BY: ALAN M. ZUCKERMAN and TRACY K. JOHNSON
Dr. Zuckerman is director and Ms. Johnson is manager, Health Strategies
& Solutions, Inc., Philadelphia. This is the sixth in a series of articles
on revenue growth that will appear in Health Progress.
Market segmentation is a useful business tool to identify new and expanded
ways to improve services and enhance revenues. This tool identifies unique subsets
of the population to target for specialized services and marketing initiatives.
Market segments can be defined by three major categories: demographic characteristics,
disease categories, and geographic location.
Demographic Characteristics
Demographic segmentation targets services for certain socioeconomic characteristics
such as gender, age, or cultural/ethnic background. Strategies that target women,
in particular, are becoming increasingly prevalent for several reasons:
- Capturing the female patient means influencing the vast majority of health
care decisions made for families.
- Women use health services more frequently than men, including
physician visits (31 percent more) and admissions to the hospital
(17 percent more).1
- Most women are dissatisfied with how they receive care, which is often
in settings that do not support the unique aspects of care to women.
For these reasons, significant opportunity exists to develop services targeted
to women, and even to certain age groups within this population, that can make
a meaningful distinction in the marketplace, improve quality of care, and increase
patient satisfaction. These opportunities can range from focused niche service
development to comprehensive approaches that incorporate a wide range of programs.
Most acute care hospitals provide maternity services and, historically, have
defined their strategy for women around obstetric services and little else.
This narrow approach forces hospitals to compete in a highly competitive and,
in many places, shrinking market. Strategies that target a wider spectrum of
women and their health needs — such as older women who are interested in perimenopausal
care, breast health, bone health, and fitness — will increase the opportunity
to reach and retain this market segment for all their health care needs.
The most comprehensive approach, which is being used at such
places as Magee Women's Hospital, Pittsburgh, involves developing
services for women across other non-gender-specific clinical
service lines, such as cardiology, orthopedics, and oncology
(beyond breast and gynecological cancers). Although this approach
is the most difficult to put into operation, it goes farthest
in establishing a market presence in women's health. Magee's
program is one of 14 medical centers federally designated as
a "center of excellence" for women's services, a program of
the office on women's health in the U.S. Department of Health
and Human Services. These centers of excellence for women are
also distinguished by a multidisciplinary approach and strong
education and research programs supporting the development of
treatments for women.2
Key non-maternity-based strategies for women include mid-life women's programs
and women-oriented services in oncology and cardiology. Although the appropriateness
of various strategies for developing differentiated women's services will ultimately
depend on the organization and its marketplace, those that provide only amenities
and not substantive services, compete with physicians, follow late in the marketplace,
or attempt to add too many services without ensuring program stability and commensurate
market support are less likely to succeed. Strategies that are more likely to
succeed focus on market-based program design, partnering (not competing) with
physicians, niche programming, and careful market positioning and differentiation.
Health care organizations are also recognizing the importance of the aging
population and its impact on demand for services. Targeting older adults for
care and improving access to services in a meaningful way has proved more challenging
than offering comprehensive women's services. Greenwich Hospital in Greenwich,
CT, has partnered with area agencies and organizations to create the Geriatric
Health and Resource Center of Greenwich Hospital. This center focuses on four
areas, including:
Interdisciplinary geriatric assessment provided by a board-certified geriatrician,
including any necessary treatment plan
- Geriatric continuum of care that uses case managers to link a variety of
services frequently needed by the elderly, including inpatient and outpatient
care, rehabilitation and fitness, respite care, adult day care, group living,
skilled nursing, hospice, and home health services
- Education and awareness through a variety of media sources and a membership
program providing discounts on drugs, eyeglasses, and hearing aids
- Resource information services linking various data sources within the community
to health care providers
The Geriatric Health and Resource Center has improved health
care services for the elderly and increased the hospital's share
of its primary market as well as expanded its share of the secondary
market.3
In some areas of the country, ethnic characteristics are useful
to identify special needs, particularly for minority or immigrant
populations. Health care organizations, particularly in urban
areas, are frequently faced with the special needs of immigrant
populations in their communities. The Hispanic population in
the United States increased by 58 percent between 1990 and 2000,4
and immigrants from dozens of countries have settled in greater
numbers, even in rural areas in the Midwest.5
Sensitivity to cultural issues that may be barriers to accessing health care
can lead to the development of programs that increase access, improve health
status, and increase patient satisfaction. Bilingual staff and even multilingual
translation services in very diverse communities are an important first step
in reaching out to these markets. In many Arabic and Asian communities, women
must be chaperoned by male relatives to see health professionals. An obstetric
health clinic at St. Joseph's Hospital in Paterson, NJ, expanded its hours into
the evening so that husbands could bring their wives for care after working
hours.
Programs that modify the delivery of care to meet cultural and religious needs
can also enhance services and revenues. "Bloodless medicine" programs have been
successful in communities with a significant population of Jehovah's Witnesses
and other religious groups whose beliefs forbid blood transfusions.
Disease Categories
Segmenting the market by disease can be another useful way
to identify gaps in the delivery of care and to enhance services
and revenues. Unlike the service continuum concept (discussed
in an earlier article, "Filling
Gaps in the Continuum," November-December 2001, pp. 34-38),
which starts with the question "What are all the diagnostic
and treatment services we can offer in a clinical specialty
area, such as cardiology?" segmenting the market by disease
asks, "What services are needed by those with a certain condition
or disorder?" This approach starts with a comprehensive review
of the patient's needs and may cross traditional service lines.
A community assessment of key health status indicators in the service area
and review of high-volume diagnoses admitted or treated at the health system
are good ways to identify health conditions and disorders that may warrant more
focused attention. Typically, conditions related to an aging population — such
as diabetes, arthritis, neurological conditions, heart disease, and pulmonary
disease — are found frequently in patients accessing health services. In some
areas, asthma, particularly in children, is a significant health issue.
Once the major health issues in the population are confirmed,
an inventory of services potentially needed by patients with
specified conditions can be prepared and compared with existing
capabilities to identify gaps in services. If the service area
has a high incidence of diabetes, a comprehensive diabetes program
can provide the entry point to multiple services, including
assessments, education, weight management, laboratory services,
vascular studies, wound care, and surgery. An arthritis program
targeted to older residents can coordinate patient services,
including assessments, imaging, pain management, physical/occupational
therapy, joint replacement, and clinical trials.
Neurologic institutes can provide an umbrella for a number
of conditions, including strokes, Parkinson's disease, Alzheimer's
disease, multiple sclerosis, epilepsy, balance disorders, and
sleep disorders. As discussed in a previous article in this
series("Niche
Services,"January-February 2002, pp. 23-28, 51), the aging
of the U.S. population, advances in technology, increasing subspecialization,
and higher levels of research funding are fueling interest and
service development in the neurosciences. Although some capabilities
will remain only in academic medical centers that provide the
most comprehensive array of services, many subspecialty neurology
programs are becoming increasingly feasible for community hospitals
because of growing volumes and the diffusion of technology to
lower-cost settings. Community hospitals serving populations
of 250,000 or more should be able to sustain a fairly comprehensive
neuroscience program. A population of this size can generate
1,200 neurology-related discharges, nearly 1,000 neurosurgical
procedures, and more than 2,500 neurodiagnostic procedures for
a variety of conditions.6
Many health systems and hospitals already provide most, if not all, the services
to treat certain diseases but need to reconfigure them to be much more patient
focused, accessible, and visible to the community. Health care organizations
may also want to take their programs to a higher level of clinical and market
effectiveness by developing centers of excellence.
By reorganizing and marketing existing services more productively, hospitals
can not only serve patients better, they can also make their services more visible
to targeted audiences by presenting them in a comprehensive, integrated way.
Moreover, implementing a center of excellence will move an organization to a
higher level of performance through patient-centered service enhancements, clinical
alignment, integrated operations, outcomes measurement, and focused investment.
Geographic Location
Yet another way to target opportunities for growth through market segmentation
is to identify geographic subregions that may be experiencing significant population
growth. Fast-growing suburbs in many parts of the United States have led some
health care organizations to invest heavily in new outpatient facilities and
sometimes entire new community hospitals.
Many areas across the country are experiencing significant
population growth. The population of Clark County, NV, which
includes the Las Vegas metropolitan area, grew more than 85
percent between 1990 and 2000, adding 600,000 people during
the decade.7 With this population growth expected
to continue, St. Rose Dominican Hospital has recently announced
plans to add a third acute-care hospital to its system in the
Las Vegas area, "designed to meet the future needs of our valley's
rapidly expanding population."8
Another fast-growing county in Colorado has become the target
of two health care systems looking to add acute care facilities
in the area. Douglas County, just south of Denver, nearly doubled
its population between 1990 and 2000 to more than 115,000 people.9
Both HealthOne and Centura Health, Colorado's largest health
care system, are planning new hospitals in the county to serve
the growing demand for services and relieve the stress at neighboring
facilities.10 Centura Health, established
through a joint operating agreement between Catholic Health
Initiatives and the PorterCare Adventist Health System, will
open a 100-bed facility in 2004 that is expandable to 200 beds.11
Although many communities are not projected to grow enough to justify the
construction of a new hospital, some communities may have pockets of population
growth, particularly in the periphery of the existing service area, that would
support some outpatient service development and also support a phased strategy
of adding more (and possibly acute) services in the longer term. With outpatient
use rates growing on average by up to 5 percent per year, the combined effect
of population growth and use rate increases makes ambulatory needs great in
any sizable, rapidly growing population area.
Segmenting the market by key characteristics will help identify needed services
and opportunities to enhance programs, visibility, and revenues. These approaches
include identifying certain socioeconomic characteristics, disease categories,
and/or fast-growing geographic markets within the population being served that
can be targeted for new or enhanced service development. This population- and
market-based approach will increase differentiation of services in the marketplace
and help support the feasibility of new program development and the organization's
financial success.
NOTES
- J. R. Popovic and M. G. Hall, "1999 National Hospital Discharge Survey,"
Advance Data, no. 319, April 21, 2001, and D. K. Cherry, C. W. Burt,
and D. A. Woodwell, "National Ambulatory Health Care Survey: 1999 Summary,"
Advance Data, no. 322, July 17, 2001.
- N. Milliken et al, "Academic Models of Clinical Care for Women: The National
Centers of Excellence in Women's Health," Journal of Women's Health and
Gender Based Medicine, vol. 10, no. 7, 2001, pp. 627-636.
- S. Jones and G. Fritts, "User-Friendly Healthcare for the Elderly Pays
Off for Patients, Care Givers, and Providers," Healthcare Marketing Report,
vol. 19, no. 7, 2001, pp. 16-18.
- U.S. Census Bureau, 2000.
- U.S. Census Bureau, 2000.
- C. Markham, "New Focus for Community Hospitals: Neuro Centers," Health
Care Strategic Management, vol. 18, no. 3, 2000, pp. 21-23.
- U.S. Census Bureau, 2000.
- "St. Rose Dominican to Build Third Las Vegas Hospital," Catholic Health
World, December 1, 2001, p. 7.
- U.S. Census Bureau, 2000.
- "Centura Hospital Set for Parker," Denver Post, December 14, 2000,
p. A-01.
- Centura Health, "Centura Health Finalizes Hospital Land Deal," www.centura.org,
December 15, 2001.
The authors thank Christie Markham for her contributions to this article.