While hospitals increased spending on marketing slightly last year, the advertising portion of those budgets was slashed by 20%, according to a recent annual survey of hospital marketers.
Results of the 1996 National Hospital Marketers Survey show hospital expenditures on advertising plummeted 20% to $195,100 compared with $243,100 in 1995, which was an all-time high for advertising budgets.
Meanwhile, the overall marketing budget, which includes advertising expenditures, rose 1.9% to $467,100, compared with $458,100 in 1995.
"The fact that marketing budgets kept up with the cost of living may indicate (marketers) are allocating their advertising dollars somewhere else," said Steven R. Steiber, president of Evanston, Ill.-based Quality Expectations, a healthcare market research and consulting firm that has conducted the annual study since 1984.
The firm's 1996 survey of 200 hospital marketing executives, randomized by bed count and geography, included hospitals with 50 or more beds.
Steiber said the decline in advertising expenditures could be an aberration of sorts, but it's also an indication hospitals are spending their marketing budgets on other things. The survey doesn't get into specifics of where marketing departments spend the money cut from advertising.
"There are a lot of potential buckets where they are pushing that extra change," Steiber said.
Nationally, overall hospital marketing expenditures rose slightly to $2.3 billion from $2.27 billion in 1995.
Of that total, hospitals spent $966 million on advertising, compared with the record $1.2 billion doled out in 1995.
The survey continues to suggest that large facilities, which tend to be the hubs of most healthcare systems, are driving advertising spending.
As in 1995, hospitals with more than 500 beds affected the overall advertising picture. They spent an average of $570,100, a 27% decline from the $779,200 posted a year earlier.
However, advertising spending at smaller hospitals with between 100 and 500 beds jumped 50% to $108,600 from $73,180 in 1995.
"Some new (healthcare) systems may have spent a lot of money last year after they formed and are now going back cutting back," Steiber said.
Print advertising continues to net the dominant share of ad budgets, although that share is declining.
The average marketing department spent 43%-down from 46% in 1995-of its advertising budget on ads in newspapers and magazines.
The rest of the advertising budget was devoted to radio, 14%; direct mail, 12%; yellow pages, 11%; television, 11%; bus/billboards, 4%; and other media, 5%.
Marketers' salaries kept pace with their departments' budgets. Marketing executives' annual compensation rose nearly 2% to $53,390 in 1996, compared with $52,610 in 1995.
Nearly 6% of hospital marketers have salaries larger than $100,000 a year; most of those are at the largest hospitals. The survey also indicated marketers with the six-digit salaries are likely to come from hospitals with occupancies greater than 50%.
"Even in an environment that is moving to increasingly capitated payment, marketers with institutions above the 50% occupancy mark have 10 times greater likelihood of receiving more than $100,000 per year than those under this mark," Steiber said.
The average tenure of a marketing executive is 4.8 years.
As hospitals restructure, the marketing executive continues to report to the hospital's top executive, with 68% of them saying they report directly to the CEO.