Itemization of Rehabilitation Centers from Marketing Point of View -- Current Analysis and Future Challenges

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1 Itemization of Rehabilitation Centers from Marketing Point of View -- Current Analysis and Future Challenges Ashish Chandra, Marshall University Graduate College William B. Stroube, University of Evansville James H. Plitt, West Virginia Bureau for Medical Services ABSTRACT A rehabilitation center is another form of healthcare organization that specializes in providing care for particular conditions of patients. Patients admitted in rehab centers range from being accident victims to those suffering with a particular illness. These organizations are now becoming extremely valuable in providing patient care services. However, they have not marketed themselves as aggressively as other healthcare organizations. This paper provides an insight regarding rehab centers and conducts a SWOT analysis for these centers. It further provides some future prospects and challenges for marketers of these organizations. INTRODUCTION Rehabilitation centers are healthcare organizations that specialize in providing care for range of conditions and patients. Patients admitted to rehabilitation centers range from accident victims to those suffering with particular illnesses. These organizations are now playing a significant role in providing patient care services; however, they have not marketed themselves as aggressively as other healthcare organizations. Rehabilitation services can be attained in specialized institutions as well as numerous other settings. This paper discusses rehabilitation in institutionalized settings only. There are many types of rehabilitation centers. Some treat a wide range of patients while others specialize in selected illnesses or types of disabilities. Patients in specialized centers may be treated for cardiac conditions, drug addiction, alcohol dependency, neurological problems, or sports related injuries. Patients are frequently placed in centers because they need special care and treatment that a hospital may not be able to offer. Traditionally, rehabilitation centers have not marketed themselves as aggressively to consumers as other healthcare institutions. Physicians refer most patients in rehabilitation centers, and thus marketing and promotion has historically followed a business-to-business model. Recently, as in other areas of health care, consumers are playing a more significant role in center selection. Many centers have appropriately begun to promote themselves in order to inform and educate consumers. An examination of the marketing mix for rehabilitation centers reveals a complex marketing situation. The organization is run by a diverse group of personnel in direct and indirect patient care. The product is often not well defined, with a complex mix of services. The reimbursement issues that affect other areas of health care are also present. This paper provides

2 an insight into the marketing of rehabilitation centers. It further provides some future prospects and challenges for marketers of these organizations. A BRIEF OVERVIEW OF REHAB CENTER S MARKETING MIX Like any other business, once a rehab center has established its organizational strategy, it should make an attempt to clearly identify the various characteristics of their marketing mix. The target market for rehab centers includes persons who are in need of specialized care and therapy that can be helped in their restoration to good health or useful life. A variety of rehabilitation services (their product) offered at these centers are provided by trained professionals. The level of intensity of these services varies based on the needs of the client. Since rehabilitation therapy often involves specialized equipment and personnel, it tends to be expensive (price). Even patients with Medicare and HMOs may have problems with paying for the long and extensive stay that they might have to endure during the course of the therapy (Health News 1997). Rehab centers are located in both rural and urban settings (place). Many centers are located near other healthcare facilities, such as hospitals. Rehab facilities have traditionally not promoted as extensively as other healthcare facilities (promotion). Not many people like to even think about being admitted to a rehab facility. For obvious reasons, physician and healthcare institution referrals have served as major promotional techniques for rehabilitation centers. Word-of-mouth is perhaps one of the most common forms of advertising enjoyed by these organizations. STAFFING REHAB CENTERS Rehabilitation centers employ a wide variety of medical and non-medical personnel such as doctors in specialty fields, nurses, physical, occupational and speech therapists, psychologists, social workers, chaplains, and pharmacists. Besides the medical personnel, there are also a variety of non-medical personnel who perform various key healthcare and non-healthcare related tasks. Doctors play an important role in the admission of patients to rehabilitation centers. They must evaluate the patients and decide whether or they need to be placed in the rehab center. Some patients don't have a choice in the decision to attend the rehab center because their condition requires a level of care not allowable in a regular hospital (Ostomy Wound Manage, 1997). Rehab centers also will employ a variety of specialist physicians such as neurologists, psychiatrists, and cardiologists. Physical, Occupational and Speech therapists play a vital role in the rehabilitation effort. They must make sure that each patient receives individualized treatment, whether it is learning how to walk again (physical), talk again (speech) or learning how to use their hands (occupational). The therapist must be able to provide these services for the patient being rehabilitated (Pullwitt et. al 1999). Nurses are key players in rehab centers. They make sure that the patient receives medication correctly, gets to their therapy appointments, receives their meals on time and that

3 their is diet is correct. The monitoring of the patients health and progress is the nurse s responsibility. With the changing role of pharmacists, they are now more actively involved in direct patient care in various health care institutions. Clinical pharmacists often go on rounds with doctors in these institutions and are actively playing a role in making sure that the drugs prescribed are appropriate as well as are involved in counseling activities. At times, some patients may require respiratory therapy in addition to other therapies. A respiratory therapist often performs this activity in the rehab facility. Some duties of these individuals include monitoring proper operations of all respiratory therapy machines. They also have to make sure that the oxygen machines are calibrated precisely for optimal therapeutic benefit to the patient. They also provide training to the patient and the nursing staff regarding proper operation of the respiratory therapy machines and equipment as well as the exercises that can benefit the patient. Psychologists are trained professionals who work directly with the patient, providing both testing and therapy. They often are able to clearly explain and convince the patient in a nonthreatening manner to pursue treatment for their injury or illness. The emotional support provided by these individuals is quite vital in the recovery process of the patient. Some other personnel that are now actively involved in patient care activities at rehab centers include nutritionists, social workers, and clergy. Nutritionists assist the patient and their family members in developing an appropriate menu that the patient may like and which is also going to be nutritionally beneficial to the patient. Social workers are licensed professionals who work with patients and the patient's family members directly and provide them valuable information from various social services agencies as well as are often involved in emotional support to the patient and the patient's family members. Clergy provide mental and spiritual support to the patient and their family. They also help the patient to cope with depression associated with the injury or illness. COMPETITION FOR REHAB CENTERS Rehabilitation centers are now competing with other healthcare organizations for the same patients. Nursing homes are perhaps most directly competing with rehab centers. Even though the services provided by rehabilitation centers can often be beneficial to the patient, these centers have no control over the doctor s decision to recommend the admittance of the patient to a nursing home over the rehab center. Veterans Affairs (VA) hospitals and hospitals with multispecialty units that include rehabilitation in one location also tend to be competition for the rehab centers (Sheppard 1996). S. W. O. T. ANALYSIS IN BRIEF In this highly diverse and competitive business environment, it is essential to identify the strengths and weaknesses of any organization, and also the opportunities and threats relevant to

4 the organization's future strategy (Berkowitz 1996). A brief S.W.O.T. (Strengths, Weaknesses, Opportunities, and Threats) Analysis of these centers is provided below. Strengths of Rehab Centers One of the major strengths that rehab centers enjoy is that they are highly recognized as a specialized patient care facility health care facility. Another strength is that rehab centers are entitled to receive reimbursements from healthcare insurance providers for many of their services. Reimbursement issue is very important because as health care costs increase, many health services do not get appropriate reimbursement. Weaknesses of Rehab Centers A commonly observable indirect weakness is related to the rehab center's location. For example, being located in a city with a high volume of noise and pollution, the patient may not be able to receive the proper amount of rest and fresh air as may be recommended by the healthcare professional. A direct weakness of rehab centers could be associated with the high expense for patients who don't have private insurance or any other form of healthcare plan that covers for rehab therapy. Also, since rehabilitation and rehab centers are expensive some major funding sources such as Medicaid, in some state, do not offer this as an optional benefit. Patients without insurance would not be able to afford the usually high costs associated with rehab centers. Another direct weakness can be a shortage of space in rehab facilities. Opportunities for Rehab Center Due to the scarcity of rehab centers in many locations, it creates a major opportunity for existing centers. Some facilities located in the same region also have an opportunity to be associated with health care systems, for example hospitals. Increasing awareness of substance abuse problems among the general population and the subsequent seeking of treatment has also created opportunities for these organizations. Since rehab centers are considered as a legitimate and recognized health service providing institution, in most instances they are entitled to get reimbursed for their services by many health insurance providers. Another business opportunity that these centers have comes in an unlikely form. They have the opportunity to sell medical supplies, including medications, to nursing homes. In 1997, nursing homes purchased almost 30% of their medications from "other" institutional pharmacies that are not retail pharmacies. These non-retail pharmacies are located in rehabilitation centers, assisted-living facilities, hospice care organization, long-term health care facilities, and even other nursing homes (Drug Benefit Trends 1998). Rehab centers, working with patients and family members also can open public sector by means of legal class actions. For example, if people with traumatic brain injuries are not adequately served throughout the state, affected parties can prompt change by means of legal challenges. The Americans with Disabilities Act further strengthens this approach.

5 Threats for Rehab Centers Some threats for rehabilitation centers include competition with hospitals and nursing homes. HMOs and insurance can be a threat to rehab centers by not covering the entire patient stay or not reimbursing the rehab center with a desirable rate. Other threats include government intervention. For example, changes to funding arrangements can create problems for rehab centers that accept Veterans type insurance and other government payments (Sheppard 1996). Government intervention will continue to be a threat to rehab centers for as long as they continue to change funding arrangements. Under circumstances in which patients can't afford the rehab facility or cannot be admitted due to lack of space, they are usually sent to nursing homes. Nursing homes are also specialized facilities and they often have elderly patients who are suffering from illnesses such as heart attacks and strokes. Hence, these facilities can pose a significant threat to the existence of rehab centers as they are competing for the same patients. Some hospitals have realized the potential financial benefits of operating rehab centers. As a result, some of these hospitals have constructed rehab facilities in their hospital. This is a major threat to rehab centers because hospital physicians referred a majority of patients admitted in these centers. FUNDING OPPORTUNITIES According to Retchin et al. (1997), stroke patients on Medicare HMOs are subject to being placed in nursing homes instead of rehabilitation centers. Anecdotally, patients with insurance or fee-for-service plans that covers a significant portion of rehabilitation expenses are more preferred by the rehabilitation centers. In an article published in Health News (1997), the results of a study conducted in 12 different states on HMO patients needing rehabilitation were presented. According to this study, of patients needing rehabilitation, 42 percent were sent to nursing homes and only 16 percent were sent to rehabilitation centers. They also stated that it is similar for fee-for-service patients. Only 23 percent of patients needing rehabilitation are actually sent to rehab centers and 28 percent are sent to nursing homes. Medicare and private insurance are some of the major sources of income for rehab centers but Medicare only pays in full for 20 days and partially for 80 days or more regardless of a senior's pay plan. In order for Medicare to pay for these services the patient must be able to participate in 3 hours of therapy daily and mentally able to cooperate with the staff in the rehabilitation center (Health News 1997). There are other sources of payment for rehabilitation centers, for example, workers compensation, Veteran Affairs, private health insurance or self-funding (meaning the patient is paying out of the pocket for their treatment) (Sheppard 1996). For many medical needs, Medicaid is a payer source. However, since Medicaid is a program administered differently by each state, some states have not chosen a rehabilitations option. This can be turned into an opportunity if there is public support for the option.

6 Rehab centers often rely heavily on private donations. Satisfied ex-patients of the rehab center often give donations. Even family and friends of the patient give donations to the rehab center if they perceive that the rehab center provided valuable aid to the patient in the recovery process. Fund Raising activities, such as phone-a-thon, pledge drives, etc., are also performed during certain times of the year by many private, not-for-profit rehab centers. In these activities, rehab centers usually get a helping hand from staff and patients of the rehab center as well as from volunteers. Grants from government and non-government agencies are often used to fund the operations and maintenance of private rehab centers. These granting agencies may or may not directly be related to healthcare. Grants are usually for specific duties mentioned in the grant proposal submitted. FUTURE MARKETING CHALLENGES When in such a highly diverse and competitive business environment, rehab centers must realize prospects that will take place in the future. Some future prospects that could affect rehab centers include the possibility a higher admittance of accident victims due to the increase in highway speed. Some news reports have already mentioned an increased accident rate due to the increased speed limit on some interstate highways. Another future prospect is that rehab centers may see an increase in the number of elderly being admitted. One reason may be that victims of certain disease states that are often treated in rehab centers, such as stroke and heart attack victims, may be on the rise in future due to the increasing number of elderly. Heart attack victims can survive longer because of the availability of advanced drug products, but may need cardiac rehabilitation in order to live a better quality of life. Rehab center marketers should also identify probable places and individuals to be targeted in their marketing practices. A place to target marketing that seems unlikely is nursing homes and their administrators. The main reason for targeting them is also associated to the increasing numbers of elderly. As the number of elderly increase, an increase in the demand for nursing homes will also likely follow. However, this may cause an overflow of people wishing to be admitted to these facilities. Rehab facilities can be in a position to accommodate patients who cannot be admitted to nursing homes. It can be a major revenue generating opportunity for these organizations. CONCLUSION There is no doubt that rehab centers provide an invaluable service to a select group of patients, who require highly specialized care, in a more conducive environment. These centers have great future potential. However, it is extremely important for the administrative staff, as well as the owners, to recognize that in order for them to survive in this highly competitive healthcare business environment they may have to take drastic steps in future.

7 Unfortunately, these organizations have traditionally not marketed themselves aggressively directly to consumers. However, now it is time for them to devise plans and adopt direct-to-consumer marketing practices. Though it may not seem the appropriate thing to do by some personnel working in these organizations, a marketing plan should be considered an essential component now because it is now a matter of survival. Marketing of these services directly-to-consumers will definitely be a challenge. Identifying and clearly defining the various components of the marketing mix for rehab services providers will help them in their SWOT analysis that in turn will help them in establishing appropriate marketing strategies. REFERENCES Berkowitz, Eric N ESSENTIALS OF HEALTH CARE MARKETING. Gaithersburg, MD: Aspen Publishers, Inc More Nursing Homes are Using Drug Formularies. Drug Benefit Trends, 10(8), "Seek rehab after stroke," Health News (Aug 20), _1_1.asp Pullwitt, D.H., O. Krause, F. Hiderbrand, and G.C. Fischer Screening for Rehabilitation Needs of Patients in Care of Family Practitioners. OnHealth.Com. Retchin, S.M., R.S. Brown, S.C.J. Yeh, D. Chu, L. Moreno "Outcomes of stroke patients in Medicare Fee for Service and Managed Care," Journal of the American Medical Association, Vol. 278 No. 2, pp Sheppard, L Analysis of the Physiotherapy Industry: Challenges for Marketing. Health Marketing Quarterly, Vol. 14(2),

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