City of Paris

The economy and drive toward cost reduction continue to fuel the debate over in-house vs. outside agencies My own experience is that most healthcare and life science companies have some level of in-house capabilities. These range from a relatively small staff dedicated to specific functions, such as trade shows, media buying or collateral development, to a full-service agency that, in at least one case, built sufficient capabilities to compete for business with outside agencies. While there is little if any published metrics to support the relative merit of the different models (in-house, outside or combination), the companies I’ve come across with some level of in-house capabilities have not been uniformly successful—as measured by client satisfaction and the creative product. Usually these two factors are related, as the complaint I hear most often from marketing people about their in-house agencies is the latter’s inability to deliver viable creative solutions. Indeed, the more insightful heads of in-house agencies often realize this shortfall and proactively look for ways to supplement in-house talent and thinking.

For my colleagues who would like to elevate the output of their in-house agencies, I’d like to offer my observations, but with one caveat. I define in-house agencies as dedicated resources (i.e., a designated department) led by communication professionals, not errant product managers who are frustrated copywriters or art directors.

• Take a look at your processes. Are you able to develop effective creative briefs that provide proper direction to the team? Are you able to facilitate productive brainstorming sessions, drive an objective evaluation of creative solutions and, finally, sell your creatives to stakeholders, from risk-averse regulatory departments to senior management who sometimes bring strong personal biases?
• Refresh and expand your talent pool. Outside agencies have access to multiple creative teams that can be tapped for new perspectives and ideas. In-house agencies can do the same, by building a freelance pool or engaging an outside agency to take on the heavy lifting, such as during the formative phases of brand development. By the way, if you are serious about building an in-house agency, then you should consider hiring experienced agency professionals. Because of the relatively narrow scope of products and assignments, an in-house agency is generally not a good training ground.
• Encourage collaboration. If you do bring in outside help, don’t pit your in-house team against your outside agency, and never ask one team to “correct” or complete the work of the other. Creative ideas are as much about execution as concept development, and in fact many ideas are fleshed out, refined and enhanced during the execution phase. Hint: Don’t ask your outside agency to turn over concepts for internal execution. At best, you’ll lose their enthusiasm and good will. More likely, they will not be around the next time you need help.

To find out what your colleagues think about in-house agencies, cast a vote on our poll.

“Big Pharma Finally Taking Big Steps to Reach Patients with Digital Media,” announced Advertising Age last week. The article, like many other industry observers and new media experts, attributes the hesitancy on healthcare companies’ part to adopt new media to fear of regulatory backlash. I imagine this backlash can come just as readily from corporate regulatory departments as from the outside, but I believe the more important takeaway is the authors’ suggestion that new media can be an effective way for the industry to rebuild trust with consumers. Johnson & Johnson’s site (www.jnjbtw.com) was mentioned as a prime example.

In my mind, the opportunity to start a new dialogue and rehabilitate a company’s—and an industry’s—image is so important, so significant, that it’s worth the effort and resources to work through the regulatory challenges. But perhaps the greater challenge is not from regulatory pushback, but in realigning our own mindset with the media habits and expectations of today’s audiences, as well as with the power of new media. For example, the healthcare (not just big pharma) industry is so used to talking to or talking at our target audiences that it is easy to forget that the true advantage of interactive media is that they allow us to listen as well as talk, converse instead of lecture, and that the audiences want to interact with each other, express their opinions (and perhaps vent their dissatisfaction) and ask questions. To the article’s list of dos and don’ts, I’d like to add, “DO leverage the interactivity.” And a side effect of listening and facilitating dialogues may be that we will talk less, and perhaps reduce our risk of making regulatory blunders!

To spark ideas on how to use new media to build or enhance your brand’s image, the concept of the generous brand that focuses on adding value to consumers’ lives couldn’t be more timely. As healthcare marketers, we are good at thinking about messages and how to get the audience to “get it.” Now more than ever, we need to put ourselves in our audience’s shoes and think about enhancing their experiences (with us), and perhaps in the process gain their confidence in allowing us to improve their lives with our clever products and services.

For a good overview of Web 2.0 for healthcare marketers, see Donna Vetter’s slide show. For a little fun, don’t miss this extraordinary video, which was created by GSK to educate the public about restless leg syndrome but actually outlived the campaign. We should all aspire to creativity like this!

A recent McKinsey global survey of chief marketing officers and senior executives on how companies budget, plan and measure marketing campaigns concluded that “consumer-focused companies are stronger marketers” on the basis of their more disciplined use of metrics and benchmarks in allocating marketing resources and measuring performance.

Now, most healthcare marketers operate in the business-to-business (B2B) space and we are painfully aware that business-to-consumer (B2C) companies typically have far more marketing resources, but the McKinsey results point to something worth reflecting upon. If our resources are more limited, would it not make sense for us to pay even more attention to how we allocate budgets and track results? The results of the survey suggest some best practices that healthcare marketers should consider.

A clear and global view of marketing budgeting and spending. The survey showed that consumer companies are more likely to have standardized processes for allocating and communicating marketing spending across business units, channels and geographies. Likewise, they are more likely to conduct systematic, regular and quantitative reviews of marketing mix and effectiveness, and to use past effectiveness as a gauge for future allocations.

Planning with an understanding of barriers to purchase. Our B2C counterparts “take a much more comprehensive approach to understanding barriers to purchase, with 46 percent of B2C companies using a mix of quantitative and qualitative assessments . . . ”

Targeted vs. across-the-board budget cuts. More than half of the companies surveyed plan to decrease marketing spending in the next 12 months, and among those that are planning to cut budget, 40 percent are making across-the-board cuts. Just as interesting, companies where marketing spending is clearly allocated and understood across the company are likely to make cuts that are more targeted.

A time for budget increase? One third of the companies surveyed plan to increase marketing spending over the next 12 months. High-priority campaigns (52 percent) and digital media (38 percent) are the top two areas where spending will be increased.

The authors concluded that B2B companies “have an opportunity to improve their performance just by catching up to what their consumer-oriented peers are already doing to manage their marketing programs” and that companies that have a good grasp of their marketing spending are more likely to make targeted cuts and/or increase spending on high-priority campaigns. I agree. Why not make better use of the budget, build performance measures and then use the demonstrated ROI to expand future efforts?

The 15,000-word healthcare reform position paper released on April 6 clarified the vision of China’s leadership toward government-supported universal healthcare, to be supported by a revamped and reinforced healthcare delivery system, new policies around pharmaceuticals and an overall increase in the government’s responsibility in healthcare. Additional details that followed, responses from citizens, and interviews with policy makers and observers have flooded the Chinese media. For Americans interested in China’s healthcare reform from a personal or business perspective, the interview China Central Television (CCTV) conducted with former minister of health Gao Qiang, who left the Ministry of Health in February, provides a good overview and insight into the underlying thought process and challenges ahead. Below is an excerpt from the transcript.

CCTV: The healthcare reform policy has been described as an in-depth reform of the healthcare system. What does “in-depth” mean in this context?

Gao: We are talking about going deep with healthcare reform at three levels. The first is that healthcare reform is not new; in fact we have been working toward reform for several years. Second, while past healthcare reform efforts have resulted in some successes, those achievements were inadequate. In fact, the solution of old problems often led to the uncovering of new ones. So we need to think about reform as a long-term, gradual and continuing process. Third, building on past experience and extensive research over the past few years, we have been able to elevate the level of clarity in the way we think about our goals, directions, responsibilities and policies; and we need to think about all of this from the perspective of scientific development and the healthcare needs of our citizens.

CCTV: You speak with confidence about the new plan for healthcare reform. What is truly new about this plan? Where is its biggest value?

Gao: Compared with past efforts, the current plan is much more comprehensive. It extends beyond health services to public health. It covers health insurance, pharmaceuticals and medical supplies. It goes beyond reforming public hospitals to healthcare in the community and rural areas. The new plan addresses funding for expanding health-related services. We are working with a more defined goal, to build a basic healthcare system that covers all citizens, urban and rural, so that all citizens can have fair and equal access to basic health services. The government’s involvement will go beyond funding to stronger oversight. The basic system reforms will touch on resource allocation, including human resource allocation. And human resource development will very much be a part of the effort to rebuild our system.

CCTV: Do you think these new initiatives represent drastic changes or evolution and progress?

Gao: I think the biggest change is in the development of the system itself and transitioning toward one that focuses on the society and the health and benefits of the people.

CCTV: Why do you think they will succeed where we’ve failed in the past?

Gao: Our past efforts did not adequately anticipate some of the system changes that led to the dilution of the public interest. The whole purpose of the healthcare system is to protect the people’s health and serve their healthcare needs. You cannot think about the health system without putting the benefit of the citizen first.

But this focus on public benefit does not come naturally. First, the government needs to make clear that the healthcare system is a public service system. Second, the government has to take financial responsibility for the construction and staffing of such a system. Some say that the government cannot take on this financial burden. I think they are mistaken. I believe the government’s role is to help the system along until it can sustain itself through health insurance as health insurance gets built up. The government also has a role in helping those who are less able to pay. In this way, the government can also effectively help curb unreasonable profit motives and protect the public’s interest. Third, we will increase training on ethics and professionalism among healthcare workers—increasing their sense of responsibility, honor and sense of mission, establishing a public service model within a secure environment. Fourth, we need stringent oversight, encouraging and rewarding organizations that embrace these values and penalizing those in violation. In my mind, all four conditions must be satisfied to be effective. The past practice of some local governments that cut funding as a way of penalizing non-compliance, leaving the local health system to survive on their own, makes it difficult to consider public interest when the focus shifted toward survival.

CCTV: How far do you think we are away from achieving this focus on public interest?

Gao: We are still a fair distance away. . . . Our healthcare reform plan has two sets of goals. This is a long-term plan spanning 2009 through 2020, with the goal of building a standardized, scientific and complete healthcare system. We also have a three-year plan that takes us to 2011.

CCTV: You don’t think we can achieve that sense of public service in three years?

Gao: Think of the next three years as a trial period, especially for public hospitals. Public hospitals are far more complex than rural and community healthcare. Not only do we need to refocus them on public service, we need to make them less exclusive [favoring the socioeconomically privileged]. Right now, public hospitals charge more for their services, yet people prefer them because of the level of care they provide. If we lower fees for public hospitals, but are not able to simultaneously elevate the care standard at the community level, then we will not be able to meet demand. This is a clear dilemma. A related issue is to develop a fair and equitable system for classifying [and compensating] healthcare workers [and in general elevating their status].

Healthcare workers are the driving force behind healthcare reform. They have to implement the new policies and bring the vision to fruition. We have to protect the rights of the healthcare workers without taking away their mandate to serve the public. In the past, some organizations adjusted compensation based on hospital revenue, but this encouraged inappropriate use. We have to evolve a pay-for-performance system with the proper performance metrics.

CCTV: We all know that current compensation for doctors is insufficient and they make up for the difference through other means. It seems that one requirement is to make sure their base compensation, within the new system, is the same as their total compensation in the old. So the new, totally transparent compensation equals the old.

Gao: We have to look at this in two ways. First, we need to protect a lawful and reasonable income level for the doctor. Doctors should not suffer lower income as a result of healthcare reform. Second, where compensation is excessive due to abuses, we cannot offer them protection from income reduction. We need better strategies based on more detailed analysis to come to a fair resolution.

CCTV: What other significant challenges do you see ahead?

Gao: Healthcare reform touches 1.3 billion people, the interrelationship between the government and the healthcare system, as well as the relationship between the healthcare workers and the public. At the heart of this is the conflict of interest between the healthcare workers and the public. Tying the doctor’s compensation with what the public pays for healthcare is a formula for failure. Moving forward, we need to consider metrics such as quantity of care, quality of care, patient satisfaction and competency. This will be a fundamental shift from the current preoccupation with how much the doctor or hospital can charge the patient.

CCTV: Today, the public has high expectations of what healthcare reform can deliver. And many people look to it to solve a number of different problems. Based on your past seven years at the Ministry of Health, what touches you the most?

Gao: I feel some level of regret. I was preoccupied with the problems around healthcare for a long time. We solved some of them, but we did not achieve the level of care for the public that I would have liked. People from all socioeconomic levels have experienced some level of difficulty with the healthcare system. I truly hope that this time around, we will be successful. I hope that the government will implement the policies in their entirety. And I hope that the investment made by the government will be tightly managed to make sure they benefit the public, to solve the public’s health problems and relieve their burden. Managing healthcare is a difficult task, because it touches everyone. By necessity, healthcare reform has to draw upon our collective intellect and reflect the will of the public—and these needs have driven our process to date.

It will be interesting to watch China’s healthcare reform unfold, even as the United States launches yet another new chapter on this. While we are two vastly different societies, and there are few commonalities between our health systems, we do share one central issue—the juxtaposition of the multiple economic interests. Please post a comment and let’s start a discussion.