Your Healthcare Marketing ROI: Are You Comparing Apples to Bananas?

// By Jessica Walker //

With case volumes slipping and persistent competitive threats to operating margins, many healthcare marketers look to purchase multiple solutions — CRMs, digital marketing services/tools, targeting lists, among others — to gain a strategic advantage in acquiring new patients or retaining market share. While these services or technologies can be helpful, healthcare marketers need to be clear on the true returns they may expect for what they are buying.

This sounds like it should be a straight apples-to-apples comparison, but the truth is that we use the term healthcare marketing ROI across a range of investments and strategies, and how it is calculated is frequently based on inconsistent or subjective data points.

Let’s look at an example from real life and see how it applies to healthcare marketing. I have two “monkeys” at home (8-year-old and 5-year-old boys) who love bananas. How do I find the best deal on bananas? To start, I compare the advertised price of bananas across four stores:

Units Not Aligned

The problem is that they state the price based on different units: per unit, per pound, per three pounds, or per bunch. How do I know which to buy? To calculate the best value, I need to standardize the units. I do this by finding the price per pound:

Standardizing on Price per Pound

If we believe the best measure is price per pound, then the warehouse store is the deal for me. But we failed to include the total cost of purchasing, which includes the cost of my warehouse membership. In addition, I did not account for my individual utilization cost.

Considering that my kiddos often leave a banana half eaten, I know I will have waste. Therefore, based on my goals, I am better off looking at price per banana. Adding this measure, it looks like my regional grocery chain offers best value for dollars spent.

Standardizing on Price per Banana

Normalizing Measures in Healthcare Marketing

Healthcare marketing is, of course, more complicated than grocery shopping. But the principles are the same. When looking at a marketing strategy or investment, you need to be clear about what you are measuring. Start with the end in mind. What is your goal ROI, and how can you normalize measures you are evaluating to be sure you are investing appropriately?

Part of the problem is that solution providers may claim high ROI, yet how they calculate it may vary drastically. It is important to understand the underlying assumptions. On what basis was ROI calculated? Frequently, you see that ROI is based on average charges of patients acquired. Other claims of ROI are based on activity measures such as number of clicks, likes, phone calls, or views. While these measures may be directional, they are not a direct link to true revenue growth.

Using a healthcare example, let’s say I am a hospital marketer faced with declining surgical volumes and my biggest capacity is in the bariatric service line where I have a significantly higher contribution margin. My strategy is to increase bariatric surgery volumes, which will increase the amount of high-margin revenue.

I start by searching the web for “bariatric marketing ROI” and find CRM-based solutions showing ROI in the double digits, and social media and email-based solutions highlighting above $40 return for every dollar invested. Assuming I am interested in a CRM-based strategy for tracking purposes, I narrow my focus to those solutions. At first glance it may appear that the CRM targeted list would be my best solution to investigate further as it promotes the highest ROI.

Oversimplification May Lead to Wrong Conclusions

But when we look at the difference between the approaches, we see the units of outcome measure do not align.

Now that I know the CRM targeted list is based on charges to any encounter (e.g., ER visit, laboratory, unrelated service line), it does not offer me a true comparison of how it will support my bariatric-specific volume and high-margin revenue needs. As my goal is to increase bariatric surgical volume and high-margin revenue specifically, it may appear now that the CRM #2 Multichannel is my best bet for a greater return as it is aligned with final revenue contribution margin.

Misaligned Outcome Measures

Since I need to show revenue and volume growth as quickly as possible, I need to normalize our comparisons further to see which solution could help me the most. Looking at the tactic that offers the greatest number of leads in the shortest time, the CRM #1 Multichannel appears to hit the mark for my needs.

Time a Key Variable

Going back to our main goal of direct volume growth and high-margin revenue, we cannot judge success by volume of leads alone. We must ask ourselves how many of those leads are highly qualified and result in the greatest number of surgical cases in the shortest time. Adding the total number of leads and total bariatric surgical volumes by tactic, it appears that the digital content campaign yields the highest conversions of surgical procedures.

Quality of Leads vs. Volume of Leads

Using a deeper analysis of the proposed volume increase, cost, and time to obtain that increase, it appears that the digital content campaign drives greatest ROI in the shortest time.

Factoring in Conversion Rate and Time

Applying industry standards for cost and margin as proxy measures, the final ROI would be 43:1. This gives me a baseline to evaluate my campaign effectiveness in the future.

The Bottom Line

¹U.S. national average charges for bariatric surgical cases – $25,000
²U.S. national average contribution margin for bariatric surgical cases – 50 percent

Healthcare is complicated and there are many variables, making it challenging to build an apples-to-apples ROI. Additionally, it would be inappropriate to claim success using one variable in isolation, as many marketing initiatives operate in tandem with others that support and enhance the outcomes (e.g., a social media campaign running concurrently with a paid search campaign).

It is critical that healthcare marketers know how to normalize measures of success when deciding which solution will be most likely to support their ultimate goals.

The views expressed above are my own and do not reflect those of any institutions or groups I am affiliated with.

Jessica A. Walker is a strategic consultant and product development professional in the healthcare marketing, analytics, CRM, digital, and engagement field. She has spent the past 12 years working with healthcare organizations across the nation on deploying highly effective strategies impacting the consumer, employee, and patient experience.