Chapter 8Assessment and Documentation for Optimal .docx

Chapter 8
Assessment and Documentation for Optimal Care
Copyright © 2018, Elsevier Inc. All rights reserved.
Is more complexIs more detailedTakes longer to
performRequires special abilitiesDone in every setting
Assessment of Older Adults
*
Collection of dataBiological, psychosocial, and functional
informationCultural and spiritual assessmentsCognitive
abilitiesPsychological well-beingCaregiver stress or
burdenPatterns of health and health careReview of preferences
for advanced care Presence of any geriatric syndromes
Assessment Components
*
Sexual functionDepressionAlcoholismHearing lossOral
healthEnvironmental safety

Problems to Address in an Assessment
*
Listen patientlyAllow for pausesAsk questions that are not often
askedObtain data from all available sourcesKnow that not all
positive findings need interventionsKnow normal changesPace
the assessment according to the patient’s stamina
Special Assessment Abilities
*
Establish rapportData collection approaches includeSelf-
reportReport by proxyObservationIdeally should be done to
gather baseline data before the older adult has a health crisis
Collecting Assessment Data
*
Conduct the assessment at a time when the patient is at his or
her bestAvoid biasing the responseExplore for more information
only if neededApproach sensitive information in a matter-of-
fact mannerRecord the patient’s words for accuracy
Guidelines for an Assessment of the Older Adult
*

What is the best approach to take when obtaining a health
history from an older adult?
Choose a private, quiet area in a comfortable room
Ask a family member to respond to some of the questions
Raise your voice if the patient does not appear to hear you
Take thorough notes during the interview, asking detailed
questions as needed
Question
*
A—When collecting a verbal health history, the nurse should
use techniques that optimize communication. This includes
choosing a private, quiet area in a comfortable room.
Answer
*
Increase the likelihood of obtaining reliable, useful dataCan be
used to monitor changes over timeExisting instruments can
categorize physical health, mood, motor capacity, manual
ability, self-care ability, instrumental abilities, and cognitive
and social function
Assessment Instruments
*
Is collected in a face-to-face approach with the patient or a

review of the patient’s written historyIncludes medical history,
review of systems, medication history, nutritional history, and
factors that influence the person’s quality of life,
includingLiving arrangementsFinancial resourcesSupport
Health History
*
Begins the moment the nurse sees the personPerform a problem
assessment first because of the length of time it takes to
conduct an assessmentWhen the focus is a well-check
assessment, the emphasis is placed on health problems in later
life
Physical Assessment
*
FANCAPESFluids: State of hydrationAeration: Respiratory
functionNutrition: Type and amount of food
consumedCommunication: Adequate ability to communicate his
or her needsActivity: Ability to meet basic needs of toileting,
grooming, and meal preparationPain: Physical, psychological,
or spiritual painElimination: Difficulty with bladder or bowel
eliminationSocialization: Ability to give and receive love and
friendship
Assessing Frail and Medically Complex Patients
*
Need to conduct an assessment of mental status, especially

cognitive abilities and mood whenever there is a change in an
elder’s condition or safety Assess whether an increase in
chronological age has resulted in an increased rate of dementing
illnessAssess cognition and mood
Mental Status Assessment
*
Tools for cognition assessmentMini-Mental State
ExaminationClock Drawing TestThe Mini-CogGlobal
Deterioration ScaleTools for mood assessment Geriatric
Depression Scale
Cognition and Mood Assessment
*
*
*
*

Thorough functional status of the patient includesIdentifying
areas where help is neededDetermining whether a change in
abilities from one period to another has occurredAssisting in the
determination of a needDetermining the safety of the patient’s
living situationIf the patient is healthy and active, record a
simple statement such as, “The patient is active and independent
and denies functional difficulties.”
Functional Assessment
*
IncludeEatingToiletingAmbulationBathingDressing Grooming
Tools to assess ADLsKatz IndexBarthel IndexFunctional Index
Measure
Activities of Daily Living (ADLs)
*
Considered to be more complex activities necessitating higher
physical and cognitive functioning than ADLsIncludeHouse
cleaningShoppingManaging moneyTools to assess IADLs
Instrumental Activities of Daily Living (IADLs)
*

*
OARS Multidimensional Functional Assessment Questionnaire
(OMFAQ)Fulmer SPICES (sleep disturbance, problems with
eating and feeding, incontinence, confusion, evidence of falls,
and skin breakdown)Minimum Data Set used in skilled nursing
facilitiesOASIS used in certified home care agencies
Comprehensive Assessments
*
A nurse who needs to assess a patient’s ability to perform ADLs
will choose which tool for this assessment?
OASIS
Katz Index
Fulmer SPICES
Global Deterioration Scale
Question
*
B—The Katz Index measures the ability to perform ADLs and
has served as a basic framework for most of the subsequent
measures.
Answer

*
Chronicles, supports, and communicates the patient’s
conditionProvides the data needed for the development of the
individualized plan of care Helps the nurse identify, monitor,
and evaluate treatment or interventionsProvides the
communication needed to ensure continuity of careDetermines
reimbursementDemonstrates the quality of care provided
Documentation
*
Level of documentation required varies by setting and
determined by state and local lawsDocuments and communicates
day to day careWhen care is not considered “skilled” and
covered by Medicare, narrative notes are reduced to “problem-
oriented only” or “as needed” depending on the facility and
licensing body
Skilled Nursing Facility Documentation
*
When care is covered by Medicare, Medicaid, or another
insurer, reimbursement in all settings is based on the assessment
and the documentationDocumentation used varies by
settingSkilled nursing facilities—MDS and RUGSkilled home
care—OASISInitial reimbursement in acute care settings—
DRGs
Documentation and Reimbursement

*
Nursing responsibilitiesMake sure that communication and
documentation are of the highest qualityCommunicate important
information regarding safe patient careCollect accurate data in
the most efficient yet caring manner possibleUse tools as a way
to organize assessment data and compare the data from time to
time
Implications for Gerontological Nursing and Healthy Aging
*
7 Managing Marketing Activities
Thomas Northcut/Digital Vision/Thinkstock
Marketing is too important to be left to the marketing
department.
—David Packard
Learning Objectives
After reading this chapter, you should be able to do the
following:
• Define marketing and explain how the marketing concept
is patient centered in HCOs.
• Discuss the relationship between organizational planning
and marketing planning with regard to objectives

and strategies throughout the planning levels.
• Name the three basic marketing strategies that can be used
under the product/market approach to market-
ing strategy development, identify two other approaches to
marketing strategy development, and list four
factors influencing the strategy selection.
• Discuss how the four strategic elements of the marketing
mix become marketing tactics for implementing
the selected marketing strategy.
• Identify two basic types of organizational structures for
managing marketing activities.
• Explain how ethical issues in marketing relate to
marketing decisions, and provide examples of ethical
issues facing healthcare providers.
Section 7.1What Is Marketing?
Introduction
This chapter provides an overview of marketing, the
relationship between marketing plan-
ning and overall organizational planning, basic marketing
strategies, and approaches to orga-
nizing marketing activities in an HCO. This chapter also
includes a discussion of the ethical
decision-making process in marketing and lays the groundwork
for later chapters on the mar-
keting process and its role in HCOs.
7.1 What Is Marketing?
The marketing of HCOs is a relatively recent phenomenon. It

was as late as 1977 that the
American Hospital Association held its first convocation on
marketing. Much of the early mar-
keting efforts by hospitals were aimed toward the recruitment
and retention of physicians.
Many physicians remained skeptical of marketing to patients
and believed it was unprofes-
sional. However, as healthcare has become more complex and
expensive, HCOs and individual
healthcare providers have seen the need to better communicate
to patients the value of their
services (MacStravic, 1994).
Over the last two decades, the discussion of marketing in HCOs
has evolved from whether
it was even appropriate for HCOs to use marketing to give the
organization a competitive
advantage and “tell its story.” But what is meant by the term
marketing?
Various definitions of marketing have evolved over the years,
but one that appears to be fairly
complete is as follows: Marketing directs those activities that
involve the creation and distribu-
tion of products and services to identified market segments.
Several key words in this defini-
tion need further explanation. First, what is meant by the words
marketing directs. This is a
managerial perspective rather than a residual perspective, which
is concerned only with
what has to be done to get goods and services to customers. A
managerial perspective is one
that is proactive, customer oriented, and aligned with the firm’s
overall strategy. In contrast, a
residual perspective is one that is reactive and only deals with
needs as they arise. Thus, mar-

keting is not just a group of activities but, more specifically,
activities that are controlled in
their execution to attain identifiable objectives. Second,
marketing involves the performance
of specific activities or functions. These functions constitute the
work or substance of what
marketing is all about. To be involved in marketing means to be
involved in the planning,
execution, and control of these activities.
Third, marketing involves both the creation and distribution of
goods and services.
Although the service is actually created by the operating
function, marketing personnel are
very much concerned not only about the way goods are created
and services are performed
but also the way customers utilize goods and services.
Marketing needs to have a vital role in
the creation as well as the distribution of goods and services. In
fact, a well-conceived service
or good makes the rest of the marketing tasks easier to perform.
Finally, marketing’s concern with customers, and meeting a
need in the marketplace, is
patient centered in an HCO. However, marketing is particularly
concerned with customers
preselected by management as the market segment(s) on which
the organization will con-
centrate. Thus, specific customers with their specific needs
become the focal point of market-
ing activities.
Section 7.2The Marketing Concept

7.2 The Marketing Concept
The marketing concept is a business orientation that focuses on
satisfying customers’ needs
at acceptable levels of revenue and costs. In for-profit
organizations, acceptable levels of rev-
enue and costs are defined in terms of a target return on
investment, while in not-for-profit
organizations the focus is achieving a balance between revenues
and costs.
Organizations that have a true marketing orientation focus on
addressing the needs and
wants of one or more targeted segments of the market. However,
managers with marketing
titles may apply other business philosophies that, in reality, do
not reflect authentic market-
ing thought. Table 7.1 shows three different business
orientations that have been used as
the operating philosophies behind management decision-making
(Stevens, Loudon, Wrenn,
& Mansfield, 2006). The term dominant in the table identifies
the core objective, which gives
the orientation its name. Present means that the orientation
includes that objective, but does
not use it as the centrally controlling goal in orienting the
manager’s thoughts about his or
her company, its services, or its customers. Not pertinent means
that objective has no rel-
evance, pertinence, or connection with the orientation
described. This table makes it clear
that the service and selling orientations are internally driven.
Put simply, managers using
these orientations determine what they want to dictate to the
market. The last orientation—
marketing—contains the elements of an outside-in, market-
driven, or customer-oriented

philosophy, which stresses discovery of market opportunities,
marketplace input regarding
the organization’s claim of a competitive advantage, and the
integration of effort across all
aspects of the organization to deliver quality and customer
satisfaction.
Table 7.1: Possible organizational orientations
Service
orientation
Selling
orientation
Marketing
orientation
Desire to capitalize on syner-
gies and efficiencies in operating
processes
Dominant Present Present
Attention to designing acceptable
levels of quality services
Not Pertinent Present Present
Dedicated resources to stimulating
interest and desire for increasing
revenues
Not Pertinent Dominant Present
Focus on identifying and satisfying

needs and wants of customers
Not Pertinent Not Pertinent Dominant
Considering the short- and long-
term effects of actions on custom-
ers and on society
Not Pertinent Not Pertinent Dominant
HCOs have been concerned with the delivery of a satisfactory
level of patient services for
decades. Most services, including healthcare services, are
intangible. That is, they cannot be
touched or held before being purchased. Additionally, the
delivery of a service is dependent
on the ability of the service provider. As service providers are
human, the quality of service
varies from patient to patient.
Section 7.2The Marketing Concept
Traditional strategies in healthcare for overcoming these
limitations include improving the
appearance of physical facilities, projecting competence, and
employing empathetic per-
sonnel (Stevens et al., 2006). However, these strategies have
been shown to be inadequate,
as healthcare has become more expensive and complex, from
both the providers’ and the
patients’ perspectives (Merlino & Raman, 2013).
According to Michael Porter and Thomas Lee, “the overarching
goals for providers . . . must

be improving value for patients, where value is defined as the
health outcomes achieved that
matter to patients relative to the cost of achieving those
outcomes” (Porter & Lee, 2013, p.
52). The implied message for HCOs is not just to put together
procedures to help patients
navigate the system, but to fundamentally change the system.
The marketing orientation is particularly well suited to dealing
with the internal and exter-
nal environmental forces currently facing healthcare managers.
Marketing includes all of the
positive contributions of the service and selling philosophies,
but it adds concern for the long-
term effects of the organization’s actions and services on its
customers, as well as the desire
to consider the effects of the organization’s actions on society
at large. Putting the marketing-
orientation philosophy into practice requires a planning
procedure that transforms the exter-
nal consumer orientation into marketing activities.
Thus, the marketing orientation holds that the only social and
economic justification for the
existence of a business enterprise is this: the satisfaction of
customer needs, either at a profit
or at acceptable levels of revenues and costs, and with due
diligence for the long-run wel-
fare of the customer and society. A firm’s existence is justified
socially in meeting customer
needs—directly through the provision of goods and services,
and indirectly through being
a good citizen of its operating environment. In healthcare,
meeting customer needs means
being a patient-centered organization. Thus, everyone in an
HCO is concerned with patient

care, including nonmedical employees. In the U.S. economy, the
marketing-orientation philos-
ophy is exactly why organizations were given the right by
society to own and use resources to
produce goods and services. A firm finds economic justification
by making a profit or generat-
ing enough revenue to cover costs. Profit or breakeven for
nonprofit organizations rewards
the stakeholders’ investment in the organization and supports
the continued availability of
funds. Customer needs become the focus of firms that operate
under the marketing-orienta-
tion philosophy.
Traditionally, medical providers have seen their role as healers
who provide a valuable social
service. Costs have been secondary. The need for economic
justification has created tension
for many healthcare providers. However, providers cannot just
continue to increase fee-for-
service. Many physicians lose money on Medicare and Medicaid
patients but have been able
to make up the difference from the uninsured and commercial
insurance patients. With more
patients now covered by governmental programs and with
commercial insurers’ and employ-
ers’ emphasis on costs, those days are over (Porter & Lee,
2013).
Section 7.3The Organizational Planning and Marketing Planning
Connection
Administrators and other healthcare providers who have adopted
the marketing-orientation

philosophy must continually survey the environment to detect
changes in consumer needs,
or other related variables, that warrant the altering of their
marketing activities. Revenues,
in effect, become votes to help management judge the
effectiveness of its efforts in meeting
market needs compared to those of competitors; and profits or
breakeven serve to judge the
efficiency of management in this attempt. Putting the
marketing-orientation philosophy into
practice requires effective management of the marketing
process.
7.3 The Organizational Planning and
Marketing Planning Connection
The strategic planning process described in the first six chapters
of this textbook has con-
centrated on the organization’s overall strategic plan. The
development of that overarch-
ing strategic plan precedes the development of the strategic
marketing plan, as well as
the annual or operating marketing plan. The strategic marketing
plan contains the over-
all approaches to marketing within an HCO, and the annual or
operating marketing plan
spells out the details of what is to be done on a day-to-day,
week-to-week, and month-to-
month basis to translate the major strategies into specific
actions, responsibilities, and time
schedules.
Both the strategic marketing and the annual operational
marketing plans must be consistent
with the organization’s overall strategic plan. Although
marketing plans are more detailed and

cover only the marketing functions, the marketing planning
process involves steps similar to
the strategic planning process at the organization level. These
steps usually involve including
a detailed analysis of the company’s situation, setting specific
objectives, developing strategy,
implementing strategy, and evaluating and controlling strategy.
The details of the marketing
planning process are discussed in Chapter 8.
The relationship between the organization’s strategic plan,
strategic marketing plan, and
annual operational marketing plan is shown in Figure 7.1
(Loudon, Stevens, & Wrenn, 2005).
Note the connection of both objectives and strategies from the
organization’s strategic plan
to the organization’s strategic marketing plan and, finally, its
annual or operating marketing
plan. This approach to planning ensures that consistency is
maintained between what is done
on a weekly or monthly basis and the organization’s overall
marketing strategy. The stra-
tegic marketing plan is devised from and in turn supports the
organization’s strategic plan.
Connection
Figure 7.1: Organizational and marketing plan relationships
Connecting an organization’s objectives and strategies ensures
that the entire plan maintains
consistency between current actions and the overall marketing
strategy.

f07.01_MHA 626.ai
Operating marketing plan strategy
Operating marketing plan objective—year 1
Overall Marketing strategies
Marketing objective—5 year
Organization strategy
Organization objective
Increase networking effort to increase referrals.
Launch promotional campaign, showing expertise of
staff and remodeled facilities.
Achieve a 2% reduction in operating costs.
Focus on increasing volume of existing services to
reduce costs per unit and achieve economies of scale.
Increase usage rate among existing patients by 10%
over the next 5 years.
Increase usage rate among existing patients by 5%
by the end of the year.
Use market penetration strategies to achieve increased
volume in years 1 and 2, and focus on market
development in years 3–5.
Operating
marketing plan

Strategic
marketing plan
Organization-
level plan
Source: Loudon, D., Stevens, R., & Wrenn, B. (2005).
Marketing management: Text and cases. The Haworth Press,
Inc., p. 126.
Figure 7.2 provides an industry-specific example of how
objectives and strategy should be
consistent throughout the planning levels (Stevens et al., 2006).
Pharmaceutical firm Eli Lilly
and Company chose the service leadership value discipline to
provide strategic direction at
the organization level. Servant leaders are those who want to
lead because they want to serve
first. The servant leader ensures that other people’s highest
priority needs are being served
(Greenleaf, 2002). The organization-level objective is general in
nature and consistent with
Connection
the value discipline. At the strategic marketing level, this
organization’s strategic direction is
focused in one instance on objectives and strategies for its
nonnarcotic analgesic line. The
leading product in the line, Darvon, will be going off-patent
during the year. The objective of
maintaining a high market share in this market would be

impossible, given the influx of new
generic competitors for Darvon, unless new patent-protected
products can be introduced and
physician prescribing habits changed so that an increasing
number of prescriptions will be
written for the new drug. This new product-entry strategy is an
embodiment of the service
leadership organization value discipline.
Figure 7.2: Eli Lilly Pharmaceutical Company
In this industry-specific example, the objectives and the
strategies are consistent throughout the
different levels.
f07.02_MHA 626.ai
Organization Level
Objective: Maintain product leadership in each market.
Strategy: Adopt a product leadership value approach.
Strategic Marketing Level
Objective: Maintain a market share of the nonnarcotic analgesic
market of 80 percent
over the next five years.
Strategy: Introduce new products to take place of products when
they lose patent
protection.
Operating Level
Objective: Call on physicians to detail our more advanced

analgesic with more
efficacy and fewer side effects; call on pharmacists to leave
order blanks at sale prices.
Strategy: Product line extension and aggressive pricing.
Source: Stevens, R., Loudon, D., Wrenn, B., & Mansfield, P.
(2006). The marketing planning guide. The Haworth Press, Inc.,
p. 248.
At the operating level, one of several objectives deals with
tactical implementation of the
product line extension and aggressive pricing strategy. The
objective here is to get the word to
the physicians that a new and improved product, Darvocet, is
now available with advantages
over Darvon, so they should change their prescribing to write
for the new drug. Simultane-
ously, tactics include making detail calls to pharmacists to let
them know that Darvon is now
discounted 30%. If successful, this sale should cause the
pharmacists to stock up on Darvon,
so that prescriptions written for it will be filled with the Lilly
product and not some generic
equivalent. While the pharmacists reduce their Darvon
inventory, the objective effects a
change: physicians prescribing to Darvocet. Hence, there is a
consistency between objectives
and strategies among the three levels, and within any particular
level. It should also be noted
that these objectives and strategies are only a sample of what
would be set for sales volume,
Section 7.4Marketing Strategy

growth, share, percentage of prescriptions written for new
versus old products, and so forth.
Finally, it is important that objectives set in functional areas
other than marketing (finance,
R&D, and so forth) support the overall organization strategy to
pursue service leadership.
7.4 Marketing Strategy
Like management itself, marketing strategy development is both
a science and an art, a prod-
uct of both logic and creativity. The scientific aspect deals with
assembling and allocating the
resources necessary to achieve a company’s marketing
objectives by emphasizing opportuni-
ties, costs, and time. The art of strategy is mainly concerned
with the use of resources, includ-
ing motivation of the workforce, sensitivity to the environment,
and ability to readjust to the
counterstrategies of competitors.
Marketing strategies provide direction for marketing efforts.
Alternate strategies are courses
of action managers evaluate before committing to the specific
course of action outlined in the
marketing plan. Thus, strategy links objectives and results.
Strategy is the answer to one of
the basic questions posed in a marketing plan: How are we
going to get there?
The development of a marketing strategy usually encompasses a
two-step process: (a) identi-
fication of the target market (discussed in detail in Chapter 8);
and (b) creation of a market-
ing mix aimed at satisfying the needs of that target market
(discussed in detail in Chapters

9–11). The marketing strategy used by a company is the result
of the blending together of
various marketing elements. These elements, which are known
as the four Ps of marketing,
consist of (a) the product/service to be offered to buyers; (b) the
distribution of products
to various outlets, referred to as place; (c) the promotion or
communications to prospective
customers, using various promotional techniques; and (d) the
price charged for the product
or service. The term marketing mix describes these various
elements. Therefore, marketing
strategy development may be viewed as developing a marketing
mix aimed at satisfying the
needs of selected market segments and accomplishing specific
marketing objectives.
As Figure 7.3 shows, marketing-mix decisions are made with a
particular market segment in
mind. Marketing effort is targeted at the selected segments
through blending the elements
of the marketing mix into a cohesive strategy aimed at
satisfying those specific segments. An
organization targeting several segments must develop an overall
marketing program, which
includes all of its marketing activities.
The development of alternate marketing strategies can be
viewed in many ways, but three
approaches will be discussed in this chapter. First, there is the
overall way a firm approaches
the markets it is attempting to serve. Second, there is one firm’s
strategy in relation to com-
petitive strategies. The third approach deals with the position of
a product or firm in relation
to competitive offerings.

Figure 7.3: The marketing mix and target markets
Marketing activities, usually a blend of different elements,
target the specific market identified by the
organization.
f07.03_MHA 626.ai
Selected
Target
Markets
Product/Service:
Features
Quality
Branding
Place:
Location
Satellite facilities
Physical attributes
Promotion:
Advertising
Sales promotion
Publicity
Social media
Price:
Fee structure

Payment options
Payment terms
Product/Market-Oriented Strategies
The product/market approach to strategy development is
illustrated in Table 7.2. Three
approaches can be used under this strategy development
concept. Undifferentiated strat-
egy basically offers one product aimed at all market segments.
Even if differences in market
segments are recognized, these differences are not incorporated
into the firm’s marketing
activities. Ford Motor Company used such a strategy in its early
days when its only model
was the Model T. As Henry Ford might have said, “You can
have any color you want, as long as
it’s black.”
An undifferentiated strategy only works when there is little or
no competition. New com-
petitors that enter the market, using a differentiated strategy or
a concentrated strategy, soon
begin to erode the market share of an undifferentiated strategist.
For example, a hospital with
an undifferentiated strategy advertises its image, rather than
specific services. The goal is to
convince patients to use the hospital when they need care, even
if it is just a one-time sale.
As hospitals have become savvier in their marketing efforts,
they have begun to develop dif-
ferent service features, such as heart health, newborn care, and

behavioral health. These new
marketing approaches are effective against the one-size-fits-all
message that many hospitals
initially adopted.
Table 7.2a: Undifferentiated hospital marketing
Image Image Image
Image Image Image
Image Image Image
Table 7.2b: Segmentation, or differentiated, hospital marketing
Newborn care Cancer treatment Heart health
Sports medicine Digestive health Radiology
Neuroscience Rehabilitation Women’s health
Table 7.2c: Concentrated, or focused, hospital marketing
Behavioral health
A firm using a segmentation marketing strategy recognizes
differences in the needs of each
market segment and responds by developing a unique marketing
mix for each segment pur-
sued. Of course, not all segments have to be pursued, but at
least two are required to use the
term segmentation strategy. When a company develops mixes
aimed at different segments,
it can also be referred to as a market segmentation strategy. A
firm using this approach usu-
ally offers a wide variety of products to meet the needs of

customers in many segments.
Focused marketing strategies pinpoint one segment of the
market and concentrate all their
efforts on that one segment. A financial firm specializing in
mergers and acquisitions would
use this strategy as would firms specializing in financing new
ventures. Firms using this
strategy option develop a distinctive competence for doing one
thing well. Focused market-
ing strategies are based on finding growth segments with unique
requirements the firm can
meet. The vision of Cancer Treatment Centers of America to be
“the premier center for heal-
ing and hope” for cancer patients is an example of a focused
marketing strategy based on
unique end-user needs.
The basic difference between the segmentation marketing
strategy and the focused market-
ing strategy is the number of segments the firm attempts to
serve. Firms following a focused
strategy target their efforts on one segment only. The factors
that influence the choice of a
particular marketing strategy will be discussed in another
section of this chapter.
Baylor Medical Center at McKinney in McKinney, Texas is
following a segmentation marketing
strategy. This full-service hospital offers advanced treatment
for many medical specialties,
including cancer care, digestive diseases, emergency care, heart
and vascular, imaging and

radiology, neuroscience, orthopedics, rehabilitation and
physical therapy, transplant services,
and women’s health (Baylor Health Care System, 2013).
A focused marketing strategy concentrates on one segment of
the market and directs all of its
efforts to that one segment. For example, St. Jude Children’s
Research Hospital in Memphis,
Tennessee treats children with cancer and other catastrophic
diseases and seeks to advance
cures for pediatric catastrophic diseases through research (St.
Jude Children’s Research Hos-
pital, 2013). Brentwood Hospital in Shreveport, Louisiana is a
psychiatric hospital that pro-
vides treatment for chemical dependency and other behavioral
health disorders (Brentwood
Hospital, 2013). A psychologist who accepts only cash-paying
clients is also adopting a focused
marketing strategy. By refusing to take insurance benefits, the
psychologist ensures that no
record is kept by insurance companies to label the client or
patient as mentally unstable.
Competitive Marketing Strategies
Another approach to strategy development employs competitive
marketing strategies cur-
rently used in the market. Table 7.3 classifies the strategies that
may be used by a company
based on its market position. Market position is defined in terms
of one firm’s share of the
total market and its relation to competitors in the industry.
Table 7.3 identifies four market
positions and some possible strategies for each (Kotler, 1980).

Table 7.3: Competitive marketing strategies
Market position Possible strategies
Market leader
Firm acknowledged as the leader, with
the largest market share of the relevant
market.
1. Expand total market: Develop new uses, new users,
or
more usage by existing customers.
2. Protect market share: Use innovative
marketing tactics or
retaliate against challengers.
Market challenger
Second, third, or fourth firm in market
share. May be quite large, though smaller
in a relevant market than the market
leader.
1. Direct attack strategy: Meet leader head-on
with aggres-
sive promotion and/or prices.
2. Backdoor strategy: Go around leader options
through
innovative strategy.
3. Guppy strategy: Increase market share by
going after
smaller firms.
Market follower

A firm that chooses not to challenge
the leader and is content with market
conditions.
1. Copy leader: Match as closely as
possible leader’s strategy
without directly challenging.
2. Coping strategy: Adjust to strategies of both
leader and
challenger without direct confrontation.
Market nicher
A smaller firm that operates in a geo-
graphic or client niche without directly
clashing with competitors. Specialization
is the key to its success.
1. Geographic niche: Specializeby offering quick
response to
customers.
2. Product niche: Offer products that are unique
to the cus-
tomers served.
Market leaders are the recognized leaders that have the largest
market share of the relevant
market. Although their position of dominance may be widely
recognized, their success may
be constantly challenged by other firms. The strategies that are
used by market leaders focus
on expanding their own control of the market while warding off
or countering the activities of

aggressive competitors. The market leader’s strategy becomes
the pivot around which other
competitors adjust their own strategies.
Market challengers are the firms that are constantly trying to
increase their market share
in head-on competition with the leader, attacking the leader at
its weak points or merging
with smaller competitors. Market challengers are usually large
firms in terms of revenues and
profits, and they may be even more profitable than the leader.
The challenger usually tries to
identify weaknesses in the market leader’s strategy and either
confronts or goes around the
leader, or concentrates its efforts on taking over smaller firms.
Pepsi’s challenge of Coke’s
leadership position clearly demonstrates how the challenger’s
strategy can affect the strate-
gies of other competitors. The New Coke, which was closer in
taste to that of Pepsi than Clas-
sic Coke, was clearly a competitive strategy response.
Market followers and nichers adjust to the strategies of the
market leader and challenger
without making challenges. Nichers usually try to specialize
geographically or by products
offered, and basically avoid direct confrontation with other
competitors. The followers simply
copy the leader’s strategy or adjust their strategy to cope with
both the leader’s and the chal-
lengers’ strategies, without calling attention to their own
activities. For example, The Coo-
per Institute in Dallas, Texas targets well-to-do executives and

other high-income individuals
(for example, former President George W. Bush) for preventive
care. The institute provides
physicals, colonoscopy services, dermatology screening, and
nutrition and exercise counsel-
ing. The Cooper Institute is not contracted as a provider with
any insurance company and
does not accept Medicare (The Cooper Institute, 2013). Thus,
competitive strategies must be
considered in developing the marketing strategy for a firm
where established markets are at
stake. A company must strive to develop a marketing strategy
that will give it a competitive
advantage and provide long-run profitability.
Positioning Strategies
Positioning strategies usually evolve when there are several
well-defined competitors with
fairly unambiguous images. This situation permits placement of
a firm or a new product rela-
tive to existing firms or products or, in some instances, the
repositioning of a firm or product.
The firm or product is positioned in the market based on
customers’ needs and the firm’s own
distinctive competencies, that is, what the firm does well.
For firms that have gone through the strategic planning process,
this positioning approach is
an extension of the work done in answering such questions as
What kind of firm are we? and
What kind of firm do we want to become? Such a strategy
encourages the firm to focus on what
it does best relative to other competing firms and clearly
defined client markets.
The positioning of healthcare will increase in importance with

the implementation of the
Affordable Care Act. HCOs will need to position themselves in
terms of service level and inte-
gration of care. For example, the positioning strategy of
Northwest Hospital in Randallstown,
Maryland is to highlight the variety of outpatient services it
offers. Patients are able to receive
many tests and medical procedures without being admitted to
the hospital. The positioning
map shown in Figure 7.4 demonstrates such an approach for day
care services for adults
(Ginter, Duncan, & Swayne, 2013).
Adult day centers are places that care recipients with
Alzheimer’s or other dementias can go
to during the day. The care recipients participate in activities
and their attendance at the day
center allows their caregivers to run errands or tend to other
family needs. These centers
vary in price and, accordingly, the activities offered to
differentiate their services.
Figure 7.4: Positioning of adult daycare services
The activities and prices for a facility depend on the needs of its
care recipients.
f07.04_MHA 626.ai
Low price
High price

Few
activities
Many
activities
• Adult Day Stay
• Encore
Care
• Friend’s
Place
• New Horizons
• Comfort
Care
• Agape
Care
• Omni
Care
Source: Adapted from Ginter, P. (2013) The Strategic
management of healthcare organizations, John Wiley & Sons:
Hoboken, N. J.
Factors Influencing the Strategy Selected
At least four factors influence the choice of the strategy
selected by a firm: (a) corporate strat-
egy and resources, (b) the firm’s distinctive competencies, (c)
the stage of the product’s mar-
ket and the stage of the product’s life cycle, and (d) competitive

strategies. There is no single
strategy that will always prove successful. Instead, the strategy
chosen must be the one that
is best for the firm, given the nature of these four factors. A
firm’s resources, for example, may
limit the company to a relatively low position in the market, and
a niche strategy may be the
only feasible alternative to follow. The firm may even be an
innovator in terms of product ideas
but not have the financial, marketing, or personnel resources to
compete for the mass market.
Section 7.5Transition from Strategy to Tactics
The marketing strategy must be derived from the corporate
strategy. If the corporate strategy
is focused on diversification through funds generated by a
specific product or product line,
then the strategy used for the product must be one that generates
maximum cash flow. If the
firm wants to harvest a product, then the marketing strategy
must reflect the need to generate
short-term cash and eventual elimination through reduced
research, promotion, and so forth.
Also, the organization’s value discipline provides a context
within which the strategy should
fall. For example, it would be inconsistent for a firm whose
business is grounded in customer
intimacy to pursue a strategy that reflects a desire to be a low-
cost, one-size-fits-all producer.
The distinctive competencies of the company have a direct
bearing on the strategy selected.
Distinctive skills and experience in marketing, production, or

finance influence strategy
choice. These distinctive competencies are the basis of targeting
marketing efforts and devel-
oping a competitive advantage.
Two additional factors that influence strategy selection are the
product’s life cycle stage and
competitive strategies. The influence of competitive marketing
strategies was discussed ear-
lier in this chapter (see Table 7.3). The firm’s or specific
product’s stage in its life cycle also
distinctly influences strategy. For example, a firm whose market
share has eroded over time
because it failed to alter its marketing strategy may need to take
an aggressive, turnaround
strategy stance. Repositioning the firm by introducing new
products or going after new mar-
kets would be pivotal for its turnaround strategy. Chapter 10
discusses the product life cycle
in more detail.
As the product and its market go through cyclical stages, many
alterations in the firm’s mar-
keting strategy may become necessary to adjust to the growth or
decline in the size of the
market and the entrance or departure of competitors. The
evolving stages of the market
require commensurate adjustments to marketing strategy. Note
the many strategy-element
changes that may need to be made by a firm to remain
competitive in the market. The selected
marketing strategy must be given sufficient time to be
implemented and affect consumers,
but an obviously ineffective strategy should be changed. Still,
resistance to change, in many
companies, is a common phenomenon.

7.5 Transition from Strategy to Tactics
Once the marketing strategy is selected, specific marketing
activities—usually called market-
ing tactics—must be created to implement the marketing
strategy. Turning the strategic ele-
ments of the marketing mix into tactics is not an easy task and
requires detailed knowledge
of each of the mix elements. Discussions follow for each of
these marketing elements, which
include (a) product/service, (b) place, (c) promotion, and (d)
price/fees.
Product/Service
Moving from a product-positioning statement to a tangible
product that delivers customer
satisfaction in accordance with the positioning strategy and at a
profit to the company is not
easily accomplished. Positioning involves determining how the
firm’s product or service is
perceived by the customer in relation to the firm’s competition.
Such a strategy encourages
the HCO to focus on what it does best relative to competing
HCOs and clearly defined patient
markets (Stevens et al., 2006). The design team must not lose
sight of the product strategy,
while applying a high degree of creative and technical skill to
their tasks. They must under-
stand not only the strategic needs affecting the product’s design
before the sale, but also the
entire product use or consumption experience in order to make

the product as user-friendly
as possible. Follow-up services must also be considered. For
example, at Cleveland Clinic, it
was found that patients who were ordered to have no food or
drink before a procedure would
go hungry all day, if the procedure was delayed, because staff
failed to follow up with the
attending physician (Merlino & Raman, 2013).
Decisions about product quality, the provision of services,
market-entry timing, scheduling,
follow-up services, and many other issues must be made. All of
these decisions should be
influenced by how they affect the delivery of customer value
and the correct tactical imple-
mentation of the selected marketing strategy.
An HCO should never lose sight of its product strategy, which
indicates where its competitive
advantage lies when it engages in the myriad acts required of
the exchange process with new,
existing, or potential customers.
Place
In terms of distribution tactics, value is defined not simply by
physical access to the service
but also by quality of performance, including procedural follow-
ups and medication. All of
these functions play a role in implementing the positioning
strategy and must be seen as
parts of a whole strategy instead of autonomous tasks. Likewise,
accessibility—the type and
number of locations—plays a major role in positioning the
product in the minds of target-
market consumers.

Promotion
Many models exist for selecting promotional media to maximize
reach and frequency objec-
tives for a given audience at a given budget. However, in this
area, models are never a perfect
substitute for managerial judgment. Promotional tactics involve
the actual presentation of
communication messages to target-audience members. These
messages must be formulated
to be the most effective means possible of presenting the
essence of the positioning strategy
to potential customers. Many examples exist of companies with
a sound positioning strategy,
which self-destructed at the implementation stage because the
chosen advertising approach
was totally unsuited to conveying the image they wished to
project. Promotions, materi-
als, special-event marketing, displays, collateral material, and
all other forms of promotion
should likewise be carefully designed to support the tactical
implementation of the position-
ing strategy. Possible competitive reactions to promotional
efforts should also be considered
when choosing tactics. Coherence with marketing strategy is as
important with staff interac-
tions as it is with the other promotional elements, training, and
support materials; addition-
ally, reward systems must be considered with the overall
strategy. Some special events, such
as opening a new location, may require the services of event
planners to ensure that all ele-
ments are coordinated. If there is going to be a groundbreaking
ceremony with the traditional
“shovel picture,” then someone has to bring a shovel.

Price/Fees
Implementation issues with respect to pricing may pertain to fee
mandates and third-party
reimbursements and deductibles. Policies established in these
areas are, in essence, the
implementation of a pricing plan that acknowledges the
necessity of adjustments to price
to fit market and cost conditions. Other price implementation
issues include initiating price
increases and responding to changes in competitors’ prices.
As costs rise, organizations feel the pressure to initiate price
increases. The following types of
price adjustments are commonly used by HCOs:
• Collecting deductibles upfront for some services. This
tactic may seem simple, but it is
complicated by situations where patients have more than one
form of insurance and
the deductibles are large. It may be necessary to offer payment
plans in some cases.
The most important aspect of this price adjustment is
communicating to patients
about the policy or the change in policy.
• Unbundling of goods and services. The fees for the
service are maintained, but ser-
vices that were previously included, such as X-rays, are now
priced separately.
• Reducing discounts. Policy changes might be initiated that
preclude offering dis-
counts (Kotler, 1980).

A company’s reaction to a change in price by a competitor also
affects pricing implementa-
tion. Market leaders, in particular, must determine how they
will react to a drop in price by
major competitors. Several options, which include the
following, are available:
• Maintain price. The market leader may decide to maintain
its price without losing
customers it wishes to retain. This strategy can be risky in some
circumstances, but
it avoids giving the competitor confidence that price changes
will not be challenged.
• Raise perceived quality. Another option is to maintain
price but improve the prod-
uct’s perceived value by strengthening the product, services, or
communication
messages.
• Reduce price. A market leader might decide to lower its
price in response to the
competitor. This tactic is commonly motivated by a belief that
buyers primarily make
their purchase decisions on the basis of price, and that a failure
to lower a price will
result in an unacceptable decline in market share. However,
quality should be main-
tained, even if the price is lowered.
• Increase price and improve quality. By establishing an
elite image as the “best” in
the market, a company believes it can better capture the share of
the market that
comprises customers who are motivated by that image. Some

firms pursuing this
strategy simultaneously launch a less expensive “fighting
brand,” which is intended
to compete against the lower-cost competitor.
Any price-implementation actions should be governed by the
objectives a company sets
for its price decisions. These objectives must be clearly
communicated to patients to avoid
misunderstanding.
Section 7.6Organizational Designs for Marketing
7.6 Organizational Designs for Marketing
Organizing marketing refers to the process of developing a
structure to accommodate and
assign responsibility for managing marketing activities.
Organizing may be defined simply as
a process that includes the following:
1. Determining what must be done to achieve a given set of
objectives.
2. Dividing the necessary activities into segments small enough
so that each can be
performed by one person.
3. Providing a means of coordination to ensure that no effort is
wasted and that the
members of the organization do not get in each other’s way.
Organization design should produce a structure of task-and-
authority relationships that
enhance the firm’s ability to accomplish its stated marketing

objectives. The end result of the
process is usually represented by an organizational chart that
shows individuals’ positions
and their formal relationships of authority. When detailed job
descriptions, which specify
duties and responsibilities, are prepared for each position, the
foundations for the manage-
rial system have been laid. If current job descriptions do not list
the development of strategic
and annual marketing plans, the job description should be
rewritten to state the individual’s
responsibility toward that task. This, of course, does not mean
that each manager would indi-
vidually carry out all the activities necessary to develop a plan,
only that he or she is respon-
sible for seeing that a plan is prepared or providing input for it.
The organizational structure reveals the relationships between
activities, authority, and
responsibility at a given time within the organization. The
nature of a firm’s organization
greatly influences not only who will be responsible for
marketing planning but also how
much assistance the planner can expect from others in the
organization.
Two basic types of organizational structures are (a) the line
organization and (b) the line
and staff organization. The distinction between these two
organizations is the separation
of planning from operating tasks in the line-and-staff approach.
The line organization is the
simplest organizational structure and will be described first.
In a line organization, authority flows directly from the chief
executive to the first subordi-

nate, then to the second, and so forth. Few, if any, specialists
are present in the line organiza-
tion, and planning and operating activities are usually
performed by the same individual. The
chief executive might do all the planning for all areas and
maintain primary authority and
responsibility for all areas. This type of organizational structure
is depicted in Figure 7.5.
In the marketing line organization, the marketing manager is
responsible for planning and for
the operations in marketing. The sales supervisor and
distribution supervisor carry out the
manager’s plans through supervision of other employees.
Although this type of organization
may be successful for small organizations, its usefulness in
larger, more complex situations is
limited. Effectiveness of the line organization depends on
division of effort, and this is exactly
what staff positions provide. Staff personnel are added to help
the line personnel perform the
various functions carried on in an organization, especially
planning. A marketing manager in
a line organization must not only develop plans but also carry
them out. This means less time
is available for planning because the manager is involved in the
organization’s operations.
Good planning procedures can still be used under these
conditions, especially if there are only
Section 7.6Organizational Designs for Marketing
a few services and customers. However, the analysis section of
the plan usually will not be as

thorough simply because the manager has less time and fewer
resources.
Figure 7.5: Marketing line organization structure
The marketing manager is responsible for the planning and
operations in each marketing area.
f07.05_MHA 626.ai
Marketing Manager
Advertising Public Relations Provider Relations Payer Relations
Social Media Patient Relations Wellness Center Contracting
The line and staff organization, depicted in Figure 7.6,
illustrates the addition of staff special-
ists to the organization. This approach permits separation of
planning and operating activi-
ties, which in turn means more time and resources available for
marketing planning.
Figure 7.6: Marketing line and staff organizational structure
Specialized staff can help the organization’s overall efforts by
providing assistance in their areas
of expertise.
f07.05_MHA 626.ai
Marketing Manager
Advertising Public Relations
Planning

Director
Media
Specialist
Provider Relations Payer Relations
Social Media Patient Relations Wellness Center Contracting
Section 7.7The Ethical Orientation of Marketing Decisions
The marketing planning effort that results from this
organizational design should be more
thorough. Figure 7.6 shows the addition of staff positions at
both the headquarters and
regional level. This makes staff specialists available to
coordinate overall company efforts
in their areas of specialization at the headquarters level, and
also takes into consideration
regional differences that warrant additional specialization by
geographical area. Of course,
there are many other ways for staff personnel to be
specialized—by services, customer type,
channel of distribution, and so forth. A wide variety of potential
organizational structures can
be adapted to a specific organization’s needs.
7.7 The Ethical Orientation of Marketing Decisions
In recent years, leaders have focused attention on creating an
organizational environment
with a high concern for ethics. Ethics are principles of right or
good conduct, or a body of
such principles. Ethical issues in marketing can be categorized
by type into one of two areas:

issues pertaining to individual marketing decisions and those
related to collective marketing
decisions. Ethical issues arising from individual marketing
decisions are those that lead to
unethical practices, although they may help the company.
Ethical issues arising from collec-
tive marketing decisions result in no ethical infraction in and of
themselves, but they do con-
tribute to problems in combination with similar decisions over
time or by other marketers.
The adverse impact of packaging on the environment might be
an example of such a collective
marketing decision.
The American Marketing Association has developed ethical
standards of behavior for its
members through the use of a code of ethics, a portion of which
follows. Not only are general
areas covered, such as honesty and fairness, but specific
attention is devoted to the marketing
mix variables.
Numerous ethical issues have surfaced in recent years that apply
specifically to healthcare.
Some, such as patient referrals, have been addressed through
legislation. For example, physi-
cians may not refer a patient to entities in which they or any
family member have a financial
interest.
Another issue is patient privacy. The Health Insurance
Portability and Accountability Act (U.S.
Department of Health & Human Services, 2014) addresses this
issue. Physicians and other
care providers, as well as nonmedical personnel, are prohibited
by this act from unlawfully

disclosing patient information.
Other, more complex ethical issues also face healthcare
providers. Examples include deter-
mining how long to maintain life-support systems for brain-dead
patients, determining how
long to maintain a life-support system for a brain-dead patient
who is pregnant with a viable
fetus, deciding who should make end-of-life decisions for
patients, and granting hospital priv-
ileges to physicians who perform abortions.
T H E A M E R I C A N M A R K E T I N G A S S O C I A T
I O N
C O D E O F E T H I C S
Honesty and Fairness
Marketers shall uphold and advance the integrity, honor and
dignity of the marketing
profession by:
1. Being honest in serving consumers, clients, employees,
suppliers, distributors, and
the public;
2. Not knowingly participating in conf lict of interest without
prior notice to all parties
involved; and
3. Establishing equitable fee schedules including the payment or
receipt of usual, cus-

tomary and/or legal compensation for marketing exchanges.
Rights and Duties of Parties in the Marketing Exchange Process
Participants in the marketing exchange process should be able
to expect that
1. Products and services offered are safe and fit for their
intended uses;
2. Communications about offered services and services are not
deceptive;
3. All parties intend to discharge their obligations, financial and
otherwise, in good
faith; and
4. Appropriate internal methods exist for equitable adjustment
and/or redress of griev-
ances concerning purchases.
It is understood that the above would include, but is not limited
to, the following
responsibilities of the marketer:
In the area of service development and management:
• disclosure of all substantial risks associated with service
or service usage;
• identification of any service component substitution that
might materially change the
service or impact on the buyer’s purchase decision;
• identification of extra cost-added features.
In the area of promotions:

• avoidance of false and misleading advertising;
• rejection of high-pressure manipulations, or misleading
sales tactics;
• avoidance of sales promotions that use deception or
manipulation.
In the area of distribution:
• not manipulating the availability of a service for the
purpose of exploitation;
• not using coercion in the marketing channel;
• not exerting undue inf luence over the reseller’s choice to
handle a service.
In the area of pricing:
• not engaging in price fixing;
• not practicing predatory pricing;
• disclosing the full price associated with any purchase.
(continued)
In the area of marketing research:
• prohibiting selling or fundraising under the guise of
conducting research;
• maintaining research integrity by avoiding
misrepresentation and omission of perti-
nent research data;
• treating outside clients and suppliers fairly.

Organizational Relationships
Marketers should be aware of how their behavior may influence
or impact the behavior of
others in organizational relationships. They should not demand,
encourage or apply coercion
to obtain unethical behavior in their relationships with others,
such as employees, suppliers,
or customers.
Source: Adapted from the American Marketing Association,
Statement of Ethics
https://www.ama.org/AboutAMA/Pages/Statement-of-
Ethics.aspx
The growth and impact of the Internet on marketing activities
has prompted the American
Marketing Association’s development of a code of ethics
dealing specifically with the use of
the Internet as a marketing tool. As shown in the following
statements, the code focuses on
privacy, ownership, and access to infrastructure. These are the
key areas of concern for ethi-
cal standards of conducting marketing or marketing research on
the Internet.
A M E R I C A N M A R K E T I N G A S S O C I A T I O N
C O D E O F
E T H I C S F O R M A R K E T I N G O N T H E I N T E R
N E T
General Responsibilities
Internet marketers must assess the risks and take responsibility
for the consequences of
their activities. Internet marketers’ professional conduct must

be guided by:
• Support of professional ethics to avoid harm by protecting
the rights of privacy, owner-
ship and access.
• Adherence to all applicable laws and regulations with no
use of Internet marketing that
would be illegal, if conducted by mail, telephone, fax or other
media.
• Awareness of changes in regulations related to Internet
marketing.
• Effective communication to organizational members on
risks and policies related to
Internet marketing, when appropriate.
• Organizational commitment to ethical Internet practices
communicated to employees,
customers and relevant stakeholders.
Privacy
Information collected from customers should be confidential
and used only for expressed
purposes. All data, especially confidential customer data,
should be safeguarded against
unauthorized access. The expressed wishes of others should be
respected with regard to
the receipt of unsolicited e-mail messages.
(continued)
https://www.ama.org/AboutAMA/Pages/Statement-of-
Ethics.aspx

Summary & Resources
Ownership
Information obtained from the Internet sources should be
properly authorized and docu-
mented. Information ownership should be safeguarded and
respected. Marketers should
respect the integrity and ownership of computer and network
systems.
Access
Marketers should treat access to accounts, passwords, and other
information as confiden-
tial, and only examine or disclose content when authorized by a
responsible party. The
integrity of others’ information systems should be respected
with regard to placement of
information, advertising or messages.
Source: Adapted from the American Marketing Association
https://www.ama.org/search/pages/results.aspx?k=ethics
Summary & Resources
Chapter Summary
This chapter introduced the concept of marketing and discussed
how HCOs can design effec-
tive marketing programs. Additionally, basic marketing
strategies were described, along
with the organizational structures necessary to put these
strategies in place. Lastly, ethical
decision-making, as it relates to healthcare, was discussed.

Key Points
1. It is important to understand what marketing is. While there
are many definitions of
marketing (including that of the American Marketing
Association at www.market-
ingpower.com/AboutAMA/Pages/Definitionofmarketing.aspx),
we will use this defi-
nition: Marketing directs those activities that involve the
creation and distribution
of products and services to identified market segments. Key to
an understanding of
this definition are the following statements:
• Marketing is a managerial function directed by executives.
• Marketing involves specific activities.
• Marketing is involved in both the creation and distribution
of products and
services.
• Marketing is concerned with satisfying customer needs.
2. While it is important to satisfy customer needs and wants, it
is also critical to do so
at an acceptable level of revenue and costs. Marketing with this
in mind is known
as the marketing concept. For-profit and not-for-profit
institutions similarly need to
satisfy customer needs and wants. The for-profit institution,
however, needs to gen-
erate enough profit to attract investors, while the not-for-profit
institution requires
a positive cash flow to remain viable.
https://www.ama.org/search/pages/results.aspx?k=ethics

http://www.marketingpower.com/AboutAMA/Pages/Definitionof
marketing.aspx
http://www.marketingpower.com/AboutAMA/Pages/Definitionof
marketing.aspx
Summary & Resources
3. An HCO can follow three basic orientations in its
organizational function. The first of
these is a service orientation, where the dominant desire is to
capitalize on efficiency
in the operating process. While this approach helps control
costs, it does not address
quality, revenues, customer needs and wants, or the firm’s
benefit to society.
The second basicorientation that an HCO can
follow in its organizational func-
tion is a selling orientation. Here, the dominant factor is to
increase revenues by
stimulating interest in the product or service. Secondary factors
include controlling
costs and providing quality. However, sales of existing products
or services are more
important than actually addressing customer needs with
specifically designed prod-
ucts and services.
The most preferable of thesethreeorientations is
the marketing orientation.
With this orientation in practice at an HCO, marketing costs are
controlled, quality
is addressed, and increasing revenues is important. The
dominant factors, however,
are identifying and addressing customer needs while
considering the effect of the
HCO’s product and services on both customers and society at

large.
4. HCO executives first develop the firm’s overall strategic
plan. Once this plan is in
place, the strategic marketing plan is developed so that it
conforms to the strategic
plan. Following the strategic marketing plan is the annual
operational marketing
plan. Annual operational marketing plans spell out the details of
what is to be done,
when, and by whom. By deciding on the overall strategic plan
first, the HCO can
ensure that the direction of the marketing efforts indicated in
the strategic market-
ing plan and the activities directed by the annual operational
marketing plan are
consistent with the direction of the overall strategic plan.
5. Marketing strategies provide the direction to marketing
efforts. Three basic mar-
keting strategies are in use: undifferentiated strategy,
segmentation strategy, and
focused marketing strategy. Undifferentiated strategy offers one
or a few products
or services aimed at all market segments. This type of strategy
works best when
there is little or no competition.
A segmentation strategy recognizes differences
in the needs of each market
segment and responds with products or services developed for
each segment pur-
sued. While not all segments will be pursued, at least two are
required to be consid-
ered a segmentation strategy.
Focused marketing strategies pinpoint one segment of
the market and focus all

efforts on that segment. An example is a hospital that
specializes in emergency and
acute care.
6. Marketing tactics are the activities required to implement the
chosen strategy.
Turning the strategic elements of the marketing mix into tactics
is not an easy task
and requires detailed knowledge of each of the mix elements.
Specific product,
place, promotion, and price decisions must be aligned with the
overall strategy and
planned in great detail to avoid failures. Some special events,
such as opening a new
location, may require the services of event planners to ensure
that all elements are
coordinated.
7. Organizing marketing refers to the process of developing a
structure to accom-
modate and assign responsibilities for managing marketing
activities. Two basic
organizational structures exist: (a) the line organization, and (b)
the line and staff
organization.
a. In a line organization, authority flows from the
chiefexecutive to the first sub-
ordinate, then to the second and so forth. In a line organization,
the person
responsible for planning marketing is also responsible for
marketing operations.
Summary & Resources

b. A line and staff organization adds staff specialists to the
organization. In this
type of structure, planning is done by line employees and
carried out by staff
specialists.
8. Ethics are principles of right or good conduct. In marketing,
ethics can be broadly
categorized into two areas: ethical issues connected to
individual marketing deci-
sions and ethical issues pertaining to collective marketing
decisions. Individual
marketing decisions are those that—though they can benefit the
HCO—may lead
to unethical practices. Collective marketing decisions do not
result in an unethical
act but may contribute to problems in combination with similar
decisions by other
HCOs. For example, bionic body parts are now available that
replicate the part of
the body they replace, an invaluable aid to people who have
been disabled through
injury. However, does this present a challenge to ethical limits?
Can it be right to
replicate an entire human body?
Key Terms
concern with customers Understanding
the needs and wants of target markets.
creation and distribution of goods and
services In HCOs, the service is actually cre-
ated by the operating function, but market-
ers are involved to make sure the product or
service meets patient needs.

ethics Principles of right or good conduct,
or a body of such principles.
focused strategy A marketing strategy that
concentrates on a marketing segment and
competes with rivals based on a lower price
or some other form of differentiation.
line and staff organization A form of
organization that adds staff specialists to
the organizational structure. This approach
permits separation of planning and operat-
ing activities.
line organization A form of organiza-
tion in which authority flows directly from
the chief executive to the first subordinate,
then to the second, and so forth. Few, if any,
specialists or support staff are present in the
line organization, resulting in planning and
operating activities being performed by the
same person.
managerial perspective A perspective that
is proactive, customer oriented, and aligned
with the firm’s overall strategy.
market segment(s) An aggregation, in
healthcare, for example, of patients with
similar characteristics, such as diabetics,
heart patients, children, geriatrics, and so
forth.
marketing Directs those activities that
involve the creation and distribution of

products and services to identified market
segments.
marketing concept A business orientation
that focuses on satisfying customers’ needs
at acceptable levels of revenue and costs.
marketing mix A combination of the four
strategic marketing elements—product,
place (distribution), promotion, and price—
to satisfy the needs of the market selected in
the marketing strategy process.
marketing strategy A strategic plan for
selecting a particular target market and then
satisfying customers in that market through
the marketing mix.
Summary & Resources
marketing tactics Specific actions taken to
execute a marketing strategy.
operating marketing plan A plan that
spells out the details of what is to be done
on a day-to-day, week-to-week, or month-
to-month basis to translate an organiza-
tion’s major strategies into specific actions,
responsibilities, and time schedules.
positioning The placement of a firm or
a new product/service, relative to exist-
ing firms or products, in the mind of the
consumer.

product life cycle The progression of a
product through various stages from intro-
duction to decline. The stages of the product
life cycle are introduction, growth, maturity,
and decline.
residual perspective A perspective that is
reactive and only deals with needs as they
arise.
segmentation strategy A strategy that
aggregates consumer groups with similar
characteristics and common interests.
strategic marketing The overall approach
to marketing within an HCO.
strategic marketing plan A plan that con-
tains the organization’s overall approaches
to marketing. The strategic marketing plan
is always aligned with the HCO’s overall
strategic plan.
undifferentiated strategy A strategy that
concentrates on producing a single product
that is marketed to all customers.
Critical Thinking Questions
1. How can an HCO implement the marketing concept into its
organization?
2. Explain the relationship between the strategic plan and the
marketing plan.
3. How could a dental organization implement a focused
marketing strategy?

Chapter 7
Economic and Legal Issues
Social SecurityDesigned as a pay-as-you-go systemAn age
entitlement programAge of eligibility has increased over
timeSupplemental security incomeProvides stipends to low
income people who are aged 65 years or older, blind, or
disabledSocial Security income is not adequatePrivate
investmentsPensions
Late Life Income
*
To be eligible for Medicare, one must be eligible for Social
SecurityOnly covers select services and requires that they are
medically necessaryCosts are covered by a employer and
employee tax of 2.9% and by the beneficiary in the form of
premiums, deductibles, and co-pays
Medicare
*

Offers acute care or short-term rehabilitative care Free to those
who receive Social SecurityProvides insurance regardless of
financial status A person is automatically enrolled on the first
of the month of his or her 65th birthday Deductible and co-
payments under Part A vary by setting and can be quite high
Medicare Part A
*
A person eligible for Part A must apply for Part B in the 6
months surrounding his or her 65th birthday or wait until the
next open enrollmentChoose either (the “Original”) Medicare
Part B or an alternative plan available in his or her areaOriginal
is a traditional fee-for-service arrangementPatient is responsible
for a monthly premium (usually deducted directly from the
monthly Social Security check), an annual deductible, and co-
pays
Medicare Part B
*
*
Offers Medicare Advantage Plans similar to an HMO or
PPOReplaces both Medicare Part A and Medicare Part BCo-

pays and deductibles, if any, vary considerably, and extra
premiums may be required for added servicesSeveral new
programs alternatives to Medicare Part C, such as Private Fee-
For-Service Medical Savings Accounts
Medicare Part C
*
*
Person pays a monthly premium and in exchange all of the co-
pays and deductibles not covered by the “primary insurance”
(e.g., Medicare) are paid Some are part of a person’s retirement
benefit or available to members of organizations such as AARP
Supplemental Insurance
*
Program funded jointly by federal government and state
governmentState determines eligibility, types, and extent of
services to be covered; sets the payment rates to providers; and
administers its own programsStates pay about 40% of the costs
with the federal government paying the restProvides care for
those with low incomesCovers more services than Medicare
Medicaid
*

Veterans Administration (VA) system is a model for the
continuity of care in various care provider systems Active duty
and retired military members and their dependents are
eligibleVA hospitals have restrictions; the problem has to be
service relatedFinancial support, “Aid and Attendance Pension,”
is provided
Care for Veterans
*
TRICARE health care programHealth care insurance program
provided by the Department of Defense for eligible
beneficiariesRequires the person to enroll in both Medicare Part
A and Part B and pay the premiums for Part BAs a Medigap
policy, Tricare for Life covers expenses not covered by
MedicareLong-term care insurance
Other Veterans
Administration Services
*
Which part of Medicare helps cover some skilled nursing
facility care, hospice care, and home health care under certain
conditions?
Part A
Part B
Part C
Part D

Question
*
A—Medicare Part A covers acute hospital care, short-term acute
rehabilitative care, and costs associated with hospice and home
health care under certain circumstances.
Answer
*
Financial issuesHealth care decisionsConsent to
treatmentsCapacity
Legal Issues in Gerontological Nursing
*
Ability to understand a problem, the risks and benefits of a
decision, the alternative options, and the consequences of the
decisionRange of tasks, from handling finances and daily
business, to taking care of self and making medical
decisionsOnly the courts can declare the person “incapacitated
Capacity
*

Powers of attorneyConservatorshipGuardianship
Advanced Care Planning
*
Legal document that gives a designated person the power to act
on the behalf of a personTwo types of power of attorney (POA)
documentsGeneral POA
Usually has the right to make financial decisions, pay bills, and
so on in defined circumstances but not necessarily to make
decisions related to health careDurable POA
Can make health-related decisions for persons when they are
unable to do so themselves
Power of Attorney
*
*
Individuals, agencies, or corporations that have been appointed
by the court to have care, custody, and control of a disabled
person to manage his or her financial responsibilitiesGuardian
is a person appointed to be responsible for another
personConservator is a person specifically appointed to control
the finances of the person
Guardians and Conservators

*
Nursing roles includeHelping older patients deal with financial
issuesUsing their expert advocacy and negotiation skillsThe
nurse may be the first to notice the subtle changes indicating a
potential change in capacity Obligation to work with the
applicable statutes of his or her state, province, or country
Implications for Gerontological Nursing and Healthy
*
Who can be the POA for an older adult?
Anyone
Attorney
Blood relative
Anyone except a blood relative
Question
*
A—Although it usually is a friend or family member, a person
can designate any another person to act on his or her behalf.
Answer
*

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