Hawking Healthcare

A PREGNANT WOMAN, her bulging belly marked with intersecting black lines, is wheeled into an emergency room. She had been waiting for a bus when an out-of-control car plowed through the bus stop, critically injuring her and several others. Doctors and nurses work to save the lives of the woman and her unborn child.

The three-hanky story (mother and child survive) might well have been excerpted from prime time’s ER. It’s not. It’s a 30-minute docudrama produced and aired on local TV stations by Sharp HealthCare to promote its countywide system of hospitals and medical centers. This is just one of hundreds of TV spots Sharp has aired in recent years, and more are on the way. Sharp isn’t alone in leveraging the effective multisensory impact of television to market its healthcare services, although it’s been the most aggressive so far.

Joining Sharp with 30- and 60-second TV commercials have been Palomar Pomerado Health and Kaiser Permanente, as well as Oceanside’s Tri-City Medical Center, which aired its first TV spots in February. For budgetary reasons, Scripps Health, the other large healthcare system in San Diego County, has not recently aired any TV ads. But as the battle for market share heats up, particularly in the regions north of Mission Valley, Scripps is likely to join the multimedia fray. And with bond measures for Grossmont and Tri-City healthcare districts on the ballot in June, even more TV air time is being purchased.

Why the uptick in the most-expensive form of advertising from an industry beset with financial woes? To get a bigger slice of a shrinking pie of patients able to pay for their healthcare.

Although the competition in San Diego is not as cutthroat as in other large metropolitan areas, it’s becoming more so. “Without question, San Diego is very competitive when it comes to attracting patients,” says Gustavo Friederichsen, chief marketing and communications officer for Poway-based Palomar Pomerado Health. “This year, Palomar will have the most-aggressive marketing, relative to the size of our operation, in the entire state of California.”

In healthcare, the haves subsidize the have-nots. As baby boomers retire and become Medicare recipients, it will further strain an industry already walking a financial tightrope. Add to the equation the proposed expansion of health savings accounts, and the situation is likely to get worse. Several San Diego–area community hospitals have already closed due to financial problems. For those that remain, enrolling full-payers and establishing brand loyalty is critical.

Advertising tries to keep the image of the hospital as a community resource at the forefront of how people think about hospitals, says Steve Escoboza, president and CEO of the Hospital Association of San Diego and Imperial Counties. “It’s an image thing,” he says. “Competition is keen because the payment is hard to get, so you have to woo those who are covered by some sort of healthcare plan.”

“The reimbursement climate is terrible; the number of uninsured people keeps climbing,” adds Jean Hitchcock, vice president of marketing and communications for Scripps. “California is 49th out of 50 states in terms of spending for the poor.”

Government programs—Medicare, Medicaid, Medi-Cal—typically do not cover a hospital’s actual cost of providing that care. Healthcare providers try to meet the bottom line through cost shifting to the private side. But the commercial health plans don’t want to pay any more, so the providers have to make up the difference.

Sharp claims it underwrote $153 million in community benefits in 2004, much of that for under- or uncompensated healthcare. The other providers tell similar tales of providing millions of dollars of healthcare to those who are either unable to pay or whose health plan does not cover the full cost of the care.

“There is no county hospital,” says Todd Miller, Sharp’s vice president of advertising. “It falls upon us to be able to take care of the community, and part of our mission as a nonprofit is to take care of all those we serve.” To accomplish that, he says, Sharp must bring in patients with health insurance so it can afford to continue operating. To balance their budgets, nonprofits such as Sharp and Scripps rely on philanthropy, and healthcare districts such as Grossmont, Palomar and Tri-City rely in part on taxpayer support as well as philanthropy.

SHARP BEGAN USING TV ADVERTISING five years ago and has since increased its use. When Grossmont Hospital turned 50 last year, Sharp—which operates the hospital and adjacent medical facilities under contract to the Grossmont Healthcare District— launched an awareness campaign. The campaign was renewed in January and February, tying the ads to the Olympic Games coverage. Palomar and Tri-City followed suit.

The biggest battle for market share is in lucrative North County, and Palomar is leading the attack. “We don’t own the market in our own healthcare district, but we should dominate in every category,” Friederichsen says.

When Friederichsen moved to Palomar two years ago, after stints with Scripps and Sharp, the healthcare provider did no TV advertising, relying primarily on newspaper ads. But people don’t read as much anymore, he says. Palomar learned from focus groups that nine out of 10 people form their opinions about healthcare providers from TV news and advertising. About 70 percent of Palomar’s 2006 advertising budget will be spent on television, trying to wrest market share from Scripps and Sharp.

In response to Palomar’s aggressive marketing, Scripps probably will begin using television, says Hitchcock. “We’re not going to sit twiddling our thumbs while everybody comes after North County. The wagons are circling around us, because it’s a great payer mix.”

And that mix subsidizes hospitals in South County, which has the greatest need, while the growth is in North County. “If one of our hospitals in the north goes down, we have a very difficult healthcare situation here in San Diego. That’s scary,” Hitchcock says. “Because we, Sharp and UCSD are not-for-profit, we can’t walk away from that. Palomar, which has no hospital in South County, doesn’t have to deal with that.”

And with the virtual demise of health maintenance organizations in San Diego— Kaiser being the notable exception— consumers have more choice than ever in selecting healthcare providers. “People are literally calling health systems up and asking, ‘How much do you charge?’ ” Hitchcock says.

What’s more, all these providers are either embarking on expensive upgrades of facilities or building new structures. Some of this is planned expansion, but much of the work is in response to an unfunded state mandate to complete seismic upgrades by 2013. In addition, the costs of medical technology and pharmaceuticals are rising, and consumers are demanding better, hotel-like service.

Sharp broke ground on a 381-bed hospital in late 2004 at its Kearny Mesa medical center, and Palomar will begin construction of a 453-bed hospital in Escondido later this year. Both will be “hospitals of the future,” boasting the latest patient-care technology in private rooms, improved room design to reduce patient falls, decentralized nursing and robotic equipment in operating rooms. Both providers already offer hotel-like concierge services in their existing facilities, and this will be expanded in the new hospitals.

This makes effective advertising more important than ever, so consumers might as well get used to seeing more commercials for healthcare sandwiched between the car and beer ads.

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