You may want to think twice about cutting your ad spend during times of economic uncertainty. Here’s why marketing should be a part of every health system’s resilience plan.
According to the National Bureau of Economic Research (NBER), a recession is forthcoming when inflation rises and GDP declines across all industries over several months. This pattern showed signs of unfolding last year, and while US GDP grew by a 2.9% annual rate in the fourth quarter, the growth was slower than Q3. The International Monetary Fund (IMF) also recently reported that a global recession could possibly be avoided this year, projecting a 2.9% global economic growth in 2023. However, the projection is still down from 3.4% last year. As such, economists and financial experts continue to warn industries about making preparations for potential ramifications.
Current economic factors hint at a looming recession bringing new challenges that didn’t exist 15 years ago. Unlike the 2008 recession, unemployment has dropped to a low rate of 3.6%, housing prices haven’t declined, and inflation has become a global phenomenon. According to Bloomberg, consumers have already prepared their finances for what’s to come. Meanwhile, the healthcare industry has also changed considerably since the 2008 recession: with digital technologies making healthcare more accessible for consumers, patients are becoming more proactive than ever.
Nonetheless, past downturns have taught us one thing about marketing in times of crisis: businesses are most likely to lay off employees and cut marketing spend when budgets tighten. As a hospital marketer, you need to determine what’s worth salvaging and cutting from your budget. In this article, we’ll help you determine your best course of action to maintain stability in this period of economic uncertainty.
How a Potential Recession in 2023 Could Impact Health Systems
Every industry is impacted differently during a recession. As an essential entity, healthcare is naturally more resilient in times of economic downturn—but it is not immune to financial loss. Steady consumer demand can help health systems buy time to prepare for the worst, but current inflationary circumstances are already adding pressure to the bottom line.
According to research from McKinsey, significant industry changes since the 2008 recession will determine how the impending economic stress will affect health systems. Keep an eye on these three trends:
- Increased Medicaid Enrollment: As of 2018, 34 states expanded Medicaid eligibility. However, almost half of these states have rainy day funds that may not be enough to cover extra costs. More budget cuts may be needed to offset financial pressure.
- More High-Deductible Health Plans (HDHPs): In 2008, only one out of 10 people with employer healthcare coverage had enrolled in an HDHP. As of 2018, that number increased to one in three people. Higher costs awaiting more patients down the line will lead to increases in medical debt and strain for hospitals with already tight budgets.
- Considerable Health Coverage Shifts: McKinsey estimates that up to 10 million people will move out of commercial health insurance plans and into Medicaid coverage. They may also become uninsured, negatively impacting revenue streams.
Data-driven insight is key to better understanding these shifts in consumer behavior and market dynamics. That said, how can hospital marketers prepare for potential pitfalls and protect revenue?
Establishing Certainty in Uncertain Times
It’s tempting to take current recession outlooks as a sign to cut ad spending until the market recovers. However, analysis from past economic downturns has shown that if you maintain or even increase your advertising budget during a recession, your hospital might remain resilient and come out stronger.
Consider how Toyota outcompeted Volkswagen as the top imported car manufacturer in the US by maintaining its ad spending during the 1973-75 recession. Pizza Hut and Taco Bell followed this same tactic in 1990 and earned a 61% and 40% increase in sales, respectively. Additionally, a 2022 report by Analytics Partners found that 60% of brands that nurtured their marketing spending during the 2008 recession improved their ROI. On the other hand, those that didn’t risked a 15% loss of revenue.
Maintaining your marketing budget can position your health system as a beacon of stability in difficult times and help you reach prospective patients who are actively seeking care. However, if you have no other alternative but to cut back on spending, make sure where you are sacrificing money won’t come back to hurt your financial results later. Experts recommend these three tips to manage money wisely during times of economic strain.
1. Preserve Strong Revenue Channels
Reallocate money from awareness campaigns into low-funnel initiatives that drive demonstrable near-term revenue. Leaning on your healthiest service lines and strengthening relationships with loyal patients helps your health system maintain a steady profit as you adjust your marketing goals to accommodate shifting economic factors. Think about setting your health system up for success, not just survival.
2. Prioritize Valuable Messaging
When consumer budgets tighten, cost transparency and honest messaging become even more valuable to patients who need care but may have financial reservations about seeing a doctor. Encourage consumers to prioritize their health by offering free educational content about chronic conditions and preventative health practices. It’s also important to highlight what your hospital is doing to make care more attainable in tough times.
Remaining sensitive to consumer concerns goes a long way in building patient trust and appreciation. Take General Mills, for example. During the 2008 recession, consumers dined less frequently in restaurants to save money, so the brand promoted the value of at-home meals. As a result, the company sold more products across all categories and grew faster than its competitors.
3. Conduct Data-Driven Decisions
Audit your highest-performing campaigns to avoid the short- and long-term ramifications of slashing viable revenue channels. The slightest misstep could mean the difference between success and failure. Incorporate KPI tracking to gain concrete, consistent insight into high-revenue marketing campaigns. Metrics such as qualified leads, conversion rates, organic traffic, and bounce rates are all strong indicators of how well an advertising initiative is faring.
Hospital marketers can also lean on Healthgrades for data-driven solutions that provide rewarding results—without stretching your budget.
Healthgrades Helps Drive Conversions—Even Amid Recessionary Concerns
With the number of commercially insured patients already shrinking, a recession is expected to intensify competition for these consumers. How can you ensure that your health system stands out before, during, and after a period of economic stress?
While every doctor in the United States has a profile on healthgrades.com, our advertising solutions for health systems make your physicians even more discoverable and accessible to new patients:
- Healthgrades offers premium placement for your healthcare providers. Prominent branding and calls to action on healthgrades.com physician search results pages and doctor profiles ensure that more consumers see your health system first.
- Our competitive intercept feature lists your doctors’ profiles as alternative options directly on your competitor profiles, providing you with another avenue for new patient acquisition.
- Campaigns on healthgrades.com are designed to grow your hospital’s specific focus areas and drive more traffic toward high-performing service lines, such as cardiology, oncology, or general surgery.
- Promoting your brand’s online appointment scheduling and telehealth offerings removes barriers for patients who are ready to appoint.
Since the Healthgrades audience is actively engaged in the search for care, our solutions can both complement and outperform Google SEM. In a year-long health system case study that included 26,300 responses, the combination of Healthgrades and SEM reached distinct audiences, with only 2% overlap, and the Healthgrades program drove a downstream encounter rate of 68.2%—compare this to the 46.5% of households with a downstream encounter through Google SEM. Additionally, the cost per conversion with Healthgrades is 2.7x lower than SEM strategies, granting your hospital better results at a fraction of the cost.1 Through cross-promotion, syndication to other health properties, and integrative online appointment scheduling tools, Healthgrades makes it easy for target patients to interact with your health system when they need care the most—during and beyond a recessionary period.
Fortify Your Marketing Strategy with Healthgrades
The time to prepare for a potential recession is now—ensure conversions will continue by partnering with Healthgrades to promote your health system with efficient spending and effective results. Patients are ready to make the next move with their health and connect with the physicians who will get them there. Healthgrades can make sure your brand leaves them with a lasting impression. Get in touch with us today to maximize the impact of your budget and grow your brand through any economic circumstance.
