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Volume 51, Number 3
May/June 2006

  • INTERVIEW
    Interview with Richard D. Cordova, CHE, president and chief executive officer, Children’s Hospital Los Angeles, Kyle L. Grazier
  • PAY FOR PERFORMANCE
    Aligning Financial Incentives, Kaveh Safavi
  • COMPETENCIES
    Knowledge of the Healthcare Environment, Andrew N. Garman and Lac Tran
  • ARTICLES
  • The Performance of Medicare, Medicaid, and Individual Commercial Products, Diane M. Howard, Kevin Croke, Edward Mensah, and Ross Mullner
  • Healthcare CEOs and Physicians: Reaching Common Ground, J. Deane Waldman, Howard L. Smith, and Jacqueline N. Hood
  • Current Marketing Practices in the Nursing Home Sector, Judith G. Calhoun, Jane Banaszak-Holl, and Larry R. Hearld
  • FELLOW PROJECT
    Developing a Strategic Contracting Strategy in an Integrated Delivery System, R. Lyle Luman

 

Executive Summary
The Performance of Medicare, Medicaid, and Individual Commercial Products, Diane M. Howard, Kevin Croke, Edward Mensah, and Ross Mullner

Medicare, Medicaid, and individual nongovernmental insurance products are marketed by commercial health insurance companies. We propose that the product offerings be viewed as a group rather than as separate products competing for internal company resources.

A study population consisting of 35 Aetna plans in 24 states, 124 Blue Cross Blue Shield plans (BCBS) in 45 states and the District of Columbia , 45 Cigna plans in 28 states, and 23 UnitedHealth plans in 22 states was examined on 29 variables, including financial, marketing, and medical management data. The findings revealed that Medicaid and individual nongovernmental products were terminated more often than other products across all ownership types. When BCBS plans were analyzed across for-profit, nonprofit, and mutual ownership types, the companies had distinct preferences for product offerings. The study provided evidence that health plans will limit their exposure to Medicare, Medicaid, and individual nongovernmental products in preference to comprehensive/group products.

Executive Summary
Healthcare CEOs and Physicians: Reaching Common Ground, J. Deane Waldman, Howard L. Smith, and Jacqueline N. Hood

A survey of 670 hospital and health system CEOs was conducted to understand why they chose a career path to CEO, what characteristics typify their career paths, and what major concerns they have about the future. Respondents expressed very strong altruistic reasons for becoming CEO, a finding that is consistent with the rationale many physicians express for entering medical practice. Early CEO career paths were diverse but typically led respondents to a senior managerial position before becoming CEO. Nine percent started as direct providers of healthcare. The respondents’ most frequently expressed concerns for the future centered on reimbursement/financing issues and staffing shortages.

Physicians may be surprised to learn that healthcare CEOs share their core values, experience similar frustrations, and have identical fears about the future of healthcare. Rather than emphasizing the differences between CEOs and doctors as a stumbling block to alliance, we urge the establishment of a common ground based on similar core values and purposes that will lead to improved communication and the powerful combination of talents that diversity offers.

Executive Summary
Current Marketing Practices in the Nursing Home Sector, Judith G. Calhoun, Jane Banaszak-Holl, and Larry R. Hearld

Marketing is widely recognized as an essential business function across all industries, including healthcare. While many long-term care facilities adopted basic healthcare marketing practices and hired marketing staff by the early 1990s, a paucity of research on nursing home marketing exists in the literature. This study examines the extent to which nursing homes have developed more formulated marketing and related communication and promotional strategies as market competition has increased in this sector during the past two decades. In addition, we explored managers’ perceptions of their control over marketing decision making, the impact of competition on the use of marketing practices, and areas for enhanced competitive positioning.

Administrators from 230 nursing homes in 18 Southeastern Michigan counties were surveyed regarding (1) the adoption level of approximately 40 literature-based, best-practice marketing strategies; (2) the types of staff involved with the marketing function; and (3) their perception of their level of control over marketing functions and of local competition.

Results from 10l (44 percent) survey participants revealed that although respondents viewed their markets as highly competitive, their marketing practices remained focused on traditional and relatively constrained practices. In relation to the importance of customer relationship management, the majority of the administrators reported intensive efforts being focused on residents and their families, referrers, and staff, with minimal efforts being extended to insurers and other types of payers. A significant positive relation was found between the intensity of marketing initiatives and the size of the facility (number of beds), whereas significant negative correlations were revealed in relation to occupancy and the perceived level of control over the function.