HealthLeaders Media to Publish New CFA Cardiovascular Service Line Marketing Book
HealthLeaders Media (a division of HCPro), Brentwood, Tennessee, will publish a new book by CFA...
We have written extensively on the issue of low-volume cardiac surgery and the challenges faced by these programs in today’s competitive environment. There are many options available to these programs to boost their volume, ranging from reinvestment in program development efforts all the way to divestiture or closure if all else fails.
For hospitals that commit to keeping their low-volume program both operational and thriving (please refer to Can Low Volume Cardiac Surgery Programs be Excellent? and Low-Volume Cardiac Surgery “Excellence”), it is important to appropriately analyze your unique circumstances and opportunities, both to understand the reasons for non-optimal volume, and to ascertain reasonable potentials to increase volumes to appropriate levels in the search for optimal program performance and perhaps, its continued existence. While there are many potential program-specific as well as underlying market conditions that contribute to volume achievement, let’s talk about the concept of market “leakage.”
The Definition of Market “Leakage”
In an attempt for hospitals to successfully address the low-volume issue, one of the many strategies that can be applied in these situations requires analyzing and addressing the “leakage” issue. Leakage can be defined as the difference between the size of the market and a hospital’s share of that market. If a hospital’s market produced 100 cardiac surgeries in a specific year, and its share of that same market is 78, or 78 percent, then 22 patients, or 22 percent went to another provider (either in- or out-of-the-market), or “leaked” from the hospital’s market and potential share. Assuming the overall size of the market is reasonable, and there is additional market share to be had, trying to increase market share is a reasonable growth strategy. Note that if there are only 75 to 100 total cases in a given total market, and two hospitals are competing over the same market, then neither program will ever attain sufficient market share to reach moderate to high-volume status. One of these two hospitals probably needs to divest their program. It is important to stress that leakage can be external – originating in the marketplace outside the hospital system entirely, or internal to the hospital system itself. Realistically, internal leakage is the more critical priority as it is under the direct control (or at least influence) of the hospital and its medical staff.
Understanding Market Leakage
Understanding the underlying reasons behind leakage and basing any development strategies on a thorough analysis of your situation is critical. That being said, it is often complex, information-poor and multi-factorial, challenging the hospital to understand the true reasons behind its market position and what changes may be necessary to address any underlying issues. Here are a few thoughts about leakage.
Do not forget that achieving 100 percent market share for any clinical service is unrealistic under almost all market circumstances.
Implications
Successfully addressing market leakage can be seen as an issue requiring both appropriate program diagnosis and definitive treatment. For external leakage, appropriate information and assessment can size the market and help define the issue of its provider market shares, composition, competitor advantages and disadvantages and the patient’s ultimate disposition. Internal leakage can be assessed by program capabilities and deficits, cardiac physician subspecialization, overall staff capabilities and referral patterns. Realistically, each of these interdependent factors can be responsible for some portion of the overall leakage equation. Careful and comprehensive analysis is called for and definitive action, no matter how problematic, challenging and potentially requiring an extensive time commitment, will need to take place to maximize program potential, development and success in a specific market.
Low-volume cardiac surgery programs cannot be “rehabilitated” by solving any leakage problem in a vacuum, but within the overall context of the market, can be a vital part of successfully addressing a going-forward strategy.
If you are interested in learning more about strategies to deal with your low-volume cardiac surgery program and a program assessment for cardiovascular services, please contact CFA at (949) 443-4005 or by e-mail at cfa@charlesfrancassociates.com.
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