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. Looking for new opportunities for service area growth, hospitals and health systems often rely on their instincts, local knowledge, or attempt to draw guidance from raw market data. Too often, these tactics lead to frustrating ends—growth plans that prove unsuccessful and year-end budget frustration.
New, trackable strategies must be enacted for the growth and change that is needed. Consideration of these five key areas will allow your hospital or health system to identify the best potential opportunities within a service area and guide your team toward more productive growth strategy and planning.
- Market Data
A clear view of a facility's competitive standing in the marketplace provides valuable information as to how much volume the market contains and where that volume is currently being treated. When seriously considering your hospital’s service area growth, you must start with the market data—a clear demonstration of how much opportunity exists within the market along with the current trends for those patients. Are the majority of your patients engaged with your largest competitor? If so, how can you draw their attention to the services your facility has to offer?
Market data is mapped to show:
- Total volume (how much volume the market contains)
- Non-client volume (how many potential patients are currently connected with your competition)
- Shifts occurring over last several years, if available (have there been any big changes in patient preference for services or where they are treated?)
Market data also provides the underpinning for maps of market share, payor mix, and competitive strength (market dominance)—all clear indicators needed for determining your best opportunities for service area growth. If you’re not closely considering your market data, you’re missing out on prime opportunities and likely chasing the wrong leads.
- Market Share and Outmigration
Analysis of a hospital or health system’s market share and outmigration illustrate a facility’s strength as well as competitor strength relative to market size.
- What is your market share in comparison to your competition? Are you the dominate player or do you have a lot of catching up to do?
- Where are your patients going and for which services? Are they traveling outside the service area for specific procedures? Strategic Planners must actively seek ways to apply data to better understand—and ultimately reduce—patient outmigration.
Armed with reliable intelligence about your service area, you’ll be able to identify the specific procedures and treatments being used within your market. The most current state, all-payor data, or Medicare claims information can illustrate any 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. 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, ultimately driving interest in and awareness of your facility.
- Historical Facility Data
Specific facility data allows a look at patient treatment by product line at the block group level. No longer solely dependent on the wide-reaching ZIP code level intelligence, block group and household level patient intelligence allow you to tailor your growth planning, marketing, and service offerings to the right patients at the right time.
ZIP code level marketing, often described as “mass marketing,” means you will spend perfectly good marketing dollars developing outreach materials, crafting sales pitches, and sending promotions that will be difficult, if not impossible, to justify to upper management since tracking ROI is a challenge. By utilizing historical patient trends and specific facility data, you can put aside fears of wasteful outreach spending and rest assured that your marketing will be more effective when reaching the right patient populations.
- Just as marketing based on block group intelligence is always more effective, so is service area growth planning.
- With historical data that drills down to the block group level, you’ll see previous year trends and fluctuations that can guide your growth planning and arm you with the right intelligence for informed and effective market growth.
Additionally, financial information provided by facilities enables you to see potential lost charges and payments providing another outlet for improvement and growth potential.
- Payor Mix
Market data provides a picture of the overall payor mix of a product line and compares it with the payor mix being captured by your facility.
- How far off is your payor mix from the overall opportunity within your market?
- Is there ground you need to make up and how could this affect your strategic growth planning?
Historical facility data provides financial insight into returns based on patient type and patient geography at narrower levels than market data by ZIP code. If you are not targeting the right demographic for growth, all other considerations are essentially irrelevant. Just as your marketing will improve when creating outreach campaigns based on block group level intelligence, so can your service area growth planning.
- Competitor Strength
Information extracted from market data and market share data provides visualization of competitor location and volume share.
- Where exactly is your competition located—can you pinpoint their exact position?
- Are your trying to grow your service area in a part of your market currently saturated by the competition?
- What are your exact patient growth goals?
- Are you working with intelligence that can compare your growth goals with the real volume share of your competition?
Service area growth planning is much more powerful when combined with insights into the strength of the competition. Knowing the reality of your standing in the market—how much volume there is to work with and how much of that is going to another provider—is foundational to the right mindset for effective growth planning strategies.
If your strategic growth team has not been actively engaging these five considerations in growth planning sessions, it’s time to reconsider your process. You can start developing service area growth plans with a higher probability for success by taking time to review and integrate market data, market share and outmigration, historical facility data, payor mix, and competitor strength into your strategic plan.
Stratasan may be the partner to help you get on the right track. Our Product Line Deep Dive provides an in-depth look into a facility's overall market position, looking closely at market data, your facility’s historical data, outmigration, payor mix, and competitor strength. This analysis will pinpoint where in your service area is the ideal location for reaching your desired population and which areas have the greatest potential for growth.
Article by Carrie Allen, Health Strategist | Success Advisor