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The Healthcare Sector

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The healthcare sector provides a service just like all the other service industries and as such has a market and needs to grow that market. The nature of the healthcare service industry tended for a long time to depend on patients seeking the service and the need for marketing was overlooked. However, managers in this vital service industry realized that for people to seek these services, they needed to have information about their existence and thus started the revolution in the way healthcare providers marketed their services. This need was compounded by the fact that hospitals tended to favour metropolitan locations and as such most hospitals would find themselves concentrated in one location.

The similarities of their services and sometimes the differences provided for a platform for cooperation in multi-hospital marketing and the hospitals that used this approach mutually benefited, this research paper aims to shed more light on the bottlenecks that multi-hospital marketing approach faced in its formative years before it gained widespread acceptance. The paper addresses the appropriateness of marketing in the hospital services context, the effectiveness of such marketing in a multi-hospital systems and finally the accountability of multi-hospital systems marketing.

There were in the past questions about how appropriate marketing in the hospitals and healthcare sector was. Today, marketing in multi-hospital systems is not only appropriate but vital. According to McDermott, Franzak, & Little, 1993, “Healthcare executives may benefit from knowing how other hospitals are designing marketing and managed care functions. From a managerial perspective, these findings are useful in demonstrating organizational response to managed care and, specifically, in identifying the extent to which marketing and managed care functions are isolated or carried out in tandem.” The healthcare industry is competitive like other service industries and marketing is vital (Abdul-Gader & Bhuian1997).

In their 1992 study Zaremba, Tucker, and Ogilvie concluded that less innovative systems tended to have narrower scope of marketing activities than more innovative systems. These researchers found that, “systems that were innovators, as compared to non-innovators, tended to use marketing information and formalized communications systems-key components of an integrated marketing information dimension of a marketing orientation.”

When hospitals plan and market properly, they become more effective in their service delivery. Naidu & Narayana 1991 found that, “Often a market analysis is a key component of the strategic plan. A detailed market analysis assists in identifying utilization rates, projecting future volume, assessing competitive position, developing an actual marketing plan, and is a vital component when researching potential new services or locations. While considerable time, thought, and effort goes into the analysis of various data components, one key component of the market analysis is often overlooked — defining the actual market.”

It is important to take into consideration the fact that hospital service seekers are not a community and cannot identify themselves as such and define themselves as a market (Thompson & Hurley 1993). In their 1993 study, Thompson & Hurley said that, “The hospital marketing function has been widely adopted as a way to learn about markets, attract sufficient resources, develop appropriate services, and communicate the availability of such goods to those who may be able to purchase such services. The structure, tasks, and effectiveness of the marketing function have been the subject of increased inquiry by researchers and practitioners alike. A specific understanding of hospital marketing in a growing managed care environment and the relationship between marketing and managed care processes in hospitals is a growing concern.”

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