The Growth Channel

Are your service lines ready to compete upstream?


In Service Line Strategy Advisor, we review a lot of service line growth plans. This year in particular we’ve been seeing a similar mistake across all types of hospitals and service lines—growth plans are too focused on specialist loyalty, and not nearly enough on primary care physician preferences.

We’re gearing up to discuss this at our upcoming Market Strategy Summit, but I wanted to share a few key findings in advance.

Traditional service line strategy reaching its limits

For a long time, focusing on the specialist has been a winning formula for growing service line share. Most organizations have driven specialist loyalty by doing things like investing in high-end technology and organizing operations to cater to specialist efficiency. But the new health care economy will be defined by the influence of new decision makers, many of whom will have an active say in specialty care choices that are made well in advance of the specialty referral.

In particular, price-sensitive consumers and cost-conscious referring physicians are scrutinizing where they seek care, which means that specialists no longer hold the key to these referrals. Accordingly service lines have to look upstream in the referral chain to secure this business.

PCPs the new locus of control for specialty referrals

There’s no doubt that we’re seeing a rise in consumerism in health care. With the rise of high-deductible plans, patients are increasingly shopping around for services ranging from MRI scans to colonoscopies.

But when we think about the specialty volumes that fuel these core service lines, PCPs remain the most influential decision maker in the referral chain. And these folks increasingly raise the bar for expectations around where they send their patients for specialty care. They want to refer patients to a provider that spans the care continuum of their patients’ needs. They care about total cost of care. And they put a lot of weight on the quality of their patients’ experiences with specialists.

No easy feat to secure PCP loyalty

The average PCP refers to an alarmingly large number of specialists. Furthermore, they’re not particularly wedded to a given provider location. We did some interesting analyses looking at the PCP marketplace surrounding a single hospital. About half of the PCPs who did business with the organization will send the majority of their referrals in a single specialty (let’s call this being “loyal”) to the hospital. But only about one in five will be loyal to the hospital in two specialty areas. And only seven percent will be loyal across three specialties. So what’s the takeaway? PCPs still operate as free agents, and their loyalty isn’t tied to the hospital.

Hospitals across the country have been trying a range of strategies—from buying up PCP practices to joining ACOs—to shore up referrals, but there’s no silver bullet to this challenge.

Service lines need a primary care strategy

This disruption in referrals channels means that service lines have to act fast. There are three key things every program needs to consider doing:

  • Create a PCP-focused service model: Service lines have to win business on the PCP’s terms. This means maintaining a bench of highly accessible specialists, executing against cost and quality targets, and keeping the PCP involved in the patient’s ongoing care plan.

  • Filter achievable opportunities: PCPs outnumber specialists four to one. And they’re naturally less loyal. Every organization needs a strategy for identifying the right opportunities and prioritizing the PCP groups that will drive this growth.

  • Designing upstream market strategy: Capturing share upstream will require organizations not only prove accountability to PCPs, but also to expand their specialty footprint and branding strategy to support the community’s needs.

Needless to say, this is all easier said than done. Join us on November 17 and 18 to learn more about upstream service line strategy and what it takes to put this into action. If you're leading the charge on service line strategy and planning for your organization, it's not too late to join us.

The landscape is changing. What does that mean for your volumes?

At the 2014 Market Strategy Summit, you'll get to see our latest market analytics, review our research on consumer-oriented competition, and participate in briefings on referral strategy in the clinical integration era.

If you're helping chart strategy and planning for your organization, it's not too late to join us.

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