Marketing in the HMO industry: an analysis of spending patterns and enrollment growth results

The purpose of this paper is to assess the level of marketing spending in the HMO industry and the enrollment growth HMOs have achieved in return for their marketing dollars. This study identifies industry norms that are designed to assist HMOs in the evaluation of their marketing performance. The study is based on data from 1985 to 1986 covering approximately half the HMOs in the country and comprising a substantial proportion of industry-wide enrollment (Table 1). The analyses are designed to allow operational HMOs to compare their marketing efforts, enrollment growth, and marketing costs per new member with industry norms within similar age, model type, enrollment level, and geographic categories. The marketing expenses provided by each HMO are an aggregate figure including sales staff salaries, benefits and commissions, advertising, costs for the production and printing of marketing materials, and all other expenses directly related to the marketing effort. Components of the aggregate marketing expenses, such as the amount spent on advertising versus sales staff compensation, were not available.