Transitional Infant Care
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Transcript of Transitional Infant Care
Running Head: TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING 1
Transitional Infant Care Hospital
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING2
Summary of the background and facts
The Transitional Infant Care (TIC) Specialty Hospital was founded in the early
1980s with Dr. Ron David’s vision to care for premature and high risk infants in a non-
traditional setting. As a transitional care hospital for infants, TIC was the bridge between
the neonatal intensive care units and home; where parents were educated in the care of
their infants to facilitate the baby’s long term needs. Recognizing that the traditional
approach to neonatal intensive care did not provide the education or support to the family
of the infants, his vision included a family-centered unit with the family assisting in the
care of their infant alongside the nursing staff. The veteran staff was selected from local
neonatal intensive care units and was given decision making responsibilities in the care of
the infants resulting in positive outcomes. These respected staff members were veterans
from other NICU’s and provided a natural source of referrals from the Neonatal Intensive
Care Units (NICU’s) that they had previously been employed with.
As TIC grew they accepted sicker infants and enhanced its clinical services. The
clinician community acknowledged the significant difference TIC made in the lives of the
families and patients while maintaining low costs and TIC soon became the “prototype
for the care of medically fragile infants” (Gittell & Toth, 2000, p. 3). A new executive
director (later chief executive officer) Pamela Schanwald was secured and Nancy
Kennedy, a registered nurse and a founding member, was promoted to clinical
administrator in 1993.
Initially, marketing efforts were minimal with TIC depending solely on referrals
from clinicians who were personally familiar with the TIC physicians and staff. In 1987
some effort was placed in reaching out to private pediatricians to increase referrals. In
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING3
1994 a revised marketing proposal was identified and addressed referral sources as well
as potential supporters. TIC also reached out to third party payors in efforts to educate
them that their offering was cost effective, with family centered care and possibly a
reduction in readmissions. The lack of a marketing department, personnel, and budget
resulted in these functions being the responsibility of Kennedy and her clinical team. The
team, busy with patient and family care had little time to assist with the marketing efforts.
This resulted in a decision to employ a Director of Planning and Marketing.
Despite the initiatives undertaken by TIC, environmental issues plagued the small
hospital. With the declining birthrate, the managed care environment changes, and the
takeover of small hospitals by two large systems in Pittsburg fueling their stress over
filling beds, making budget, and the threat of a takeover, the team knows they are
approaching a pending crisis. Three final hits are taken by the small hospital in late 1996.
First, as local area hospitals faced the need to keep their own beds full, referrals to TIC
were few or non-existent. Thought to be a positive initiative, a letter written to case
managers by TIC’s main HMO requiring that TIC eligible babies be referred to TIC was
not seen negatively by both providers and consumers. The last hit occurred when Dr. Al
Lantzy, the head of West Penn’s NICU and TIC’s Medical Director starred in a television
ad campaign promoting West Penn’s newly remodeled NICU which offered the same
services as TIC. 1996 had proved to be a difficult year for TIC and the leadership knew
that action was required.
Statement of "Core" Problem(s) of the Case
Serving their patients and families with individualized, developmentally sensitive
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING4
and supportive care had been their focal point while marketing focused only on the
natural referral process from peers in the community. TIC’s lack of strategic focus is at
the heart of the problems they were facing. While the hospitals around them were
offering integrated services, TIC had not differentiated their hospital in the marketing
arena. They were competing with full service hospitals that offered patients the same
care that TIC had innovated. Although the organization was working very hard, the lack
of a marketing plan that is strategically focused and supports the mission, vision and
goals would be their downfall if not addressed.
Secondary Problems
The lack of a strategic plan significantly impacted the ability of the Transitional
Infant Care Specialty Hospital to penetrate the market. The hospital was the vision of Dr.
Ron David, a neonatologist. He wanted to open a hospital to incorporate parent teaching
and focus on the baby’s long term needs but was there demand for this type of care?
Would a hospital with such a narrow focus be sustainable? Where and how would the
hospital get referrals? It seems evident that no one performed an analysis of the market
nor developed a strategic plan for growth before the hospital was founded.
The Pittsburgh healthcare market soon became a flooded and competitive market.
Several hospitals already offered the level of services that the Transitional Infant Care
Specialty Hospital offered and most had internal referral sources. TIC needed a plan to
compete aggressively by focusing on what set it apart from all the other hospitals offering
the same services to attract customer. As the hospital entered the growth stage of the
product life cycle, marketing strategies should have changed (Berkowitz, 2011). Instead
the hospital went years without staff dedicated to planning and marketing. The Executive
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING5
Director struggled to perform her administrative duties as well as promote and market
TIC. After 12 years, the hospital finally established a formal marketing plan but failed to
fully implement it.
The hospital had no internal referral sources and failed to establish a strong
referral relationship with area hospitals. The hospital had relied mostly on its front line
staff to promote the service and gain referrals. The majority of nurses at TIC were
respected veterans of the local Neonatal Intensive Care Units and were able to capture
referrals through contacts they had from their previous jobs. Over time however, this
method became less and less effective as new staff members were hired at TIC and the
area NICU’s. These new providers and staff lacked knowledge related to TIC’s mission
and referrals declined. When referrals declined there was no plan on how to regain
market share or generate revenue through the offering of other services. The hospital
also lacked an experienced Clinical Administrator who could assist in expanding their
services to generate revenue, a key decision that should be made in the growth stage of
the life cycle (Berkowitz, 2011).
Another strategic shortfall was that the TIC Medical Director, Dr. Al Lantzy, was
also the head of West Penn’s NICU. Dr. Lantzy starred in a television commercial
promoting the NICU at West Penn. Having the Medical Director of TIC promoting the
competitors product sent mixed signals to consumers and those in the referring
community. Promotion in the growth phase should focus on a message that develops the
consumers preference for the service offered. The neonatologist’s failure to foresee or
acknowledge this potential conflict underscored the TIC’s own medical leader’s lack of
focus on the sustainability of TIC.
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING6
Constraints and Limiting Factors
Even though TIC offered excellent care at a price significantly lower than its
competition they were operating at less than 60% of their capacity and barely making a
profit. Several uncontrollable factors contributed to TICs instability. The inability to
anticipate shifts in referral practices was an obstacle. TIC relied on area hospitals with
Neonatal Intensive Care Units for transfers. These hospitals offered very similar care and
were not obligated in any way to make referrals to TIC. Periodically, referrals dropped
as new managers and physicians rotated through the NICU departments. Referrals also
dropped as the birth rate in the Pittsburgh area declined and hospitals stopped transferring
babies in an attempt to keep their own NICU beds occupied to generate revenue.
Another uncontrollable factor was the payor mix. The standard charge was $850
a day. This is an all inclusive fee that includes services such as lab work and pharmacy.
The reimbursement from insurance carriers varied depending on the payor. Blue Cross
paid $840 a day, HMOs paid $800, Medicaid HMO paid $778 and Medicaid paid only
$607 a day. Currently HMOs make up approximately 60% of TICs revenue but in the
past Medicaid, who paid the lowest reimbursements, represented 40-60% of TIC’s
revenues. The payor mix is a constantly changing variable and can easily impact the
bottom line.
TIC’s commitment to ensuring a low price through the bundling of charges is also
a constraint, albeit one under their control. TIC’s original entry into the market utilized a
penetration pricing approach based on Dr. David’s vision of providing low cost, high
quality services. Typically as the service enters the growth stage, changes in the
approach to price occur as additional service offerings are considered or quality
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING7
improves. Recognizing that it is difficult to increase pricing without a perception of
substantial increase in quality or the addition of new services, TIC was not in a position
to generate additional revenue by altering its pricing strategy. This lack of additional
revenue prevented the hospital from adding the additional resources necessary to promote
the hospital early in the growth stage.
The hospital also greatly relied on charitable contributions for capital investments
and purchase of equipment. Charitable contributions are not guaranteed and often vary
from year to year. This limited TICs ability to purchase equipment to expand services
that may attract new customers.
Alternative Solutions
In order to continue to care for patients, Transitional Infant Care Hospital has a
decision to make. They must determine whether or not they can increase their operating
capacity above the current 60% and then maintain that increase. If they come to the
conclusion that they cannot increase to that capacity, then they must decide what services
they will offer instead or in addition and move forward with those plans. By focusing on
the 4 P’s of marketing along with market research and soliciting feedback, TIC has a
variety of options to choose from.
The first possible solution is to do nothing. Should TIC choose to do nothing,
they will likely continue to operate at their 60% margin and eventually their facility will
no longer be able to cover costs. Once this occurs, TIC will ultimately close and will no
longer be a valuable community resource.
One of the first viable solutions is to merge with another hospital. However, this
is solution is not consistent with Dr. David’s original goal to “create a hospital in
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING8
disguise” (Gittell & Toth, 2000, p.2). TIC was founded on the very principle that the
“overload of stimuli such as light, sound, and touch” has a profoundly negative impact on
an infant’s recovery period (Gittell & Toth, 2000, p.2). Another option would be to
expand the services by utilizing their highly skilled staff in another role and provide
consulting services to area hospitals. Instead of creating the perfect environment in a
free-standing facility, perhaps TIC could go into other hospitals and utilize their skill set
in assisting them in creating the perfect environment for the patients admitted there. This
may have the potential to reach an exponential number of families depending on the
response from hospitals and the number of hospitals in which they serve.
Rather than focusing on the depth of their program, TIC could focus on the
breadth by considering expanding their service line to provide more than transitional
infant care. Options might include acute pediatric care for the children suffering from
some of the same illnesses as the infants they have treated or to provide outpatient
services for infants, children suffering from chronic illnesses and their families.
TIC could also consider raising their prices. Is it possible that families view their
services as less than stellar because the price is lower? Prestige pricing is defined as a
“marketing strategy where prices are set higher than normal because lower prices will
hurt instead of helping sales, such as for high-end perfumes, jewelry, clothing, cars, etc.”
(Prestige pricing, n.d.) Prestige pricing has not widely been used in health care, however,
TIC might investigate whether or not the lower pricing has an impact on their reputation.
As mentioned previously, to ensure an acceptance in this change in pricing, the consumer
must perceive a significant improvement in quality or an increase in the service offerings.
It is not clear whether TIC had been monitoring quality indicators. Should TIC consider
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING9
price increases, quality indicators could be publicized to ensure there is a tie to price
increase and exceptional quality. Former patient testimonials appealing to the emotions
of the consumer would also serve this purpose.
Another alternative would be for TIC to increase their publicity-driven promotion
strategies. Instead of concentrating primarily on marketing to healthcare providers, TIC
could direct promotional messages to the community to educate the consumers on the
available services and to appeal to their emotions. TIC might accomplish this through the
use of radio interviews, television interviews, and magazine as well as newspaper stories.
The use of the internet to promote their services would be an appropriate option as the
parents of infants are a target subset that relies heavily on the internet for information
(Diaz et al., 2002). In addition, TIC could develop a Foundation Board consisting of
prominent community leaders and marketing professionals to assist them in appealing to
local businesses to support their efforts. TIC might also want to reconsider their “home-
like” environment. For example, the staff members and nurses wear street clothes.
While this might help promote a home-like and relaxed atmosphere, this also may hinder
the way the nurses are viewed by other healthcare professionals and family members.
They may be viewed as less professional and knowledgeable.
Implementation of the Best Solution
The best solution is actually a combination of several alternatives. TIC should
target the public in their advertising instead of relying solely on physicians and hospitals,
especially those in direct competition, to provide referrals. Personal selling to potential
referral sources should also be a priority. During the growth stage, the focus should be
on maintaining the loyal consumer and to differentiate their service from others that offer
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING10
similar care. To support these efforts, marketing efforts should focus on previous
patient’s testimonials and the establishment of a foundation to recruit and receive
donations.
A “face-lift” of the image they portray also warrants change. Nurses are viewed
as professionals when they wear uniforms. Perhaps patients’ family members, possibly
even subconsciously, view the nurses in street clothes as not being skilled or having
expertise. Nursing uniforms are also specific to the profession and have the potential to
command respect and trust that street clothes do not (Albert et al., 2008).
Lastly, due to the changes in the environment and the competition from other
multi specialty hospitals who offer similar services, TIC is no longer reaping the benefit
of a niche service. TIC must expand the services that are offered in order to penetrate
new markets.
Justification
TIC entered the market as a niche hospital, specializing in not only transitional
infant care, but also providing an alternative environment for these neurologically
immature babies. As part of the vision, the entry price was substantially lower than the
competitors. It is unclear if this was a conscious effort by the founders to utilize a
penetration price strategy. Although the advantages of this strategy is that it encourages
demand and discourages competition, the disadvantages of under pricing and the limited
ability to raise prices after the introductory phase should not be dismissed. The focus
during the growth stage should be the timing of price increases with the perception of
substantially higher quality services or expanding services (Berkowitz, 2011). TIC’s
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING11
entry into the market with a new service line would support a change in their pricing,
thereby improving their reimbursements and their bottom line.
Marketing efforts should focus on both the growth and near maturity stage of the
transitional care unit as well as the emerging market for the acute inpatient and outpatient
care of children with chronic illnesses. TIC administrators should plan strategies to
differentiate the transitional infant care from other providers in the market, a key
objective during the late growth and early maturity stages. Since price changes at this
stage are typically focused on competitive pricing, the price increase should ensure that
they are still the low price leader in the market. Alternatively, as the new service line
enters the market, decision should be made as to pricing based on penetration or
skimming. Due to the competition of other provides in the area, penetration pricing is
most appropriate for this new service (The product life cycle, 2010).
Establishing a foundation board, or strengthening the association with the
Children’s Home of Pittsburg non-profit organization to increase charitable contributions
would ensure dedicated funds to be used in expansion projects and capital purchases. In
2009 the IRS reported that approximately $1.4 billion in revenue and holdings of nearly
$2.6 billion in assets were reported by charitable organizations (Sherlock & Gravelle,
2009). Tapping into this lucrative market as a means to fund projects should not be
dismissed.
Considering the impact of the nurse’s uniforms in the small hospital might be a
method to improve customer perception and gain respect and trust from the community
and peers. Albert, Wocial, Meyer, Na, & Trochelman (2008) sampled 499 patients and
visitors in a large Midwestern health care center. Utilizing a Nurse Image Scale (NIS)
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING12
score the team tested for differences based on uniform style and color and subject
demographics. The study found that adults create perceptions of professionalism based
on uniform color and style with the highest noted in white uniforms. The study could not
directly tie an improvement in patient and family satisfaction based on this trait, but it
would be practical for TIC to consider this finding.
TIC’s leadership realized their hospital was at a turning point in late 1996. A
decision as to the direction of their organization was pivotal to their future. In 1996 the
hospital had limited marketing resources with no strategic, business or marketing plan
that had evolved to the point of execution. With a focus on marketing research, the four
P’s of marketing, and strategic business goals, TIC has a future as they both deepen their
penetration and begin to broaden their presence in the current Pittsburg market..
TRANSITIONAL INFANT CARE HOSPITAL: DIAGNOSES MARKETING13
References
Albert, N.M., Wocial, L., Meyer, K.H., Na, J., & Trochelman, K. (2008). Impact of
nurses’ uniform on patient and family perceptions of nurse professionalism.
Applied Nursing Research, 21(4), 181-90.
Berkowitz, E.N. (2011) Essentials of health care marketing ( 3rd ed.). Sudbury, MA:
Jones and Bartlett Learning, LLC
Diaz, J. A., Griffith, R. A., Ng, J. J., Reinert, S. E., Friedmann, P. D. and Moulton, A. W.
(2002). Patients' use of the internet for medical information. Journal of General
Internal Medicine, 17: 180–185. doi: 10.1046/j.1525-1497.2002.10603.x
Gittell, J.H., Toth, M. (2000). Transitional infant care specialty hospital (2nd ed).
Harvard Business School. Retrieved from http://hbr.org/product/transitional-
infant-care-specialty-hospital/an/898070-PDF-ENG
Prestige pricing. (n.d.). In Buisness Dictionary Online. Retrieved from
http://www.businessdictionary.com/definition/prestige-pricing.html
Sherlock, M.F., Gravelle, J.G. (2009, Nov. 7). An overview of the nonprofit and
charitable sector. Retrieved from http://digitalcommons.ilr.cornell.edu/cgi/
viewcontent .cgi?article=1690&context=key_workplace&sei
redir=1#search=%22charitable+donations+in+ healthcare+ as+revenue+source
%22
The Children’s Home. Retrieved from http://www.childrenshomepgh.org/
The Product Life Cycle (2010). Retrieved from
http://www.quickmba.com/marketing/product/lifecycle/