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Archive for the ‘Healthcare Marketing’ Category

The Google Model of Healthcare Quality and Advertising

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The Google model — trading advertising for quality:


The article notes that Google rarely advertises its new functionality, but, having built a better mouse trap, users seek and adopt it — because, by reputation and past exposure, it consistently delivers on three fronts … simplicity, utility, and price … the constituent attributes of its character and persona.  With each new addition, a web of use and reliance follows, creating a barrier to exit for the consumer and more strongly establishing customer loyalty.

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Written by rcrawford

November 25, 2008 at 8:46 pm

Healthcare Quality Thoughts from Recent Work

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(Painting of Magnolias in a Bowl referenced later)

It is during the summer that I take a break from teaching and focus on consulting projects that keep me current in the field of management and prevent me from feeling sequestered from the competitive healthcare market. This posting is devoted to some common healthcare management themes identified during recent consulting projects and conference presentations.

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Cavetching On-Line — The WWW.BullHorn for Patient Complaints

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Studies indicate that it takes three times as many satisfied customers to overcome the damage to reputation from a single dissatisfied customer. Why? The satisfied customer will tell 21 of their closest friends about the negative experience, while the satisfied customer will tell just seven.

I’ve mentioned this statistic in previous postings, and I have gone so far as to note that it is not the average of three-to-one that is so compelling, but the disproportionate influence of the outlier. A single highly dissatisfied customer, possessing an abundance of motivation and friends, or one that is particularly well regarded in the community, can represent a business’s worst nightmare.

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Computer Simulation Lessons Learned

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In previous postings, the names Kahneman and Smith have been referenced – Daniel and Vernon, respectively. Jointly, they won the Nobel Prize in economics (2002); although, their work was conducted separately. http://nobelprize.org/nobel_prizes/economics/laureates/2002/index.html .

In the case of Kanneman, the award was “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty,” and for Smith “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.”

Both focused on investor psychology and the use of simulations to study investor and market behavior, response to new information, reactions to uncertainty, and the speed with which markets achieve equilibrium.

I mention this because the use of simulations may strike some as fundamentally different than fully competitive markets, but the research was validated as accurately mirroring typical market responses under an assortment of scenarios.

Why mention it here? Well, I use a computer simulation with my marketing class, and, yesterday, the four competing teams gave their end-of-semester “lessons learned” presentations. As usual, the results were interesting, and I thought you might be interested in some of the more significant realizations.

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Are CFOs Taking Over Healthcare?

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CNBC’s Mike Huckman is reporting on an Ernst & Young survey of senior executives in the pharmaceutical industry, in which three quarters of respondents indicate an increasing role for the chief financial officers. As the report indicates, pipeline difficulties and increasing unwillingness by insurance to accommodate the rising cost of pharmaceuticals prompts the industry to focus on cost reduction. What the report does not indicate, but what my students and I identified back in 1999 as a likely trend, is the net effect of this strategic shift within the industry.

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Newsletter – February 17, 2008

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This USA Today article questions whether cultural disparities between a largely Caucasian physician community and a more diverse patient population accounts for health-outcome disparities. This strikes me as interesting on a number of fronts. First, it has been a recent focus of my marketing class, as we’ve covered the materials related to cultural differences and the necessity of providers to accommodate an increasingly diverse patient population. Second, my quality improvement class has indicated a growing belief that the physician practice community is similarly reflecting the melting pot of America.


For hospital administrators, this indicates the need to take into account not only language translation as an operational necessity (to avoid miscommunication when family members are used as interpreters), but the increasing need for multi-lingual signage in larger facilities, an understanding of cultural uniqueness (such as gender-appropriate physicians for Islamic patients), and accomodation of dietary practices (when not in conflict with best-practice medicine).


Perhaps, more interesting still, is the position of a former student, Frank Shelp, MD, who argues that the superior outcomes enjoyed in Europe’s socialize-medicine is largely attributable to a more homogeneous population. Under this logic, the question is not “What are we doing wrong (in the US) and what are they doing right?” Instead, there is no question, because healthcare does not control the cause of the disparity (i.e., the demographic mix in the US).


This article from Seattle outlines the settlement of a government lawsuit against Caremark for $1.7 million (out of a $41 million multi-state agreement), in which the pharmacy benefits manager was accused of urging practitioners to switch patient medications. The switch, as recommended, argued that doing so would save the patient unnecessary costs. In order to do so, however, additional diagnostic testing was often necessary, and the new medications may not have provided the promised savings. Assuming, for the sake of argument, that the company was acting with the best of intentions, this may represent an unintended consequence of change – just as we initially witness added costs associated with adoption of electronic medical records (prior to realizing anticipated savings). For healthcare executives, this further urges the adoption of the rule of twos and threes – namely, that new initiatives take twice the seed capital and three times as long as originally projected. This rule typically applies to new entrepreneurial startups, but delays and cost inflation apply to new initiatives by established firms, as well.


The Minneapolis-St. Paul Star Tribune is reporting on the uncertainties and consternation for senior management at United Healthcare, following announcement by the New York attorney general of a probe into the company’s practices. Under the heading of “full disclosure,” I should mention that I own stock in United Healthcare. My purpose in mentioning this article, however, is not to, either, defend or oppose the company’s practices. Instead, it is to note that this second-day, follow-on article is consistent with an earlier blog entry describing the expandable news cycle — with initial reports and a long sequence of sustaining articles. For healthcare executives, this is an important recognition. It urges strong establishment of corporate leadership focused on customer satisfaction, quality, and public relations/marketing. At a time when the industry is questioning whether the Chief Marketing Officer should occupy a C-Suite position, there is nothing like defending bad news in the press to settle the issue. The time to bring the Chief Marketing Officer in to the boardroom is not after the fact.


It has been a week since my last newsletter or blog contribution, which is longer than at any time in the past. This is a particularly class-focused semester, teaching a seminar at the start of the semester and marketing and quality improvement classes during the semester. Consequently, my weeks are filled with teaching and grading assignments, and this newsletter will be shorter than most.


Allow me, therefore, to do three things at the close of this newsletter. First, I would like to reiterate the purpose of the newsletters, which is to use local newspaper articles from around the country to identify health-care market trends before they become broadly recognized and disseminated by consultants in their white papers. Once that happens, the professional healthcare executive works on a treadmill, constantly seeking to catch up with what the competition knows.


In addition to daily reading of the New York Times, Wall Street Journal, Washington Post, the Chicago Tribune, and the Los Angeles Times (using the Factiva service) and weekly reading of Time, Newsweek, US News, Business Week, and Forbes (primarily the healthcare and economic content) I rely heavily on the daily newsletters provided by Healthleaders.com. I also have the table of contents for the New England Journal of Medicine, Journal of the American Medical Association sent by email and scan the content of Health Affairs magazine (each of these last items is subscription based).


This may seem like a great deal of reading for a busy professional, but my focus is on topics that influence the future direction of the industry and those providing a different perspective and density of content (as opposed to filler, fluff, and flatulence). Most of what is published fails this test, and I move through the materials quickly. Life is too short to live it as other than a news snob, so the Time Magazine article on whether the Sports Illustrated Swimsuit edition is porn gets ignored (no matter how hard it may be to pass up).


The second item that I would like to reference is the availability of thought-leader materials that are increasingly offered free of charge on the web. MIT is offering course content for its classes free on the web, Harvard’s faculty has just voted to require opting out of providing journal articles authored by faculty, and, within the realm of healthcare management, UNC is providing the syllabi for courses offered through the School of Public Health – which reference the texts employed. The MIT and UNC offerings provide working executives who have been out of business school for some time an opportunity to stay abreast with best practices without returning to the university for added training. Of course, seminars, extension courses, and other continuing education offerings are important, because so much of what is published and provided at the local bookstore represents a waste of perfectly good trees.


The final recommendation for professionals seeking actionable content is Knowledge@Wharton. Their book reviews, alone, are excellent, and they provide executives with an early description of recent publications that are likely to influence professional practices at the executive level. Here is an example of their coverage of marketing (traditional and on-line) or a report on changing international capital flows from the Davos conference.


And, lastly, my favorite mind-candy web site is www.ted.com. What comes in second? How about http://www.kurzweilai.net/ ?


Written by rcrawford

February 17, 2008 at 9:03 pm


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Robert T. Crawford, MBA

Adjunct Lecturer

University of North Carolina at Chapel Hill

Originally Presented at a Joint Conference of the

The Portuguese Society of Internal Medicine


The Portuguese Association of Hospital Managers

Tivoli Hotel, Lisbon, Portugal

May 19, 2006

Submitted January 28, 2007

Correspondence concerning this manuscript:

Robert T. Crawford, MBA

University of North Carolina at Chapel Hill

School of Public Health, Health Policy and Administration

CB# 7411, 1106-D McGavran-Greenberg Hall

Chapel Hill, NC 27599-7411

[Note: Originally published in ARS Medicinae. I am indebted to Dr. Filipe Basto, MD, Executive Director, Medicine, Arts, and Ideas and Internal Medicine Attending at Sao Joa Hospital, Porto, Portugal, with special affection to the two women in his life — Christina and Anna.]

The question seemed simple enough when it was first proposed as a conference presentation topic — “Is Marketing the Silver Bullet of Health Care.” Even the answers were abundantly obvious. In support, marketing accompanies free markets, with all the attendant benefits of economic competition — namely, increased quality and reduced costs. In opposition, the example of the United States, where quality is suspect and costs continue to outpace wages, should suffice to persuade many. In fact, so simple was the question and so obvious the responses that I began to suspect the conference attendees were in for an uneventful evening.


What followed was a thought exercise that led to a different and somewhat unexpected conclusion.




Fort Sill is the home of the U.S. Field Artillery, and Snow Hall is the training headquarters. Along one prominent hall is a famous and incongruous quote by World War II-era General George Patton, “I do not have to tell you who won the war. You know the Field Artillery did.” It is famous among artillery men and women as a supremely nice complement from an armor (tank) commander. Mark Twain, after all, wrote that he could live for a month on a good complement.


The quote is incongruous, however, because it flies in the face of conventional wisdom. No less than Tom Hanks, Tom Brokaw, and Steven Spielberg have produced television shows, movies, and best-selling books touting the bravery, sacrifice, and important contributions of the “Greatest Generation” — the young adults that fought World War II. This, we are told, is the generation that saved the world for democracy and freedom, but General Patton argues that the war was won by a much smaller and less heroic group — the field artillery.[1]


It appears that General Patton was right. Statistical and technological advances occurring between World War I and World War II significantly increased artillery accuracy, responsiveness, and lethality, and the field artillery was responsible for killing or wounding more of the enemy than the infantry, the armor, the Air Force, the Navy, and the Marines… combined.




If it was the generation prior to the “Greatest” that produced the advanced weaponry and munitions, it was, also, the prior generation that defined much of the current business and health-care environment. The Marshall plan, with the rebuilding of Germany, much of Europe, and Japan, set the stage for more robust international trade and the departure of isolationism as a viable posture for the US. More importantly, the “GI Bill” initially served to productively occupy returning soldiers as the American economy retooled from its wartime focus to a domestic marketplace. Rosie the Riveter left the factory floor and returned to the home, while former soldiers sought work or, under the GI bill, headed off to the universities.


The expansion of university graduates under the GI Bill helped create a virtuous cycle for the US economy, where, initially, we witnessed research and development advances along a broad front of household goods — everything from cleaning detergents to vacuum cleaners, and, of course, the advertising necessary to sell each new product. Marketing created a culture of consumerism. Today, the front-line buyer of goods and services accounts for more than 70% of the overall economy in the US.


R&D related to health care was not limited to over-the-counter medications. The advancement in American education made possible more intense research and development by the pharmaceutical, medical supplies, and the medical device manufacturing industries. Research begun during the post-war era ultimately led to many of the advances witnessed more recently in the areas of cardiac care, cancer, physical therapy and prosthetics, etc.


Research and development, of course, is expensive, and the industry naturally expected a return on their investment. Prior to the arrival of managed-care, the physician served as the medical gatekeeper, and industry employed an increasingly large and sophisticated sales force to woo and persuade prescribing practitioners. But this, too, was a virtuous cycle… initially. As industry advanced and the tools of medical care improved, the credibility of health care and its practitioners increased. It may be difficult to imagine today, but there was a time in health care when patients confronting a mortal diagnosis often elected to receive no medical care because the treatment was viewed as worse than the disease.[2]


As Wikipedia correctly notes, a medium-size pharmaceutical firm today typically has a sales force that numbers in the thousands, while large pharmaceutical companies employ sales representatives in the tens of thousands. Beyond providing product-specific and product-comparison data, sales representatives commonly offer promotional samples in an effort to influence physician prescribing patterns. In marketing terms, this is known as a “push” tactic, while direct-to-consumer advertising represents a “pull” stratagem. Industry expenditures from direct-to-consumer advertising rose from $700 million in 1997 to over $4 billion in 2004, according to the same source.




Just as significant expenditures on research and development represent a venture for which a return on investment is expected, expenditures on advertising and marketing (to include the sales force) similarly serves as a predicate to an expected return on investment. In this sense, advertising and marketing expenses are addictive. In order to sustain sales volumes, no firm in the industry can readily afford to cut back on marketing.


This recognition is all the more compelling when the role of stockholders is taken into account. Each share of stock represents fractional ownership in a publicly traded company, and the stockholder’s financial investment in their equity share includes an anticipated return on that investment. Indeed, those who purchase stock in R&D-intensive firms expect a higher rate of return sufficient to compensate for the added uncertainty and risk associated with new product development. In health care, that added risk is significantly greater due to the uncertainty of producing new medical advances, the oversight role of the Food and Drug Administration prior to product launch and, thereafter, the residual threat of tort liability.


Perhaps a few numbers will help better clarify the severity of this risk for equity owners of pharmaceutical firms producing novel therapeutics. The industry estimates that just 1 in 5000 newly identified chemical compounds and just 1 in 500 undergoing initial laboratory research leads to a viable product introduced into the marketplace. While patent protection lasts 17 years, more than 12 years is typically spent in research and development, clinical trials, and FDA approval. On average, this leaves less than five years of patent protection, during which the firm must cover its expenses and generate an acceptable return on investment.


Between $600 million and $800 million is typically spent on product development for each new medication that comes to market. The industry spent $37 billion in 2004 and $39.4 billion in 2005 on research and development, alone. Consequently, as of May 15, 2006, the average price-to-earnings multiple for pharmaceutical firms producing novel therapeutics among the Standard & Poor’s 500 stood at 18.33. More telling, still, the price-to-earnings multiple for firms reporting profits stood at 23.8. The historic average for the S&P is marginally above 16, and, to the extent that the industry figure exceeds that number, we are left with a loose estimate for the risk premium. As of May 15, that risk premium stood at somewhere between 5% and 7%.[3]


Stockholders, of course, expect equity price appreciation that will exceed the rate of growth for the larger market, and, as the owners of the company, they exert significant pressure on the firm’s leadership. This helps to explain much of the inflationary pressure on health-care costs.


In the United States, health care costs have risen at a rate that is roughly twice that of wage inflation (the capacity of our customers to purchase our services) since 1980. In more recent years, healthcare inflation has risen at rates as high as four times that of wage inflation. Where a dollar earned in wages in 1980 would render $2.37 in 2002, a dollar spent on health care in 1980 cost $5.79 in 2002. Trending analysis indicates that it would take 61 years for wages to catch up with healthcare inflation if health-care costs were held steady and wage inflation continued at the same pace.


Market economists, of course, would argue that this is unsustainable, despite this 25-year history. The price elasticity of health care, however, is such that patients are willing to bear nearly any price to receive quality care and improve the quality and quantity of life. Consequently, healthcare is the leading cause of bankruptcy in the United States, prompting 2 million middle-class Americans to declare bankruptcy each year. For all of this expense, we might reasonably expect to see the benefits of the free market, since healthcare in the United States largely operates in a free market environment.[4] Those benefits include increased product quality and reduced comparative expense. Compared to socialized medicine countries, where the free market is not as significant, neither expected benefit appears present in the US system. According to the World Health Organization, healthcare costs in the United States are more than double all but three socialized-medicine countries in Europe, while life expectancy in the United States is below all but three.




In one respect, the greatest generation was, indeed, superior to all others. It appears that my country’s supreme generation of warriors was also our utmost generation of lovers. Following World War II, with an abundance of time-saving devices[5], the greatest generation had more time on their hands, a booming economy, international stability, and the evident luxury of a frisky disposition. If idle hands are the devil’s workshop, we know what the greatest generation was doing with those idle hands, and we have the baby boomer generation prove it. The baby boomers, however, are no longer babies. My generation will begin retiring in 2010-2012, and we will nearly double the number of senior citizens from 42 million to 80 million by the year 2030.



The situation in Portugal is similar. World Health Organization data indicates a declining birth rate, increasing longevity, and an expected increase of retirees over the next several decades. This changing demographic is important, given the rising cost of health care, because 70%-to-80% of health care costs are typically borne in the last five years of life. While not as significant as the 17% in the United States, the percent of GDP (Gross Domestic Product) consumed by health-care in Portugal has risen from, roughly, 8% in 1995 to over 9 percent in 2002 — projected to exceed 10% by the year 2010. Per capita expenditures on health care in Portugal are rising as well (from just over $600 in 1995 to more than $1000 in 2001). Despite an increase in the private-sector component of healthcare in Portugal, public expenditures on health-care increased from just under 62% in 1995 to roughly 69% in 2001 (with total expenditures on health-care serving as the denominator). Indeed, healthcare expenditures in Portugal have risen at a rate that significantly outpaces the European average.



Based on all of this, some may be ready to conclude that healthcare marketing is not the “silver bullet” to all that ails healthcare, public health, and health-care policy. Given its evident role in increasing demand, driving up unsustainable costs, draining public coffers, and bankrupting patients, healthcare marketing may be viewed as the “septic bullet” of health care, even in strongly socialized medicine countries and those, like Portugal, that are moving toward a hybrid system. This, however, is shortsighted, in my opinion.




I may be accused of pandering if arguing that health-care is unlike other economic sectors. As noted previously, the price elasticity of demand for health care prompts patients and families to value health-care and health-care products more strongly than normal discretionary purchases. It is certainly the case that health-care and how we treat our children and our elderly more prominently define who we are as a culture and as a people than other purchasing decisions. We cannot think well of ourselves or possess the necessary optimism to promote cultural, economic, intellectual, and personal advancement if we deny adequate health care to, either, the next generation or the previous. Nevertheless, we confront a scarcity of resources challenge, and that challenge strikes more prominently in socialized medicine countries than where the free market controls.


It would not be pandering to note that health-care for the elderly does not represent as strong an investment in the future of Portugal or the United States as other social investment opportunities. The future prospects of both countries would be more strongly advanced if those funds were invested in educating the next generation, maintaining the productive and economic infrastructure (roads, bridges, etc.), and addressing the health-care and public health challenges that more prominently confront working-aged citizens and the larger society (HIV, bird flu, etc.).


In the United States, there is concern that this recognition will prompt “generational warfare.” Rather than “warfare,” I suspect an equitable solution is more readily at hand than the pessimists argue. In the United States, at least, no demographic group is as strongly committed to the future and prosperity of the youngest generation as are their grandparents. I doubt that Portugal is any different. Indeed, I suspect that the elderly of Portugal are strongly committed to the future they built and to the advancement of subsequent generations.


Of course, we cannot know this if the hard questions are not asked, discussed, and decided. At what cost do the elderly of the United States or Portugal want the national treasure expended to secure an additional 30 or 60 days of life? Is financial wealth and capacity to pay legitimate criteria for creating a divided system of health care haves and have-nots at the end of life? I doubt these and other such questions will produce a homogeneous response, but, in the United States, a growing number of seniors possess and value living wills, advance directives, and do not resuscitate orders. They argue that the capacity to undertake extraordinary medical efforts is not the same as an ethically-compelled requirement to do so. They worry about lost dignity, prolonged discomfort, and unnecessary expenses that devastate savings, leave surviving spouses impoverished, and destroy estates designed to advance and educate a subsequent generation.


These are, certainly, macabre and uncomfortable questions, and advocates on either side may not like the answers, but there are some immutable certainties. First, we cannot produce positive outcomes of any significance or complexity in the absence of planning. Second, these are discussions that a growing number of families (with elderly members) have each year. Third, these issues are widely and quietly discussed in health policy settings but rarely appear in the news or among election-year agenda items. Fourth, there is no good time to have this discussion, but the worst time to have it is when desperately compelled by worsening economics and pressured by an overpowering number of Boomer Generation seniors seeking end-of-life care.


And all of this is why marketing is the “silver bullet” of health care… especially in Portugal.




At its core, marketing is the means by which organizations communicate with their customers and, through market research, the means by which customers communicate with the organization. If we are to cultivate healthcare systems and health policies that do not threaten to bankrupt entire nations, and, if health-care is unique as a market sector in the value placed on it by society, an open discussion of the challenges and alternatives seems vital.


Such a discussion would certainly bring out a host of different views and actors, with each using advertising to advance their agenda and persuade the citizenry. Organizations claiming to represent the best interests of seniors, future generations, the various political parties, and other interests will surely contribute to the debate. The diversity of opinions seems likely to inform and educate, just as it threatens to promote division. This, however, is what democratic societies do, and, while we seem perfectly willing to argue, ad nauseum, the momentary and divisive trivialities of liberal and conservative politics, scant attention is too often accorded to the long-term questions that ultimately shape society. The future of health-care is just such a question, and it is worthy of our collective attention.


This is especially true of socialized medicine countries. Healthcare, under socialized medicine, is more strongly associated with government, its credibility, and its perceived effectiveness. During testimony last year, I told a special legislative committee in Pennsylvania that the American people would, neither, forgive nor forget those in elected leadership who oversaw the demise of the American health-care system.[6] I even went so far as to argue that, in the absence of effective reform, the incumbent politician stands as the most significant endangered species in the United States.[7] The closer association between healthcare and government in socialized medicine countries makes this imperative all the more compelling to, both, government and the citizenry.


Consequently, as the engine of health policy discussion, debate, and, hopefully, consensus, marketing may, indeed, be the “silver bullet” of health care.




Okay, let us assume that you were not persuaded by the previous argument. Candidly, I am not entirely persuaded, either; although, I am leaning strongly in that direction — given the charm and charisma of the author.


The one aspect of this argument that bothers me most is the recognition that, as we attempt to reduce the drivers of health-care inflation, we run the risk of an unintended consequence — namely, undermining the research and development industry that made the last 20 years the “Golden Age” of medical science. This is the argument that the pharmaceutical industry offers in opposition to government negotiation of volume discounts. If correct, it means that we will all die sooner and less pleasantly than if our brilliant researchers are left to advance medical science without the limiting constraints of economic reality.


So, an alternate ending may be necessary if the Marketing as the Silver Bullet argument is to persuade and prevail. Here, in two paragraphs, is the outline of such a position.


Some argue that the patient is at fault for health-care inflation. Under this logic, the patient is an egotistical hedonist, addicted to fatty foods, a sedentary lifestyle, tobacco, sugar products, and a confection of sins that seems to grow with the arrival of each new critic.[8]


Personally, I question whether a pristine and healthy life will deliver immortality, sufficiently undermine the costs associated with end-of-life care, or persuade the industry to cease churning novel therapeutics into the market, in an effort to sustain profits, pacify stockholders, and beneficially expense dying patients. Nevertheless, let us assume that I am wrong about all this, and that the cure for all that is driving health-care inflation is a change in lifestyles. How, without persuasive public health marketing/advertising, are we to produce such dramatic changes in our imperfect neighbors and, indeed, society at large?


So, is marketing the silver bullet of health care? Yes, but like all bullets, whether used for good or ill, it must be chambered and fired to produce the desired effect.



Bentes M, Dias CM, Sakellarides C, Bankauskaite, V. “Health Care Systems In Transition: Portugal.” Copenhagen, WHO Regional Office for Europe on behalf of the European Observatory on Health Systems and Policies, 2004.


Berkowitz, Eric N. “Essentials of Healthcare Marketing, 2nd ed.” Jones and Bartlett, Sudbury, Massachusetts. 2006. ISBN: 10-0-7637-8350-1 and 13-978-0-7637-8350-1.


Gladwell, Malcolm. “Tipping Point: How Little Things Can Make a Big Difference.” Little, Brown & Co., New York, NY. 2000/2002. ISBN: 0-316-31696-2 and 0-316-34662-4.


Hardin, G. (1968). “The Tragedy of the Commons.” Science 162, 1243-1248.


Holland, John H. “Emergence: From Chaos to Order.” Perseus Books, US. 1998. ISBN: 0-201-14943-5 and 0-7382-0142-1.


Kaiser Family Foundation. “Comparing Projected Growth in Health Care Expenditures and the Economy.” May 2006. http://www.kff.org/insurance/snapshot/chcm050206oth2.cfm (as of 1/27/07).


Kaiser Family Foundation. “Health Care Spending in the United States and OECD Countries.” January 2007. http://www.kff.org/insurance/snapshot/chcm010307oth.cfm (as of 1/27/07).


Kuhn, Thomas S. “The Structure of Scientific Revolutions, 3d ed.” University of Chicago Press, Chicago and London. 1962/1996. ISBN: 0-226-45807-5 and 0-226-45808-3.


Levitt, Stephen D. and Dubner, Stephen J. “Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.” William Morrow/HarperCollins, New York, NY. 2005. ISBN 0-06-073132-X.


Petzinger, Thomas Jr. “New Pioneers: The Men and Women Who Are Transforming the Workplace and Marketplace.” Simon & Schuster, New York, NY, 1999. ISBN: 0-684-84636-5.


PHRMA. “What Goes Into the Cost of Prescription Drugs?” June 2005. http://www.phrma.org/files/Cost_of_Perscription_Drugs.pdf (as of 1/27/07).


Starr, Paul. “The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry.” Perseus Books, US. 1982. ISBN 0-465-07934-2 and 0-465-07935-0.

Tenner, Edward. “Why Things Bite Back: Technology and the Revenge of Unintended Consequences.” Vintage Books / Random House. New York, NY. 1996. ISBN 0-671-42563-2 and 0-671-74756-7.


Wheatley, Margret J. “Leadership and the New Science: Learning about Organization from an Orderly Universe.”Berrett- Koehler Publishers, San Francisco. 1992. ISBN: 1-881052-01-X and 1-881052-44-3.


Wikipedia. “Pharmaceutical Company.” http://en.wikipedia.org/wiki/Pharmaceutical_company (as of 1/27/07).



[1] I was once a field artillery officer, and, indeed, I was less than heroic.

[2] Much of this history is recounted in Paul Starr’s “Transformation of American Health Care.” Interestingly, Starr notes that “patent” medications once referred to products sold by “snake oil” salesmen, rather than the novel therapeutics now produced by reputable pharmaceutical firms.



[3] As of this writing (1/27/07), the Price to Earnings average for the S&P 500 is 25.3 versus 35.3 for the health care firms in this index (a 40 percent premium).

[4] Government now accounts for a slight majority of healthcare service payments in the US when Medicare, Medicaid, social services for children, government contributions toward indigent care, government’s portion of health care expenses as an employer, and government’s portion of health care expenses for the prison population are taken into account. By this measure, it may be claimed that health care in the United States is more prominently a socialized medicine endeavor that a free market one. The free market, however, remains dominant for this $1.7 trillion economic sector when work in process goods and equipment, as well is the other contributors to producer price costs are factored into the equation.

[5] Recall the R&D-advanced and marketing-touted washing machines and dryers, dishwashers, toaster ovens, vacuum cleaners, and automobiles described earlier.

[6] Medicare is projected to go bankrupt in 2020, and, depending on the state, Medicaid is under threat today.

[7] Figuratively, of course.

[8] Mark Twain noted that “Nothing so needs reform as other people’s habits.”