1
Living Well-Freedom From Tobacco
HADM 559: Health Care Marketing and Market Research Methods
Loma Linda University
Running Head: LIVING WELL
LIVING WELL 2
Table of Contents
Executive Summary……………...……………………………………… 3
Organizational Profile……...…………………………………….........… 3
Industry Overview……...………………………………………............... 4
Demographics......................................................................................... 4
Laws and Policies................................................................................... 4
Technology.............................................................................................. 4
Smoking................................................................................................... 4
Regulations............................................................................................. 5
Service Overview……...………………………………………................. 5
Target Market……...………………………………………....................... 5
Competitive Analysis……...………………………………………........... 6
Marketing Plan……...……………………………………….................... 6
Primary Data Collection........................................................................ 6
SWOT Analysis...................................................................................... 7
BCG........................................................................................................ 7
Marketing Strategies............................................................................... 7
Operational Plan……...……………………………………….................. 8
Positioning Statement.............................................................................. 8
Goals, Objectives and Process Measures................................................. 8
Financial Plan……...………………………………………...................... 9
References……...………………………………………............................ 10
Appendix A…...………………………………………............................... 13
Appendix B.................................................................................................. 14
Appendix C.................................................................................................. 16
Appendix D.................................................................................................. 17
LIVING WELL 3
Executive Summary
Kaiser Permanente Fontana Medical Center’s (KF) covered population has a
disproportionately high rate of smokers as compared to similar facilities (Kaiser Permanente,
2014a). As a result of this high rate, the Kaiser Foundation Health Plan bears an estimated cost
of over $114 million annually from increased service utilization (Appendix D). The present
proposal seeks to mitigate some of this cost through an expansion of the current tobacco
cessation program. This will be accomplished through expanded awareness campaigns and
expanded services to participants. With current participation rates of 0.38% of eligible
participants, even modest growth in participation will yield significant long term cost savings of
over $2 million annually if participation rises to 1.75% (Appendix D). These benefits more than
outweigh the proposed $100,000 per year cost in even the least likely of outcomes (Appendix D).
This program will simultaneously improve the lives of Kaiser members and improve the
financial performance of the organization.
Organizational Profile
Kaiser Permanente is the largest managed care organization in the United States. The Kaiser
Foundation Hospitals operate medical centers in California and manage other outpatient facilities
in the remaining Kaiser Permanente regions (Kaiser Permanente [KP], 2014b). The hospital
foundations are not-for-profit and rely on the Kaiser Foundation Health Plans for funding;
however, they provide infrastructure and facilities that benefit the for-profit medical groups (KP,
2014b). Each entity of Kaiser Permanente has its own management structure, but all are
interrelated and require collaboration (KP, 2014b).
Kaiser Fontana is a general medical and surgical hospital in Fontana, California. The hospital
has 390 beds, accommodating 25,482 admissions in 2012 (US News & World Report, 2013).
The hospital provides twenty-four hour emergency services, as well as a wide variety of
outpatient services, including more non-traditional services such as preventive medicine. Their
service area spans San Bernardino County (SBC) and parts of Riverside County.
The patient population served by KF is compromised of a wide range of ethnicities, but the
two predominant groups are White (34%) and Latino (35%)(KP, 2013). The age range is also
widely dispersed. The largest group includes patients from birth to 18 years of age (31%),
followed by those aged 19 to 34 years old (24%) and the 35 to 54 year old group (27%) (Garcia,
Khamkongsay, Trinidad, Vela, & Wat, 2013).
LIVING WELL 4
Industry Overview
Demographics
Thirty-one percent (31%) of the total SBC population is aged 18 or younger, which mirrors
the significant proportion of patients this age served by KF (KP, 2013). By comparison, 25% of
the population in the state of California is less than 18 years old (KP, 2013). The total
population of SBC and Riverside County has increased by about 21% from 2000-2010, a growth
trend that is expected to continue (KP, 2013). This translates into an expected growth in KF’s
most significant age demographic.
Laws and Policies
The Patient Protection and Affordable Care Act (PPACA) is legislation that will impact
KF. The PPACA will lead to more members, and more importantly, under the PPACA, the
mandated health benefits include coverage for mental health services and treatment of substance
abuse disorders. This paves the way for greater utilization of tobacco cessation programs (The
Kaiser Family Foundation, 2013).
Technology
Another trend that will impact KF is mobile technology. Since 2010, smartphone ownership
has been on the rise (Smith, 2013). According to the Pew Research Internet Project, in 2011,
35% of the US population owned a smartphone (Fox & Duggan, 2012). By 2013, the number
was 50% and the percentage is expected to continue increasing over the next few years (Fox &
Duggan, 2012). Additionally, the highest percentage of smartphone ownership is among those
aged 18-29. Even more noteworthy is the increased use of mobile technology to access health
information, from 17% in 2010 to 51% in 2012 (Fox & Duggan, 2012).
Smoking
Tobacco use costs $4,260 per smoker in direct health care costs, and it is still the number one
preventable cause of death in the United States (Centers for Disease Control and Prevention
[CDC], 2008). In just four years, from 2009-2012, the United States spent at least $133 billion
dollars in tobacco-related health care costs; in the same period it is estimated that smokingattributable
economic costs, such as missed days of work, were over $289 billion (CDC, 2012).
The main form of tobacco use in United States – cigarette smoking—has remained constant at
20%; one in five Americans are still smoking (CDC, 2012). The United States previously
decreased its smoking use from almost 50% of the population in the early 1970’s to 30% in the
LIVING WELL 5
1980’s to about 20% in the 1990’s (American Lung Association, 2011). Since then, however,
further reductions have been minor (American Lung Association, 2011; Appendix A).
Importantly, most smokers will start during adolescence and nearly all smokers (99%) start by
age 26 (CDC, 2012).
Sand Bernardino County has a higher percentage of adolescents than the rest of the state and
it contains a larger number of smokers (Dignity Health, 2009). California has 13.5% current
smokers, compared to almost 15% current smokers in SBC (Dignity Health, 2009; KP, 2013b).
Compared to other Kaiser centers in the Southern California region, KF has the second highest
number of tobacco dependent members, second only to San Diego (Kaiser Permanente, 2014a).
Regulations
Kaiser Permanente Fontana Health Center is licensed, regulated, inspected, and certified by
agencies at the state and federal levels. The California Department of Public Health (CDPH) is
responsible for ensuring healthcare facilities comply with state laws and regulations (California
Department of Public Health [CDPH], 2013). Kaiser Fontana also has met the standards for Joint
Commission as demonstrated by the awarding of their Gold Seal of approval (CDPH, 2013).
While such accreditation is voluntary, choosing to participate in the accreditation process
requires the fulfillment of relevant regulatory requirements (Blackmond, n.d.).
The Health Insurance Portability and Accountability Act (HIPAA) defines and limits the
circumstances in which patients’ protected health information may be used or disclosed,
including for marketing purposes (Health and Human Services, 2003).
Service Overview
Currently, smoking cessation classes, called Living Well, are offered in seven sessions over
six weeks at no cost to KF members. Their current marketing strategy is to rely on physicians to
refer their tobacco dependent members to the classes (S. Turner, personal communication, May
6, 2014). The service we aim to provide is a more targeted, comprehensive marketing campaign
geared towards the younger population of smokers in order to save KF money in the long term
and meet benchmarking goals. We will accomplish this by creating incentives for physicians to
refer their patients, and by providing patient-centered marketing strategies.
Target Market
Historically, the referrals to the smoking cessation program at KF have been primary care
physicians (PCPs) (S. Turner, personal communication, May 6, 2014). Because of this, PCPs
LIVING WELL 6
will likely remain one of the most significant sources of referrals. Therefore, one of the main
targets of the marketing strategy will be to enlist PCPs as referrers to KF’s tobacco cessation
programs. The second strategy will be to target young, tobacco dependent members. We will
target those aged 18-24, as they are one of the largest age groups in SBC and KF, and are among
the most vulnerable to developing a lifelong addiction to tobacco (CDC, 2012a). Furthermore, a
campaign specifically targeted to this young age group will mean that KF will reap the most
long-term rewards, both in their members’ health and financially. The total population of
smokers within the KF member area is 27,611 individuals (KP, 2014a).
Competitive Analysis
When evaluating competitors for a managed care organization, it is often helpful to look at
internal company benchmarking as well as to identify what similar organizations have done
successfully. Since most hospitals collect Healthcare Effectiveness Data and information Set
(HEDIS) data, this can be utilized is to compare hospital performance. Two tobacco related
HEDIS measures were compared with the Loma Linda Veterans Affairs Healthcare System, and
KF performed lower in both measures (Department of Veterans Affairs, 2009; KP, 2013b). In
this comparison Kaiser had lower referral rates to smoking cessation as well as less offers for
smoking cessation (Department of Veterans Affairs, 2009; KP, 2013b). This means that in
comparison to other managed care organizations KF has significant room to grow with respect to
smoking cessation (Appendix A). Most other non-managed care organizations are non-competes
for a smoking cessation business line as they are currently not managing population health.
However, this may change as the PPACA changes the trends in reimbursement schemes for
almost all insurances, and thus emphasizes quality over quantity of care.
Marketing Plan
Primary Data Collection
A short, six-question survey was administered to tobacco dependent residents of SBC to
identify basic demographics and types of services smokers would like to have to help them quit
tobacco (Appendix B). The tobacco users who participated in the survey varied in ages, from
less than 18 to 61-70 age groups; most were ages 51-60. Three quarters had been using tobacco
for over ten years; 13% used tobacco for six to ten years, and 12% had a two to five year history
of tobacco use. No respondent had used tobacco for less than two years. The most commonly
used form of tobacco was the cigarette (62%), second to cigars (25%) and the pipe (13%). All
LIVING WELL 7
respondents stated that their primary care provider had talked to them about quitting tobacco.
Qualitative data was gathered by asking what service from their physicians would be most
helpful. This revealed four common domains: didn’t know; nicotine replacement, including the
e-cigarette; emotional support; and a program. This data collection has limitations in its
applicability to KF, however. The respondents were recruited from a smoking section outside of
a Veterans Affairs hospital and were limited in the numbers of participants (n = 8). Given the
external research and demographic data from KF, we anticipate that a greater number of tobacco
users from the KF membership will be younger.
SWOT Analysis
A SWOT analysis was conducted in order to capitalize on KF’s strengths, minimize their
weaknesses, take advantage of opportunities, and minimize their threats (Appendix C). Some of
KF’s strengths are that they have a well-established education program located in a building that
is dedicated to prevention and health education. The health education building is easily
accessible with ample parking. The education classes are also conveniently timed with multiple
sessions for members to choose from, at no cost to members. Some weaknesses are that the
savings to KF are not immediate, and Living Well is not currently well advertised. Threats may
come in the form of budget cuts, cuts to the whole program, and cuts to personnel time. Patients
may also try other substances to substitute tobacco with, such as e-cigarettes; this may give
people a false sense of safety and complacency about quitting tobacco. The many tobacco users
in the KF service area provides them with a unique opportunity to reach many patients.
BCG Portfolio Analysis (Appendix C)
Tobacco cessation is one of four service areas in the KF preventive medicine department.
The other three are obesity treatment (bariatric surgery), diabetes self-management education
(DSME), and non-surgical weight management classes. Kaiser sets benchmarks by calculating
what percent of eligible members are participating in each of the four programs. The obesity
treatment program is outperforming the other departments, reaching about 7% of its eligible
members; this program is the star (KP, 2014a). Weight management is reaching about 3.5% and
the DSME is reaching 3.5%. Living Well has both a low growth and low market share, and is
therefore is the program that would be typically considered a marketing dog (Appendix C).
Marketing Strategies
LIVING WELL 8
After our analysis, we decided to focus the marketing strategies to providers and to younger
KF tobacco users. Provider-focused strategies include motivational reporting. Monthly reports
will be given to physicians notifying them of how well they did in referring their eligible
members to Living Well in comparison to each other. There will be referral incentives of a prime
parking spot and recognition for the most referrals. Patient-focused strategies will also include a
testimonial bulletin board, a testimonial video Kaiser Care Story, and a smartphone app to cater
to the technology use in our target population. Other patient focused strategies might include
peer-to-peer support – for example, hosting Nicotine Anonymous Groups.
Operational Plan
Positioning Statement
Kaiser Fontana is dedicated to the prevention of premature deaths and diseases attributed to
tobacco use. We will welcome patients to our Living Well program with compassion and
provide the resources, strategies, and support needed to ensure patients quit tobacco for life.
Goals, Objectives and Process Measures
Our primary, three-year goal is to decrease the number of Kaiser members who are tobacco
dependent. Secondly, we will reduce mortality and morbidity due to tobacco use. In addition, we
will reduce long–term costs associated with tobacco use. The Living Well objectives include:
decreasing the number of Kaiser members who are dependent on tobacco by 1.75% within the
next 48 months; increasing enrollment to the smoking cessation program by 50% in the next 24
months; and increasing the number of physician referrals to the Living Well program by 25% in
the next 12 months. The process measures are to increase the number of patients offered tobacco
cessation strategies and medications from 54% to 57% and to increase the number of patients
advised to quit from 70% to 73%.
Human Resources Plan
Currently, nine employees staff the Living Well program: a sponsor, a physician leader, an
administrative leader and other support staff. This marketing plan will utilize positions already
in place and hire an additional 1.5 FTEs in the positions of project manager and marketing
advisor. The physician leader will also be re-tasked to be a physician liaison to encourage
physician buy-in and increase referrals to the program.
Due to the trends in mobile technology ownership and the focus on persons aged 18-29, we
propose hiring an employee with a background in mobile technology marketing. This employee
LIVING WELL 9
will be in charge of managing the KF Living Well program’s Facebook, Twitter, and Instagram
accounts, and must also be able to learn any other new forms of social media that gain
traction. We will also develop an addition to the KP mobile app. This app add-on will include a
counter on a smartphone’s notification bar indicating the number of days a person has been
tobacco free, a customizable folder of reasons why the smartphone owner wants to quit (photos
of family, health, etc.), and other resources.
A volunteer facilitator will be recruited from the population of former program participants.
They will be placed in charge of recruiting and carrying out the volunteer program. Volunteers
will be used to perform basic administrative functions, give their testimonials, and serve as peer
counselors and nicotine anonymous group support.
Financial Plan
Within the preventive medicine department, tobacco cessation has the distinction of the
marketing dog, as seen in Appendix B. While this low growth and low market share position is
typically a disadvantage for many business lines, it is in fact an advantage for a tobacco cessation
program. This is because tobacco cessation is predicated and funded on the idea that there
should be the fewest number of smokers possible within a managed care organization.
In estimating the financial viability of a tobacco cessation program it is important to
understand two key metrics, the cost per smoker, and the cost of administering the program. By
using these metrics, as well as estimating program participation, it is possible to calculate the
break-even point and most likely financial outcomes of a given program. For the present
analysis we used data recognized by the American Lung Association, which estimates the direct
healthcare cost per smoker per year at $4,260 (Adhikari, et al., 2008). With a serviceable
population of 27,611 and a current cessation participation rate of 0.38% (n=104), this large target
market provides significant opportunity for savings growth (KP, 2014a). The initial estimated
annual cost for the program expansion is $100,000, as seen in Appendix C. With this
information we can estimate that the break-even participation rate for this program will be
achieved with only an additional 23 adherent participants (Appendix C). A three way weighted
average was conducted to assess the outcome in the most likely scenario. The result of this was
an estimated participation ratio of 1.31%, which is short of the 1.75% goal, a realistic goal as it
represents 175 participants. At this participation rate the net annual savings for KF are estimated
to be over $1.5 million annually (Appendix C).
LIVING WELL 10
References
Adhikari, B., Kahende, J., Malarcher, A., Pechacek, T., & Tong, V. (2008). Smoking-Attributable
mortality, years of potential life lost, and productivity losses—United States, 2000—2004.
Morbidity and Mortality Weekly Report, 57 (45), 1226-1228.
American Lung Association. (2011). Trends in tobacco use. American Lung Association Research and
Program Services Epidemiology and Statistics Unit. Retrieved from
http://www.lung.org/finding-cures/our-research/trend-reports/Tobacco-Trend-Report.pdf
Blackmond, B. (n.d.). Hospital Accreditation – Alternatives to the Joint Commission. Retrieved from
http://www.healthlawyers.org/Events/Programs/Materials/Documents/HHS09/blackmond.pdf
Centers for Disease Control and Prevention. (2012a). Youth and tobacco use. Retrieved from
http://www.cdc.gov/tobacco/data_statistics/fact_sheets/youth_data/tobacco_use/index.htm
Centers for Disease Control and Prevention. (2012b). Economic costs associated with smoking.
Retrieved from
http://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm#spendin
g
Community Hospital of San Bernardino. (2013). Community Health Needs Assessment. In Community
Hospital of San Bernardino. Retrieved June 11, 2014, from
http://www.dignityhealth.org/stellent/groups/public/@xinternet_con_sys/documents/webcontent/
196180.pdf
Department of Veterans Affairs Veterans Health Administration. (2009, October). 2009 VHA Facility
Quality and Safety Report. In va.gov. Retrieved June 12, 2014, from
http://www.va.gov/health/docs/HospitalReportCard2009.pdf
Fox, S., & Duggan, M. (2012, November 8). Mobile Health 2012. In Pew Research Internet Project.
Retrieved June 12, 2014, from http://www.pewinternet.org/2012/11/08/mobile-health-2012/
Garcia, A., Khamkongsay, R., Trinidad, R., Vela, M., & Wat, E., (2013). Community Health Needs
Assessment. Retrieved from http://share.kaiserpermanente.org/wpcontent/
uploads/2013/09/Fontana-CHNA-2013.pdf
Kaiser Permanente. (2013a). Community Health Needs Assessment. In Kaiser Permanente. Retrieved
June 12, 2014, from http://share.kaiserpermanente.org/wp-content/uploads/2013/09/Fontana-
CHNA-2013.pdf
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Kaiser Permanente. (2013b). MEASURING CARE QUALITY Southern California Region. In Kaiser
Permanente.org. Retrieved June 13, 2014, from
https://healthy.kaiserpermanente.org/static/health/pdfs/quality_and_safety/sca/sca_quality_HEDI
S.pdf
Kaiser Permanente . (2014a). 2014 SCPMG LOS Health Education Monthly. In J. Dang & .
(Eds.), Regulatory Relations Performance Assessment.: Kaiser Permanent
Kaiser Permanente. (2014b), Fast Facts, Retrieved June 11, 2014 from
http://share.kaiserpermanente.org/article/history-of-kaiser-permanente/
Kaiser Permanente (2014c). Understanding the Affordable Care Act. Retrieved from
http://healthreform.kaiserpermanente.org/
Klein, E. (2012). 11 Facts about the Affordable Healthcare Act. The Washington Post. Retrieved from
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/06/24/11-facts-about-the-affordablecare-
act/
Smith, A. (2013, June 5). Smartphone Ownership 2013. In Pew Research Internet Project. Retrieved
June 12, 2014, from http://www.pewinternet.org/2013/06/05/smartphone-ownership-2013/
Sohn, E. (2011, January 26). How Safe Are E-Cigarettes?. In Discovery News. Retrieved June 11, 2014,
from http://news.discovery.com/tech/gear-and-gadgets/e-cigarettes-health-nicotine-tobacco-
110127.htm
Suburban Stats. (2014). Current Fontana, California Population, Demographics and statistics in 2014,
2013. In Suburban Stats. Retrieved June 12, 2014, from
http://suburbanstats.org/population/california/how-many-people-live-in-fontana
San Bernardino County. (2013, July). Our Community Vital Signs: San Bernardino County. In
Community Vital Signs. Retrieved May 29, 2014, from
http://www.communityvitalsigns.org/Portals/41/Meetings/2013Stakeholder/CVS_data_report.pd
f
The Kaiser Family Foundation. (2013, April 23). SUMMARY OF THE AFFORDABLE CARE ACT.
In FOCUS Health Reform. Retrieved June 13, 2014, from
http://kaiserfamilyfoundation.files.wordpress.com/2011/04/8061-021.pdf
United States Department of Labor. Occupational Safety and Health Administration. Retrieved
fromhttps://www.osha.gov/law-regs.html
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US News and World Reports. (2013, July). Kaiser Permanente Fontana Medical Center Stats &
Services. In US News Hospitals. Retrieved June 13, 2014, from http://health.usnews.com/besthospitals/
area/ca/kaiser-permanente-fontana-medical-center-6930737/details
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Appendix A: Competitors
48%
50%
52%
54%
56%
58%
60%
62%
64%
2/13
3/13
4/13
5/13
6/13
7/13
8/13
9/13
10/13
11/13
12/13
1/14
2/14
Tobacco
Cessa*on:
Offered/Meds
(rolling
12
mo.)
Fontana
and
Ontario
Medical
Centers
%
Region
Best
%
68%
69%
70%
71%
72%
73%
74%
75%
76%
12/12
1/13
3/13
5/13
6/13
8/13
10/13
11/13
1/14
3/14
Tobacco
Cessa*on:
Advised
to
Quit
(Rolling
12
mo.)
Fontana
and
Ontario
Medical
Centers
%
Region
Best
%
LIVING WELL 14
Appendix B: Primary Data
Survey Form
Survey
1. How long have you been using tobacco?
less than one year
two to five years
six to ten years
over ten years
2. What type of tobacco product do you use most often?
cigars
cigarettes
e-cigarettes
chewing tobacco
3. How many times have you tried to quit tobacco in the last 12 months?
never
once or twice
three or more times
4. Has your healthcare provider ever talked to you about quitting tobacco?
no
yes
5. What type of help from your doctor would be most helpful?
6. How old are you?
less than 18
18-25
26-30
31-40
41-50
51-60
61-70
70 or more
LIVING WELL 15
Survey Results
Age
Distribu*on
of
Survey
Respondants
0%
12%
13%
75%
Dura*on
of
Tobacco
Use
two
to
five
years
six
to
ten
years
over
ten
years
LIVING WELL 16
Appendix C: Market Positioning
SWOT Analysis
25%
62%
0%
13%
Type
of
Tobacco
Used
Most
OHen
cigars
cigareEes
pipe
Strengths
• Well
established
classes
&
education
• HMO
Report
Card
rated
“Good”
• Location
excellent
• New
building
• Better
parking
• Covered
benefit
Opportunities
• Many
tobacco
users
in
service
area
• Modifiable
risk
factor
Threats
• Budgetary
restraints
or
cuts
• E-‐cigarettes
•
Marijuana
as
substitute
Weaknesses
• Difficult
to
treat
tobacco
dependence
• Currently
little
marketing
• No
immediate
cost
savings
LIVING WELL 17
BCG Matrix
Appendix D: Financial Statements
Market Size
Total Number of Smokers at KHF 27,611
Estimated Cost per smoker/Year $4,260+
Total Cost per year $117,600,000+
High
Low
Low
High
Relative Market Share
Relative Market Growth Rate
?
$
Obesity
Treatment Diabetes
Self
Management
Weight
Management
Tobacco
Cessation
LIVING WELL 18
Trial Balance
Itemized Activities (in $USD) Debits Credits
Tobacco Cessation Account 100,000
Labor 1.5 FTE 77,500
Print Advertising/ Flyers 1,000
Search Engine Optimization 3,000
Video production 2,500
Active e-mail campaign 2,700
Supplies for Group 2,000
Reserve Funds 11,300
100,000 100,000
LIVING WELL 19
Projected Benefit
Net Benefit
Participation
Rate
Number of
Participants
Current participation rate ($100,000) 0.38% 105
Breakeven Participation Rate $0 0.46% 127
50% of goal $1,029,200 0.88% 242
75% of goal $1,543,800 1.31% 362
100% of goal $2,058,400 1.75% 483
0
100
200
300
400
500
600
-‐$500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Net
benefit
at
various
par*cipa*on
rates
Net
Benefit