Cardiac Services Expansion Part 2: An Increasing Appetite for Cardiovascular Program Growth

Cardiac Services Expansion:  More Hospitals Are Taking a Second Look

In Part 1 one of this blog we discussed the key economic, demographic, technological and financial forces driving a growing interest by hospitals and health systems to develop new or expanded cardiac services.  

For the first time in more than a decade, CFA is seeing an increasing number of hospitals, in a variety of different operating environments, start new or expand their existing cardiovascular services footprint.  In Part 2 of this blog we will: 1) Review the key market indicators and conditions that will identify whether your hospital may be a good candidate for cardiac services entry and/or expansion and, 2) Provide a concise case study of one such hospital

Assessing Cardiovascular Services Expansion: More To It Than Meets The Eye 

Conducting a thorough and comprehensive cardiovascular market assessment and feasibility analysis is, by definition, a multi-factorial, highly detailed endeavor.  As the old saying goes, “Experience is often the best teacher.”  A number of hospitals that engaged CFA later in their program development assessment process, have shared in hindsight they often missed a significant amount valuable information from their own internal market assessments.Collecting and analyzing typical market data sets alone will often result in an incomplete or skewed picture of your cardiovascular marketplace.  Knowing what to look for and asking and answering the right questions is essential to uncovering critical and, often unseen, market intelligence and opportunities.
 

Analysis and Experience Drive Actionable Insights 

The CFA team has successfully completed well over 100 cardiac services expansion feasibility and development projects.  One of the key outcomes from our hands-on experience has been the development of our cardiovascular Market Assessment Profile Tool.  While the market profiling tool methodology is necessarily comprehensive in scope, the ultimate value is its ability to provide a detailed, fully synthesized case for or against a hospital successfully starting a new cardiovascular program or expanding or retooling an existing cardiovascular program.  The assessment tool defines market opportunity by processing all assessment data and findings through the following five core, weighted filters.  These filters provide clients with the key strategic guidance needed to determine clinical service feasibility, strategic market opportunities, projected current and future growth rates and programmatic needs:

1. Overall current/future demand for cardiac services (demographics, regional CVD incidence/prevalence rates, market share and in/out migration dynamics)
2. Competitor's Strengths/Weaknesses (key factors determining strategy, tactics and barriers)
3. Key Stakeholder/Medical community support (including local and regional cardiovascular physicians dynamics, needs, reputation and opportunity)
4. Payer Mix/Profitability
5. Short and long term facility and technology requirements/magnitude of developmental needs

Case In Point: Down But Not Out 

Recently CFA was engaged by a health system in the Northwest looking to assess the feasibility of re-entry into the hospital’s regional cardiovascular marketplace and development of a full-service cardiovascular program.  Several years earlier, after years of their cardiac program experiencing declining volumes and robust growth by their local competitor hospital, the health system made the strategic decision to downsize.  In brief, as a result of CFA’s comprehensive market assessment, a number of key findings emerged.  The incidence of CVD in their market was higher than the national average and projected to continue to rise.  The volume of cardiac procedures originating in their primary and secondary service areas had grown significantly demonstrating solid volumes and demand.  The largest percentage of CV surgery was out-migrating from their primary service area! 

While their competitor hospital had been enjoying steady volume growth, the client had been experiencing significant cardiovascular physician alignment issues. Through our assessment CFA learned there had been a steady reduction in the competitor hospitals cardiovascular physician(s) satisfaction due to a recent change in health system ownership. The assessment process documented solid local medical community support for the client hospital to re-develop their cardiovascular program as well as a commercial rich payer mix demonstrating an opportunity for significant operating margins.  After downsizing their program many years earlier, the conditions were now favorable to go forward with multi- phased, full-service cardiovascular strategic business development plan.
 

Moving From Data To Understanding 

CFA believes the critical success factors for developing an accurate and reliable “go/no go” strategy are not found in predictive analytics and algorithms alone, but in seasoned, capable professionals who have the proven knowledge, skills and hands-on experience to ask the right questions and effectively collect, interpret and synthesize a wide variety of assessment data.  And then actually spend a significant amount of time listening to and interviewing all key stakeholders.  We have found this approach consistently produces positive results for our clients by generating an accurate profile of their cardiovascular marketplace and providing the basis for producing an objective, comprehensive and customized cardiovascular market assessment and development plan.
 

Conclusion 

This two part blog presented the rationale for the growing uptick in the start-up and/or expansion of cardiac services across the country.  It presented the key drivers of successful cardiovascular services market assessment and a brief case study highlighting a health system's interest in re-establishing itself as a competitive cardiovascular presence in their local and regional service areas.

As always, CFA invites your comments, suggestions and questions.  For additional information, including strategies for developing new or expanded cardiac services, please call us at 1-949-443-4005 or send us a confidential email at cfa@charlesfrancassociates.com

Footnotes:

¹ ddCFA/Definitive Healthcare National Hospital Database