Even for the most prepared hospice provider, change often contains an element of chance. This includes entry into new markets.
Increasingly, providers are leveraging data to mitigate the potential risks that come with growth.
Opportunities for expansion are not created equal. Whether a company grows through an acquisition, a de novo or other means, these decisions require careful and comprehensive analysis of a complex web of factors.
Considerations such as the competitive landscape, characteristics of the local population, the available labor pool, referral patterns and a hospice’s individual priorities all come into play, among others.
“There is no blueprint of exactly what’s going to work for every organization. [There are] some target areas where they feel like home health and hospice are underutilized. There are some organizations who feel like they are really good at delivering the highest quality care and can come in and compete,” Christine Lang, director of data consulting at Simitree, told Hospice News. “By using data to explore new markets and understand who the players and the providers and the patterns are, they can determine if it matches their strengths.”
The Connecticut-based consulting firm Simitree recently unveiled a new Market Analysis Platform (MAP) to assist health care providers as they navigate these decisions.
Hospices seeking to expand must consider a diverse range of variables. Near the top of the list is referral trends in the target market.
For example, discharges to hospice can range from 2% to 6% from state to state, according to Lang. But some hospitals send as many as 60% of their patients home with no post-acute care referral at all. One contributor to these variations is that some hospitals are more familiar with post-acute services than others.
Another key point is that some referral organizations have tight networks of post-acute providers they work with.
“Even in hospitals that do use post-acute care a lot, some of them have no more than 30% of their patients going to a single home health or hospice provider. But in some communities, no hospital has fewer than 70% of their patients going to one provider,” Lang said. “Another really huge market dynamic that we see a lot of variability on is just the concentration of providers overall.”
Hospices also need to think about the concentration of referral sources.
Some locales may have a handful of large providers that are each capturing 20% or 25% of the market share, or they may have a plethora of smaller organizations who have 5% or less, Lang said.
This yields substantial influence on how a hospice needs to operate to achieve success in that market.
“By just understanding what the patterns look like today, who they’re up against and how they position themselves relative to who is actually receiving the referrals today, providers target that message a little more effectively,” Lang told Hospice News. “That’s really in thinking about getting market share from an existing space or potentially moving into a new space, but then even assessing what new space may make sense. They can determine if it matches their strengths, and it would be a good fit for them.”
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