Optimizing Service Line Distribution
Let’s say you’re enjoying a Starbucks coffee while strolling down the street. These days, it’s likely you could pass by yet another Starbucks only a few blocks away before you’ve finished your cup of coffee. You might think, “Is that really necessary?” While a bit baffling, the concept of two (or more) stores located in close proximity selling the same array of products works. This method works especially well for coffee shops, fast-food restaurants and retail pharmacies, where brand ubiquity, high foot traffic and short lines drive sales volume. But does that formula work for acute care hospitals?
Why Health Care and Retail Differ
While analogies comparing health care to the retail environment seem to be ubiquitous, there are limitations to this comparison, particularly when it comes to inpatient care. You won’t find a value menu at your local hospital. In other words, acute care is extremely expensive to deliver, considering the high-cost technologies and workforce required. And there aren’t express checkout lanes for 10 items or less—patients arrive at their destination for service through a complex referral channel of physician preference, insurance steerage and known reputation of clinical programs.
When health systems try to put the same services, particularly high-cost programs, in multiple locations in the same geographic market, they risk overextension of resources and potential dilution of brand, performance and outcomes. Successful service line distribution means placing the right complement of services at the right mix of access points to meet the distinctive medical and wellness needs of patients, both in the present and future.
Right Care, Right Place, Right Time
Optimizing service line distribution is not an easy task. It requires difficult trade-offs, and many organizations are ill-equipped to make those choices because of insular culture, politicized management processes and organizational inertia of the status quo. Trying to harmonize service line investments without independent perspective, comparative data and prior experience can result in less than desirable outcomes. With an analytically driven assessment of market needs and service placement, organizations can deliver “the right care, in the right place, at the right time.” They can also:
- Remain financially competitive
- Improve capital decision making and stewardship
- Elevate the value of care and the patient experience
- Enhance clinical integration between sites
- Align leadership around a common set of growth objectives
- Clarify partnership needs
As part of a service line distribution initiative, each System of CARE component plays a clear role in the coordination and delivery of services across the market.
Case Study: Cancer Service Line Distribution
A West Coast health system was planning to open a new hospital, with the potential to develop space for cancer treatment, in close proximity to another in-system hospital with a well-established cancer program. To understand how to best distribute cancer services across the region, the system engaged with Sg2 to design multiple configuration options that fell into three distinct categories:
- Centralized System: Provides comprehensive offerings and advanced technologies at a main site to facilitate “one-stop” shopping convenience in a physically integrated, healing-oriented environment
- Distributed System: Offers retail convenience and tailored offerings across multiple sites that bring services into the local communities where patients live to minimize stress of travel times
- Multihub System: Sustains balanced programs designed to meet patient needs across the care continuum in multiple geographies with elements of local differentiation and system coordination
Each of the three configurations was assessed in a standard five-category framework:
|Category||Key Analyses Performed|
|Patient Access||Population density; submarket demographic attractiveness; in-migration/out-migration; patient drive times|
|Clinical Capabilities||System of CARE assessment—capabilities and gaps at various points in the care continuum|
|Provider Satisfaction||Provider interview feedback on preferences for location|
|Market Share Potential||Market share fragmentation; under-/overrepresentation of share by submarket|
|Competitor Footprint||Competitor location mapping; competitor capability inventory; potential partner assessment|
After structured review of the evidence, the system opted for a multihub configuration. It used Sg2’s Impact of Change® forecast along with Ambulatory Market Share analytics to inform spoke placement to support the cancer program. When selecting spoke locations, the system wanted to clarify boundaries and minimize overlapping drive time for patients between the two hub campuses. It also considered how to adequately cover submarkets where market share penetration was below average for the service line. Sg2 guided the system in determining the necessary changes to workforce, technology, partnerships and cross-campus clinical coordination.
Keys to Success
Service line distribution planning requires a concerted effort to transcend organizational politics and determine a decision-making framework for assessing configuration options. Implementing these frameworks and tying together custom analytics with market research can foster a productive discussion on the best allocation of resources, including workforce and capital. We’ve found that there are three keys to success in developing a service line distribution strategy:
- Consensus building on the service line’s configuration of access points across the system
- Clear determination of the role of each location in the system
- Discussion of case studies and proven methods to improve System of CARE coordination and patient transitions between sites in the service line
Unlike in the retail world, it does not always make sense to put clinical services on “every corner.” In fact, this mentality can actually render programs suboptimal and less ready to compete in a value-driven environment. Sg2 can help your organization think through your System of CARE on a service line basis and facilitate stakeholder decisions on “right care, right place, right time” for a given geography. Contact us at firstname.lastname@example.org for details on kick-starting this effort.