Power of market strategy
. . .do not use average benchmarks, but stretch your goals for your practice to make it more profitable.
Internal-external analysis key to market position
By Sandra Lee Breisch
Being strategically positioned in the marketplace is critical not only to your practices success, but also marketability.
And if your group doesnt have any strategic plans in place to differentiate yourself from your competitors, your ability to attract patients, referrals and payers is going to suffer and so is your bottom line.
To develop some marketing strategies and/or reevaluate the ones you have in place, it is essential that you first perform an internal and external analysis of your practice.
"Internally, you need to look at who your current patients are and what services you are providing for them," advises Craig Hunter, associate partner at The Coker Group, a national health care consulting firm in Roswell, Ga., that specializes in physician practice management and strategic development. "You can do this by developing a patient-origin-zip code analysis and by analyzing your payer mix, the services your practice is providing for patients, patients ages and finding out where referrals and new patients are coming from currently," he says.
After youve obtained this information, Hunter says practices should ask themselves: Is this the audience we want to target and why? "You may find that when you look at your patient zip code demographics, patients may be driving through a zip code to get to your practice," says Hunter. "You need to know why they are doing that. Is it because of the quality of your practice, the services you provide, a strong patient following or are your referral sources strong? Another question is: should you consider opening up a satellite office or an outreach clinic in another zip code location or town?"
As you complete an assessment of your patient base or market share, Hunter believes you should measure customer perceptions and needs through some form of patient assessment
questionnaire. "Ask patients, Why did you seek our services? What services would you like us to offer that were currently not offering?" he says. "The survey will help you determine what additional services you might want to offer in the future to expand your current practice operations."
Are the services youre providing profitable?
"Many times physicians dont know what lines of business a practice deals with are profitable and what lines are not profitable," explains Richard E. Strain Jr., MD, COO, Rocket Science Consulting, Ft. Lauderdale, Fla. "Knowing this information gives practices some idea of their costs. And many times physicians do not know their costs. They need to see which payers are profitable or not, look at different payers and what their costs are, know what their contracts are and what the key [moneymaking] performers are doing.
"Unless physicians are holding a health care plans feet to the fire, they may be getting short-changed. Many times, physicians are just remiss in taking the time required to get this necessary information and having the right software process for billing packages to track this type of information."
By examining your payer mix and contracts, Hunter says youll find out not only what contracts are profitable for your practice, but if your payer mix is too heavily weighted with one managed care plan.
"If so, you might want to diversify," he suggests. "That would lead to some external marketing initiatives that you need to consider. One example would be to look at employers such as manufacturing plants who may have better reimbursing managed care plans. One way to market to them is to proactively call on them to attract occupational medicine and rehabilitation cases if you offer those services."
Benchmarking will be instrumental in helping you track performance and profitability, notes Hunter. "But if youre going to use benchmarks for your practice, do not use average benchmarks, but stretch your goals for your practice to make it more profitable," he says.
"A full time orthopaedic surgeon should annually have approximately 4,500 ambulatory encounters, gross charges around $1.4 million, total RVUs of around 17,000 and operational overhead around 45 percent."
Look at your referral sources.Hunter says to find out the answers to these questions:
"Really examine your referral sources and your patients needs," stresses Hunter. "Think along the lines of developing a service line concept. Its offering comprehensive services such as a hand or spine specialist, or rehabilitation services so your practice becomes a one-stop shop. This might give you greater negotiating power with the managed care companies not to mention greater marketing power. You really want to distinguish why your practice is better than other practices in the market and as the premier orthopaedic group in town."
You should know your practices strengths and weaknesses. "Look at the practice objectively and ask, What are our strengths and weaknesses," suggests Dr. Strain. "Obviously you want to capitalize on the strengths of the practice and market to those strengths. For instance, where the office is geographically located can be a strength."
How do you stack-up with your competitors? "If you dont know, find out," Dr. Strain says. "Practices need to perform a competitive evaluation of other practices location, ownership, scope of services, scope of markets serviced, services and markets that you compete against with each competitor, distinguishing features/benefits for patients and other purchasers, key competitive strengths and weaknesses, significant recent events (such as a merger), and competitive strategy (are they a total musculoskeletal center).
A practices physician-to-population service ratio should also be examined. "One of the things practices need to consider is that they should estimate the need for one orthopaedic surgeon for every 15,000-18,000 of population," says Hunter. "You may be in a situation where the market is under-supplied. And you may look at bringing in another physician to help meet the demand for your practice. If a practice has a good relationship with the primary care providers in those towns, they may be getting referrals from 20-40 miles away. Maybe the physician was on the local hospitals speakers bureau, worked with the nursing homes primary care doctors or did other networking outside the primary practice community."
Now that youve got a pulse on how your practice is strategically aligned in the marketplace, you can develop a marketing strategy.
Although there are many marketing resources out there, Dr. Strain suggests practices look first to the Academy for developing their web site, brochures and other marketing collateral material.
If you need to retain outside marketing expertise to develop other marketing strategies, be sure the company knows what your strategic goals are, notes Hunter. "You need to make sure their expertise will meet your expectations in ensuring a return on your investment not only monetarily but from a time perspective," he says.
Remember that your rapport with other health care professionals in and outside the community is key to word-of-mouth referrals. "Understand that physicians and patients make choices about a physician and/or their practice upon recommendations," says Dr. Strain.
Certain medical practices do "billboard" advertising to develop a branding concept with the community. Hunter says it may be appropriate in some cases, but it is very expensive. "Most practices dont want to market on billboards, unless theyre marketing more of a "walk-in clinic" or "urgent care" facility," he says. "In a small town, a patient typically isnt going to call an orthopaedic surgeon, theyre going to call a family doctor or go to an emergency room or urgent care clinic. So, its important to network with primary care practitioners and medical facilities performing ancillary services."
Hunter says this branding process could also occur through the use of practice brochures and Internet or web site promotional strategies.