Defining the Healthcare Market — A Critical Precursor to Your Strategic Plan
- Volume 15 - Issue 10 - October, 2003
- Posted on: 8/1/08
- 0 Comments
- 4778 reads
It is usually the case that an overall MSA or large group of counties within a metropolitan area will be too large to analyze as a single area. Once the overall market has been defined, individual markets or “sub markets” within the area should be identified. If you talk to people who have lived in the area for any significant amount of time, they should be able to provide guidance in the grouping of zip codes or counties based on demographics, travel patterns, and a sense of “community”. Most cities have a vague definition for what people think of as “the north side” or “south city” or “mid county”. Once these areas have been identified each area should go through a verification process. First, map the market(s) and let as many people as possible examine the map to see if it “feels right”. Next examine the demographics, while some swing in income levels and age demographics can be expected, large differences on a zip code or county basis should not be apparent. Finally examine the patient origin and marketshare of the groupings of hospitals within the market area(s). Do the groupings of competitors within the markets make sense? While the competitors may draw patients from other markets (and potentially different) markets outside of the market in which they are located, the basic grouping should seem right.
Conclusion. A market analysis using appropriate market definitions can assist in the development of a targeted strategic plan. The benefits of defining the market(s) based on consumer preferences and characteristics rather than the traditional patient origin based service area(s) include:
1) New opportunities may emerge once previously unexamined areas are analyzed;
2) Market definitions enable strategic planning from a community/consumer basis;
3) Analysis will support targeted marketing strategies;
4) Once developed, market definitions rarely (if ever) need to be adjusted, providing for consistency in analysis (service areas can change quite a bit from year to year);
5) Market definitions can be used by multiple hospitals or practices within a network, in essence only one overall market analysis will be necessary to suit all the hospitals’ needs;
6) Market definitions provide a consistent approach for analysis across product lines and departments (planning and finance analysis is easily integrated);
7) Markets “make sense”, people identify with them, they work how people think.
Importantly, in today’s environment, a healthcare organization can ill afford not to know its market. This admonition applies to a variety of healthcare organizations — from hospitals, to information companies, to individual physician practices. Indeed, one needs to develop a set of sources and resources by which leaders in those organizations can obtain information about the external environment that impacts the organization and day-to-day operations. Key questions are posed to any organization undertaking strategy:
• What type of decisions are we being called upon to make? What data/information supports those decisions?
• What trends are occurring locally/nationally that impact the organization?
• What type of market information do we get on a regular basis? What do we need? How frequently do we need it?
• How does the organization measure its impact on the marketplace? What measures make sense?