLoS ONE, 8(6), 1-8. Web.

Manning, B., Bohl, D., Saltzman, B., Cotter, E., Wang, K., Epley, C., … Bach, B. (2017). Factors influencing the patient selection of an orthopedic sports medicine physician. Orthopedic Journal of Sports Medicine, 5(8), 1-5. Web.

Olson, S., & Mather, R. (2013). Understanding how orthopedic surgery practices generate value for healthcare systems. Clinical Orthopedics and Related Research, 471(6), 1801-1808. Web.

Page, A., Butler, C., & Bozic, K. (2013). Factors are driving physician-hospital alignment in orthopedic surgery. Clinical Orthopedics and Related Research, 471(6), 1809-1817. Web.

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