Every day patients are acting more and more like consumers when it comes to healthcare – and the way those consumers behave greatly impacts the types of services they’ll need and how they go about choosing their healthcare provider.
With more accessibility in the healthcare marketplace than ever before, in order to compete, you must understand the population segments that make up each of your markets. Within those markets you must also evaluate the healthcare needs of the market populations in order to match the appropriate service lines to the right locations.
Understanding the size, scope and diversity of your markets’ population base has never been more important, as consumers influence the drive for increased convenience and ease of access to care. Uncovering this information can be done through analyzing and reviewing the demand density of market trade areas around each of your locations.
What is Demand Density?
Demand density, in its simplest terms, is the aggregate of the income and people or households in your facility’s trade area. It’s the basic details and statistics that a facility needs to make location decisions. This information applies to more than just building new locations, as it can also influence operations to help you determine which service lines would be better suited at a particular facility based on its demand density.
Using Demand Density in Market Analysis.
When beginning the demand density analysis process, the first step is to determine the size of your location’s trade area. Don’t just think in terms of distance. Consumers are driven by convenience, and while your clinic or hospital may only be five miles away, it may take an extra 10 minutes to reach your facility over a competing facility at a slightly farther distance. The preferred method of analyzing your trade area is to use drive times as they better define how consumers make decisions.
Why Use Drive-Times Instead of Distance?
A drive-time trade area shows the distance consumers are willing to drive to reach a location or facility. In a convenience-driven environment, consumers think in minutes, not miles. Your prospective patients may recognize that it only takes five minutes to reach your facility, not that it’s only 1.2 miles away. Establishing a reasonable drive-time of a potential or existing facility will help you better understand the demand density of the nearby populations.
Once you’ve determined your drive-time, the next step is to analyze the trade area’s basic demographic data to include:
- Population characteristics such as age, education, and ethnicity
- Employment trends
- Daytime work population
- Transportation and mobility data, traffic volume, and construction
- Household composition and income
- Average and median household incomes
- Per capita income
In addition to the demographic details, your analysis should include psychographic data, which details the lifestyles of the consumers in the trade area and delves into their shopping habits, tastes and preferences, propensity for needing various medical services lines, and more. These details are critical for site selectors and operations managers and help to determine which operations are suitable for your potential markets.
The goal behind the collection and analysis of all this information is to help better estimate the need for particular service lines in your trade areas and better deploy solutions to your market populations. Learn more about Demand Density analysis using Buxton’s SCOUT analytics tool.