Where Should You Grow? Identifying Healthcare Market Opportunity
From The Buxton Co
Opening new healthcare facilities isn’t the same process that it used to be. The old “If you build it, they will come” mantra is no longer a guarantee, which means providers need to take a hard look at their market opportunities before making real estate decisions.
You could assess market opportunity based solely on macro level factors such as population growth and existing healthcare supply, but this approach doesn’t paint a complete picture. The next time you are planning to expand into a new market or infill an existing market, consider these two steps for a more accurate assessment.
1. Understand What Makes a Location Successful
Before you can identify the right market opportunities for your organization, you need to understand what makes your locations successful. Success is typically driven by two sets of variables:
Traditional healthcare variables on supply (existing physicians in the market) and demand (estimated use rates for specific healthcare services) provide the first glimpse into market dynamics. What’s the current balance of supply and demand around your most successful locations? At what level does the competition become too high to sustain a facility?
The healthcare industry is driven by more than just supply and demand. Today’s patients view healthcare like any other type of consumer service, which means healthcare organizations of all types need to consider traditional retail variables.
What’s the consumer profile of your patients – not just in terms of demographics, but also in terms of lifestyles? Are there specific cotenants or traffic generators that correlate with increased visits at your facilities? How far are patients traveling on average to visit one of your facilities? How do qualitative factors like signage or real estate type influence performance?
2. Find Market Opportunities by Identifying New Locations That Look Like Your Best Locations
The healthcare and retail variables associated with successful locations can be combined into a custom site selection model or service line model. These models can be used to assess markets and identify:
How many locations the market can support
Where those locations should be placed
This exercise shows you the gaps in your current or potential markets based on the factors that are important for success. It gives you a realistic view of market opportunity and a “roadmap” to guide your expansion efforts.
The Bottom Line
By understanding the factors that influence your performance and identifying trade areas with the right mix of variables, you can understand your organization’s true market opportunity in any current or potential market.
Need help getting started? Buxton’s market opportunity solution is designed to give you the answers you need based on our robust datasets and analytics experience in the retail and healthcare industries.
Buxton is the leading customer analytics firm that helps organizations identify who their customers are, where those customers are located, and the value those customers have to the organization.
2651 South Polaris Drive
Fort Worth, TX 76137
If you have an opinion on the retailing or retail real estate industries, take this opportunity to share your thoughts. Articles should run between 400 and 800 words. Topics can, be general in nature, consumer observation or specific to retail concepts or practices.
Articles will be posted for at least one week and will then be placed in the Editorial Archives. All articles submitted will be read and considered but we cannot guarantee publication. Each published article will carry the submitters byline (if desired) and is a free service to our community.
Article ideas and suggestions are also always welcomed. Contact PVS@PlainVanillaShell.com