Hospital Market Analysis

Financial & Operational Assessment Tool

FLORIDA FLEX GRANT, 2012-2013

Sponsored by:

FL STATE OFFICE OF RURAL HEALTH

&
HOMETOWN HEALTH

Hospital name:
 TABLE OF CONTENTS

Section I. Review of hospitals recent performance

Section II. Strength, Weakness, Opportunities & Threats

Section III. Assessment of competitive strength

Section IV. Assessment of competitive position

Section V. Identification of strategic issues/problems that the hospital faces

Section VI. Strategic Recommendations

Note to Senior Leadership

Part of the 2012- 2013 FLEX Grant Collaborative is to perform a hospital market
analysis for each participating hospital. To that end, HomeTown Health is providing
an assessment template for the analysis. While this template contains six “sections”,
we will complete sections 1 & 2 for the FLEX Grant. Completion of all six sections
would provide valuable insight into your competitive strength and position as well
as a framework for improving your market position. The timeframe for completing
the enclosed assessment tool is as follows: analysis to the hospitals- early January,
site visits by Lou Semrad (HTH) to assist in the analysis-Jan & Feb, analysis
completed and returned to HTH-late February. Completing the assessment tool may
require asking some questions that make people uncomfortable and that is one of
the objectives. To survive and thrive, you must be willing to ask and answer: how will
we defend our market position, how will we improve our market position, how will we
respond to a changing healthcare industry and competitive conditions/forces and do
we have a distinctive competence?
Tools like this are more beneficial if several leaders participate. Feel free to
call or email me if questions or issues arise and you need some assistance.
Good luck,

Lou Semrad, BSN, MBA

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Section I. Review of hospitals recent performance:

Financial:
Data sources: iVantage strength index, AHD.com, in-house financial data (Fill in the blank
or circle one of the provided options)
Market share: rising flat falling
Margin: profitable break-even not profitable

Days in A/P __________

Days cash on hand __________ (use of a monthly average is ok)

A/R days __________

Denials as % of net revenue __________

Operational:

Self pay patients as %: 12 months ago now

Emergency dept. __________ _________
Outpatient services __________ _________
Inpatient __________ _________
Ave Daily Census trend over last 24 mo.: increasing flat decreasing

# of senior leader turnovers ___________ (2 year time period)

# of manager turnovers ___________ (for 2012)

# of management positions (middle & senior) that have been open

more than 3 months ___________

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Section II. Strength, Weakness, Opportunities & Threats:

One way to approach a SWOT analysis is for management to carry a small notebook
and in the course of regular duties, when you feel like banging your head against a
solid object or throwing something at someone (weakness, opportunity, threat) write
it down. When you feel like high- fiving someone (strength, opportunity) write it
down. When you feel like scratching your head (opportunity) write it down. I have
included some areas to include in your analysis:
· Line staff – stable, losing staff (specific depts.), etc.
· Dept. managers- same as above
· Senior leadership- experience, turnover, vision, communication skills, etc.
· Financial resources- line(s) of credit, loan worthiness, County supplement, etc.
· Cash flow
· Local economy
· Local government- County support, relationship with Sherriff’s dept. &
prisoner care
· State government – Medicaid exposure
· Federal government- Medicare, legislation, “Obama” Care
· Medical staff- employed/not employed and implications, ave age of medical
staff, ability to recruit new primary care staff, willingness to adopt best
practice models, willingness to admit patients, hospitalist program, etc.
· Strategic alliance(s)- would you be an attractive partner or a burden, in an
alliance (evaluate the alliance-strength/weakness/threat to your survival)
· Local/patient demographics- age of population, strength of local industry,
commercial insurance, increasing/decreasing population base, etc.
· Customer loyalty
· Technological advances- consider your technology (EHR, CT, MRI, etc.
versus your competition), telehealth, etc.
· Business office- this is on area you should spend a lot of time thinking
about your strengths, weaknesses, opportunities and threats. Strong
P&P’s, following P&P’s (cash collections at point of service), education,
strength of employees, denials (follow-up and follow-through), etc
· Clinical quality- customer perceptions, errors, education, clinical
practice lab, quality improvement program, CNO, staff, etc
· Brand strength of the hospital
· Reliability of services and equipment
· Radius of care- what is the competition doing in a 10 mile, 20 mile and 30
mile radius from your hospital. What presence does your hospital have in
those areas (clinics, etc.)
· Factors affecting increasing/decreasing market share (increasing mkt
share is not a strength, it is the result of a strength, successful
exploitation of an opportunity or reversal of a weakness)
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 Strength Weakness

Opportunity Threats

When completed successfully, leadership should be able to take the

SWOT analysis and:

a) Determine if existing strategies are working

b) Determine if strategic issues/opportunities have been defined/revealed
c) Set goals to be successful. The goal should not be to make money or to
stay open. The goal should be to do those things that will result in
staying open. You should apply that principle to this exercise.
d) Develop new/revised strategies
e) Identify resource allocation priorities
f) Establish key/critical success factors
g) Develop methodology to track new/revised strategies and KSFs
h) Remember it is not the amount of ink in each box that contributes
to a functional SWOT analysis; it is the impact on the organization
of each identified strength, weakness, opportunity & threat.
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Section III.Assessment of Competitive Strength
Where a SWOT analysis focuses on an inward assessment of your organization,
this section focuses on an outward assessment of your organization versus your
rivals. Who has a stronger reputation among your customers, who has the upper
hand at recruiting physicians, who can grow revenue streams quicker?
Completing this section shines a spotlight on market share and revenue trends.

In this section, you are asked to rate yourself against rival hospitals. Some
may have only one rival while others may have two, hence room for two
rivals in the following chart. If your rival is a regional medical center, it
may be more useful to compare yourself to your closest peer hospital.
We have provided the competitive variables for two reasons: 1) save you
time and 2) uniformity in the analysis. Use a 1 to 10 rating scale with 1
being weak or poor and 10 being equal to top decile performing hospital.
When complete, please add each column to derive an overall rating of
competitive strength. If you are unable to assign an informed rating for
your rival, this may reveal a weakness in the hospital ’s strategy and
marketing plan. You should know your competition.
I have provided several “fill-in-the-blank” rows for you to add variables should

you feel they need to be included in the competitive strength analysis.

Key Success Factors/ Competitive Variables You Rival 1 Rival 2

Reputation/image in the community (include med staff here)
Stability of management
Adequacy of management
Primary care base (are patients staying local)
Ability to recruit new physicians (primary care and specialty)
Quality of medical staff
Quality of patient care & service (hospitality/manors)
Culture of accountability
Culture of innovation (ability/willingness to adapt to survive)
Business office accuracy & efficiency
Ability to hire and retain qualified employees
Use of new technology (EHR, tele-medicine, etc)
Support of key stake holders (Board & elected officials)
Access to same-day-services
Ability to grow and accelerate referral streams

Overall rating of competitive strength

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Please visit the following website and enter your zip code as well as that of your

rival(s) to see how iVantage Analytics has assessed your hospital strength.

www.hospitalstrengthindex.com/hospital-ratings/

iVantage’s rating: Rival #1 score __________ Rival #2 score __________

Your score ___________
Your rating from the above grid: Rival #1 score __________ Rival #2 score __________

Your score ___________

Did your competitive analysis draw the same conclusion as iVantage’s vs. your rival(s)?

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Section IV. Assessment of Competitive Position
This section builds upon the Competitive Strength Assessment from the
previous section and will instrumental in building a successful strategic plan.
Compile a list of those factors/variables that represent strengths/advantages
for the hospital’s current market position.
1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Compile a list of those factors/variables that represent a

weakness/disadvantage for the hospital’s current market position.
1.

2.

3.

4.

5.

6.

7.

8.

9.

10.
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Using the above lists, decide the following:

a) Is the hospital’s position improving or declining and WHY.

b) Does the hospital have a net competitive advantage or is the hospital at a

competitive disadvantage (If you have a competitive advantage in a

specific area and disadvantage in others, then specify).

c) Now, based on the whole of the data, decide:

a. how weak or strong is your competitive position

1 2 3 4 5 6 7 8 9 10
b. weak strong
how easy will it be to overcome a weak or disadvantaged position

1 2 3 4 5 6 7 8 9 10

c. easy difficult
how easy will it be to defend a strong position (if applicable)

1 2 3 4 5 6 7 8 9 10
easy difficult

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Section V. Identifying the Strategic Problems/Issues That Need Addressing
In this section, we need to identify/prioritize what problems/issues are
indicated by the diagnosis of the hospital’s situation and competitive position.
Make a list of 5 problems/issues that the hospital must address to achieve a
strong competitive position.

Problem/Issue #1:

Problem/Issue #2:

Problem/Issue #3:

Problem/Issue #4:

Problem/Issue #5:

Hints for identifying problems/issues that the hospital must address:

As you compile the list, ask:

· What are the implications of this for the hospitals strategy?
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· What hurdles will the hospital have to overcome, given the
current competitive forces, future competitive conditions and
likely moves by rivals?
· Is this an outcome or the root problem/issue that needs addressing?
Example: Unable to pay A/P in timely manner. You may feel that the
inability to pay bills on time is a problem, but it is an outcome, not a
root problem/issue. Why do you not have enough $$$ in the bank? High
denials, lack of cash collections, lack of accurate clinical
documentation, etc.? These are still outcomes but we are getting closer
to the root problem. Do you have a P&P for cash collections at the point
of service? Do employees know you have a P&P and that they are
expected to adhere to this policy? Have they been given the proper
training on how to implement the cash collection policy? These are the
kind of questions that will lead you to the root cause of a
problem/issue that is contributing to a competitive disadvantage.

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Section VI. Recommendations
In this section, take the results of the Hospital Market Analysis, and translate

that into a recommended strategy and course of action.

There are 6 basic components to this section:

1. Specifying a basic strategy direction, with a strategic mission and

target objectives

2. Recommending an overall business strategy

3. Recommending competitive approaches with the goal of creating a sustainable

4. competitive advantage

5. Recommending service line support strategies where needed

6. Recommending specific short-term action steps

7. Recommending specific long-term action steps

Hints for creating a competitive advantage:

· Pinpoint what kind of competitive advantage the hospital should

try and achieve. Being specific is the goal.
· What specific actions or steps should the hospital take to
create this advantage?
· Do not overreach. Be realistic, stay within the boundaries of
resources (cash, talent pool, etc.) available. If you can expand the
resource boundary with a high degree of confidence, then do it.
· Creativity can be an ally when looking for a competitive advantage.

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