The Search for Strategy: Lessons from the Front Lines

1. The Search for Strategy: Lessons from the Front Lines Kathleen L. Lewton, MHA, Fellow PRSA Steven V. Seekins, MPA, Fellow PRSA Lewton,Seekins&Trester AAMC Group on Institutional Advancement March 27, 2009

2. Blogs Podcasts Social media DTC ads PR SOCIAL Media Websites “Webinars Buzz marketing And social media Brochures Celeb spokespersons Special events Social Media Billboards Mobile vans Refrigerator magnets! SOCIAL MEDIA SOCIAL MEDIA SOCIAL MEDIA . . . . . Today, it seems it’s all about TACTICS

3. But as Sun Tzu wisely said: “Tactics without strategy is the noise before defeat.”

4. Of course he also said: “Strategy without tactics is the slowest route to victory” But without a chicken, there will never be any eggs. We aren’t anti-tactic. We’re just pro-strategy, as the foundation for successful tactical execution.

5. So today, in this room . . . . • There will be no talk of Twitter • There will be no focus on Facebook • Or My Space (or YOUR space) • Or any other tactics du jour • “Blogs are SO yesterday” • “Facebook – all the old people are on it” • And Twitter . . . . . . . .

7. These are serious times • And getting grimmer • We selected this topic long before October 2008 . . . . • But now, with the economy in tatters, it’s even less sensible to talk of tweeting • The pundits say healthcare is recession-proof . . . . . not what we’re hearing from CEOs and CMOs and CPROs

8. Our E-inboxes read like this: • “Navigant just told the CEO I have 50% more staff than I need – HELP – benchmarks, quick!” • “I can hit my budget cut targets if I just dump our advertising in Q 3 and 4 . . . . but then what do I do next year?” • “I know I can’t say I won’t make cuts – or can’t – but I have no idea what I should keep, or if there are better ways to do what we’re doing.” • “WHICH staff are essential?”

9. And from an AMC CEO: • “No one on my team of institutional advancement people can seem to figure out a strategic game plan to help us hunker down and survive – they’re all arguing about which area is more important, and why they need more budget. When can you get here?”

10. The news is bleak andAMCs are particularly hard hit Everything that impacts a “regular” hospital, plus: • State budget cuts • Research dollars drying up • Disproportionate share of charity care • High expectations • Demanding faculty • Government policy oversight

11. And so, the CEOs turn to: • Marketing – more patients, more volume with better payer mix • Development – more donors, bigger contributions, and QUICK! • PR – no crises, better coverage, higher rankings • Alumni – make ‘em happy so they give more money . . . . . . And could you all do this with fewer resources, please??

12. And right now, unfortunately, our reputations are at an all-time low • How much do you trust businesses and organizations in this sector to do what is right? 2008 2009 Healthcare 58% 42% Pharma 52% 42% Informed U.S. residents, Edelman Trust Barometer study

13. The good news?? • We’re rated higher than banks and automakers • But BELOW retail, technology and consumer product manufacturers • And for first time ever, we’re on same level with pharma industry

14. Other findings: Few information sources are seen as credible Analysts 47% Biz mags 44% Friends/peers & Company employees 40% Media stories 36% Free Internet portals 27% Corporate sources 19-26% Other blogs 16% Social media 15% Ads 13%

15. And yet the hunt is still on . . . For that magic bullet • Q: How many conferences, webinars, seminars and teleconferences are there on Social Media? (A:4,258) • The hype seems to overtake reality • Witness the “Obama won via the Internet” myth

17. Obama team, 2 hours post-Grant Park: • “It was our grassroots strategy that made the difference” • Note: Strategy • Note: Traditional grassroots • Note: Internet was a tactic they used as part of the core strategy • BUT there’s something in the DNA of marketing and related disciplines that seems to make us focus on what’s new, what’s hot – because who wants to do the old basics?

18. Reality: In a time of chaos, sustainable strategies are essential • So let’s begin at the beginning . . . .and ground our discussion in a core reality • Patients are at the center of our enterprise • Without them: • No revenues • No clinical trials • No education • No us • And yet there’s more misinformation about the patient audience than nearly subject in healthcare

19. How do people think we attract patients? • Marketing • Advertising • Ratings and rankings • Gorgeous facilities • Glitzier websites • Direct mail • What else?

20. The reality: • Where do you go for information & recommendations on what hospital to use when you need a procedure? My doctor 74% Another doctor 15% Friends/family 10% Health plan 7% Internet 2.5% Media 2% Ctr. for Health System Change - 9,400 households

21. The reality: • Where do you go for information & recommendations on selecting a specialist? My PCP 69% Friends/family 20% Another doctor 18% Health plan 10.5% Internet 6.8% Media  4%

22. AND: • Where do you go for information & recommendations on selecting a primary care doctor? Friends/family 50% Another doctor, health professional 38% Health plan 35% Internet 10.8% Media  7%

23. AND . . . . • While it varies by market, generally 80-90% of consumers say they already have a PCP • So do the math: • Specialists and PCPs drive hospital choice, Internet/media, etc., are barely considered • PCPs drive specialist choice • And of those approx. 15% of consumers are looking for a doctor, fewer than 10% use Internet or media sources for information or guidance

24. The implications for strategy? • Physician recruitment, retention, relations and referrals are critical • Word of mouth – from friends and family – is also important, which means that . . . . • Patient satisfaction is essential, to drive word of mouth and impact physicians

25. The implications for strategy: • And reputation management matters – because affects all of the preceding, plus: • Employee recruitment, retention, performance and morale • Ditto physicians, faculty • Drives donations, grants, alumni support • Attracts partnerships and alliances • Supports or undercuts promotional efforts to build market share (Good service/bad hospital vs halo) • Plays a role in decisions by managed care companies, foundations and more . . . . .

26. LS&T’s recommendations for Sustainable Strategies • Build the foundation: a strong and enduring institutional reputation that can withstand crises and support other all advancement functions • Focus on superlative performance of our core work: care and caring for patients • Create a highly satisfied and motivated workforce • Build powerful relationships with those who bring the patients, do the teaching and conduct the research

27. Strategy 1: Reputation Matters

28. Reputation is real – and has impact • Today we’re going to look at: • How reputations are built, nurtured and managed • Why it needs to be an INTEGRATED process • How a strong reputation helps an organization survive a crisis First, a sampler of crises past and present. . .

29. Mt. Sinai New York 2002 “On top of the fiscal mess came the death of a man who had donated part of his liver in January 2002 . . . . .a state investigation found “woefully inadequate care . . . . Violations in 80 of 195 complaints patients had brought . . . . .The sum of it all has been a crisis of spirit.” “Today, most worrisome are the occupancy numbers.” New York Times

30. Tenet 2003 “Amid widespread media coverage, Tenet said patient volume had declined 20 to 30% since the start of the investigation.” Modern Healthcare

31. Duke 2003 “A Death at Duke “In the future, we can expect more publicity after major errors in medical care, especially when communication breaks down and trust is lost.” New England Journal of Medicine 3/20/03 “Ms Santillan’s plight also tarnished to some degree the reputation of one of the nation’s most renowned hospitals.” NY Times 2/22/03

32. And in just past six months . . . • $13.5 awarded in hospital death; Jury faults doctors at Dana-Farber (Boston Globe) • “Dana-Farber did not issue an apology” • Immigrants Facing Deportation by U.S. Hospitals (New York Times) • “Sister Margaret McBride, vice president for mission services at St. Joseph’s in Phoenix, which is part of Catholic Healthcare West, said families were rarely happy about the hospital’s decision to repatriate their relatives. But, she added, “We don’t require consent from the family.”

33. And . . . . . . • Top Psychiatrist Didn’t Report Drug Makers’ Pay (New York Times) • “Repeatedly assured by Dr. Nemeroff that he had not exceeded the limit, Emory did nothing.” And (truly) that just skims the surface

34. Reputation matters “If you lose money for the firm, I will be very understanding. If you lose reputation for the firm, I will be ruthless.” Warren Buffet To Salomon Brothers employees Warren Buffett to Salomon Brothers employees

35. Reputation can be managed • Every organization HAS a reputation, even if no one knows what it is or tries to manage it • Reputations can be created and nurtured, repaired and restored, managed and monitored • And reputations can be damaged by poorly managed crises

36. The Reputation Equation Reputation = Perception Perception = Reality + Awareness Reality = E2 Personal Experience + Trusted Endorsements

37. In healthcare, E2 rules because reality reigns • Promotion aside, the truth is that reality (as interpreted by personal experience and trusted sources) dictates patients’ choice in healthcare • Promotion can build awareness and amplify the reputation, but it can’t override nor create reality

38. The HCO reputation management track record: C- • And AMCs have often done even worse • HCOs have the prerequisites for positive reputation given their lifesaving work and AMCs have even more assets including high profile brand names • Always assumed favorable reputations as a “given” • Many did not actively work to sustain reputation based on performance • Many focused more on promotion • HCOs prone to crises • And many high profile crises have been handled badly at AMCs

39. Flash forward to 2009: • All health care, all the time – and clearly Obama intends to keep it front & center • Every sector is seen as a villain or potential villain (MDs, Rx, HMOs and yes, HCOs) • And we all provide enough fodder to make the concerns realistic • The transition from white hat to black hat continues (nurses are tarnish exempt) • And the public doesn’t know who or what to trust

40. This is significant because without trust . . . • The bond that is essential for human service organizations broken • The impact can be massive • From clinical outcomes • To philanthropic support • To over and re-regulation • To patients not trusting caregivers • So the time for reputation management is now!

41. A good reputationis like money in the bank • A solid reality-based reputation means the AMC has full account in the goodwill bank • So when crises occur, as they will and do, the AMC’s reputation destroyed • But if the goodwill bank is empty, damage can be lethal • Managing the crisis effectively will keep that reputation and the bank account intact • Alternatively, if the crisis is not managed effectively, even a big bank account can be overdrawn

42. Building Reputation:The Basics 1. An integrated process 2. The ARM Approach: Audience identification Audience research Message development 3. Effective crisis management

43. Reputation The AMC reputation in a complex universe Donors, grantors Prospective employees, faculty Influencers Employees Patients Residents, students Families/ Visitors Faculty Media Government Referring MDs, health pro’s Alumni Volunteers Community

44. Reputation Basic # 1: An Integrated Process

45. Reputation Basic #1– An integrated process • Managing reputation requires an integrated approach involving multiple functions: • PR • Marketing • Alumni • Development • Employee relations • Physician relations • And . . . . .

46. An integrated reputation plan  fighting for CONTROL • It does require a collaborative, inclusive team approach • Get the right people at the table – someone has to make the first move • Focus on institutional goals • Build consensus on on master audience list • Use research data to: • Identify current communications channels • Identify appropriate messages • Shape strategies and tactics • And settle disputes

47. Above all else, set clear, measurable objectives • If we are clear on the desired outcome, we can figure out the key audiences and how to move them to action • SO, why do we need this ad/brochure/campaign? • Increase “awareness” – why? To what end? • Increase volume of procedures • Increase inquiries as first step to an appointment • Change perceptions of poor quality • Increase donations, employment applications, physician referrals, etc.

48. Once we know the objective . . • We can create a plan with an outcome that can be tracked, monitored and measured • And measurement is critical • Not everything can be measured precisely, but most things can be counted • Calls, inquiries • Appointments  admissions  revenues • Changes in awareness, perceptions • Donations

49. The KEY question: • What do we want this audience/individual to DO?

50. From there, we can develop: • Core messages and messages tailored by audience • Clearly identified tactics, many that will reach multiple audiences • Edelman study found that 60% say they need to hear messages at least 3-5 times, from multiple sources, for credibility (10% say 6 times or more) • Implementation responsibilities based on expertise, experience and interest