Measure the amount of consumerism in your market
One of the most important factors to consider is the level consumerism in the market. In consumerist markets, patients and payers tend to be more price sensitive and consider a number of options in order to steer towards the lowest-cost site of care.
While there a number of ways to measure a market's level of consumerism, private payer mix and level of competition are two easily accessible indicators.
Index No. 1: Private payer mix
Markets with high private payer concentrations, especially those offering high deductible health plans, lend to a consumerist market as these conditions incentivize low-cost utilization. In contrast, markets with a large public plan presence are less price sensitive.
To measure private payer presence in you market, turn to our Hospital Benchmark Generator. You can see how your hospital compares to the national average for Medicare, Medicaid, and "Other" payer mix (with "Other" referring predominantly, but not exclusively, to private payers). If your "Other Payer Mix" is above the 50th percentile, this may indicate a higher-than-average private payer mix. Markets with a high private payer mix indicate higher consumerism (and typically higher reimbursement rates).
Index No. 2: Competition
Measuring the competitiveness of your market is another way to evaluate demand for freestanding imaging. Two common methods to do so are the Four-Firm Concentration Ratio—which measures the aggregate market share of the top four competitors—and the Herfindahl-Hirschman Index (HHI). Markets that are more fragmented, and therefore more competitive, signal a freestanding investment may be a good bet.