Care delivery is being pushed into communities in a host of different ways, with new models sprouting up like designer clothing stores. Healthcare systems are afraid to be the last into a market they’ve identified as a fit, but oftentimes they don’t have the capital to enter. Developers have access to capital, but they tend to focus more on financials than the fit that a healthcare system might require. New project initiatives are often led from one perspective or the other without the strength of a blended approach that ensures both a strategic location and financial viability. However, a methodology can be used to collect and analyze available data to ensure that offerings, size, and scale together support the long-term sustainability of new assets.

Proper market definition
Making sure that the boundaries of a target market are set realistically will help identify an opportunity. The first step is to define the type of medical service or specialty that will be provided and how far consumers are willing to travel to seek that type of care. Specifically, the acceptable travel time to primary care and obstetrical services will typically be less than to a specialty service. Mapping tools can be used to determine the distance that can be traveled within those determined time frames.

However, a key factor that’s often overlooked in this process is consumer perception of their communities. Boundaries can be cultural as well as physical, lines that don’t necessarily show up on a map but still have great influence on patient access patterns. It’s important to determine where these fall.

The second step is to evaluate catchment areas by using social and demographic data that captures consumer buying practices in a community to help target pockets of new patients. Sources for this service include medical and strategic planning consultants or developers.

Service area growth
In addition to the current market share, consideration of future population growth and migration will highlight future opportunity. Sources such as the U.S. Census Bureau as well as state, county, and municipal government agencies are charged with creating projection profiles for regional resource studies, transportation, and school forecasts—data available for public use, as well. The biggest challenge is combining information from multiple sources to create a composite that paints a full picture. As any projection is a statistical prediction, it’s important to remember there’s a window of error  and decision making shouldn’t be based on this information alone.

There’s also a limit to how much business existing providers can absorb. Understanding this limit in comparison to future opportunity will highlight the additional providers necessary to service anticipated growth. Physician productivity information from internal or external sources can guide the expected ratios of providers to patients and varies by provider type.

Market share analysis
Provider market share is generated by comparing the total number of physicians in a market with a system’s internal number of physicians. This total is best acquired through medical provider list agencies. Information on where physicians already practice in a community can be overlaid with where other similar physicians are practicing, to give a clear picture of the competitive market and saturation of physicians. In addition to highlighting where physicians are located, these services can also be used to help evaluate the patient visits volume for a given market.

Additionally, patient visits should be evaluated to determine current market share in a particular service. This evaluation is the comparison of internal visit and procedure reports to external market estimates generated by consultants or purchased data services. Understanding both components of providers and patient visits helps to illustrate where there is true market share available and where there might be a false reading of opportunity.

A lack of providers might be due to many factors, such as office availability, medical center affiliations, or neighborhood quality.

Current system capacity
Before considering new construction, healthcare providers need to understand their current capacity, assessing assets to see if they’re being fully leveraged. This assessment should consider provider scheduling and how much time could be recovered with additional providers to service patients. Often, shifting sessions and balancing appointments across the week can showcase available capacity. It can be a difficult discussion to have with physician groups, but when evaluating the health and sustainability of an organization, this is a key point to review closely. The other factor is an evaluation of a clinic’s processes to understand how the system might be optimized to garner additional visits. Industry benchmarking data can assist in identifying outliers by specialty. From the system perspective, these two assessments could absorb additional need prior to the creation of additional resources.

Financial performance
There are two financial indicators that will assist in decision making when considering future return on investment. The first is how each product offering contributes to cash flow. This is done by evaluating profitability by service line and unit of service compared to the anticipated market capture. The second indicator is to understand the fixed cost of doing business in each submarket, as costs will vary by geography and location.

For example, what are the costs of leasing, clinic renovation, and utilities? Developers and brokers are good sources to communicate the range of these costs at a high level. The combination of these fixed and variable factors determine the overall viability of an asset.

Making the decision
Using these tools, a developer may look to market saturation and growth, providers in a market, and financial performance. A healthcare system, on the other hand, will likely focus on market share analysis and current system capacity. Examining overlays of all components and noting opportunity levels for each (for example, as “high,” “medium,” and “low”) will showcase which opportunities grade well across multiple dimensions. The comparison identifies the number of different services that make sense for a given market and drives size and type of development.

While these tools provide a sound analytical platform, in the end, they serve to confirm the intuition and vision that comes from knowing your market. The decision involves other nontangible factors such as strategic implications, competition, or other qualitative indicators. However, by utilizing the techniques described here, the risk of poorly positioned assets in a changing healthcare environment is lowered significantly. This blended assessment allows decision makers to ensure they’ve considered all aspects in matching their needs with their capital.

Judson Orlando, MBA, CHFM, is senior director of facilities development and operationsat Childlren’s Medical Center Dallas. He can be reached Clinton Compton, MA, AIA, is director at The Innova Group. He can be reached at