Marketing Issues in the Health Care Industry

1.0 Terms of Reference

This paper will outline the different emerging marketing issues in the Health Care Industry. The reason why this industry has been selected is because the issues that prevail in the industry seriously affect all of its stakeholders and we need to be aware of them in order to do something about them. This report will highlight the issues one by one. It will start of by giving a brief introduction to the Health Care Industry. Different secondary sources will be sued to highlight the key facts about this industry. Special concentration will be given to the marketing strategies used in this industry and how they have changed over time.

Some of the issues that will be discussed are Sales Strategies, Patents, Medical Tourism, Direct Consumer Advertising, Branding of Medicines, Prices, Distribution, Ethics, Ratio of Promotional and Research & Development budget, Quality of Service, and Packaging and Labeling. All these issues are very prevalent and today, there is a strong need to shed light on them and find solutions. Towards the end, a conclusion will be given and this will include a few recommendations that may help overcome the issues discussed.

2.0 Procedures

Secondary sources were mainly used to complete this report. These include online journals, articles, books and other websites. These revealed a great amount of information which was useful throughout the making of this report. In addition to this, a few specialists were interviewed which helped us understand the issues better.

2.1 To Research the Health Care Industry

This section of the report was prepared by a mixture of sources. Mainly secondary sources were used to understand the health care industry. However, we also took help from a couple of people from within the industry in order to get a better insight. The secondary sources that were used to understand the health care industry were all up to date. This was very important considering the fact that the health care industry is ever changing. Everyday there are new discoveries, new procedures, new issues, and new opportunities. Therefore in order to include all of these in this report, it was very important that up to date sources were used.

2.2 To Identify the Key Factors under a range of Marketing Topics

This was the most critical part of the entire report. It was very important that no issue was left un-discussed. Therefore a large number of secondary sources had to be consulted for this. Once the list of marketing issues that are emerging was established, both secondary and primary sources were used to understand how these issues pose challenges and how they can be overcome. The degree of importance of each issue was based on these sources as well.

2.3 To Evaluate the Impact of these Factors upon the Industry

This was very important in order to evaluate the degree of importance of each issue. The impact has to be evaluated in order to understand which issue was more important than the other. For this, secondary sources were mostly consulted and different statistics, facts and other information was collected from there which demonstrated the impact of these issues. Primary sources were not as reliable when evaluating the impact in this case because those are based on individual judgment and for this we needed a more holistic and general opinion which was there in the secondary sources.

3.0 Findings

From the procedures mentioned above, a great amount of information was retrieved which has helped in understanding the health care industry better. It has allowed us to understand the different underlying issues that are now emerging. We will begin by giving a brief introduction to the health care industry. Next it will move on to the different marketing issues that are emerging in today’s time.

3.1 Introduction to the Health Care Industry

The health care industry comprises of a large number of sectors dedicated to improving and maintaining the health of individuals. It includes the hospitals, medical institutes, pharmaceutical companies, health insurance companies, equipment and instrument providers, and nursing homes etc. The basic feature of a sector belonging to the health care industry is that its ultimate affect of its activities is improvement in the health of individuals in a society.

The health care contributes to the society economically and socially to a great extent. Through its output and employment opportunities, it contributes to the GDP and employment level which is why we say it contributes economically and by providing health care services, it improves the living conditions of individuals and hence we say that it contributes socially (Economy Watch, n.d).

The health care industry has been growing worldwide for a number of reasons. Firstly, there are new and new diseases coming up everyday and hence this causes the health industry to grow. Also, because of the problem of ageing problem in many countries all over the world, the pressure on the health care industry increases which hence can be attributed towards the growth in the health care industry globally. In the year 2006, the medical plans of 42.5 million have grown to a great extent. It is expected that with the increase in the number of different health care programs and health care insurance coverages, the total amount of medical plans will increase to 70.2 million in the year 2025. This will be almost a 40 percent increase in the size of the health care industry (Economy Watch, n.d).

According to the Institute of Medicine, there are four key underlying reasons for inadequate quality of care in the US healthcare system today. They include the growing complexity of science and technology, the increase in chronic conditions, a poorly organized delivery system and constraints on exploiting the revolution in Information Technology. In addition to all this, the trend towards consumerism is also expected to shape the future organization of the health care industry (Sears, A. & Julia A. Jacko, 2008).

Technology has changed the way health care institutions operate. Biomedical and genetic research have changed the treatments rapidly. Such changes have also transformed the rules and regulations set by the authorities. The patients and the healthcare workers have also changed. Many countries are facing the problem of ageing problem. Therefore we can say that the patients are changing in terms of demographics. They are becoming more and more diverse. Because of the increase in information technology, the people are also becoming more and more aware. They, therefore, have higher expectations from the health care service providers (Borkowski, N., 2005). In addition to all this, the global economic crisis has changed the strategies adopted by the companies and the consumer buying behavior as well. All these factors have changed the marketing strategies in the health care industry and it is very important that we are aware about the issues it brings along with itself.

There are a number of countries that contribute largely to the global health care industry. These include Indonesia, Russia, Mexico, Brazil, India, Turkey and China. According to a source, these countries comprise approximately 1/5th of the worldwide health care sales (Economy Watch, n.d).

A few facts about the health care industry will highlight the importance of the industry. In the United States, it is one of the largest industries in 2008. It is said to have provided a total of 14.3 million jobs. 10 of the top 20 occupations that are growing at the fasted pace are health care related. It will generate a total of 3.2 million new jobs till 2018. This is more than any other industry and it is said to be in response to the rapid growth in the elderly population (Bureau of Labor Statistics, 2009).

The issues discussed in the coming section will help in understanding the health care industry even better.

3.2 Emerging Marketing Issues

As we complete 10 years into the new century, there are a number of marketing issues that have emerged. These issues have been there for a while now however, only recently, they have been recognized as issues and the need for light to be shed on them has been emphasized upon. These issues will be discussed one by one in the coming sections.

Sales Strategies of Marketers

The number of pharmaceutical sales representatives has increased to a great extent in the past few years, however, the growth in the number of physicians is very low compared to that. This means that the supply has increased and the demand has remained relatively constant. As a result, there is a need to increase the sales of the sales representatives and for this they adopt various sales strategies which may or may not be ethical (Liu, L., 2003). This raises an issue for the health care industry.

At present, there are a number of strategies adopted by sales representatives that are not in the best interests of the customers and the main motive behind these strategies is profit and nothing else. One of these sales strategies is making up uses of a drug in order to sell it. For instance, we witnessed that a very popular pharmaceutical company GSK made up a disorder in order to just sell one of its drug. The drug ‘Requip’ was initially for Parkinson’s disease (PD). GSK, however, through its strong public relations and its marketing muscle created a new market for Requip by targeting the drug at the ‘restless legs syndrome’ (RLS). This disorder was not very commonly known by people. It became very popular after this strategy and experienced strong growth (Yoak, S.D., 2000). Such strategies can be very harmful for the customer because it makes us believe that the pharmaceutical companies are willing to go to any lengths in order to sell their drugs.

Patents

Millions of dollars are put into the research and development of a drug. A lot of time and effort is put into the development of a new drug. Once the formula of a drug is developed, it can be easily copied. This raises a challenge for the large companies that spend a very large chunk of their total budget into development of a new drug. They feel that if they are spending so much money on a drug, only they should enjoy the benefits obtained from it. In order to ensure that no one else copies their drugs, they use patents.

However, there is a dilemma in this entire scenario. Although patents protect the rights of the companies, it takes away the rights for the general public. When copies of a drug are made, they are often sold at a lower price. However, when patents are used, copies are not made and the drugs are sold at a high price which is often unaffordable for most people. Therefore there is a often this conflict of whether to protect the rights of the people or the companies that produce the drugs.

Medical Tourism

Medical tourism is when one country promotes its health care industry in order to attract people from other countries into their own. This is a relatively new concept that countries have adopted in order to increase the revenues coming in from tourism. In the past, medical tourism used to refer to people going abroad for vacations to take advantage of health spas, vacations at the sea shores, or in the mountains and so on. Now this term is being used for going abroad for health care services. Today, medical tourism has become a multi billion dollar industry (Ashcroft, R.E., 2007).

A number of countries have made use of this concept and have started to promote unsafe and untested procedures. For instance, China has promoted its stern cell treatments for paralyzed people and Parkinson disease. People have sold away their houses in order to travel and get treated in China and the treatment has very high success rates. However, the procedures have still not been formally tested and hence we cannot be too sure if the treatment is good for the patients in the long term or not. The researchers also argue that the success feeling may only be psychological which is also known as the placebo effect (Miller, J., 2008).

Similarly many treatments like stapling of the stomach which are not allowed in the United States are carried out in Mexico. These treatments are made popular because of the rise in spread and growth of information technology (Morgan, D., 2001). Such treatments are made available as a result.

Direct-to-Consumer Advertising of Prescription Drugs

The Food and Drug Administration (FDA) allowed direct-to-consumer advertising of prescription drugs on television in 1997. These strategies help increase the sales level, avert under-use of medicines to treat chronic conditions and lead to some overuse of prescription drugs. The ultimate effects of all these strategies benefit the company producing the drug.

Such methods of marketing the products have been criticized for encouraging inappropriate uses of drugs and medications and it is often argued the only motive behind such methods of advertising is driving up drug spending. New drugs that have not been tested properly for the post marketing revelations regarding problems with drug safety are also launched into the market and are advertised directly to the consumers. One can only imagine the kind of effect such methods of advertising can have on the people (Donohue, J.M. et al., 2007).

Prices

The rising price of the drugs and health care treatments is also an issue that is emerging in the health care industry. As mentioned earlier, companies spend a large amount of their expenditure on research and development on new products. In addition to this, the instruments and equipments for treatment in the health care industry are also very expensive. As a result, the price that is often charged for the treatment and drugs is very high. When we see the income of the people in general, it is unaffordable. People who have not taken up health insurance in the United States cannot afford to get treatment when they are in need (Sears, A. & Julia A. Jacko, 2008).

However, when we look at this from the players of the health care industry’s point of view, the high prices are justified. They claim that they need to cover their costs of research and development and also the equipment etc. For this, they must charge high prices because otherwise they would suffer losses and would have to close down. If this happens then the health care industry would collapse and the people will have no way of improving their health. Therefore they argue that the high prices are kept in order to protect the people at large in the long term.

Distribution

The distribution of health care products and services is a very important issue that needs to be given a lot of attention. Pharmaceutical companies often make their products very widely available so that they sell in huge volumes and make large profits. This however means that people will have access to drugs and may misuse them.

When we talk about distribution about health care service, we mean the distribution of different hospitals all across the world. Mostly, we notice that the areas with people from low socioeconomic groups have little access to medical services. The distribution of such services needs to be such that will allow all people equal medical services.

Ethics

The competition in the health care industry, more specifically, the pharmaceutical industry is very high. The different organizations in the health care industry go to every length in order to gain a competitive edge over others. They often use unethical ways of selling the drug to the doctors. They may make incorrect claims in their advertisement. They may make monopolies in order to ensure that no new competition enters into the market and they remain market leaders. They may charge higher prices. They may not innovate in their range of drugs. Information about patients may be disclosed. The patients may not be treated properly (Murray, S.J. & Dave Holmes, 2009). All the issues discussed in this section are in one way or the other unethical and can be included in this section.

All the situations mentioned above are very common in today’s health care industry. These basically include using any unethical means in their daily marketing related operations.

Ratio of Promotional and Research & Development budget

As mentioned before that companies have started promoting to consumers directly through the television. This is an expensive medium of communication. Other such mass communication mediums are now being used by pharmaceutical companies which really puts a lot of stress on their budgets.

One very common strategy that these companies adopt is that they compromise on research and development for a while and use the money saved from these to promote their existing products. By using this strategy, their total expenditure does not increase and at the same time, the awareness level of their drugs increases.

When the research and development budget is reduced in a pharmaceutical company, it has two main effects. Firstly, fewer products are developed which means less innovation for the consumers. The second effect is that products that are not researched upon properly are introduced into the market which means they may not be completely safe for the consumers. Both these effects are bad for the consumers therefore it is very important that research and development in a pharmaceutical company is not being compromised on.

This is an emerging issue because there have been a number of cases when a certain drug was introduced in the market and only after the launch it was discovered that the medicine was not appropriate. Such cases need to be avoided and for that we need to ensure that the ratio of expenditure spent on promotion and research and development is appropriate.

Quality of Service

Another very important issue in the health care industry is the fall in the quality of the services. Although the prices for the health care services have been rising, the quality has still been falling. However, how can we judge if one is getting good quality of service or not? One is said to get good quality of service if the health care service fits the needs and preferences of the consumers. Safety is also an essential feature of health care service. A good quality of service in health care would ensure that the treatment is the best available and suitable treatment for one’s illness. There must not be unnecessary delays and it should include the tests and other necessary procedures. Lastly, the service must be given to everyone and factors such as gender, race, and nationality should not determine whether or not one should get health care services or not (Check Point, 2009).

If all of these conditions are met, we can say that the quality of service is good. However, in most countries, this is not the case. Doctors are negligent, hospitals are dirty, treatment is not suitable and other such cases are very common. The end result is that instead of getting better, the consumer or patient is actually paying for a worse health.

Packaging and Labeling

This is the last issue that we will be discussing in this report. This basically refers to companies not making proper use of the packaging and labeling of the medicines. There is a lot of information that should be included on the label of a medicine. However, the marketers fail to include that information there.

For instance, we can take the example of the case of Accutane which was known as a miracle cure for acne which was introduced in the 1980’s. The ingredients of this medicine were the same as the medicines given to cancer patients therefore it was very strong. It had many side effects and one of them was birth defects if taken by pregnant women. The Federal Drug Administration took action by making sure that very graphic pictures of deformed babies was shown on the medicine containers which reminded the pregnant women not to take the medicine (Consumer Psychologist, 2009). Such actions need to be taken in order to ensure the safety of everyone.

In this case, the label was made use of in order to ensure that consumer was aware of any side effects that the drug may have. It also reminded the people who tend to ignore such side effects and the end result was that women stopped using the drug if they were pregnant because of the fear imposed on them.

3.3 Customers

The customers are very important stakeholders to any industry. In the health care industry, the customers are most important because any action taken in this industry will affect their lives. Therefore these customers need to be protected from the issues discussed above. The main issue with customers in this case is that we are very emotionally and intellectually vulnerable and marketers try to make use of these vulnerabilities.

However with time, the consumers are becoming more and more aware but at the same time the marketers are also becoming smarter. They are finding newer techniques of fooling the customer without them even knowing. It is very important that the customers have full information in the health care industry because their lives depend on it.

One issue over here is that the consumers because of increased awareness are demanding higher quality of service. The increase in population and the fact that ageing population is now becoming a common phenomenon deteriorates the health of patients. They now demand more services, pharmaceuticals, and medical breakthroughs (Price Waterhouse Coopers, 2009).

There are a number of opportunities that health care service providers now have. The increase in technology allows them to provide a service that is demanded by the customers. They can live up to their specifications and expectations. However, the health care service providers must make sure that they do not carry out operations that are unethical. The marketing of these products will have serious consequences for the customers. This must be kept in mind when strategies and products are being designed by them. This will enable them to satisfy the customers (Efro Tech, n.d).

4.0 Conclusion

There are a number of emerging issues that are associated with the health care industry. These include using unfair and immoral sales strategies, direct consumer advertising, medicine branding, increasing prices of medicines, distribution, ethics of health care, compromising on research and development and not making proper use of packaging and labeling.

In conclusion, I would say that the health care industry is all about taking care of the health of people. If this objective is not fulfilled because of the issues discussed above, there is no point of this industry. Therefore in order to increase the effectiveness of this industry, these issues need to be brought up and solutions need to be developed.

There are a number of steps that can be taken in order to reduce the degree to which these issues negatively affect its stakeholders. First of all, a strict framework should be established which must be followed by all nations. Some might argue that this has always been done. However, there is a strong need to concentrate on the implementation of these policies and monitoring the degree to which they are being followed and if any further changes need to be made in them. When this will become a part of the public policy, it will definitely make a difference.

References

Economy Watch (n.d) [Internet]. Available from <http://www.economywatch.com/world-industries/health-care/world.html> [January 25, 2010]

Economy Watch (n.d) Health Care Industry Trends. [Internet]. Available from <http://www.economywatch.com/world-industries/health-care/trends.html> [January 25, 2010]

Consumer Psychologist (2009) [Internet]. Available from <http://www.consumerpsychologist.com/> [January 25, 2010]

Liu, L. (2003) Making a Case for Change. [Internet]. Available from <http://frost.com/prod/servlet/market-insight-top.pag?docid=ABAD-5NLTVR&ctxixpLink=FcmCtx21&ctxixpLabel=FcmCtx22> [January 25, 2010]

Yoak, S.D. (2000) Ethical Issues in Medical Practice Where Medicine and Business Meet. [Internet]. Available from <http://74.125.153.132/search?q=cache:7OcS1BbyLEQJ:www.mgma-sl.org/TempImg/images/mgma-stl/Ethical.ppt+marketing+issues+of+medicine&cd=6&hl=en&ct=clnk&gl=pk> [January 25, 2010]

Miller, J. (2008) Medical Tourism Ethics. [Internet]. Available from <http://www.bioethicsinternational.org/blog/2008/01/07/bioethics-medical-tourism-china-offers-unproven-medical-treatments/> [January 25, 2010]

Donohue, J.M. et al. (2007) A Decade of Direct-to-Consumer Advertising of Prescription Drugs. The New England Journal of Medicine. Vol 357. pg 673 to 781

Ashcroft, R.E. (2007) Principles of Health Care Ethics. John Wiley and Sons.

Morgan, D. (2001) Issues in medical law and ethics. Routledge Cavendish.

Murray, S.J. & Dave Holmes (2009) Critical Interventions in the Ethics of Healthcare: Challenging the Principle of Autonomy in Bioethics. Ashgate Publishing, Ltd.

Check Point (2009) Why Quality in Health Care. [Internet]. Available from <http://www.wicheckpoint.org/WhatQualityHealthCare.aspx> [January 25, 2010]

Sears, A. & Julia A. Jacko (2008) The human-computer interaction handbook: fundamentals, evolving technologies, and emerging applications. CRC Press.

Borkowski, N. (2005) Organizational Behavior in Health Care. Jones & Bartlett Publishers

Price Waterhouse Coopers (2009) Healthcare. [Internet]. Available from <http://www.pwc.com/gx/en/healthcare/index.jhtml> [January 25, 2010]

(Efro Tech, n.d)  Local, Innovative Technological Solutions for the Healthcare Industry! [Internet]. Available from <http://docs.google.com/viewer?a=v&q=cache:Tpl42LCQiPcJ:www.efrotech.com/portfolio/cs/Pharmalink.pdf+healthcare+industry&hl=en&gl=pk&sig=AHIEtbTBbrlgeEFXTbb8zqJVkATN9kzQTA> [January 25, 2010]

Bureau of Labor Statistics (2009) Healthcare [Internet]. Available from <http://www.bls.gov/oco/cg/cgs035.htm> [January 25, 2010]

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