Market segmentation

Health Progress, Mar/Apr 2002 by Zuckerman, Alan M, Johnson, Tracy K

Sixth in a Series Examining Revenue Growth Strategies in a Difficult Health Care Market

Market segmentation is a useful business tool to identify new and expanded ways to improve services and enhance revenues. This tool identifies unique subsets of the population to target for specialized services and marketing initiatives. Market segments can be defined by three major categories: demographic characteristics, disease categories, and geographic location.

DEMOGRAPHIC CHARACTERISTICS

Demographic segmentation targets services for certain socioeconomic characteristics such as gender, age, or cultural/ethnic background. Strategies that target women, in particular, are becoming increasingly prevalent for several reasons:

* Capturing the female patient means influencing the vast majority of health care decisions made for families.

* Women use health services more frequently than men, including physician visits (31 percent more) and admissions to the hospital (17 percent more).1

* Most women are dissatisfied with how they receive care, which is often in settings that do not support the unique aspects of care to women.

For these reasons, significant opportunity exists to develop services targeted to women, and even to certain age groups within this population, that can make a meaningful distinction in the marketplace, improve quality of care, and increase patient satisfaction. These opportunities can range from focused niche service development to comprehensive approaches that incorporate a wide range of programs.

Most acute care hospitals provide maternity services and, historically, have defined their strategy for women around obstetric services and little else. This narrow approach forces hospitals to compete in a highly competitive and, in many places, shrinking market. Strategies that target a wider spectrum of women and their health needs-such as older women who are interested in perimenopausal care, breast health, bone health, and fitness-will increase the opportunity to reach and retain this market segment for all their health care needs.

The most comprehensive approach, which is being used at such places as Magee Women's Hospital, Pittsburgh, involves developing services for women across other non-gender-specific clinical service lines, such as cardiology, orthopedics, and oncology (beyond breast and gynecological cancers). Although this approach is the most difficult to put into operation, it goes farthest in establishing a market presence in women's health. Magee's program is one of 14 medical centers federally designated as a "center of excellence" for women's services, a program of the office on women's health in the U.S. Department of Health and Human Services. These centers of excellence for women are also distinguished by a multidisciplinary approach and strong education and research programs supporting the development of treatments for women.2

Key non-maternity-based strategies for women include mid-life women's programs and women-- oriented services in oncology and cardiology. Although the appropriateness of various strategies for developing differentiated women's services will ultimately depend on the organization and its marketplace, those that provide only amenities and not substantive services, compete with physicians, follow late in the marketplace, or attempt to add too many services without ensuring program stability and commensurate market support are less likely to succeed. Strategies that are more likely to succeed focus on market-based program design, partnering (not competing) with physicians, niche programming, and careful market positioning and differentiation.

Health care organizations are also recognizing the importance of the aging population and its impact on demand for services. Targeting older adults for care and improving access to services in a meaningful way has proved more challenging than offering comprehensive women's services. Greenwich Hospital in Greenwich, CT, has partnered with area agencies and organizations to create the Geriatric Health and Resource Center of Greenwich Hospital. This center focuses on four areas, including:

Interdisciplinary geriatric assessment provided by a board-certified geriatrician, including any necessary treatment plan

* Geriatric continuum of care that uses case managers to link a variety of services frequently needed by the elderly, including inpatient and outpatient care, rehabilitation and fitness, respite care, adult day care, group living, skilled nursing, hospice, and home health services

* Education and awareness through a variety of media sources and a membership program providing discounts on drugs, eyeglasses, and hearing aids

* Resource information services linking various data sources within the community to health care providers

The Geriatric Health and Resource Center has improved health care services for the elderly and increased the hospital's share of its primary market as well as expanded its share of the secondary market.3

In some areas of the country, ethnic characteristics are useful to identify special needs, particularly for minority or immigrant populations. Health care organizations, particularly in urban areas, are frequently faced with the special needs of immigrant populations in their communities. The Hispanic population in the United States increased by 58 percent between 1990 and 2000,(4) and immigrants from dozens of countries have settled in greater numbers, even in rural areas in the Midwest.5