New skills and ways of working in healthcare comms
pharmafile | March 10, 2011 | Feature | Medical Communications | HCA, Healthcare Communications Association, benchmarking
A new report from the Healthcare Communications Association (HCA) indicates a trend towards new skills and ways of working, as the economic climate remains harsh and the emphasis on defining and delivering value increases.
27 communications agencies/consultancies participated during May/June 2010 in the annual benchmarking survey, which explores trends in the provision of communication services to the healthcare industry.
More than ever before, the challenge for consultancies is to respond to the need to up-skill their staff in the use of new technologies, to offer an increasingly diverse range of services, yet at the same time, develop a unique offering that makes them stand out.
The report looks at overall trends in healthcare communications, based on quantitative data for 2009 and key issues emerging through the course of 2010.
In support of the emerging trends, the findings refer to discussions at the HCA’s inaugural annual conference ‘The Future of Healthcare Communications’, held on 11 October 2010.
The survey also contrasts experiences by agency size and type, through further analysis of the benchmarking data. For example, a larger, networked agency, whilst facing the same overall environmental pressures as a smaller, independent organisation, may develop very different business models in response.
Overall, the organisations surveyed gain 51% of their fee income from UK work, and the rest is split roughly evenly between regional and global programmes. As agency size increases, so does the focus on non-UK work. Most of the programmes are focused on prescription brand/therapy area communications.
The HCA definition of communications includes activities conducted by PR, medical education and meetings/events management, government and public affairs consultancies, but does not currently include direct advertising.
A tough financial climate
2009 saw a continued pressure on profit margins and an overall slowing down of growth amongst the companies surveyed. Turnover across all consultancies increased by only 2.8% when comparing 2009 to 2008 – whereas 2008 growth was up 11.8% on 2007.
Clearly there were varying performances at an individual consultancy level, as the PR Week league tables demonstrated, but the overall picture is as expected in a recession.
Maintenance of profit margins and the pressure of procurement was one of the most significant internal business issues identified by participants. As well as the ultimate impact of procurement processes on profit margins, the survey revealed that agencies are spending significant amounts of time on non-billable work such as filling in forms and ongoing financial analysis.
There was little change in the number of accounts handled and overall average client charge-out rates remained static. Overall, client budgets are falling, but the very large programme budgets still appear to be increasing, which tends to benefit the larger agency. In contrast, some budgets are very small and smaller agencies are tending to pick up more of these less lucrative one-off project-type assignments.
Larger organisations enter into discounted pricing arrangements more commonly than smaller companies. This may be reflective of volume discounting by larger agencies. Where budgets are smaller there may be less manoeuvrability for clients to negotiate discounts.
The challenge of developing new business
Marketing and developing new business – whilst meeting and exceeding current client expectations – was identified as one of the top three most significant internal business issues for consultancies.
The cost of pitching for business continues to increase, as agencies compete to showcase their expertise in the breadth of areas required.
Two-thirds of participating organisations had entered the arena of online bidding – their experiences had not proved positive, with an average of 14 agencies being involved in an online auction and little evidence that this can represent benefit for agencies, or any progress for a client looking for a valued partnership.
Larger organisations are slightly more successful at pitches than smaller organisations and tend to gain a higher proportion – 70% – of their business via pitches. If pitch opportunities are turned down, this is most likely to be due to conflict of interest.
Smaller agencies gain most of their business without a pitch – on average 60% – of which just under two-thirds is from existing clients.
When smaller agencies do pitch they have less success (and the cost/time investment is likely to have a greater impact on them).
The main reason for the difference is that 11% of pitches made by smaller organisations fail because no one is appointed (vs 2% of pitches made by larger companies), suggesting that smaller companies are more vulnerable to ‘fishing’ by pharma companies.
Smaller organisations turn down pitch opportunities for a number of reasons – conflict of interest, lack of capacity, and also the lack of a relationship with the client/conflict of working style, which is something that smaller companies are more sensitive to.
Smaller organisations are also less likely to have taken part in online bidding. From a qualitative point of view, marketing/securing new business and managing growth were identified as more significant issues for smaller, independent agencies than for the larger organisations.
Communications consultancy by definition
Most consultancies offer a diverse range of services and are increasing their capability in the digital communications arena in particular. Communications are increasingly being defined in much broader terms – including internal and corporate communications, public and government affairs – ‘helping clients to communicate with all of their publics/stakeholders/influencers and those that influence them’.
The top chart on the left page here illustrates just some of the diverse range of services that are offered by most communications consultancies.
Increasingly, consultancies are tending to define themselves as a ‘communications consultancy’, as opposed to having a PR or med ed only focus (up from half in the previous survey to three-quarters of companies in 2010). Ninety-six per cent of organisations had seen an increase in digital communications over the last year and on average digital work had increased by 60 per cent.
Overall, 44% of client programmes now include digital elements (and this is likely to have increased since the survey was conducted), with websites being the biggest area of activity.
Market access, online education and scientific/medical writing are also areas of growth. In each case more than half the participating companies are increasing their capacity or adding them as new services. As well as offering new services, agencies are playing an increasingly important role in advising clients on Code compliance.
In today’s more regulated environment, consultancies can add extra value by ensuring that all their staff are highly trained in this area.
Diversity of offering seems to be the case across the board, though some smaller organisations may focus on a specialised niche – e.g. public affairs.
Continuing focus on recruitment, along with retention
Recruitment, retention and staffing – whilst important areas of focus for all companies – have relatively high prominence in the ranking of important internal business issues for larger networked organisations.
The expansion into new areas presents an even greater recruitment challenge, as companies need to find more staff with specialist skills as well as meeting the ongoing need to fill vacancies with talented and experienced communications professionals, and to motivate existing staff when it is harder to reward them financially.
Some consultancies have implemented creative solutions to this challenge. Recruitment was the number one “most significant internal business issue” identified in the survey, with retention and staff motivation also featuring in the list.
Average agency spend on recruitment was over £30,000 in 2009. Recruitment agency fees continue to be by far the biggest expense. Forty-four per cent of agencies have specific in-house recruitment teams/internal head-hunters. As yet these have not reduced the average cost of recruiting a new member of staff, but this is a positive step.
Most of the organisations surveyed recruit graduates and the larger companies provide formal training schemes – even in difficult times, there is a significant investment in developing the talent of the future. There is also a continued pattern of recruitment from diverse sources – including other pharma industry roles, the NHS and non-healthcare communications.
The exodus of staff who leave the industry completely, to travel or pursue other career or family interests remains an issue, but we are seeing an increase in the percentage of recruits moving into agencies from freelance work, rather than the other way round, which suggests that the recession and a desire for job stability may here be working in the industry’s favour.
Apart from at the very senior levels, average salaries at each job level have not changed.
However, significant salary increases are still being awarded to individuals and this seems to be largely due to promotions.
Given the challenge of retention it is obviously important to give staff the opportunity for progression, but companies need to be careful not to promote staff too quickly into senior roles for which they are ill-prepared in terms of experience and skill. Training spend fell significantly in 2009, with agencies spending less than they had planned, so this seems to have been an area targeted for cutting back, although companies continued to invest in their staff by maintaining the time spent on training, presumably by delivering more training internally.
What of the future?
Three-quarters of organisations participating in the HCA survey were expecting growth in gross billings for 2010. Eighty-six per cent expected to be increasing headcount. Whilst most participants believed there would be no change in the general economic outlook for healthcare communications over the coming year, the optimists (predicting an improvement) outnumbered the pessimists.
At the time of producing the benchmarking survey the government’s White Paper on the future of the NHS had not yet been published, so any predictions were extremely speculative.
It is still early days in our understanding of what the NHS changes might bring, but the general tone of the HCA Conference was upbeat in terms of healthcare communications.
Opportunities lie ahead for communicators to play a greater role across the product lifecycle, seizing the opportunity to forge strategic partnerships and deliver broader specialist skills and flexible, workable strategies to help clients navigate the new landscape and communicate with their new publics (whoever they may be).
Overall, there is some optimism for the future, and the likely pressure on NHS budgets and pharma company spend may present opportunities for healthcare communications, as well as challenges.
The HCA
The HCA was founded in 2001 as an independent, not-for-profit organisiation with the stated aim of promoting excellence and best practice in healthcare communications.
HCA Benchmarking Sub-Committee
Aline Beresford, independent market researcher (sub-committee chair).
Antonia Betts, Ogilvy Health PR.
Julia Cook, StepBack Healthcare (HCA chief executive).
Claire Eldridge, Aurora.
Fiona Hall and Polly Purser, Chandler Chicco Companies.
Mark Swainson, Virgo Health.
HCA website: www.hca-uk.org
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