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 existing locations successful. Success is typically driven by two sets of variables:
Healthcare Data Variables
Traditional healthcare variables on supply (existing physicians in the market) and demand (forecasted 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?
Retail Data Variables
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. Learn more and contact us for an initial consultation.