Journal of Invasive Cardiology

What Is A Market? In most instances, the development of market definitions for use in the market analysis is preferred to a service area approach. Markets are also defined by grouping zip codes or counties but unlike service areas they are NOT dependent on the patient origin or marketshare of any one particular hospital. Rather, a healthcare market can be defined by consumer behavior/preferences, demographics, use rates, natural and manmade barriers, and travel patterns.
Defining The Market. The most important part of defining the market is to constantly look at things from a consumer/patient perspective, not from hospital perspective.
The first step is to determine the outer boundaries of the total area to be examined, or the “overall market area”. For a local multi-hospital system or large independent provider a good start is to examine the entire MSA (Metropolitan Statistical Area) in which the provider is located. While it may be that your hospital(s) or practice does not currently pull from across the entire MSA it is usually the case that with the appropriate strategies, relationships (including medical staff and affiliate hospitals), and marketing in place, patients within the MSA will travel to your hospital or practice.
After a draft of the entire market area has been established, basic analysis should take place to verify the appropriateness of the selection. Out migration, should be at a minimum for services provided within the market area (10% or less out migration is a good rule of thumb for metropolitan areas). Next examine the overall patient origin for the hospitals within the market area. In general the overall market should represent 80% or more of the discharges for hospitals within the area. If this is not the case, further analysis should ensue to identify additional areas to include. Often “feeder” areas along a highway outside the MSA may be the source of inmigration. If so, these area(s) may also be appropriate to include in the overall market. (Note: it may not be reasonable to consider extremely large regional providers or specialty providers, e.g. pediatric providers, when applying the 80% patient origin guideline. These providers typically pull patients from a multi state or even national basis. In these cases it is best to define the local market for these providers even if it only represents 50–70% of their patient base. Very large referral markets can be defined to analyze outreach efforts.) Finally, examine the marketshare of hospitals within the overall market. While there may be one or two large regional centers or specialty providers outside the market area that have a significant marketshare, if there are multiple general acute care facilities outside the market area that have a marketshare presence, the overall market definition should be reconsidered.