Marketing in health care

Marketing in Health Care: The Good Samaritan Society

The Evangelical Lutheran Good Samaritan Society is a non-profit health care organization with 238 nursing and healthcare facilities throughout the United States. They do not use a specific corporate pricing strategy. Instead, individual facilities across the United States set the prices for their service using a Cost-Plus Pricing strategy combined with a Price to Market approach.

The Cost-Plus strategy is "simply building price from the cost up, usually on a percentage basis" (AMA par 1). The Good Samaritan Society set budget goals for each facility considering local expense and revenue projections. The expense projections are based on market costs of items needed in the business. "The greatest expense in a health care facility is staffing." (Gebo). State and local governments require specific staffing levels for facility licensure. The Federal Government also sets staffing requirements if the facility receives Federal revenue from the Medicare Program. The cost of labor is largely based on supply and demand pricing. The services provided for the elderly are priced by building on the costs of operating the business up to a hoped-for profit margin.

The second consideration for The ELGSS is the market surrounding the specific facility. The daily room rate is different in each facility and based upon the level of care required by each patient. If the area in which the facility is located is saturated with beds then the ELGSS tries to stay within the market price according to its projected expenses.

There is definitely a relationship between the cost of providing the services that are offered by The ELGSS and the price of those services. In a Cost-Plus Strategy, the first consideration is the cost.