If the healthcare market is a patient, then the numbers say it’s noticeably sick. ASI data found that in the last four years, healthcare’s share of the total market for promotional products has steadily declined, from 13.8% in 2012 to 10% in 2016. And if the distributors are the doctors in this metaphor, then they’ve made a diagnosis based on symptoms of fear and uncertainty stemming from the ongoing partisan debate over healthcare policy, as well as exaggerated scrutiny on spending. Change typically fosters cautious spending habits, and according to distributors, this market is no exception.

“We’re finding that hospitals and the buyers are scared to make mistakes when purchasing promo items,” says Mark McCormack, owner of Identity Marketing Group (asi/229993). “Remember a number of years back when pharma was outlawed from buying promo items that weren’t educational? The more regulated or uncertain the industry, the more gun-shy people are to embrace creative ideas and spend money.”

In recent years, hospitals and healthcare facilities have increased oversight on departmental spending as they scrutinize costs and follow where their money is going. And in many instances, says Peter Will, president of UniversalPromo Inc. and medical products supplier UpLine Ideas (asi/92977), promotional spending is viewed as an easy “non-essential” cut.

The finance and supply chain departments used to let marketing do its own thing with regard to advertising and promotional spending, says Sarah Thomas, director of vertical markets for American Solutions for Business (ASB, asi/120075). “In the last couple of years,” she says, “there’s been a shift with people trying to get their arms around spending and get control over who they’re buying from.”

Increased competition among vendors seeking to capitalize on a lucrative market sector has also prompted healthcare providers to question why they have so many vendors, says Cathy Armando, ASB senior national account executive. “Hospitals want to simplify – they’re recognizing they can get leverage and value by using larger-volume, pre-approved and vetted suppliers,” she adds.

Still, distributors caution that it’s too early to tell what impact the proposed legislative changes will have on promotional spending. And according to David Walker, vice president of field sales for Hit Promotional Products (asi/61125), the healthcare proposals affect the insurance companies’ spend more than the healthcare industry itself. (And judging from the recent agreed-upon merger between Aetna and CVS, major changes in the insurance industry could also affect the future of healthcare.) Those insurance companies that work in healthcare will continue to spend money to market their services, he says. “Any changes will only affect who they target, and possibly the amount of the spend,” Walker explains.

Yet even among the shifts in healthcare spending, “with change comes opportunity, as well as a need for education. And isn’t that what marketing is all about?” asks Bret Bonnet, president and co-founder of Quality Logo Products (asi/302967). “The market may not be the same as it was before, and old strategies may not work as they have, but ingenuity and adaptation will lead into the next chapter for us.”

Buy and Large
Large distributors command the greatest portion of the healthcare market; it accounts for 11.2% of revenue for distributors $1 million and up, compared to 9.2% for mid-sized distributors and 7.6% for small firms. Why? According to Ron Williams, director of marketing for Fey Promotional Products (asi/54040) and a former physician, healthcare clients look for relationships and built-in value with products, as opposed to securing the cheapest price. That suits larger distributors, he explains. “Working with healthcare is solely relationship selling,” says Williams. “Larger companies have had greater time and opportunities to develop those relationship ties, which is why it’s normally their second largest client segment.”

Still, cost and purchasing power do remain a point of emphasis. Many healthcare providers participate in Group Purchasing Organizations (GPOs) as a way to be more cost-effective and efficient. GPOs rely on leveraging purchase volume to negotiate discounts with vendors. These buying groups can also act as a gatekeeper and restrict the number of companies they do business with. “Very few smaller distributors have contracts with GPOs like we do,” says ASB’s Armando. Adds Thomas: “It can be a year-long RFP process, and distributors need to be competitive and demonstrate value, but it allows us to bid on projects that we normally wouldn’t have an opportunity to pursue.”

While Bonnet agrees that larger distributors are more heavily represented, he notes, “only on the basis that holds true in every industry, which is: big spending takes great responsibility, systems, depth of talent and unparalleled offerings. It’s hard to do some of those things as a smaller distributor, but that certainly doesn’t mean the entire market is out the window.”

Physicians are increasingly being employed by hospitals (34.6% last year compared to 30.4% in 2014, according to The Physicians Foundation), and a wave of consolidation stands to threaten independent hospitals and practices. Still, many smaller healthcare entities remain, and Bonnet suggests targeting “the hundreds of doctors and medical professionals in your area that aren’t part of a huge group and that care for their clients the same way you care for yours.”

And perhaps in doing so, distributors can work their way up to bigger clients. For those wanting to enter this space, Alex Acree, owner of The Branding Society (TBS, asi/339539), recommends starting with private practices. By approaching private practices and local dentist offices, TBS got more experience and developed relationships that allowed it to segue into larger medical providers. Now healthcare is TBS’s second largest market, and the firm has preferred vendor contracts with two major hospitals, says Acree. “Even if it looks small to start, don’t be fooled,” she notes.

The size of your target will certainly inform who you should approach. For smaller private practices, speak with the office manager. For bigger hospitals, says Thomas, look to HR, marketing and the supply chain or materials management department. “Because we have a lot of experience in the healthcare market, we have an idea of what some of the pain points are industry-wide,” she says. “We’ll use those talking points when approaching gatekeepers to try and get their attention and set up a meeting to discuss our offering further.”

McCormack says research and education is key – everything from checking out their website to in-person experience. “Go into their office and see what they deal with,” he says. Identity Marketing landed one large hospital client when McCormack offered his experiences as a patient. “I told them what I thought could’ve been handled better, and the tools I could provide to do so,” he recounts. “They’re willing to listen. Learn to talk on their terms. If you can make them look better, or rank higher by implementing a program that saves money or solves a problem, they’ll listen.”

Product Prescription
When developing products, Top 40 supplier Prime Line (asi/79530) pays close attention to the top end-buyer markets, of which healthcare is always included. David Fiderer, senior director of marketing, says sales in this category have grown significantly for the supplier as it’s added many healthcare and medical items over the last three years: hot/cold gel packs, antimicrobial wipes, sticky pads and more. (Prime Line also has “Market Focus” and “What’s Trending Now” marketing tools that identify a variety of healthcare ideas for wellness, youth sports, doctor and nurse appreciation, trade shows and more.)

In Fiderer’s experience, the biggest purchasers of promotional items are medical supply companies, health insurance providers, hospitals and medical groups (the latter of which Fiderer says doctors are joining out of necessity). These groups buy lots of products, such as clipboards, pens and even patient gifts, like coffee mugs. “The goal is to promote loyalty and generate goodwill,” he notes.

In reality, a wide variety of products can be found in healthcare: drinkware, lanyards, lunch bags, jackets, floor mats, hand sanitizers, umbrellas – the list goes on. Some items are specifically geared toward patients; for example, Will says that dosing spoons and medicine droppers for pediatrics are UpLine’s most popular niche item.

Others are designed for recruitment and employee satisfaction. Nurses Week in particular is a “huge annual spend across the industry,” according to Hit’s Walker, while Will mentions that a shortage of nurses has amplified the need for recruitment. Prime Line offers nurse (and doctor) character items that entice these groups, including new ceramic mugs and plush bears with T-shirts for 2018.

Even scrubs – which are often tied to a laundry facility or contract with uniform dealers – present opportunities for distributors. “Uniforms are big for us. We do scrubs, doctor coats and shirts or jackets for volunteer programs,” says Acree, noting that it helps generate business for interdepartmental referrals. Just be aware of the uniform requirements per state and per department when pitching to a healthcare client. “Do online research, make phone calls and go in armed with a knowledge base. For example, certain positions require long-sleeve uniforms and some don’t,” she says.

ASB has found success with scrubs in multiple ways, including an on-site uniform fair during Hospital Week and customized apparel to celebrate one provider’s 100th anniversary. The anniversary order was an employee recognition initiative where everyone at the hospital who wears scrubs received two separate sets, and if their position didn’t require scrubs, they got polo shirts. “We received great feedback, and were told it boosted morale around the hospital,” Thomas says.

Whatever the product, Williams says it’s essential for distributors to detail how they can help healthcare clients accomplish their goals. “Ad impressions are a soft metric they really don’t care about; they want trackable and actionable results-based marketing and advertising,” he says. Also, be clear on the message the client wants to convey to the end-user, the timeline and the budget, adds Will.

McCormack emphasizes that the products used have to be in a campaign and trackable, or used in treatment of a patient, such as drinkware for hydration of a patient, or custom nonslip socks. He advises taking a more strategic approach by spending more time creating campaigns that will prove to the consumer that this can be a piece in the strategic play to drive revenue. “Then it’s an entirely different conversation,” he says. “You’re no longer the swag guy, you’re the consultant who drives revenues.”

And don’t be afraid to explore possibilities beyond promo. As a full-service ad agency, Identity Marketing has witnessed medical customers putting more of their budget into other areas, such as web, digital advertising and social media, creating healthier returns. “We love promo, but the margins on getting all the marketing spend are much better if we control the campaign,” says McCormack. “We want to talk with our customers about their entire budget, not just the promo piece.”

6 Niches to Know

Home Healthcare
This is becoming an increasingly important and lucrative sector. “Keeping people at home as much as possible keeps costs down for the hospital,” says Peter Will, president of UniversalPromo Inc. and UpLine Ideas (asi/92977). In addition, when patients are sent home shortly after surgery or elderly patients are released but still have medical needs, services like the Visiting Nurse Association (VNA) and home health aide services are essential. Adds David Fiderer of Prime Line (asi/79530), “These services aren’t always covered by insurance, and often there’s a fairly large out-of-pocket expense for the patient.” They depend on referrals and word-of-mouth, and there’s an opportunity for distributors to provide high-impression items, such as a mobile phone pocket that contains contact information for such services, he says.

Wellness Programs
Still popular with corporate America, as employers strive to keep their employees at work and reduce healthcare premiums. Top products in this category from Fey Promotional Products (asi/54040) include pizza and kitchen cutters, along with flexible cutting boards “because people are eating healthier and prepping more fruit and veggies,” notes Fey’s Ron Williams, who educates distributors on wellness programs through a series of webinars. All three of the products are easy to clean and FDA compliant.

Community Outreach
Hospitals and medical centers are increasingly doing more of this, as well as expanding into partnerships with nonprofit groups. They’ll sponsor events like 5Ks to make people aware of their services and ultimately become patients, says Alex Acree of The Branding Society (asi/339539). For example, a hospital-funded expectant mom group can create the opportunity to provide small incentive gifts for attendees, such as baby onesies and hats, or hot/cold packs for moms-to-be. “Once you work with traditional medical centers,” she says, “lots of events spin off from that.”

Medical Tourism
Mark McCormack of Identity Marketing (asi/229993) is seeing a boost in “medical tourism,” where customers fly overseas for surgical procedures. “It’s cheaper, and there are more procedures offered that are often experimental for therapies such as certain cancers that have better outcomes abroad,” he explains. These companies buy lots of promo items, like luggage tags and other travel items, similar to what travel companies use, he notes.

Concierge Care
These services are geared toward a wealthy clientele, often aren’t covered by insurance, and have high profit margins, says Prime Line’s Fiderer. Potential patients usually need service quickly and often don’t know who to call or where to go, making it a great branding opportunity for service providers and distributors as well, he says.

Newer Markets
Bret Bonnet of Quality Logo Products (asi/302967) sees organic spending increases in elder rejuvenation, opioid rehab, traumatic event counseling, developmental behavioral, pediatric care and more. “Services like these are often patient paid or at least partially reimbursable, so there’s a great need and value in the medical field to provide it,” he explains.

Jean Erickson is a contributing writer for Advantages.