Drive Growth and Provide Quality Care to the Right Patients
By Sara Handa
Hospitals have long used service line development to provide easily accessible, quality care to well-defined patient populations. While vital to growth, these development efforts can be risky and often require significant time and financial investment. In order to minimize risk and expand your service offerings more effectively, hospitals need reliable, data-based intelligence to guide their efforts.
In this post, we consider four ways to identify pockets of unmet demand and consider how to add new facilities in these areas that will ultimately grow your market share and meet patient needs. We’ll highlight some common mistakes providers often make and discuss how to get a more detailed understanding of your patient population so you can focus on the right service line growth opportunities.
How to Identify Opportunities for Growth
1. Define Your Service Area
Defining where the majority of your patients are coming from and where you can draw market share is both art and science. In our years of working with healthcare strategists, marketers, and planners, we’ve found that most organizations define service areas incorrectly, often defining them larger than they should—trying to capture 100% patient origin. By doing this, you muddy the waters with ZIPs that aren’t contributing to market share.
There is no one-size-fits-all way to define a service area. In fact, there are several ways to do it. Which one is best? The answer is, it depends. In this blog post, we discuss best practices and highlight the pros and cons of different methods of defining a service area.
Stratasan’s recommended method is using ZIP codes. When using ZIP codes, your service area should be comprised of 50% of your patients in your primary service area and the next 25% in your secondary service area. This will give you 75% of your patient volume which is where your strategy should focus.
2. Understand Your Market
In order to fully meet the needs of patients in your service area, you must have a thorough and detailed understanding of who they are. Armed with insights such as your total patient volume, market demographics, competitive landscape, and patient landscape, where you rank in the market compared to your competition, and what service lines are you currently performing well in, you'll be equipped to grow the right service lines to accurately meet their needs. You'll then be able to target your marketing outreach to let patients know about the services you have developed just for them.
Stratasan, through the use of Esri's Tapestry Segmentation, is positioned to equip your hospital and health system with these insights. Tapestry was designed specifically to understand customers' lifestyle choices—what they buy and how they spend their free time. It incorporates the effects of growth and decline over the last decade on established consumer markets, as well as the emergence of new markets populated by millennials and immigrants. This information will help identify optimal sites for hospitals, physician offices, FSERs, and urgent care locations.
By leveraging your internal patient data, we can drill down to the block group level for more detailed granularity. This can show you exactly where your patients are originating per service line and, when coupled with block group demographics data, it equips you with patient demographics for each service line.
Finally, the most current state, all-payer claims, or Medicare data can illustrate existing trends in patient migration. You will see if one facility specializes in offering a specific sub-product line and if this has shifted over the last few years. Outmigration trends might suggest there is a demand that isn’t being met for a service line in your area. Most importantly, a clear presentation of the data will help you identify your greatest opportunities for stepping in and providing the right care to your patient population.
3. Determine Use Rates Per Service Line
To get an idea of whether there is enough demand to sustain your investment in a service line and to project estimated future demand based on your service area’s landscape, it helps to determine population use rates. A use rate is calculated by dividing the number of people within the area you’re studying who utilized healthcare services by the total population.
By considering historical utilization rates, demographic information (such as Esri's Tapestry Segmentation), and population growth trends you can make informed projections as to what future use rates will be. With these insights, you will be able to make better hiring decisions, move ahead with confidence with a new service line opportunity, demonstrate to leadership why your proposed expansion is a sound growth opportunity.
4. System vs Independent Strategy
Not surprisingly, the service line growth strategy for a large hospital system will differ from that of an independent. For systems, it's important to look at your organization as one entity when considering service lines so you avoid competing with yourself. For example, you don’t necessarily need a cardiac center in each of your facilities if there is one in the system servicing the whole area. Avoid cannibalism by considering your whole operation and looking for ways to make the most of the services you already offer. Then, find opportunities to complement your current offerings through expansion.
For individual facilities, start by taking a straightforward look at your standing in the market. Look for areas of growth, but also be careful not to spread your facility too thin by trying to break into every service line. At Stratasan, we tend to look at overall market share and find service lines that have decent market share that is lower than the facility’s overall market share. For instance, if the facility’s overall market share in their service area is 80% and their neurosciences service line has 60% market share, that could be a good opportunity for growth. In the same way, if their women's health service line has 10% market share, we wouldn't suggest focusing on that as an opportunity for growth, as there's too much competition.
It’s no secret that the pressure to compete and expand market share is at an all-time high for hospitals and health systems. Providers in many markets are feeling the impact of reduced patient payments, competitor maneuvers, and new market entrants and are looking for service line opportunities that will compensate for these changes while allowing them to better service their patient population. Armed with the right intelligence, this can be effectively done with minimal risk.
For more information on how Stratasan’s tools and services can help you more effectively identify the right service line opportunities for growth, contact Sean Conway and schedule a discovery call today.
Article by Sara Handa, Senior Business Analyst for Stratasan