[00:00:00] Desiree Duncan: Welcome to the No Normal Show, brought to you by BPDA marketing services firm that delivers the future of healthcare’s leading brands. This shows where we leave all things status quo, traditional old school, and boring in the dust, and celebrate the new, the powerful, the innovative, the bold, all focus around the future of healthcare, marketing and communications. I’m Desiree Duncan, vice President of Health Equity Inclusion, and today I’m joined by Chris. Bevelo, chief Transformation Officer. You’ve been out here in the wild, just you holding down the podcast fort. How does it feel?
[00:00:30] Chris: I, I enjoyed being in the podcast. I don’t mind holding on the fort. Uh, and I think you should have added to the things we’ll leave behind. Um. Discussion of intestines. So since we covered that last week with Annie Chang, we just will leave that in the dust intestines. In the dust. Here’s a visual for you.
[00:00:51] Desiree Duncan: It took a great deal of intestinal fortitude to get through that episode.
[00:00:55] Chris: Wow.
[00:00:57] Desiree Duncan: Yeah.
[00:00:58] Chris: that You know what, that [00:01:00] took a lot of guts, Dez. That took a lot of guts.
[00:01:04] Desiree Duncan: You know, I’ve got a, I got a strong core. Enough, enough, enough. Uh, uh, but yes, she had a great, great listen to that episode. Uh, definitely some FOMO with yours and Stephanie’s episode, but she’s out traveling, living her best life all over Europe, apparently.
[00:01:20] Chris: Oh, and it’s hot. I’ve been reading how hot it is. I think she’s in Spain and it’s, I mean, it seems brutally hot.
[00:01:29] Desiree Duncan: Yeah.
[00:01:30] Chris: that’s, I hope she’s, I hope she has air conditioning access.
[00:01:34] Desiree Duncan: staying hydrated, but excited to hear all about it when
[00:01:37] Chris: Mm-hmm. Yes.
[00:01:39] Desiree Duncan: But Alright, so on today’s episode, we’re gonna talk about the future. The next, well, we’ve been talking about the future of the CMO, well, we’ll talk a little bit next about the, the final opportunity. but before we jump into all of that, we’ve got, of course, the new Joe public route.
Retreat coming up for 2026. Very exciting. Um, when am I gonna get to go go to [00:02:00] one of those, Chris?
[00:02:01] Chris: Well, we shall see. In fact, by the time this show hits the air, you will have, you’ll know everything you need to know about it. It’s going to be in February, uh, it is going to be in, um, sunny South Beach, Florida, and it is going to be an amazing focus on ai. And I won’t say in what way. Uh, but we have our friend Paul Rader, who’s gonna be there, uh, with us for an entire day because when he was with us in December, uh, we got two hours of Paul, which was enough to set everybody just literally running around.
Hair on fire. So, uh, we have something even more special planned this time. So, uh, watch for a link in the show notes for more information and how you can register. Remember only 40 people, we only allow 40 people because we try to keep the environment super cool. Uh, we’re already about a quarter full as of recording of this, and we haven’t even started promoting it yet.
So if you are [00:03:00] interested, sign up quick. We’ll have a wait list, but nobody likes to be on a wait list.
[00:03:05] Desiree Duncan: Yeah, it’s so very exclusive opportunities to jump on it fast and completely understand. But I, I’m always excited when you all come back from that ’cause you have all of the nuggets to share. but of course, if you can’t get enough with the no normal show and you wanna stay up to date on the Joe Public Retreat, uh, be sure to subscribe to our newsletter.
The No Normal Rewind, which recaps this discussion you hear on our show today, uh, with some extra insights you won’t find anywhere else. Uh, so yeah, let’s jump into our show. What, what,
[00:03:32] Chris: We should,
[00:03:33] Desiree Duncan: have you been up to?
[00:03:34] Chris: well, where in the world is Desiree Duncan? Where are you today? I know where you are, but this is my setup like
[00:03:41] Desiree Duncan: This is
[00:03:42] Chris: for the, for this bit. Yeah. You’re in Chicago.
[00:03:45] Desiree Duncan: I am finally settling down some roads in Chicago after just about two years on the road. I’m exhausted. I am we road weary. Um, but excited to have a, a brand new home. It’s [00:04:00] been quite an adventure getting to, uh, just explore and check out all of these different cities. Uh, I know I did it. Uh, a few years ago, but this time around it felt different because it wasn’t COVID times I actually got to experience the city and its true, uh, nature and not just everything being closed down. So yeah.
[00:04:20] Chris: you, you should probably give a little more context. We have good friends, uh, that bought a really nice rv, took their 9-year-old twin daughters and spent a year, I think they’re almost done, uh, traveling around the country. Just, just for a year visiting all the national parks, doing all this cool stuff.
You did not have an rv. So explain like which cities you basically went from city to city, staying there for what, a month or two, something like that. Give folks the context for your journey. I
[00:04:53] Desiree Duncan: So did not do van life ’cause uh, life is complicated enough without having to deal with gray water.
[00:04:59] Chris: [00:05:00] nice.
[00:05:01] Desiree Duncan: but essentially, um. was looking for a new home and wanted to kind of try on a couple different cities, and essentially what I did was, uh, my partner and I, we would find a rental, uh, via furnish finders where they have, uh, furnish pla places with all the fees of Airbnb. Um, but it’s basically the same setup that you would have at home. Um, but loaded up our cars and hit the road trying on different new cities, different new personas. Uh, I was
[00:05:27] Chris: What does that mean?
[00:05:29] Desiree Duncan: Well, I was, uh, my partner really loves Austin, Texas, and so I was like, okay, let me get the big 10 gallon hat.
Let me get some boots. Let me go learn how to two step. And I really put on, um, that personality there. Uh, and then I think when we were in, I really loved Raleigh, uh,
[00:05:46] Chris: Mm.
[00:05:47] Desiree Duncan: Shout out to Vic and the team at UNC Health. I was actually really blown away and. It’s, it’s got this gent heel, southern nature to it and charm to it. Uh, and then I rounded out. I, [00:06:00] I basically circumvented the country. Anything I needed to be able to drive, I wasn’t gonna move from Seattle to like Florida. ’cause that’s ridiculous. Um, but, um, Austin, Phoenix, Seattle, Chicago, dc, Philly, all of those great places. But ultimately nothing beat Chicago.
[00:06:19] Chris: It’s
[00:06:19] Desiree Duncan: perfect American city.
[00:06:21] Chris: Chicago’s so amazing. Isn’t it so amazing? Like we hear so much crap about it in the news and I know it has issues. There’s a lot of issues, but dang it is such a cool city. I love it. I.
[00:06:35] Desiree Duncan: And it’s funny, you learn a lot about a city based off of the way the people drive in that city, but I’ll, I’ll write a book one day.
[00:06:41] Chris: Well,
[00:06:42] Desiree Duncan: later at some point.
[00:06:43] Chris: I, I have complete opinions on most major cities on driving alone, and Chicago is definitely. A challenge city, but it’s more because of its infrastructure than the drivers, in [00:07:00] my opinion. There are drivers, uh, in other cities and I will name like LA or Houston that are crazy, crazy. LA is like the infrastructure plus crazy drivers.
[00:07:12] Desiree Duncan: Mm-hmm.
[00:07:14] Chris: I, in my times there over the years, just like, oh my gosh, if you’re not going to 85, like, what are you doing?
[00:07:20] Desiree Duncan: What are you
[00:07:20] Chris: Um, what are you doing? Yeah. So Miami has become a, a city that you could profile by traffic. You know,
[00:07:28] Desiree Duncan: that is a Formula One race, uh, everywhere you go down in South
[00:07:32] Chris: it is,
[00:07:33] Desiree Duncan: Uh.
[00:07:33] Chris: it’s.
[00:07:34] Desiree Duncan: On the flip side, Seattle hesitant, very hesitant. Drivers slow taking their time. Like I got road rage quite a bit. I’m like, just drive your car please for
[00:07:45] Chris: Well,
[00:07:46] Desiree Duncan: of God.
[00:07:46] Chris: Seattle’s notorious for its traffic because of its infrastructure. ’cause five is like the only artery. So it’s terrible.
[00:07:52] Desiree Duncan: it.
[00:07:53] Chris: It’s funny because Minnesota, the Twin Cities where I’m from, complains about how bad the traffic here is. Like you have no idea. [00:08:00] And also that Minnesota nice is infuriating. So as an example.
When you exit onto a highway, what are you supposed to do, Des?
[00:08:10] Desiree Duncan: Uh, you exit, you’re supposed to
[00:08:14] Chris: Yeah. But how, no. If you’re getting onto a highway from an exit, what are you supposed to be doing? Describe you as a driver.
[00:08:21] Desiree Duncan: Match the speed of the, of the highway
[00:08:25] Chris: that’s right. Are you,
[00:08:26] Desiree Duncan: it.
[00:08:26] Chris: are you supposed to stop at the bottom of the exit and look over your left shoulder for an opening?
[00:08:32] Desiree Duncan: Oh, absolutely
[00:08:34] Chris: No, unless you’re in the Twin Cities. Oh, certainly.
Certainly that’s the case. We also have people that, um, because we are notorious for our passive aggressiveness, they will sit in the left lane going the speed limit. And we know this to be true because they will share it in letters to the editor where they’re like, nobody should be going faster than this.
So what’s the problem? So they were literally, [00:09:00] they will literally police everybody else by just sticking in the left lane, going the speed limit. Uh, welcome to Minnesota. Yes, it’s true.
[00:09:08] Desiree Duncan: no,
[00:09:09] Chris: It’s a true thing. Anyway,
[00:09:12] Desiree Duncan: Uh,
[00:09:12] Chris: digress.
[00:09:13] Desiree Duncan: we digress. Uh, speaking of that, superhigh, we had great anticipations for chat, GPT five, uh, but they didn’t exactly pan out. Uh, I will say that we are recording this episode on August 14th, just because I know that things are changing almost every day. So when you hear this, it might be different information. Um, but I know you and Andy, uh, chatted a little bit about, um. Um, the updates, but I, there’s been quite a bit of backlash, um, especially again for folks that felt that, hey, I lost my favorite, uh, what was it? The Chad GBT 4.0 and three.
[00:09:52] Chris: Yeah.
[00:09:52] Desiree Duncan: options back. Um, but they have brought that back. But I know again, Chris, you have some thoughts and [00:10:00] um, maybe even a little bit of a recap from your convo with Andy about it.
[00:10:03] Chris: Yeah, I, I’m not, I haven’t spent enough time in it. What’s interesting for me to, to really feel this like. You know, boy, what the heck? From what I read and what I hear, what’s interesting to me is, is this a chat GPT five problem or is this a user problem? Because a lot of the feedback has been that it’s, it’s less, um, what’s the word I’m looking for?
Not congealed, congenial, is that a word? Did I make, make up a word? Congenial. It’s less friendly. I.
[00:10:39] Desiree Duncan: One less
[00:10:40] Chris: Yeah, it’s less congenial. It’s, yeah. And um, and so is it because people feel like, oh, it’s not my friend anymore and it doesn’t make me feel good anymore, and it’s more just kind of professional and I don’t like that.
If that’s true, then that’s more of a sign that people have maybe become a tad over [00:11:00] reliant on. Ai. Um, so I don’t know. It’s hard for me to suss out. I think taking away the option of 4.0 is probably a mistake. If people like it better, then give them that choice, which you said they would do. I also think they’re, you know, and they, the thing that’s funny to me is.
We’re in such a time of 2 cent Nation, like we talk about all the time, and part of 2 cent Nation is the instant overreaction. People will react immediately in an overblown way. And it’s like, I just saw an article yesterday that says, like, with all the issues with chat, GBT five is AI finally reached its limit.
It’s like, what? Like don’t, don’t, don’t like ascribe, prescribe ascribe. I’m making up words as I go. Don’t ascribe. Like this big whole thing to, to something that’s been out for like a week. You know what I mean? Just calm down. Uh, there’s a podcaster that I used to listen [00:12:00] to all the time when I finally just couldn’t do it anymore.
His name name is Bill Simmons. People who are sports fans, um, will know Bill Simmons. Super popular, super successful, but he is the king of the over the instant overblown reaction. So something happens in sports and all of a sudden it’s like, oh, are the Yankees done as a team forever? And you’re like, calm down.
Like we’ve been through this before. Like when a quarterback does good in one game, that doesn’t mean that quarterback is a hall of famer. And when a quarterback doesn’t do good in one game, that doesn’t mean that quarterback is as a horror show and a complete failure, like just reacting to these moments.
And so that’s kind of where I’m at with all this. Like everybody just needs to chill out from both sides and give it some time. How’s that?
[00:12:46] Desiree Duncan: I hear you on that. And I, and I guess it, in other podcasts I’ve listened to, they’re kind of harken it to like when the new iPhone, uh, came out where it’s like, this doesn’t. that much different, but I still bought it. I still have it. It’s doing its thing [00:13:00] we’ll see what else is next.
[00:13:01] Chris: Yeah,
[00:13:02] Desiree Duncan: flip iPhone or something.
[00:13:03] Chris: it’s fair. It is fair to, it is fair to make sure the hype isn’t too real, like PhD level. Um, and we joked about this, Annie and I did, but also like when you asked that how many bees were in the word blueberry, it insisted there were three. Um, so that’s the kind of stuff that’s fair to push back on, but also let’s not.
But let’s not run screaming in the streets that the world has ended because it’s not exactly what we thought it would be. Or it’s different in some way. Like just relax, everybody. Can’t we just relax?
[00:13:34] Desiree Duncan: Relax. It’s cool. Chill guy. so I, I know we haven’t really talked, we’ve touched on this a little bit, but we haven’t had an episode about it. But essentially, um, you know, ai, what’s the future of work? And I’ve been thinking a lot about, like with young folks, um, there have been a couple different articles in, in stories around how, uh, entry level jobs, you know, what are those?
So then if you were graduated from [00:14:00] college, you know. What are your prospects here? I bring this all up. Um, thinking about the, uh, there’s an article that came out from the, um, KKF, um, the Kaiser Family Foundation, KFF. And it is around, you know, why young Americans dread turning 26 and some of the health insurance, uh, chaos that they’re experiencing. And I know with the a CA, it. Really gave folks, uh, adults the ability to stay on their parents’ insurance plans until age 26. Uh, when before you were 18 or 19 years old, you’re kicked out or kicked off the insurance not kicked out of the home unless you were a full-time student. Um, and so as say I was reading this article, I, it’s like. Yeah, like, I mean, most people, um, you know, have their insurance through employer, uh, provided, uh, ways. But when you think about how the job market has changed, uh, with the gig economy, um, you know, with the potential, [00:15:00] uh, shift in nature of what work is, you know, it be much harder for, uh, students graduating to land or recent graduates to land that first job?
You know, what is that going to do, uh, for the insurance? Um, this is all coming up because of some of the. of the a CA subsidies that meet, that are gonna be ending this year, uh, causing insurance to be even less affordable than it is, uh, with all of the political changes and regulations and all that good stuff.
But yeah, it’s, it’s quite a bit of a concern, um, with what’s happening. I don’t know, Chris, your thoughts on any of that?
[00:15:34] Chris: Well, I have a lot of thoughts ’cause I have three daughters and one of them turned 26, oh I can’t remember last year.
[00:15:43] Desiree Duncan: Mm-hmm.
[00:15:43] Chris: I was imploring her, please find insurance. She’s like, yeah, I’m, because you know, folks in their twenties. I’m like, well, they’re not, they don’t have any health issues. Right.
[00:15:54] Desiree Duncan: Yeah.
[00:15:55] Chris: and what’s different than before when, when this age, age [00:16:00] extension wasn’t there, was getting insurance was harder, but it also was way cheaper.
[00:16:05] Desiree Duncan: Mm-hmm.
[00:16:06] Chris: you’ve got far more people now. I don’t know what the stats are, but it’s not just about college graduates. Um, because, you know, a lot of, a lot of kids in their twenties aren’t going to college. And can remain on their parents, whether they’re looking for a job, whether they have like jobs in retail that don’t give them insurance or access to insurance.
So it’s impacting more of those folks too. And now I have a second daughter who is approaching this. Uh, I believe, uh, it might not be till 20. I’m trying to think of her age. I can’t do the math. I’m terrible. 2027. So it’s coming up. Um, but you have to, you have to find it before, like when you turn 26, day one, that’s when it happens.
Not the end of 26. So actually I think it’s next year. Um, it, it just, I don’t know. I could go on and on, but the fact that we have to think about and worry about [00:17:00] this in terms of our career choices, in terms of our lives is just, I still find it mind breaking. Right. It, it impacts if you want to change a job, it impacts if you wanna start your own thing, it impacts, you know, people in their twenties in a way that it really shouldn’t.
It dictates decisions at that level. And health insurance should just be a, oh, by the way, not a, this is gonna dictate whether I take that job or this job, or whether I can start my own business or go off on my own. I mean, that is. I think, think how much economic, uh, challenge that provides to us in this country where if that wasn’t the case, there’d be, I, I would imagine free up so much more economic value in GDP by people being able to do whatever the hell they wanted to and not worry about insurance.
I don’t know.
[00:17:58] Desiree Duncan: I, I know I was talking about like if you [00:18:00] are going into the W2 route, that there’s a little bit of a hiccup with, you know, starting, but like so many young people have an. Opportunity to go more of the entrepreneurial route,
[00:18:07] Chris: Mm-hmm.
[00:18:08] Desiree Duncan: or they’re working at startups or they’re, you know, they’re, they’re kind of charting their own lane here. Um, it just really create, creates a little bit, but just something to think about, like, um, you know, with the excitement of ai, with the excitement, everything that’s going on, and, and also some of the complexities of what’s going on, the political landscape, um, to really keep a lot of the stuff under, uh, top of
[00:18:28] Chris: It’s, it’s just one, one more challenge for providers
[00:18:31] Desiree Duncan: Mm-hmm.
[00:18:32] Chris: where this hits providers is the more people who are left without insurance or adequate insurance, no matter how you’re looking at it, that’s a burden on providers who will provide care for those people, but then not get reimbursed for that care.
Um. So it impacts our clients, our audience in that way, but all of us as humans as well. So blah,
[00:18:53] Desiree Duncan: Absolutely. Blah. Alright, so let’s, let’s get into our main topic, [00:19:00] uh, which is, um, the slightest opportunity for the future of the CMO and that essentially, I don’t know about the, the old Chris Tucker movie Money Talks. Uh, money Matters, it still matters. And that we, um, you know, in this role looking at, you know, how do we. Put into, take out of, have the financial impact on our health systems and what that all looks like. Uh, I know earlier in the, the, the white paper, we talked a lot about the excitement around ai, like we talked about earlier. Um, some of the opportunities with, you know, the land grab, if you know. calms or really honing in on being that whisperer. Um, but this kind of really takes a look at, you know, still what’s always, no matter what direction you take, this is always gonna be something very critical. And I know, Chris, you have been writing about this, uh, for a number of years. Um, so yeah, I would love to hear, of course, your perspective. I’m actually the, actually, I’m gonna be a little student here today myself and listen to, uh, [00:20:00] prof B uh, give me a little bit of schooling on the financial implications of the CMO role.
[00:20:07] Chris: Yeah, we thought we would do a little, um, let’s step back and take a look at it. And specifically on ROI, um, yeah, I do feel a little bit like Don Coyote. I know I’m not the only one, um, tilting at windmills because I’ve been tilting at the ROI wheel mill for, oh my gosh. Mm. Let’s see. 17, 18 years, something like that.
Um, and I, I think we talked about this in a podcast earlier, but it, it’s funny because we did, at the Hemps conference in April, we did a panel on defending ROI, and I kind of made a joke ’cause we had, we had a, we had standing room only people spilling into the hallway for this panel. And I said, you know, everybody comes back to these, uh, because.
Even though we’ve been talking about it for 20 years, I mean, some of the people that were on the panel have been around that long, like I have. And it’s like, [00:21:00] why can’t we, why is this still a panel? Right? Like why are we still here in 2025? Talking about defending ROI. So, um, let’s just talk about this really quickly ’cause there’s some basics I think are helpful.
Uh, and this goes all the way back to, um. A book that I actually authored in 2010 called A Marketing’s Guide to Measure Results, which when it came to ROI really relied on what I consider the gospel then, and still the gospel, which was David Marlowe’s book, A Marketing Guide to Measuring ROI, which was 2008.
Um. So while I took a look at measuring results across the board, uh, David kind of wrote the first formal. Uh, you know, kind of treats you on ROI in marketing and it still holds up today. Uh, I used to call David Marlow Grand, the, the godfather of healthcare marketing. Uh, he was around in the eighties and nineties, right?
So he really knew [00:22:00] what he was talking about. And so I’m gonna reference some of that. Uh, what’s interesting about marketing, about ROI, first of all, is there’s a number of definitions when we talk about marketing. Oi uh. Marlo calls it effort, ROI, but those are interchangeable. Uh, he defines it as the revenue net of costs that comes from a specific marketing endeavor, which is I think how all of us think about ROI today and how we measure it.
Uh, what’s interesting is there’s an actual finance definition. So if you go look at, like, our source, um, for those books was Baron’s Dictionary of Accounting Terms. De I know that’s one of your favorite go-tos. Uh, I know you keep that buyer. Your bedside, um, always dipping into a barons? Uh, the, the finance definition, yes, the finance definition is completely different.
Uh, it is defined as ROIs, defined as defining net income by average. Total assets, uh, do not ask me to go into that. Uh, I am not a [00:23:00] finance major. I, I’m not a CFO, but I bring it up because. Right from the get go. If you are trying to drive and measure ROI from a marketing standpoint, you may run into confusion with your CFO who may bring that definition to the table.
And when you show up and say, I wanna measure ROI, he or she may be like, what are you talking about? Like, this isn’t really ROI, so, so that’s just like right outta the gate, something to deal with. Um, do you want to know more about the finance definition, Des.
[00:23:33] Desiree Duncan: I, I think I’m, I’m good there.
[00:23:36] Chris: Good.
[00:23:36] Desiree Duncan: and, um, my mind is just kind of thinking about even just like the tracking and just like, kind of the complications. I like already jumped to that.
[00:23:44] Chris: Yes. Now let’s just leave it, let’s leave that in the dust with intestines. I think that’s where it belongs. Okay, so Marlo Mar, so how do you actually measure marketing? Or why? And, and this is a, a very common formula that David uses. I’m gonna read it to [00:24:00] you, then I’m gonna give you an example, but I think it’s pretty straightforward.
So the formula for marketing ROI is net revenue. Minus marketing expenses divided by marketing expenses times 100. All right, so that sounds really complicated. It’s really not. So if you run a campaign and it costs you $250,000, we’ll talk about how you define that cost in a second, and it brings you a million in revenue.
We’ll also talk about what that means in a second. So you spent $250,000, you brought in a million. So using that formula, that would be a $1 million minus $250,000. So that’s $750,000 divided by. The $250,000 times a hundred, which would give you 300%. So according to that formula, your ROI in that situation is 300%.
Most people will say that in terms of a ratio, so three to one. So for every dollar you invested in that campaign, you brought [00:25:00] in $3, thus a three to one. Uh, RY. Is that track, is that making sense? It’s okay. It’s not, well, we don’t have it up on a chalkboard, which we should. Um, so if you’re not able to follow that, uh, in your mind, it’s pretty simple if you write it down.
That make sense, Des? I mean, hopefully.
[00:25:17] Desiree Duncan: does. It does, but I think it’s it speak where my mind went kind of speaks to kind of what the issue is with markers. And like you start talking about finance and business and all that, and I’m just like, do, do,
[00:25:29] Chris: Thanks.
[00:25:30] Desiree Duncan: about the actual, like, okay, well how do I track that? I’m thinking of the tech behind it and not actually understanding like what is the foundation.
So I’m glad you, you brought it up and you’re explaining it.
[00:25:41] Chris: Yeah, because that formula is pretty straightforward. But once you start defining the variables in the formula, it gets tricky. And this is why you really need to, to figure all this out before you get to where your mind is des, before all of the tracking the systems. Because if you don’t have agreed upon [00:26:00] definitions, first of all, you gotta agree upon that formula with your finance people.
Then you gotta agree on the definitions of it. So for example, we talk about, uh, the costs, right? The cost, the marketing expenses. Well, what does that mean? So really what that’s supposed to mean is the variable marketing expenses related to the efforts, right? So what are, what are the costs that you would incur for or have incurred for this campaign that otherwise you would not have?
So think creative costs, production costs, media costs. Um, if you’re working with an outside partner, an agency, a marketing firm, whatever, they charge you to develop the campaign, that’s what you would include for costs. What you wouldn’t include are staff costs. Why? Because those are fixed. So you’re spending that money no matter what you do.
So you normally wouldn’t include that. You would include your, your mark on infrastructure. So your mark tech costs wouldn’t be included there. Uh, so that’s the kind of thing that you gotta be clear on. [00:27:00] And it may have to negotiate with your, with your finance folks. On the flip side, you also have to, and this is where it gets really sticky, agree on revenue.
So what do we mean by revenue? Uh, the industry standard, not just in healthcare, but in marketing overall, is contribution margin. All right? Contribution margin is again. Is, is that revenue that you’re bringing in specific to the effort? Uh, and its contribution margin because it is the revenue that you get to count.
Uh, that’s left after the expenses. Related to that, it’s not other forms of margin nor, uh, revenue. So when we say in the formula revenue, what we really mean is contribution margin, but that matters. Uh, so for example, there are, there are kind of four different buckets of revenue. There is gross revenue.
Alright? Gross revenue is what your charges are. Uh, never use charges, never use gross revenue because it’s fake. It is just [00:28:00] monopoly money. It’s like, Hey, for this surgery we would normally charge $10,000. Well, good for you, but you’re not getting that $10,000 because in every case you’ve got a negotiated rate.
So you may say you’re gonna charge $10,000. The insurance will tell you, no, no, no, no. You’ll get to charge 4,000 for this. So that money is really not realistic. That $4,000 is what’s called net. Net patient revenue, which is the real revenue metric, but you shouldn’t even count net patient revenue because again, you’re only counting the revenue.
You’re not subtracting the costs, the marketing costs from that, that’s how you get the contribution margin. So if it’s an orthopedic campaign and you bring in a million dollars in net patient. Orthopedic care that you can track to this campaign. It’s a million in net patient revenue minus in the example before 250,000 in marketing expenses gives you $750,000 in contribution margin.
That is still different than net margin. Which would tack [00:29:00] on all of the fixed costs, not just the ones I mentioned before, but the cost of the hospital, the cost of the administrators, all of the things that are just baked in, whether you spend the money or not. And if you’re going that low, uh, now you’re at a point where you’re not gonna show any positive.
Um, from anything really from marketing standpoint. So you measure contribution margin for the effort. That was a lot, but that’s why it’s important, like if you don’t have that agreed to ahead of time, you’re gonna run into a buzz saw when you try to show up with your numbers.
[00:29:34] Desiree Duncan: Oof. So you almost need to, and I, I don’t know what, uh, depending on your school that you went to, if you went the journalism, comms marketing route, you definitely did not have a
[00:29:45] Chris: There’s my school,
[00:29:46] Desiree Duncan: That’s your school, was it
[00:29:48] Chris: State. Oh, I can’t turn around. Yeah.
[00:29:50] Desiree Duncan: I
[00:29:50] Chris: Not known for its finest necessarily, but.
[00:29:53] Desiree Duncan: Okay. Exactly. Uh, yeah, maybe I should have gone and actually taken that finance class as an elective. [00:30:00] Uh, I guess in a way it’s like, how do we get up to speed? Like if this isn’t something that is already inherent, is it more, um, learning on your own, building that relationship with your, your CFO, you know, what are the steps for something like this?
[00:30:14] Chris: Yeah, I, it, it, it almost the variables I’m talking about, whether they’re revenue or cost variables, uh, are gonna vary from organization to organization because it is that, that negotiation you have with your finance people. So we know people that do have to use net margin in their ROI calculation, which is just gonna make it look worse in terms of their contribution.
But that’s not contribution margin, marketing’s contribution to the organization. Um, but that’s, that’s what they have to use. We have other clients where the CFO has agreed to use net patient revenue or to look at, um, there’s all kinds of other things you have to think about. Like, are we just talking, are we getting credit for just new patients?
Are we getting credit for all encounters? Are we getting credit for just the orthopedic [00:31:00] surgeries that we bring in? Are we getting credit for subsequent procedures that we’re gonna get? Maybe it’s in cardiology, maybe it’s lifetime value. Um. It really will depend on what your finance, uh, folks a agree to because if they don’t agree to it, you’re not gonna get anywhere.
So it will vary. And so it’s why it starts with building that foundation with them, in collaboration with them. Um, it would be great if there were industry standards. The, like my, I said this, uh, to somebody yesterday. My dream is to have the, uh, healthcare Finance Management Association and shush mid come together and together come up with industry standards that marketers and finance people would both agree to.
Then we can just all agree and not have to negotiate each time. But that is the situation now,
[00:31:53] Desiree Duncan: Yeah,
[00:31:53] Chris: it’s
[00:31:54] Desiree Duncan: I.
[00:31:55] Chris: tough.
[00:31:56] Desiree Duncan: And I guess when I think about this, it’s also, I imagine strategy has [00:32:00] to be a part of this as well. Uh,
[00:32:01] Chris: Mm-hmm.
[00:32:02] Desiree Duncan: to clients, there’s an issue of like, okay, like is there access for this particular service line? Or if there’s a strategy of like, okay, we want to grow more in this, so we have a couple of new surgeons in, which means we have more space and access, go get ’em. But let’s get in. I know we’re at, um, have some time, but let, let’s get a little bit into that, like that tracking of that. Like what, what’s the, the formula for that?
[00:32:27] Chris: Yeah, I mean, you, you’ve got to, if you’re, if you’re not sitting an hours long meeting talking about what DRGs are gonna be counted, um, and how are, do you have the ability to track patient encounters by DRG by their payer mix? You’re not, you’re not having the right conversations. These could be grueling conversations, so.
It, it, it, it takes a long time to build all of that out. You have to have the finance systems, you have to have the marketing systems to, to, to be able to identify the encounters related to a [00:33:00] specific, um, there’s a lot there. Rather than go into all of that because it’s, it would be even more boring than one I just talked about.
For the last 10 minutes. Um, I think what’s interesting is related to the future of the CMO is even when people have figured this out, des uh, we call it climbing the mountain, right? If you’ve been able to climb the mountain and you’ve figured all this out and you’ve, you’ve got the systems in place, you’re able to show up and say, we spend a million dollars in marketing and we are able to drive $2 million in contribution margin.
It, it, there’s. You know, I would say, I don’t even know, I’m not gonna put a percentage on it, but there are far fewer people have climbed that mountain than have not. Right. Most systems are still working toward that. Even when they do, many people get to the peak of that mountain and they, their reception is a yawn.
Like, Hey, thanks, thanks for the incremental $500,000. It turns out we’re a $5 billion net patient revenue, um, [00:34:00] organization. I’m, I’m looking at an acquisition over here that’s gonna bring us, you know, maybe another billion in net patient revenue. And, you know, this payer provider negotiation we’re in could cost us a billion or gain us a half a billion.
So, um, what else you got marketer? So basically, if you are not showing. Material. Impact you, you all. This may be for Naugh, which, which can just sound awful to hear. Um, our recommendation is don’t give up, don’t stop. Um, it’s go big or go home, get this figured out, figure out how you’re show, you can show it, and then multiply your efforts.
So that you can show, uh, across multiple efforts, for example, so if it’s, well, we got 500,000 there and 250,000 there and a million there, don’t roll in separately, bundle all of that and say all of our marketing efforts combined have brought 20 million in net [00:35:00] new contribution margin. Right now that’s hard to ignore no matter how big you are.
Uh, but that is a reality that people are facing. Uh, so it, it, it is something that you have to think about as you move forward, um, because that is the point of this whole opportunity is don’t give up on this. Uh, don’t climb the mountain. And even if the end result seems incremental, it’s still valuable for the CMO to show that.
That, that, uh, hit on revenue that you can drive.
[00:35:32] Desiree Duncan: All right. Well, you heard it here first. Uh, money matters. We’re going to make sure that we’re able to translate that to that, that C-suite.
[00:35:41] Chris: What’s that podcast from? What’s that podcast from NPR? It’s one of my favorites of all time. Planet Money.
[00:35:46] Desiree Duncan: planet money.
[00:35:47] Chris: Oh my gosh. Back when the, when the world collapsed in 2008, planet Money was. I think it’s still out there. Such a good podcast for explaining economics and [00:36:00] finance and the world. And woof. We will not turn into Planet money here.
Um, but I, I need to dust off that podcast if that’s such a thing. Mix my metaphors.
[00:36:11] Desiree Duncan: I’ve been more on the personal finance one, but I’ll, I’ll jump back into that one.
[00:36:15] Chris: Yeah.
[00:36:16] Desiree Duncan: well that, that will wrap our show. And for all of you listening, don’t forget that we wanna hear from you. So shoot us an email at no normal@bpdhealthcare.com so that your question may be featured in our next episode. And make sure you share the show with friends and colleagues and give us a review in a rating on iTunes and Spotify, preferably five stars. All of that would be greatly appreciated. And until next time, don’t ever be satisfied with the normal. Push that. No normal y’all, and we’ll talk to you next week.
