The Growth Channel

Planning service lines for 2020: Three exercises you can’t overlook

Today’s service line leaders have to answer a lot of opaque questions about the future of their businesses: How do we balance growth and greater efficiency in our service footprint? What outpatient market opportunities should we pursue—and when? And how do we protect our programs given the patient steerage occurring upstream from acute care?

If you try to answer these questions without appropriate due diligence and the right analytic approach, you risk creating a strategic plan that’s neither strategic nor effective. To avoid this trap, we recommend you conduct three exercises during your service line planning process.

1. Calculate your net gain between expansion and rationalization

I know from speaking with many service line leaders that growth forecasts don’t always sync up with the growth you actually realize. I think part of the challenge is that many planners fail to account for rationalization efforts in their forecasts.

Take, for example, a system that launches an initiative to pursue 10% annual revenue growth in cardiovascular services. A few months later that system decides to consolidate its cardiac surgery programs. Planning these initiatives in silos can result in significant budget variance and lack of clarity on the service line’s true market opportunity.

That’s why we recommend coupling growth forecasting and rationalization opportunity assessments into a single planning exercise. It ensures your system leaders have the most accurate expectations for market performance.

Related: Marketing Plan Template

2. Assess your community need, not your competitors' ventures

Short-stay specialty hospitals, freestanding spine centers, dedicated breast health diagnostic centers—they’re all examples of competitors making aggressive ambulatory bets. And the trend isn’t likely to subside anytime soon; a recent HealthLeaders survey suggests that within the next three years, the average hospital will devote two-thirds of its capital program development budget to ambulatory endeavors. We see a lot of organizations trying to match their competitors clinic-for-clinic, but it begs the question: Is competitive activity the right guidepost for ambulatory service line expansion?

Our blunt advice: don’t get carried away with what your competitors are building. The best way to ground your outpatient specialty care strategy in real opportunity is to center your analyses on service gaps in the community. Do individuals in your area have difficulty accessing particular services? Are there outpatient services that would strengthen care coordination with your inpatient staples? What’s the wait time for those services? And the drive time? Answering these and other questions about community need will help you make investments that solve real patient problems and boost your appeal in the market.

3. Scope out the highest-value PCPs

Payers have figured out that the best way to influence the cost of inpatient care is to change the incentives of primary care physicians. Now, PCPs in many markets are accountable for the cost and quality of their panel’s acute care experiences, and as a result, they’re changing how they select specialty care providers. Put simply, winning share now requires winning over PCPs, and service lines need new competencies to do it.

But saying that PCPs carry more weight doesn’t mean you should try to appeal to all of them. Beyond their sheer numbers, PCPs vary significantly in their sub-specialization, panel size, and panel acuity. Chances are, not all PCPs can provide the volume and type of specialty care referrals you’re seeking. So focus on identifying those that can. As a starting point, we’ve created some guidelines for sifting through the PCP market, which you can find in our Market Strategy Summit materials.

Hopefully this provides some food for thought as you launch your service line plans for the new year. Stay tuned for more to come on each of these topics, and good luck in your early 2015 endeavors.

Planning 20/20: A new initiative

Better understand the new job roles and complex market challenges facing strategic planners by subscribing to email alerts from the Planning 20/20 Initiative. You'll get the information, data, and tools necessary to make timely, effective decisions, and the resources needed to develop new skills ahead of the market curve.

Subscribe now