What Healthcare Marketers Can Learn from the U.S. Debt Downgrade

Back to Blog Posted on August 9, 2011 by katieadams1

by Katie Adams

All politics aside, there’s an important lesson for healthcare marketers in Standard &Poor’s recent decision to downgrade U.S. government-issued debt.  The rating agency’s response to the three-month long congressional debacle and subsequent unsatisfactory fiscal response to the debt ceiling limit, was essentially the company’s way of saying “we don’t believe in – or want – the product you’re selling.”

The debt reduction deal was in many ways a product that the U.S. needed constituents, the financial markets, and investors to buy.  While the S&P downgrade reflected the company’s uncertainty about our country’s future financial capabilities, it was also a reflection of the Hill’s failure to effectively market its own product.  The poor product and stinging rating agency response drew swift reaction from key stakeholders:

  • A record 82% of Americans disapprove of how Congress is doing its job[1] and their confidence in our country’s economy plummeted to -53[2]
  • China, the largest investor in U.S. Treasury-issued debt scolded the U.S. for its “addiction to debt” in the wake of the downgrade and said that as America’s largest creditor it “has every right now to demand the U.S. address its structural debt problems…”[3]
  • Financial markets went into near free-fall with the Dow Jones industrial average posting the sixth-largest one day point loss to date on August 8th

Even though Congress staggered across the finish line at the 11th hour, bloodied and bruised with a debt reduction agreement in hand, David Beers, the head of sovereign ratings for S&P observed: “We looked at the agreement very carefully, and we concluded two things…reflecting on the whole debate this year, we concluded that the process itself was likely to continue to create uncertainty, about the resolve of the U.S. government to take decisive action on fiscal issues.  The other was simply our analysis of the agreement itself on the debt consolidation program…it fell short in size and in its scope of what was needed to stabilize the debt in the medium term.”

In other words, the product was bad and the company that produced it can’t be counted on to make a better one anytime soon.

Whether you agree with S&P’s conclusion or not there are important take-away points for your own organizational marketing efforts:

  • The financial markets did not reward a poorly-executed political process.  Your market will not reward a poorly-executed marketing plan.  Essentially what Mr. Beers said was that even if the numbers had added up in the debt reduction deal, the chaotic and poorly coordinated process it took to get there undermined Congress’ credibility.
  • Building consensus internally will require exponentially more work than you expect.  I doubt that House Speaker John Boehner thought he would need to tell his own party members to “get your ass in line” at a closed-door meeting just days before the debt ceiling deadline.[4]  However GOP leadership hadn’t done the work necessary to rally support for its own debt bill.  The lesson here is painfully clear.  No matter how seemingly good a product is on paper never assume that everyone – or anyone – else in your organization will see its value.  You need to continually educate, convince, and cajole your internal stakeholders to reach consensus.  If your own people aren’t buying it, your market never will either.
  • A strong brand depends on a well-crafted, constantly delivered message using an integrated communications strategy.  Ask 10 faithful Democrats and 10 die-hard Republicans what their parties’ message was during the debt ceiling debates and I guarantee you’ll get 20 different answers.  Neither side of the aisle produced a clear party line.  Messages were chaotic and delivery was uncoordinated.  Neither party employed the effective communications techniques they rely on in election cycles such as blast email campaigns from party leadership or members of Congress, mass mailings, or mobile messaging campaigns.  We were left to make sense of cable news program sound bites at night and newspaper headlines in the morning.  Both parties abandoned traditional integrated communications strategies and the message (if there was one) was lost.  There may have been a lot of shouting, but no one was communicating.
  • Every campaign lays the foundation for your next campaign’s success.  If you blow this one, it will be twice as hard to succeed at your next one.  As far as S&P was concerned not only was Congress’ product a flop, but the way both parties managed the process didn’t inspire future credibility.  S&P has already said there’s a “one in three” chance of another future downgrade.[5]  It won’t be enough for the President or congressional leaders to give a few good speeches. They will need to produce the results that the market demands (in this case a $4 trillion deficit reduction package or another real plan for “financial restraint”).

Have you recently suffered a marketing failure?  Learn from Congress’ example.  Quickly circle the wagons, rigorously analyze what went wrong, and then get to work setting it right.  Use the failure as a catalyst to make real, needed change.  Build a better product.  Market it more effectively.

For now the world is waiting to see what the White House and Congress will do.  PIMCO bond fund CEO Mohamed El-Erian has urged Congress to use the downgrade as a moment for action.  He wrote in the Financial Times, “For the sake of their country and the wider global economy, both parties should resist the urge to begin bickering.  Instead they should seize this potential ‘Sputnik Moment’ – a visible shock to the national psyche that can unify Americans around a common vision and a renewed sense of purpose.”

Could this be your organization’s ‘Sputnik Moment?’


[1] New York Times/CBS News Poll, August 4, 2011

[2] Gallup Poll, “Economic Confidence Index,” Week of August 7, 2011.

[3] Xinhua News Agency, August 6, 2011

[4] CNN, July 27th, “Boehner to GOP members: ‘Get your ass in line’ by CNN Congressional Producer Deirdre Walsh

[5] John Chambers, S&P Managing Director, ABC-TV “This Week,” August 7, 2011.

One Response to “What Healthcare Marketers Can Learn from the U.S. Debt Downgrade”

  1. Cogent analysis of the current debt situation and the generic strategic lessons for health care organizations in these turbulent times.

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