Practice Marketing Traps: Why Conventional Marketing Boomerangs, Triggers Shoot-Yourself-In-The-Foot Embarrassment, And Makes A Doctor’s Malpractice Risk Soar!

Why Does Conventional Practice Marketing Backfire? On Reason Is Because Doctors Did Not Judiciously Respond To A Milestone Event  Some 40 Years Ago! Today, This Lapse Is Causing Havoc In Healthcare.

    “A little neglect breeds great mischief.”
        Benjamin Franklin,
        Poor Richard’s Almanac, circa 1745.

The Planned Federal Deregulation Of The Industry (1972-1978) Was One Of The Most Important Events In The 145 Year Life Cycle Of The US Dental Services Industry. Yet, Most Dental Professionals Ignored It.

The deregulation of the industry removed all previous constraints to the natural economic evolution of American dentistry. Before deregulation, it was illegal for all healthcare provider organizations to advertise and to compete on prices.

The planned, Federal deregulation of the industry created a neo-classic economic marketplace where supply, demand and prices responded like any other economic marketplace.

Yet the doctors and their business handlers to a large extent, ignored this crucial event and failed to duly implement to the fullest extent possible, the science of management, the science of marketing, and the science of business as did every other industry in the history of the American economy.

In1978, the federal deregulation process was completed: the American healthcare industry quickly turned into an economic market, a consumer marketplace, where patients, acting as consumers, make choices and these collective decisions drive the evolution of the industry. This event formally ended the longstanding reign of industry paternalism (where the doctor made all of the decisions).

Now, consumerism emerged to control the future of the provider sector of the industry. Not responding to this classic, deregulation event was a “little neglect” that put the American healthcare establishment on the path of destruction and a looming disaster today.

In contrast, all of the other American industries that went through the deregulation process about the same time, such as the banking, trucking, airline, and the personal telecommunications industries, did what was mandatory given the situation.

Warren Greenberg, PhD was the presiding officer over this effort and repeatedly stated that whenever an industry was scheduled for this process, the response was to send hordes of delegations to the US Congress attempting to persuade lawmakers that deregulation would not work and would backfire.

The leadership in healthcare tried to stop deregulation. However, upon completion of the deregulation process, healthcare quickly turned into a classic, Keynesian marketplace where demand, supply, and prices responded in a classic fashion.

That the provider sectors of the healthcare turned into a classic marketplace was demonstrated by two established healthcare economists, Mark Pauly, PhD, and Mark Satterwaith, PhD in a study published in the prestigious Bell Journal of Economics in 1981 and depicted here.

This chart is a graphic representation of some of the factors that were brought into play by the deregulation process. It identified some of the factors and their inter-relationships. Most of all, this work demonstrated that such factors as consumer choice, consumer information, and consumer decision making were now vital concerns.

Leonard Berry, PhD is a distinguished marketing scholar now at Texas A&M University. Back in the early 1980s he and his team working at the University of Texas at Austin were researching transition industries. These industries were the ones that were passing through the deregulation process.

The research question was: “How long does it take for the business people in a recently deregulated industry to fully adopt and embrace the modern “market concept.”  What the researchers found is that it took about five years for the industry incumbents to move beyond advertising, selling, promotion, and public relations and to adopt the full concept of marketing which would include formally and proactively managing quality, service differentiation, positioning, and the exchange relationships with consumers, just to name a few.

Professor Berry labeled the first five years as the “promotion era.”  Amazingly, most of the healthcare industry today is still in the promotion era! In other words, the promotion era lasted about eight times longer than in any other industry that went through the deregulation process. One argument to support this charge is the recent claims by industry pundits, such as Jordan J. Cohen, MD that healthcare is an industry with “an astounding level of errors and with no quality!”

Why Did President Reagan’s Commission in 1982 Decree That The Driving Force Of The Then-Skyrocketing Malpractice Crisis In The Nation Was “Disconfirmed Expectations?”

Here’s one plausible explanation for this surprising finding. The entire healthcare establishment was in the normal promotion era after the deregulation process. Hospitals were proudly touting their new found tool to out-distance their competitors. Hospital advertising budgets were soaring at an surprising  rate; back then people is the Ad and PR business claimed that hospitals were a lucrative target with fat budgets.

In the “promotion era” firms then to use commercial advertising messages. Briefly, such messages are “promise” versus threat appeals. Such promise appeals tend to create high expectations as a way of increasing motivation and purchase decision making. The sky is the limit. Also, there is a tendency in a competitive marketplace for the promise claims to start to escalate and the promises become stronger and stronger. It's called "puffery" and is a form of deceptive advertising according to the FTC.

One of the seven development project in a 27-year R&D program conducted in San Diego was working on a model of the professional service businesses in American healthcare. One of the main dimensions of a professional service business (such as a dental or medical practice, a surgicenter, a hospital, etc.) was performance ambiguity.

What’s Performance Ambiguity? The Surgery Was A Resounding Success, But The Patient Died.

Simply, because of the enormous biological variability, the provider can do everything right and get a bad result; conversely, the doctor can do everything wrong and get a good result. There is a lot of dark humor that speaks to this predicament. Such as: “the surgery was a resounding success, but the patient died.”  Here’s another: “Mrs. Jones’ electrolytes were perfectly balanced in the early evening, but she crumped the following day.”

Was it likely that the promise messages that were commonplace during the time were creating high levels of expectations that were impacted by the performance ambiguity phenomenon? The net result was that there was widespread high expectations that were being “disconfirmed” by the actual experience of patients. Disconfirmed expectations can create very high levels of dissatisfaction among patients and families. There appears to be a leveraged effect. The intensity of the dissatisfaction may also be related to the perceived seriousness of the patient's problem. Whatever the cause, such disappointment triggers litigious behaviors among patients.

Hence, it is a good idea to avoid promise messages, implied or stated. Using messages touting the latest hardware or technology implies better results but may not escape the performance ambiguity phenomenon.

Although it can be tricky, threat communications tend to lower a patient's expectations and significantly increase a patient's motivation. Surprisingly, even if the patient receives a less-than-desirable result, he or she may be highly satisfied because of their low expectations (at first, many refute this claim, for sure. But even the most hard-boiled skeptic agrees once they learn more).

A classic study demonstrated years ago the old saying that "pain we obey" (Marcel Proust). Yet, while painful symptoms can dramatically reduce patient delay by 200%, accurate beliefs about the real threat can reduced delay by about 240%.

There is a vast literature on threat communications. It will give the prudent dental practice organization some background on implementing this surprisingly effective and proven knowledge-base.

Best Regards,

Francis (Frank) A. Toto

in San Diego

For more information check out these sites: http://www.rightmovesproject.com and http://dental.rightmovesproject.com