The American Journal of Surgery 181 (2001) 1–7

Physician leadership

Concepts in service marketing for healthcare professionals

Christopher L. Corbina, Scott W. Kelley, D.B.A.a, Richard W. Schwartz, M.D., M.B.A.b,c,d,*
a
Carol Martin Gatton College of Business and Economics, University of Kentucky, Lexington, KY 40536, USA
b
Department of Surgery, College of Medicine, University of Kentucky, Lexington, KY 40536, USA
c
Chancellor’s Office, Chandler Medical Center, University of Kentucky, Lexington, KY 40536, USA
d
Clinical Operations, Veterans Administration Medical Center, Lexington, KY 40536, USA

Received July 10, 2000; revised manuscript August 21, 2000

Abstract
Patients are becoming increasingly involved in making healthcare choices as their burden of healthcare costs continues to escalate. At
the same time, healthcare has entered a tightened market economy. For these reasons, the marketing of healthcare services has become
essential for the financial survival of physicians and healthcare organizations. Physicians can successfully use the fundamental service
marketing principles proven by other service industries to win patient satisfaction and loyalty and remain competitive in today’s market
economy. Understanding concepts such as service quality zone of tolerance, levels of consumer satisfaction, the branding of services, patient
participation, and service recovery can be useful in achieving these goals. © 2001 Excerpta Medica, Inc. All rights reserved.

Keywords: Service marketing; Marketing; Healthcare; Physicians

The marketing of healthcare services coincides with the
service marketing revolution that is currently taking place in
the United States. Service industries have surpassed manu-
facturing industries in terms of their size and importance to
the nation’s economy [1]. Traditional services such as re-
tailing, delivery, restaurants, banking, and insurance have
embraced the value of marketing in order to both create
public awareness and build customer satisfaction and reten-
tion. Achievement of these marketing goals has been the
key to sustaining and expanding many service ventures.
High-profile pioneers in service marketing include UPS,
McDonald’s, and Wal-Mart [2]. Their vision and goals for
customer satisfaction have been achieved and provide mod-
els for organizations in other service industries.
The question for healthcare providers is simple: why
has the world’s largest service industry— healthcare— been
slow to acknowledge, much less embrace, the importance of
service marketing principles? National healthcare spending
is projected by the middle of this decade to exceed two
trillion dollars [3] (ie, one seventh of the nation’s gross
domestic product). The healthcare industry has traditionally
not sought the benefits of improved customer satisfaction
* Corresponding author. Tel.: ⫹1-606-323-6346; fax: ⫹1-606-323-
6340.
E-mail address: rschw01@pop.uky.edu.
and retention, which are the end results of successful mar-
keting efforts. This choice has been made out of a combi-
nation of ignorance and lack of necessity. Until the recent
past, the formulation for indemnity reimbursement pro-
grams placed all of the financial risk on the insurance
carrier, and left both the providers and patients unaccount-
able. Thus, healthcare and cost containment, to date, have
been an oxymoron. Therefore, the escalating costs of health-
care were almost inconsequential to patients (consumers)
who had limited responsibility for out-of-pocket reimburse-
ment for their care.
Recently, however, the consumer’s involvement in
healthcare choices has grown exponentially. This involve-
ment is attributable to insurance premiums that are growing
annually by double-digit percentages, coupled with compli-
cated stipulations of networked providers. In concert, be-
cause of federal and administrative interventions such as the
Institute of Medicine (IOM) report and the Balanced Budget
Act of 1997, cost-containment measures are a permanent
feature of the healthcare milieu. Thus, the healthcare service
market has tightened considerably (as is true for a market
economy), and consumers, for the first time, are now active
decision-makers. Those physicians, healthcare profession-
als, and healthcare organizations that choose the benefits of
marketing will increase market share and profit margins; in

0002-9610/01/$ – see front matter © 2001 Excerpta Medica, Inc. All rights reserved.
PII: S 0 0 0 2 - 9 6 1 0 ( 0 0 ) 0 0 5 3 5 - 3
2 C.L. Corbin et al. / The American Journal of Surgery 181 (2001) 1–7
Table 1
Major principles in the marketing of healthcare services [1]
1. Services versus commodities
2. Service quality
3. Other marketing outcomes
4. Branding
5. Patients versus customers
6. Patient participation
7. Patient loyalty
8. Patient defection
9. Service recovery
10. Moods
contrast, those that remain stagnant will struggle for finan-
cial existence.
Therefore, the marketing of healthcare services has be-
come fundamental to the financial success of physician
practices and healthcare organizations of all sizes. As un-
popular as marketing (which most physicians equated with
advertising) may have been with healthcare providers in the
past, it is clear that marketing has progressed from “. . .
merely advertising . . . [to] a comprehensive approach to
satisfying patient needs”[4]. Patients are now educating
themselves with information from many sources and de-
manding that their healthcare needs, both technical and
functional, be satisfied in both clinical and service outcome
parameters. In short, they are appraising their satisfaction
with their overall service experience. Private practices and
large healthcare organizations must embrace this patient
behavior and provide the services that are desired. Satisfied
patients become “loyal customers,” and thus become posi-
tive contributors to the success of both their healthcare
experience and the overall function of their chosen health-
care entity. They are both allegiant to their physician and
active participants in the outcome of their care.
As with all types of services, whether the conventional
customer-seller relationship or the more complex patient-
physician association, there are fundamental principles and
aspects of service marketing that are imperative in creating
customer satisfaction and building loyalty. The complexi-
ties and idiosyncrasies associated with service delivery in
the healthcare industry necessitate thorough evaluation, bench-
marking, and tracking mechanisms that are imperative for
determining the degree of patient satisfaction being achieved.
Ten key principles in effective service marketing, as they
pertain to physician practices and institutional healthcare
organizations, are listed in Table 1. Discussion of each
principle follows, with examples from the current health-
care industry.
Services versus commodities
Services have four unique characteristics that differenti-
ate them from commodities, namely, intangibility, hetero-
geneity, inseparability, and perishability. Services are intan-
gible in that they do not take on a physical form. In addition,
services generally cannot be counted, measured, tested, or
thoroughly evaluated before consumption [5]. Thus, con-
sumer perceptions and satisfaction are based solely on the
perceived performance and outcome of the service. Sec-
ondly, services are heavily reliant upon personal interaction
between the service provider and the consumer. The pres-
ence of a human service provider and the associated per-
sonal interaction creates variability in the service provision
for each individual consumer. These inherent inconsisten-
cies in service delivery can interfere with the provision of
consistent and reliable service and with the formation of
consumer trust. The third characteristic that separates ser-
vices from commodities is the inability to separate the
consumer from the service provider in the completion of a
service transaction. For example, the characteristic of insep-
arability is exemplified by the fact that surgery cannot be
performed without the physical presence of both a patient
and a physician. Finally, services cannot be held for future
use. They are perishable and cannot be inventoried. These
characteristics make tracking and measuring consumer per-
ceptions of service quality and satisfaction in service indus-
tries difficult.
With virtually all types of goods, various search methods
are used to find the product or service that best suits the
needs of the consumer. To that end, consumers use three
broad criteria when evaluating products, whether they be
goods or services: (1) search properties—may be evaluated
prior to purchase or consumption of a good or service (eg,
size, color and price); (2) experience properties—may be
evaluated during or after consumption or transaction (eg,
taste, dependability); and (3) credence properties—may be
impossible to confidently evaluate even after consumption
(eg, the results of a surgical procedure).
Services are generally very low in search properties and
extremely high in credence properties. That is, a consumer
of healthcare services is generally unable to accurately se-
lect and evaluate a physician prior to the patient-physician
interaction (search). Additionally, consumers are usually
unable to identify and thoroughly understand the effects and
results of a healthcare interaction or procedure (credence).
Because consumers are unable to thoroughly evaluate all
available distinguishable characteristics before purchase
[5], the ability to preevaluate and measure perception and
satisfaction of services is further perplexing for service
providers. Furthermore, limited access to search attributes
by consumers of services, especially healthcare services,
necessitates that experience and credence attributes be
weighed heavily in the patient’s evaluation process. There-
fore, perception, evaluation, and satisfaction of the service
are most often based on understood properties, such as the
cleanliness of the waiting room, waiting times, politeness of
the staff, or the appearance and demeanor of the nurse or
physician. Interestingly, the properties used by consumers
to evaluate their healthcare service experiences often have
 C.L. Corbin et al. / The American Journal of Surgery 181 (2001) 1–7
Fig. 1. Zone of Tolerance (Zeithaml V, Berry L, Parasuraman A. J Acad
Mark Sci, 21(1):5, copyright © 1993 by Academy of Marketing, Reprinted
by Permission of Sage Publications, Inc.)
little or nothing to do with the actual service or benefit they
were seeking from the healthcare encounter.
Service quality
Healthcare providers can no longer market only clinical
outcomes; patients are demanding supportive services in
addition to the treatment of their illnesses. Patients have
preconceived desires about the level of service they should
receive; conversely, they also have a minimal level of ad-
equacy that they are willing to accept. The difference be-
tween these levels of desired service and adequate service is
considered the zone of tolerance (Fig. 1) [6]. The zone of
tolerance is conceptualized on an attribute-by-attribute ba-
sis, resulting in varying levels of difference between desired
service and adequate service across service attributes. For
example, the zone of tolerance with regard to clinical out-
comes is probably very narrow. In other words, from the
patient’s perspective the clinical aspects of the service being
provided must be done correctly. On the other hand, patients
may have a much wider zone of tolerance when it comes to
the length of time they wait to receive the service. In a broad
sense five dimensions of service have been identified. These
factors include reliability, responsiveness, assurance, empa-
thy, and tangibles [7]. Each of these broad factors will have
zones of tolerance of varying size associated with them.
From a service delivery standpoint, it is extremely impor-
tant for healthcare providers to understand the magnitude of
the zone of tolerance associated with the various aspects of
the service provided.
As reported in a recent issue of the Journal of the Amer-
ican Medical Association, 2.2% of recent medical school
graduates plan to practice in rural areas [8]. These data
reflect the ever-increasing competition between physicians
in urban/metropolitan areas. With this increased competi-
tion between providers and the transition of medical prac-
tice into a service economy, patients have begun viewing
themselves as customers and demanding better service.
Therefore, physician accessibility, patient access, conve-
nience and comfort are all elements that contribute to their
fundamental assessment of the level of service provided.
3
Fig. 2. Customer service appreciation [1].
Other marketing outcomes
As competition increases for patient market share, it
becomes increasingly important for healthcare professionals
to provide high quality healthcare service experiences. As
service quality improves, patient satisfaction will tend to
improve as well, and will move towards its highest level,
delight. Levels of appreciation have evolved over the years
and the chart in Fig. 2 shows one model that targets cus-
tomer service appreciation. The progression inward toward
customer delight is more than merely a cyclical progression;
these steps depict the time line in customer demand over the
last 20 years [1]. The initial phase in this progression,
service quality, is the first step towards customer satisfac-
tion. In this step, the service must be provided in a manner
such that customers recognize and accept the fundamental
quality administered.
The second phase in the chronology of this progression is
value. In achieving value, customers are satisfied with what
they received in exchange for what they paid in both finan-
cial and opportunity costs. The third phase, customer satis-
faction, encompasses contentment on all levels. Quality
service is provided and benefits outweigh costs.
The last stage, delight, is the highest attainable outcome
level of service. Customer loyalty, word-of-mouth commu-
nication, and repeat purchases are evidence of customer
delight. With all types of service industries, the outcome
measures delineated above are distributed throughout these
stages based on their progress. Owing to both ignorance and
lack of necessity, physicians and healthcare providers alike
are just beginning to realize and understand the need to
develop the initial healthcare service quality standards that
other service industries have long since adopted, developed
and improved upon.
Fig. 3 also depicts the relationship between service qual-
ity, value, satisfaction, and delight [1]. Contributing factors
4 C.L. Corbin et al. / The American Journal of Surgery 181 (2001) 1–7
Fig. 3. The relationship between service quality, value, satisfaction, and
delight [1].
and associations among these four service outcomes are
illustrated. Although, their chronological progression might
not be evident, this graphic provides a solid representation
of the progression of healthcare services. If patient diagno-
sis and treatment fail to follow anything more than a generic
clinical care pathway, expected and unexpected complica-
tions might naturally arise that create different levels of
service outcomes. For example, a consumer of healthcare
services might move directly to delight, bypassing interven-
ing areas, because of a superb outcome to a surgical proce-
dure.
Branding
Branding of goods and services has become pervasive
throughout the marketplace. Brands can serve as a signal of
consistency and in a sense “control the customer experience
from start to finish”[9]. As in virtually every aspect of
service marketing, healthcare organizations and physician
practices are lagging behind other service industries in the
practice of branding. Branding of healthcare services can
provide a platform whereby consumers can view their ser-
vice encounter as the purchase of a product and, therefore,
reduce the influence of the credence properties associated
with such interactions.
Healthcare services need to be branded such that they
appeal to consumers’ needs and desires. Branding efforts
related to consumer convenience, practice environment, and
professional demeanor may help consumers to focus on
their salient healthcare needs and desires. Furthermore,
branding of healthcare services might also envelop the idea
of disease management networks (ie, clinical centers of
excellence). This market niche has been a factor in the
healthcare market for the last two decades, but has relied
primarily upon word-of-mouth communication as a medium
to create awareness. Currently, organizations have capital-
ized on their past or present successes in disease manage-
Fig. 4. Branding of Healthcare Services (Reprinted with permission from
Marketing Health Services, published by the American Marketing Asso-
ciation, Peyser, 1997;17:41).
ment or disease branding, such as the reputations of the
local or regional “cancer hospital” or “heart hospital.” (See
Fig. 4, which compares branding of healthcare providers
and their retail counterparts.) Branding efforts may provide
healthcare professionals with a means of creating awareness
that is in the direct control of the healthcare marketer as
opposed to relying on current or former patients to deliver
the marketing message.
The development of healthcare branding also facilitates
the franchising of clinical services. Franchising of clinical
services through branding creates standardization in order to
cultivate and develop positive awareness and create trust
(again, this decreases credence properties). Franchising also
parallels itself to clinical protocols, as “demonstrated best
practices seek motivated owners and operators in [the] ar-
ea”[10], and thus, both build reputation and increase patient
demand market share.
Branding of healthcare services is currently a novel idea,
but with consumer demand for satisfaction on the rise, its
popularity is sure to increase. Otherwise indifferent health-
care organizations will soon be scrambling to create con-
sumer value, secure market share, and improve profitability
by creating consistency and personalization of service. The
success of these initiatives will require branding, a key
ingredient to overall consumer demand, trust, and patient
satisfaction.
Patients versus customers
At first, the differences between the words patient and
customer appear to be one of semantics only; however, the
difference runs deeper than that. The labels of patient and
customer connote very different sets of behavioral expecta-
tions for the individuals involved. Individuals labeled as
customers may be more likely to “shop around” to find the
best deal, may be more likely to question the decisions of
 C.L. Corbin et al. / The American Journal of Surgery 181 (2001) 1–7
the medical professionals involved in their care, and may
hold very different expectations for the type of relationship
they desire than individuals who see themselves as patients.
This difference is clearly seen in emergent surgical situa-
tions when physicians treat people strictly as patients rather
than as customers, and the focus is on the disease or the
condition rather than the person. In emergent medical situ-
ations, patients are less able to “shop” for services and the
patient-physician relationship is often limited to a single
encounter.
In contrast, the long-term, intimate relationships formed
between patients and their physicians far surpass the rela-
tionships developed in most instances between service pro-
viders and customers in other service industries. A long-
lasting, powerful relationship is an avenue for moving from
unadorned service quality directly to customer delight.
Patient participation
The physician-patient relationship that is built on shared
intimacy and trust is unusually strong compared to relation-
ships between other types of service providers and their
customers. Because of the nature of clinical services, pa-
tients are fundamental participants in their care and, conse-
quently, play an important role in determining healthcare
service outcomes. Studies show that when a service rela-
tionship is positive, it promotes loyalty, cooperation, and
participation with the service provider and the organization
[11]. Patients are provided advice and medications; how-
ever, after they return home, the responsibility of continuing
the treatment regimen rests on them. To this end, evidence
indicates that those patients who are active in the promotion
of their clinical well being, perceive greater satisfaction
with the service delivery transaction [11–13]. For example,
hypertensive patients might be asked by their physician to
reduce their dietary intake of sodium and increase their level
of activity. Patients who adhere to the regimen will tend to
be more satisfied with their outcomes. Conversely, those
who fail to follow their physician’s advice suffer the effects,
and tend to be less satisfied with their service outcomes.
Studies in service marketing indicate that when patients
act as participants or temporary “employees” of the organi-
zation, satisfied patients are more vocal about their percep-
tions of the organization. They become voluntary perform-
ers of the organization, whereby “[they participate in]
helpful, discretionary behaviors . . . that support the ability
of the firm to deliver service quality” [11].
The importance of creating and developing participatory
patient relationships is threefold: loyalty, cooperation, and
participation [11]. First, participatory relationships result in
the achievement of patient loyalty which involves the cre-
ation of allegiance to the organization, as well as its pro-
motion. Secondly, relationship development enhances co-
operation. Consumers of services have preconceived ideas
as to their service delivery transaction and, ideally, under-
5
stand their roles in this process; this holds especially true in
the delivery of healthcare services where the ability and
willingness of patients to understand their roles and the
methods for achieving their goals is vitally important. Par-
ticipatory relationships enhance the likelihood of this oc-
curring. Lastly, patient cooperation involves the orchestra-
tion of patient feedback on day-to-day operations and/or
service delivery. Patient feedback allows the organization a
“free” organizational consultant, but unlike traditional con-
sultants these people are vested participants who are volun-
tarily providing their expert opinion in the service delivery
transactions associated with the organization.
Patient loyalty
Traditionally, healthcare organizations have failed to ac-
knowledge the need to build and develop long-term patient-
provider relationships. The focus, to date, has been on
discrete encounters, defined by Gutek et al [14] as “single
interactions between a customer and provider; neither ex-
pects to interact with the other in the future.”
Healthcare professionals probably underestimate the life-
time value of a loyal patient. A patient and his primary care
physician probably have many encounters during the life of
the relationship. Although the reimbursement for an average
patient visit may be small, the patient loyalty that evolves
from such contact might result in a patient choosing the
physician or her facility when a more expensive procedure
becomes necessary.
Approaching healthcare service encounters as discrete
encounters may be appropriate for some types of healthcare
services such as trauma or emergency services; however,
long-term relationships, customer loyalty, and patient reten-
tion are paramount for most other healthcare service en-
counters involving “face time” with patients in an ongoing
fashion. During the healthcare service encounter, patients
often share their innermost fears and thoughts and depend
on physicians to both alleviate their problems and provide
solutions. Through this longitudinal communication, it is
possible to develop a bond of trust between provider and
patient as their relationship constantly evolves. If the needs
of the patient are not satisfied the physician can lose that
integral element of loyalty that most other types of service
providers never quite achieve: trust.
Developing and fostering a relationship, and providing
meaningful interpersonal interactions along with a satisfac-
tory clinical outcome can form intense feelings of loyalty
among patients. Loyalty, as defined by Lain [15], “. . . is a
response on the part of a customer when a company fully
delivers on and often exceeds its promise to the customer. It
becomes a state of mind such that the loyal customer does
not entertain alternatives.” This statement epitomizes the
importance of developing relationships and creating loyalty
regardless of practice size.
Moreover, the peculiar thing about loyalty as it relates to
6 C.L. Corbin et al. / The American Journal of Surgery 181 (2001) 1–7
service transactions is the consumer’s ability to remain
flexible and understand the problems sometimes associated
with the organization. As stated earlier, the presence of the
patient as a participant (or voluntary employee) of the or-
ganization, demonstrates the allegiance between the patient
and provider and the flexibility of their zone of tolerance in
service quality. However, even a loyal patient will only
accept a certain number of mistakes before they become
avoiders (and negative promoters) of the organization.
Patient defection
Another important element of service marketing as it
relates to healthcare involves the antithesis of patient loyalty
and long-term patient-provider relationships—patient de-
fection. Patient defection may sound benign, but the finan-
cial effect suffered by an organization that has a high level
of patient defection is enormous. A patient defector is mod-
estly defined as a patient who does not return for services.
Unlike lost patrons of a restaurant or automotive repair
shop, patient defectors of healthcare organizations are more
difficult to track. For example, a patient may be treated once
and may not need further treatment for 20 or 30 years. Is
that patient a defector? The answer should be no, because
they have remained monogamous to their physician or
healthcare provider. However, the sheer length of time be-
tween service transactions makes it difficult to differentiate
loyal patients from patient defectors. Regardless, the cost of
patient defection is definitely underappreciated. Data indi-
cate that companies can boost profits by almost 100% by
retaining an additional 5% of their customers [16]. The
creation of patient loyalty and reduction of patient defec-
tions will ultimately result in increased net revenue. Addi-
tionally, Reichheld and Sasser’s research [16] shows that
those organizations with lower defection rates have the
ability to outperform their competition, even those with a
higher market share. Many of these latter organizations have
a high customer turnover; they will eventually exhaust their
target market and be left with a nondesirable market niche.
Managing and reducing patient defectors allows healthcare
organizations to achieve and maintain a competitive advan-
tage.
Service recovery
Mistakes do happen in all types industries, including the
healthcare service industry. These mistakes are often re-
ferred to as service failures. Service failures in the health-
care industry range in severity from mishaps involving
clinical errors to something as common as an excessive wait
for service. Although they sound like typical everyday oc-
currences and merely a part of the service transaction, pa-
tients may soon begin to take notice and become defectors
of the organization as a result of these errors. The develop-
ment of a service recovery plan designed to correct mistakes
when they arise can assist in defusing the dissatisfaction of
aggravated patients.
No one wants to lose a customer and an effectively
implemented service recovery program can reduce patient
defections and even enhance loyalty levels. Data suggest
that it costs five times more to replace a customer than to
retain a customer [17], and some experts would argue that
the loss of a patient could exceed this ratio. Hart et al [17]
provide the following programmatic steps toward successful
recovery:
Measure the costs: failure to acknowledge patient’s costs
associated with a service mistake often leads to further
dissatisfaction and even defection. Therefore, it is important
to evaluate all of the costs a patient incurs as a result of the
service mistake or failure. These costs include monetary
costs, time costs, psychological costs, and opportunity costs.
All of these costs are important because they serve as a basis
for determining the appropriate size of the service recovery.
Patients will mentally tabulate the costs they have incurred
as a result of the service failure and will use these total costs
to help decide what is a fair service recovery in their own
minds.
Break the silence: in short, it should be easy for patients
to let their healthcare provider know when a failure has
occurred. Patient complaints should be viewed as an oppor-
tunity to correct problems within the organization. By pro-
viding a mechanism for consumers to express constructive
criticism, a healthcare organization can make necessary,
positive changes.
Anticipate the need for recovery: an organization that has
effectively broken the silence should use this information.
This may sound like common sense, but in all types of
service organizations this step is often overlooked. Health-
care organizations should make use of the information that
their patients provide to them. This information may be
useful in correcting existing service failures, as well as,
preventing future service failures from occurring.
Act fast: prompt justice and closure can do two important
things for a physician practice or healthcare organization.
First, because little time elapses it reduces the number of
people a consumer will tell about their poor experience.
Second, it promotes a sense of caring and thus aids in
building trust and loyalty.
Train and empower employees: unfortunately for most
service organizations, healthcare included, in most cases
front-line employees (the first staff that consumers generally
encounter) receive lower wages and have achieved rela-
tively lower levels of education. Should a service mishap
occur, front-line employees that have been trained in the art
of service recovery and that are empowered to provide
recoveries will reduce the time between service failure and
recovery, diminish consumer dissatisfaction, and reduce the
likelihood of patient defection.
Close the loop: whether recovery is successful or not, the
need on the part of the consumer to find closure is impor-
 C.L. Corbin et al. / The American Journal of Surgery 181 (2001) 1–7
tant. Even if a mistake remains unresolved, offering an
explanation to the patient may be as important as a success-
ful recovery. As a result, the final step in an effective service
recovery program involves letting the customer know what
was done or will be done to resolve her failure.
Moods
Unfortunately for the healthcare industry, most people
generally do not look forward to visiting their doctor. Fur-
thermore, most patients are typically unhappy about the
prospect of the healthcare service encounter. Moods have
been demonstrated to have a significant impact on evalua-
tions. Specifically, when individuals are in positive moods
they tend to formulate more positive evaluations of situa-
tions and events [18]. This presents an interesting situation
for healthcare professionals. It seems fair to say that in
many cases patients are unlikely to be in a positive mood as
they engage in a healthcare service encounter. Patients who
are in less than positive moods will tend to evaluate health-
care service encounters more critically than patients who are
in positive moods. Healthcare professionals that recognize
the effects of mood on patient evaluations may be able to
proactively address this issue with the result being more
satisfied and loyal patients.
Conclusion
Arguably the purest form of a service industry and,
certainly, the largest such industry at present, healthcare
clinical delivery has advanced dramatically over the last 50
years in terms of the technical areas of procedure and
delivery in order to meet the needs of patients. Nevertheless,
it has not been until the past decade that healthcare organi-
zations, as well as individual physicians, have widely rec-
ognized the need to market their services. Managed care
cost containment initiatives, coupled with the Balanced
Budget Act, have produced tighter margins on services
provided. Healthcare organizations and practitioners have
found the importance of promoting their services in order to
achieve increases in public awareness, market share and
reimbursement.
Service marketing, although fairly new to the healthcare
marketplace, is and will continue to be a topic of major
importance. The dynamics of the competitive healthcare
marketplace have required that profound changes be made
by physicians and healthcare organizations in order that
they remain financially and operationally viable. These dy-
namics have forced physicians and healthcare organizations
to change the way they attract and retain their patients. The
7
practice of medicine has become a business; simply put, all
business entities require revenue in order to continue oper-
ations. Patients initiate the revenue, which requires the
effective implementation of service marketing to ensure
success. These service marketing principles have been pro-
vided so that physicians may begin to appreciate such is-
sues. Acceptance, appreciation, and application of these
introductory principles will become even more important as
competition continues to intensify and profit margins con-
tinue to shrink.
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