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Hospital/health system marketing ROI was a hot topic at the recent SHMSD conference in Washington. Something of interest to all us healthcare marketers in this age of C-Suite accountability. I heard some presenters relay case histories, proudly quoting successful “ROI” stats, relative to increased preference ratings, website activity, call center volume, referrals, event participation, patient visits, and calculated column inch PR coverage.  All admirable, measurable results stemming from effective healthcare marketing efforts.

But there is a contrasting point of view that these are not true ROI metrics. That the correct definition of ROI must involve a revenue return connected to the specific healthcare marketing effort. That anything less undermines healthcare marketing credibility. Presenters from M.D. Anderson Cancer Center and Strategic Marketing Concepts offered the following ROI formula:

            ROI = [(Net Revenue - Marketing Expense)/Marketing Expense] x 100

Don’t fret - it’s not too tricky to fill in those blanks. You just need to know the following:

- Revenue collected from volumes driven by the marketing effort (adjusted for ”would have gotten anyway” volume)

- Factor for “cost of services provided” (direct variable costs which Finance must provide)

- Cost of marketing efforts

Ok, before I lose you in accounting jargon, let’s get back to the issue at hand. Which “ROI” definition is correct? My take is it depends on two factors: the available data and your audience.

If you’re substantiating your marketing budget to the CFO, obviously the textbook formula will speak her language.

If it’s a non-financial administrator you’re trying to dazzle, those other metrics mentioned above can be pretty impressive, and may actually be all you have if the necessary financial data isn’t available to calculate the textbook ROI. While in the World of Accounting, it may be more “correct” to give non-revenue based metrics an alternative term (i.e. Return on Expense), ”ROI” is the generally accepted, understood lingo. Hence, while I think it’s optimal to have and use the textbook ROI (and I do think the equation presented is something to strive for), I don’t think it’s a sin to use the term, “ROI”, for all of the above.  As marketers, we know the value of quick-read communication and should use it to our advantage.

I  think the key is to set agreed-upon, measurable goals prior to campaign start, diligently report back on returns and gear future strategy based on returns.

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