Health Services Marketing 1-3 Discussions
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Week1Lecture2Slides.pptHealth Services Marketing
HSA 305
Defining the Health Care System and its Trade-offs
Kotler, P., Shalowitz, J., & Stevens, R. J. (2008). Strategic marketing for health care organizations. San Francisco: Jossey-Bass
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Welcome to Health Services Marketing. In this lesson, we will define the health care system and its trade-offs.
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Objectives
- Upon completion of this lesson, you will be able to:
- Describe the health care system and the role of marketing
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Upon completion of this lesson, you will be able to:
Describe the health care system and the role of marketing.
Please go to the next slide.
Health Care System
- Why is it important?
- US Health Care System
- Leading indicators
We will analyze the term health care system and illustrate how its key components interact and relate to each other. It is important for marketers to be aware of the way a nation defines its health care system due to its implications on marketing tasks such as customer research, pricing, sales advertising, and coordination of channels of distribution as well as management implications such as initiatives as continuity of care programs, alignment of financial incentives, and quality assessment.
The US health care system is a complex system with ill-fitting components that can be defined as an apparent ad hoc arrangement of small units, each with its own goals and incentives, whose purpose is treatment of acute diseases of insured populations. Hence, this system focuses on disease management instead of overall health which indicates a need for an overall set of leading indicators to reflect major health concerns. Some leading indicators are as follows:
Physical activity;
Overweight and obesity;
Tobacco use;
Substance abuse;
Responsible sexual behavior;
Mental health;
Injury and violence;
Environmental quality;
Immunization; and
Access to health care.
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Framework
Table 2.1 provides an illustration of the additional dimensions to provide an understanding of how any nation organizes its health care. This table will assist you in your understanding of how any nation organizes its health care.
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Sheet1
| Who Pays? | How much is Paid (Costs/Budgets) | Who and What are Covered? | Where is Care Provided? | Who Provides the Services and Products? | |
| Political/Regulatory/Judicial | 1 | 6 | 11 | 16 | 21 |
| Economic | 2 | 7 | 12 | 17 | 22 |
| Social/Cultural | 3 | 8 | 13 | 18 | 23 |
| Technological | 4 | 9 | 14 | 19 | 24 |
| Demographic | 5 | 10 | 15 | 20 | 25 |
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Models for Understanding Health Care Systems
- Anderson
- Market-minimized
- Market-maximized
- Roemer
- Political
- Economic
Understanding any health care system can be a tedious and confusing task. The two prominent approaches to understanding any health care system are as follows:
Anderson model; and
Roemer model.
The Anderson model describes a market-minimized to a market- maximized continuum. The market-maximized version is in favor of private insurance or profit-oriented insurance. The United States has this version. The market-minimized version is completed owned, financed by the state. It is a state salaried health services system that is financed by general tax revenues. Cuba and France have this version.
The Roemer model begins with the political or policy spectrum of the Anderson model that ranges from laissez-faire to socialist, but includes an economic dimension that spans from the affluent to the poor. In addition to the political and economic factors, there are a number of equally significant factors to include when describing a health care system.
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Who Pays?
The question of who pays should be applied to cells one through five. In terms of the political, regulatory, judicial domain, one is seeking to find out where the power is to make decisions regarding payment for health care services and products. The answer will depend on the degree of centralization or decentralization of the health care system. Another question regarding this domain is to what extent the public or private sector pays for health care.
For the economic domain regarding who pays, the driver can be determined by the state of a country’s economy. For example, a country’s economy may be experiencing rapid expansion in which many companies may provide robust health care benefits. However, during subsequent economic downturn, those companies may shift more the health care payment responsibility to their workers. If the public is responsible for the payment during bad economic times, it may reduce a significant amount of support, leaving individuals to bear considerable financial responsibility. This has occurred in rural China and the former Soviet Union.
For the social cultural domain, the characteristics of a country will determine the method and source of payment.
The technological domain includes drugs, devices, and procedures used in a health care setting. The key question regarding this domain is how closely are safety and efficacy evaluations combined with cost considerations in determining whether a technology is approved and used. In the US, the Food and Drug Administration (FDA) determines
Demographic characteristics of the target population will determine who pays for products and services. A key questions countries have to ask regarding the demographic domain is how they will care for their growing elderly populations, who will care for them, and how much will the elderly be expected to contribute as well as how much will the public finance.
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Sheet1
| Who Pays? | How much is Paid (Costs/Budgets) | Who and What are Covered? | Where is Care Provided? | Who Provides the Services and Products? | |
| Political/Regulatory/Judicial | 1 | 6 | 11 | 16 | 21 |
| Economic | 2 | 7 | 12 | 17 | 22 |
| Social/Cultural | 3 | 8 | 13 | 18 | 23 |
| Technological | 4 | 9 | 14 | 19 | 24 |
| Demographic | 5 | 10 | 15 | 20 | 25 |
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How much is paid?
How much is paid is in reference to cells six to ten.
Political, regulatory, judicial regarding how much is paid has origins in public health care budgets and fee schedules. Examples of this are the government set global fees for hospitals (DRGs) and per service fees for physicians (RBRVS). These have been adopted by the private sector as benchmarks for paying providers. Economics regarding this question is determined by the state of a country’s economy. Social cultural domain regarding this question, is the groundwork for what is possible concerning factors such as the government’s role in providing health care benefits, the extent of government support, the types of services covered, and the amount of payments. Technological is regarding determining how does technology add to the cost of care as opposed to assisting to reduce overall expenses. Demographic is regarding how much does a country want to spend on specific populations.
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Sheet1
| Who Pays? | How much is Paid (Costs/Budgets) | Who and What are Covered? | Where is Care Provided? | Who Provides the Services and Products? | |
| Political/Regulatory/Judicial | 1 | 6 | 11 | 16 | 21 |
| Economic | 2 | 7 | 12 | 17 | 22 |
| Social/Cultural | 3 | 8 | 13 | 18 | 23 |
| Technological | 4 | 9 | 14 | 19 | 24 |
| Demographic | 5 | 10 | 15 | 20 | 25 |
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Who and what is covered?
Political, regulatory, judicial are regarding who is covered and what health care benefits they will received. Economic determines what benefits are offered. Social cultural domain has an impact on who and what is covered by public and private systems. Technological domain impact life enhancing or lifestyle enhancing technology and how they are prioritized. Demographic domain looks at which populations require health care will also determine who or what is covered.
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Sheet1
| Who Pays? | How much is Paid (Costs/Budgets) | Who and What are Covered? | Where is Care Provided? | Who Provides the Services and Products? | |
| Political/Regulatory/Judicial | 1 | 6 | 11 | 16 | 21 |
| Economic | 2 | 7 | 12 | 17 | 22 |
| Social/Cultural | 3 | 8 | 13 | 18 | 23 |
| Technological | 4 | 9 | 14 | 19 | 24 |
| Demographic | 5 | 10 | 15 | 20 | 25 |
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Where is care provided?
Political, regulatory, judicial domain looks at the venue of where services can be provided. There are portability laws such as the federal Emergency Medical Treatment and Active Labor Act of 1986 (EMTALA) in the US that indicates that the emergency departments have to provide appropriate medical screening or treatment to any patient and that the hospital must continue to provide services until the patient is stabilized regardless of the patient’s ability to pay. During times of economic expansion, both public and private health care systems payer allow patients to receive care at and from almost any licensed facility and provider. The opposite is true for economic hard times. Due to cultural reasons, some populations are less accepting of a trade off between cost and site of care. Centers of excellence and alternate site such as telemedicine are opposite major trends in technology regarding respect to location. Access is under question regarding the demographic domain regarding where care is provided.
Please go to the next slide.
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Sheet1
| Who Pays? | How much is Paid (Costs/Budgets) | Who and What are Covered? | Where is Care Provided? | Who Provides the Services and Products? | |
| Political/Regulatory/Judicial | 1 | 6 | 11 | 16 | 21 |
| Economic | 2 | 7 | 12 | 17 | 22 |
| Social/Cultural | 3 | 8 | 13 | 18 | 23 |
| Technological | 4 | 9 | 14 | 19 | 24 |
| Demographic | 5 | 10 | 15 | 20 | 25 |
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Sheet3
Who provides the services and products?
Political, regulatory, judicial is regarding who is allowed to provide care to patients, prescribe medications and medical equipment and the scope of the practitioner. Economic domain for this question is regarding the extent economics impact who provides care. Social cultural domain for this question seeks to determine how society determine and value who is accepted as a legitimate provider of care and what are culturally valid treatment. Technological domain is regarding who designs the educational content for training providers and who gets to implement the technology based on training, licensure, or certification. Demographic domain seeks to determine how do demographic characteristics of the population determine who provides the care.
Please go to the next slide.
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Sheet1
| Who Pays? | How much is Paid (Costs/Budgets) | Who and What are Covered? | Where is Care Provided? | Who Provides the Services and Products? | |
| Political/Regulatory/Judicial | 1 | 6 | 11 | 16 | 21 |
| Economic | 2 | 7 | 12 | 17 | 22 |
| Social/Cultural | 3 | 8 | 13 | 18 | 23 |
| Technological | 4 | 9 | 14 | 19 | 24 |
| Demographic | 5 | 10 | 15 | 20 | 25 |
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Sheet3
Strategic Choice Model of Organizations and Health Care systems
- Stakeholder identification
- Strategy development
- Trade-offs
Stakeholders are persons or groups who have interest in funding, delivery, product development, and receipt of health care services and products. Stakeholders can be divided into three different groups:
Individuals and their advocates;
Public sector; and
Private sector.
These sections may overlap and blend. The stakeholder framework is a guide to explore themes and variations.
Strategy provides a framework for making decisions within the organization’s long range goals.
Organizations have to consider strategies regarding the following:
Approaches to handling major challenges now and in the future;
Setting the organizational direction for the medium to long term; and
Taking into account short term decisions do need to be made.
Organizations must make choices because they cannot be all things to all people. Therefore, they have to make strategic business choices or trade-offs.
Please go to the next slide.
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Strategic Implications of Health Care
- Cost= f(p, V, I)
- Price
- Volume
- Intensity of service
- Quality dimensions
- Amenities
- Service
- Technical
Cost is the actual payment that is based on listed price or a pre-negotiated rate that is dictated by the following relationship:
Cost is equal to the function of price of service or product, volume or the number of units, and intensity of service or product. It is represented by the following:
Cost = f (p, V, I).
Price is determined by customers demand, but in health care the customers’ demand can be influenced by the following:
Suppliers by methods such as direct to consumer advertising and physician requested revisits;
Payers and regulators through direct and indirect methods such as rationing services and regulating prices; and
Supply such as the number of students accepted to medical school slots.
Volume is also a determinate of cost. Volume has three components:
Decision to use or not to use a product, deliver, or receive service;
Decision of which option of treatment is the best choice; and
Efficiency of execution and the number of units of care to be applied.
Intensity of service is the third determinant of cost. It has three components:
Level of service such as intensive care or a regular surgical bed;
Use of technology includes drugs, devices, and procedures which may be used in combinations or as substitutes for each other; and
Site of service can be classified as institutional and non institutional settings
The dimensions of quality includes:
Amenities
Service; and
Technical.
Amenities are regarding items that help to inform decisions regarding first impressions regarding he facility such as landscaping and the ease and cost of parking. Service affects outcomes. Services may consist of meals, housekeeping, and the staff response to a patient. The technical aspect the work that affects the outcomes such as services may consist of meals, housekeeping, and the staff response to a patient. Services may consist of meals, housekeeping, and the staff response to a patient such as activities used to perform surgeries, choice of medication, and nursing care.
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Access
- Availability
- Infrastructure
- Sustainability
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The third aspect of the strategic trade offs is issues of access or equity. Availability, infrastructure, and sustainability are three factors that have to be considered in regards to access or equity. In availability seeks to answer whether certain resources are available. Infrastructure and sustainability are topics of concern in developing countries and in rural and inner cities in the developed countries. The infrastructure includes not only things such as medications, transportation, it also includes the staffing that will provide the services. Sustainability is essential in making sure the programs continue. It include funding and high level commitment by appropriately empowered authorities.
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Summary
- Framework for understanding the US health care system
- Six domains of analysis
- Strategic model of choice
- Strategic implications for health care
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We have now reached the end of this lesson. Let’s take a look at what we’ve covered.
First, we discussed a framework for understanding the US health care system. The Anderson and Roemer models were described, but expanded to include other significant dimensions when describing any health care system. There were five questions to ask:
Who pays?
How much is paid regarding cost and budgets?
Who and what are covered?
Where is care provided? And
Who provides the services and products?
For six domains for analysis:
Political, regulatory, judicial;
Economic
Social, cultural;
Technological; and
Demographic.
Then we discussed the strategic model of choice for organization and health care systems with an emphasis on role of the stakeholder. Trade off analysis indicates that an organization cannot do everything for everyone. The organization make strategic choices.
Finally, the strategic implications for health care involve the trade offs among cost, quality, and access were discussed. Cost is the function of:
Price of the service or product
Volume or number of units; and
Intensity of service.
The dimensions of quality is divided into :
Amenities
Service aspects; and
Technical components.
Access or the issues of access or equity takes into consideration the following:
Availability;
Infrastructure; and
Sustainability.
This concludes this lecture.
Who
Pays?
How much is
Paid
(Costs/Budgets)
Who and
What are
Covered?
Where is
Care
Provided?
Who Provides
the Services and
Products?
Political/Regula
tory/Judicial
16111621
Economic
27121722
Social/Cultural
38131823
Technological
49141924
Demographic
510152025
Who
Pays?
How much is
Paid
(Costs/Budgets)
Who and
What are
Covered?
Where is
Care
Provided?
Who Provides
the Services and
Products?
Political/Regula
tory/Judicial
1
6
111621
Economic
2
7
121722
Social/Cultural
3
8
131823
Technological
4
9
141924
Demographic
5
10
152025
Who
Pays?
How much is
Paid
(Costs/Budgets)
Who and
What are
Covered?
Where is
Care
Provided?
Who Provides
the Services and
Products?
Political/Regula
tory/Judicial
16
11
1621
Economic
27
12
1722
Social/Cultural
38
13
1823
Technological
49
14
1924
Demographic
510
15
2025
Who
Pays?
How much is
Paid
(Costs/Budgets)
Who and
What are
Covered?
Where is
Care
Provided?
Who Provides
the Services and
Products?
Political/Regula
tory/Judicial
1611
16
21
Economic
2712
17
22
Social/Cultural
3813
18
23
Technological
4914
19
24
Demographic
51015
20
25
Who
Pays?
How much is
Paid
(Costs/Budgets)
Who and
What are
Covered?
Where is
Care
Provided?
Who Provides
the Services
and Products?
Political/Regula
tory/Judicial
161116
21
Economic
271217
22
Social/Cultural
381318
23
Technological
491419
24
Demographic
5101520
25
