Todd Vang
/ Chief Operating Officer, Physicians Immediate Care

Location strategy in healthcare is too important and costly to leave to your gut. These five best practices help me make smart site selection decisions by using data.

Healthcare facility location strategy continues to be an area where “gut feel” drives the decision-making process, despite the fact that it often represents million-dollar decisions that can impact profitability for years. You can improve service delivery, streamline operations and ratchet up sales and marketing efforts all you want, but if you’ve made the wrong decision about a site, you’ll always have one arm tied behind your back.

Throughout my career at Walgreens and now at Physicians Immediate Care (PIC), an urgent care provider with 42 locations and growing, I have relied heavily on a data-driven process to help identify growth opportunities, including new markets, new locations, acquisitions and even relocations. That’s not to say instinct doesn’t play a role, but more than 20 years in retail healthcare has taught me that it’s essential to back up hunches with hard data and analysis to avoid costly mistakes and make consistently profitable decisions.

These five best practices have helped me to make smart site selection decisions by using data to stay on course and ahead of the competition over the long term.

 

Know your value proposition

Location strategy is a complex discipline that combines site analysis and sales forecasting. Location decisions can take years to come to fruition, so it starts with first looking out over the five- to ten-year horizon and understanding your company’s purpose, vision and fit in the industry.

But the most important part, and where the whole process begins, lies in really understanding your value proposition: Who are your patients or customers? What do they need? Where are they coming from? Why do they choose to come to you? What other choices in the market do they have? What does your competition do differently? Do you deliver a great experience? How are you able to market your service?

This evaluation of your value proposition is critically important. It also takes considerable time and effort to uncover. When I joined PIC, I spent the first few months almost exclusively focused on getting to know our patients, our current clinics and the urgent care market before I thought about where we should expand.

Talk to people

Even though I am resolutely science and data driven, I don’t underestimate the intuition of the people who work in or manage those locations.

For me, the process begins with talking to the company’s leaders, providers, clinicians and anyone else who has a feel for the business. I’ll visit our urgent care clinics and ask questions about the people they serve—who they are, why they trust us, what they ask for, what they expect and whether those things have changed over the years. I’ll conduct patient surveys to collect unfiltered consumer insights as well.

The insights you collect by talking to people who know the business and operate it daily will help you set the direction for further data-focused exploration. Don’t forget to talk to people outside of your company also—those with industry knowledge and those who work or do business with your direct competition. When you begin collecting and analyzing that data, sometimes it simply confirms what everyone knew all along, and sometimes it turns long-held preconceptions upside down, but in each case, the outcome will be equally valuable.

Collect and dig into the data

There are many data analysis tools available to help site planners track competition and understand their patients better. If you’re not plugging those tools into your market planning and location strategy, you’re putting your organization at a disadvantage and allowing your more data-driven competitors to surge ahead of you.

At PIC, we use a geographic information system (GIS) from Buxton to display and analyze our patients (by business line), derive our urgent care clinic’s specific trade areas, track our competition and even connect our health system partner locations to our strategy. It is also incredibly important to understand the demographics, geographical boundaries, transportation and other retail and healthcare influences within our trade areas. Knowing how these factors affect your current locations is absolutely core to understanding and forecasting them in future locations.

This type of data is what crystallizes the organizational knowledge—the perceptions and experiences of the staff and leadership—into actionable information. For example, staff working at a particular location may know that they see a lot of patients from a rural town a few miles away, but the data will uncover the exact number and tell you what percentage of the market share that represents, which in turn will help you decide whether a second nearby location is sustainable. This data can also be used across many key departments in your company. For example, marketing should be using it to refine the targeting of all of their vehicles.

The important thing is to ensure that your metrics align with your value proposition. Don’t measure everything that’s measurable—measure what has meaning. The best companies focus on improving the key data that helps them make better decisions.

Don’t measure everything that’s measurable—measure what has meaning. The best companies focus on improving the key data that helps them make better decisions.

Do the legwork

Fieldwork is incredibly valuable to a location strategy in the healthcare space. It is the link that can connect all of your data and complete the picture. Getting out there and visiting potential locations in person is hugely important to site selection, which is why the largest and most successful retail healthcare organizations have their own real-estate and research teams conducting fieldwork regularly. But small- and medium-sized companies rarely do it, and that’s a mistake, especially as healthcare is becoming more consumer-driven.

As COO, I have more than enough to do in a day, but I still get out to every location under consideration, because the data I collect from databases, view in our GIS system, or receive from web searches won’t tell me the whole story.

Let’s take Target and Walmart as an example. Both have similar operating hours. They sell similar categories of merchandise. If you rely on data alone, you might get the impression that they offer a similar customer experience, too. But visit their stores and you immediately see that they have very different concepts and value propositions. Don’t underestimate what you may find visiting a location that can enhance or put perspective around your current data. A business on a map may seem like a viable competitor until you visit the physical location and see that it has no visibility, is hard to access and appeals to a different demographic than your concept.

Fieldwork is the link that can connect all of your data and complete the picture.

Build a forecasting model that can build a learning organization

Every company has a unique growth strategy. Every company has different advantages and drawbacks, and your location strategy needs to reflect those realities. Your company’s goals and challenges won’t change the tools and analysis involved in the site planning process, but they do change your model.

The biggest mistake that is made in a site analysis or sales forecasting model is to try to build in too many variables. As statistician George Box stated, “All models are wrong, but some are useful.” I have met companies that try to quantify literally everything about a competitor or everything about their customer or patient. The best models are those that define the key variables that really drive success. You gain that type of understanding over time as you continue to learn from current and future location’s success.

Ultimately, you want to look back and say that your first locations were your worst and your latest are your best. That’s the outcome of a learning organization—one that is curious, keeps asking questions and makes new discoveries.

When you commit to allowing data to drive your decisions, you not only make smarter ones today, but you sow the seeds for a more profitable tomorrow. Building business intelligence enables you to plan further out, get to those “A” locations ahead of the competition, and continue to refine your concept year after year.

Here’s the bottom line.

Decisions about location strategy in the healthcare world are too important and too costly to leave to your gut. Building on a solid understanding of your company’s value proposition and using model that combines organizational experiences, hard data and fieldwork will help your organization grow market share predictably and improve decision-making year over year.

 

LLR Partners believes in sharing the wealth of experience and expertise within our portfolio companies, network and teams in order to inspire and help accelerate growth for a wider community of business leaders. We hope you find these GrowthBits helpful and share them with your network. Send us the topics you’d like to learn more about any time. 

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