Assignment 4: Timberline Health - An Integrated Delivery Sys

Assignment 4timberline Health An Integrated Delivery System Serving

Assignment #4 Timberline Health, an integrated delivery system serving residents in five counties in eastern Washington, is considering new opportunities to increase community awareness of the organization’s outpatient health services. As the new business development manager of hearing health services, Jack Andrews is responsible for evaluating the feasibility of marketing activities for the hearing service line and must allocate resources to promotional activities that forecast positive return on investment. One option under consideration is to sponsor the health and wellness pavilion at the Spokane County Fair.

Research from comparable markets has shown that wellness fairs are not only effective at educating communities about potential risk factors for health problems, including hearing loss, but also increasing consumer awareness of new or existing health services provided by local health organizations. These activities are essential to Timberline Health’s mission within the community.

Since little is known about the hearing status of residents in the market area, Jack enlists the services of his organization’s epidemiologist, Dr. Ruth Litchfield, to help him evaluate the potential return on investment for this marketing campaign. Dr. Litchfield incorporates several factors into her analysis. She reviews public health data on hearing loss, occupational and age distribution data for local residents, as well as a query of Timberline Health’s patient databases. Based on this research, she estimates the prevalence of hearing loss in the five-county service area at 18 percent, slightly higher than the national average (NIH, 2010).

Jack receives information from the fair’s sales and marketing department to help in his calculations. Specifically, sponsorship consists of an investment of $50,000 for the design and production of promotional materials and rental of pavilion space for the duration of the twelve-day fair. Data from the previous three years shows an average attendance of 250,000 people, of whom 1% visit the wellness pavilion and participate in health screening services.

If Timberline Health is to offer mobile hearing screening, the organization must invest in new portable audiology equipment. Jack receives a quotation from his supplier and estimates the total investment in new audiometers and audiometric booths at $16,000. Timberline Health will use existing diagnostic equipment to test people who have failed the initial screening (test positive for hearing loss), so it is unnecessary to invest in additional equipment for the hearing centers. Vendor specifications for the screening and diagnostic equipment are summarized as follows: Portable audiology equipment for free screening — sensitivity 90%, specificity 96%; Clinic-based audiology equipment for follow-up diagnostic testing — sensitivity 99%, specificity 99%.

Furthermore, Jack calculates that he must provide coverage for three 6-hour shifts per day, with each shift requiring three audiologists to meet screening demand. He anticipates hiring nine audiologists to provide coverage for the fair’s duration. The hourly rate for audiologists is $37.50. The screening tests at the fair are free, but those who fail the screening will be referred for diagnostic testing, which costs Timberline Health $24 per test, and charges $57 for the diagnostic procedure.

Based on past sales data and industry metrics, Jack forecasts that 20% of diagnosed individuals with hearing loss will purchase hearing aids. He reviews product sales and margin data from the previous year (see Table 2): low-end hearing aids at an average unit price of $1,000 with a margin of 40%; mid-range at $2,500 with a margin of 50%; high-end at $4,000 with a margin of 10%. Using this information, Jack aims to calculate the estimated number of people who will buy hearing aids from the target market and the potential revenue.

Paper For Above instruction

Introduction

The feasibility of marketing activities in healthcare organizations hinges on the careful analysis of potential costs and revenues, especially in programs designed to raise community awareness such as health fairs. Timberline Health’s initiative to sponsor the Spokane County Fair’s wellness pavilion aims to increase awareness about hearing loss and promote its hearing services. This paper provides a detailed analysis of the expected financial outcomes of such a campaign, centering on the evaluation of the target market, sales projections, staffing expenses, and strategic considerations for successful implementation.

Estimating the Target Market and Hearing Aid Sales

To determine the potential number of customers who would purchase hearing aids, it is essential to identify how many individuals in the target population are likely to test positive for hearing loss and follow through with further diagnostic and purchasing processes. Based on public health data, the prevalence of hearing loss in the five-county area is estimated at 18%. The total population attending the fair is projected at 250,000, with 1% participating in the wellness pavilion, resulting in 2,500 individuals screened during the fair (250,000 × 0.01).

Assuming the screening test’s sensitivity (90%) and specificity (96%) are applied to the population, we can estimate the expected false positives and negatives. However, for simplicity, considering the general prevalence of hearing loss, we may refer directly to the proportion of individuals likely to test positive and be diagnosed with hearing loss in the targeted population (i.e., those who actually have hearing impairment, which is 18%). Among the 2,500 individuals screened, 18% or approximately 450 are expected to actually have hearing loss.

Of these 450 afflicted individuals, the probability of a positive diagnosis depends on the sensitivity of the screening instrument. With 90% sensitivity, about 405 individuals (450 × 0.9) will test positive. Conversely, the remaining 45 individuals with hearing loss might erroneously receive a negative result. Furthermore, among individuals without hearing loss (82% of those screened—roughly 2,050 people), the specificity of 96% indicates that about 1,968 will correctly test negative, and approximately 82 will be false positives, testing positive despite not having hearing loss.

All individuals testing positive will be referred for diagnostic testing. Assuming full follow-up for diagnostic testing (i.e., 100% compliance), the clinic will conduct approximately 487 diagnostic tests (405 true positives + 82 false positives). The clinic’s revenue from diagnostic testing can be calculated at $57 per test, with costs of $24 per test. Therefore, gross revenue from diagnostics would be $27,939 (487 × $57).

Of the diagnosed individuals, 20% are forecasted to purchase hearing aids, according to industry data. Hence, approximately 82 people (405 + 82) × 20% will purchase hearing aids. Of these, the mix of product types (low, mid, high-end) influences the total revenue and profit. Using typical proportions like 40% low-end, 40% mid-range, and 20% high-end aids, the clinic can estimate sales volume and margins for each category, further supporting financial projections.

Calculations of Revenue from Hearing Aids

• Low-end aids (40% of buyers): 33 individuals × $1,000 = $33,000 in sales
• Mid-range aids (40% of buyers): 33 individuals × $2,500 = $82,500 in sales
• High-end aids (20% of buyers): 16 individuals × $4,000 = $64,000 in sales

Total projected sales revenue from hearing aids would be approximately $179,500.

Estimating Staffing Expenses

Staffing costs are based on the number of audiologists needed during the fair. Jack plans for three shifts of six hours each day, with three audiologists per shift, totaling nine audiologists over the twelve-day period. The hourly rate is $37.50, thus:

Total hours per audiologist: 12 days × 3 shifts/day × 6 hours/shift = 216 hours

Each audiologist's total cost: 216 hours × $37.50 = $8,100

Total staffing expense for nine audiologists: 9 × $8,100 = $72,900

Cost-Benefit Analysis and Strategic Recommendations

Given the significant upfront investment of $50,000 for sponsorship and promotional materials, plus the $16,000 for portable audiology equipment, the total estimated expenditure on the campaign reaches $66,000. The staffing expense adds to this ongoing cost, totaling approximately $138,900 over the event duration.

Comparing this to the projected revenue of approximately $179,500 from hearing aid sales and potential diagnostics revenue, the campaign appears to be financially viable with an approximate profit margin of $40,600, before considering other operational costs. Nevertheless, this optimistic outlook hinges on full follow-up and purchase compliance, which may vary in practice. Additionally, intangible benefits such as increased community awareness and long-term patient acquisition could enhance the overall value of the campaign.

Additional Considerations

Several other factors should influence Timberline Health’s decision regarding the fair and follow-up appointments:

• Patient Follow-up and Engagement: Ensuring patients follow through on referrals is critical. Strategies such as reminder calls, transportation assistance, or teleaudiology services could improve conversion rates.
• Cost-Effectiveness of Marketing: Alternative or supplementary marketing activities, such as local advertising, social media campaigns, or partnerships with community organizations, may offer a more cost-effective approach.
• Community Demographics and Needs: Understanding local demographics, cultural attitudes toward hearing aids, and economic factors influence purchasing behavior.
• Technological Advances: Adoption of telehealth services for diagnostics or counseling could reduce costs and expand reach.
• Long-Term Revenue Opportunities: Building a reputation through community engagement can enhance patient loyalty, cross-selling other health services.
• Regulatory and Ethical Considerations: Adhering to advertising standards, patient privacy, and ethical practices remain paramount.

Conclusion

The proposed marketing campaign at the Spokane County Fair, supported by targeted screening and diagnostics, demonstrates a promising return on investment under optimistic assumptions. The analysis shows potential revenue surpassing costs, primarily driven by hearing aid sales and diagnostic testing. However, success depends on effective follow-up, community engagement, and strategic resource allocation. Therefore, Timberline Health should conduct detailed planning, incorporate patient retention strategies, and evaluate alternative marketing channels to maximize the campaign's overall benefits.

References

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