Monitoring the vital signs

Situated in Macomb County, Michigan, 30 miles north of Detroit, the St. Joseph's Health Network was founded in 1898, when the Sisters of Charity built a sanatorium in the town of Mt. Clemens that included a 50-bed hospital. With steady expansion of that site over the next several decades and the addition of new hospitals and other facilities, St. Joseph's now provides the county's 700,000-plus residents with a wide array of healthcare-related services from many locations.

But it's not alone. In addition to facing competition from HMO's, urgent care centers, and satellite clinics, the network is finding that as Detroit's metropolitan area expands, Mt. Clemens is becoming more and more attractive to that city's major healthcare providers, says Fred Towns, St. Joseph's director of marketing.

"Most of the heavy hitters are located in the Detroit area and since their consumer base is getting more and more precarious all the time, they have been looking northward into the more affluent suburbs. In certain areas we have formed alliances with them, but in others we're working in direct competition."

To monitor the competition and guide the network's development, St. Joseph's relies on a highly developed database and a number of data analysis tools, says Maryanne Moore, St. Joseph's vice president of planning.

"We're in a high growth area, that's why we see a lot more people trying to enter our market and why we feel that we need to continually improve and keep track of the information so that we know what's going on within our market.

"Along with competition from the acute care, typical hospital system side, you have independents, hospitals that have entered into the HMO business, and some that have found creative ways to joint venture, in addition to four or five other HMO's in the metropolitan area."

Using the Baxter Healthcare Corp.'s Market Model software package-which integrates internal and external databases to generate market projections of area and hospital admissions-in conjunction with other data sources, Moore says St. Joseph's performs strategic planning tasks, monitors the strength of existing care programs, and analyzes the potential of new ones.

For example, the network recently completed a market analysis to assess gains and losses of market share over a four-year period. Moore says a presentation to management based on this work cleared up some misperceptions and made people acutely aware of just who the hospital's main competitors were.

"We wanted to gauge the impact as certain hospitals expanded and either put group practices or outpatient facilities within our area. We wanted to find out if we were gaining or losing market share, and if our competitors were doing the same thing. We tracked that information by key competitor and applied it to a map and identified two competitors that were increasing their share in our market. I think it helped us identify not only where they were gaining on us, but also who were the primary (competitors) that we needed to address."

Determine market share

Using the Baxter model, St. Joseph's research analyst Kristina Johnson says it is possible to project area admissions and determine the network's market share.

"It allows you to adjust for various factors in your service area. For example, if we feel that outpatient business is a bigger component in a certain major diagnostic category-ophthalmology, for instance, where a lot of work is being done on an outpatient basis-we can adjust for that."

In addition to hospital case mix/discharge data, hospitalization rate data, and ZIP code data, Market Model supplies demographic and socioeconomic data obtained from Donnelley Marketing Information Services, which Johnson says requires updating with supplemental information because of its 1980 Census population base.

"Although adjustments are made, the data may not appropriately reflect the population shifts that have happened in our county. We have a better handle on the various housing developments changes in the area, so we can adjust for those factors and then do another projection."

The Market Model also provides regional hospitalization rates, but to get rates specific for Michigan, St. Joseph's turns to the Michigan Hospital Association (MHA).

"Market Model uses a national rate, but we don't find that national rate very helpful since Michigan is really a different type of market, it's much more competitive, so we go through the MHA for rates specific to our area," Johnson says.

Three key capacities

St. Joseph's uses the data in three key capacities: long-range strategic planning (typically a five-year projection with yearly analysis and updating), program and product development, and physician recruitment.

"Right now we're getting close to the fourth and fifth year of the plan and we're conducting a strategic audit to look at our direction and come up with recommendations for making changes as a result of some of the changes we've seen in our (market)," Moore says.

During the planning stages of the hospital's physical medicine and rehabilitation program, the data was used to assess its viability, based on community demand, population, and the types of patients the network's facilities could properly care for.

"It gave us the ability to calculate need, which is really very critical. It helped define the program and then once the program was in place, it helped with some of the follow-up marketing activity.

"The model also was helpful in supporting other supplemental rehab programs in that it identified the patients out in the community by diagnoses and helped us develop some programs with the school systems, programs for sports medicine, and a work wellness program. Basically all of those were generated from the evaluation of diagnoses our system provided."

St. Joseph's has also used the information to steer the growth of its psychiatry program. State approval was obtained to double the size of the program from 50 beds to 102, but the data indicated that such an expansion would require attracting more patients than the market could provide.

"Our analysis showed that, for us to be able to implement 100 psychiatric beds, we needed to expand the area that we draw from and go beyond our typical service area. There just weren't enough people within that service area to support it."

To expand at such a rate and keep the patient length of stay figures at a desirable level, the hospital would have to capture an unrealistic portion-over 90 %-of the market. So an analysis was done using an increase of only 25 beds, and a 20-day length of stay, which turned out to be a more reasonable solution.

"We presented that information to various department people and had an outside consultant come in and test that hypothesis. (The analysis) certainly helped us evaluate whether or not we wanted to implement the full complement of beds or perhaps phase it in. The strategic approach we're taking is to expand up to about a 75-bed unit and see how that goes."

Physician recruitment

The hospital also uses its database and data analysis tools in its physician recruitment efforts, providing the doctors with market demographic and case mix information.

"In a couple of cases we've been able to direct physicians to growing areas that we think will be beneficial for our exposure and beneficial for them," Moore says. "We can say to them, 'Here's an area where we don't have any physicians, we think it's dynamite, here are the types of patients we see from that area and here is the volume of business in that area.' "

Using Atlas*Graphics, a desktop mapping package made by Strategic Mapping, Inc., the analysts can make a map of the market by physician specialty, for example, to give a specialist an idea of what services the area has a shortage or surplus of, or to show a general practitioner the availability of specialists, such as cardiologists and neurosurgeons, to whom they can refer patients.

Moore says the computer maps are very valuable in these situations because they provide a graphic representation of the market, which is beneficial to doctors who are thinking of relocating there but are unfamiliar with the area.

"It's extremely helpful, particularly for physicians that are out of the area, because it's hard for them to put (the market) into perspective. For example, they 'll say, 'Would you make a map showing the institution with a five- or ten-mile radius? That would really help me in terms of my office location and its proximity to the hospital,' " she says.

"The physicians that we've met with have been so pleased that this information is available to them, particularly that now we can provide specific figures on the actual number of patients in a specific area, and on patient visits by various subspecialties. That's nice because it gives them a ballpark idea of how many visits they can anticipate through their office."

Evaluate existing programs

The data also allows the hospital to evaluate existing programs. For example, the hospital's cardiology department was doing a high volume of business, but research indicated that there were problems with patients' lengths of stay. So although plenty of beds were full, patients were staying longer than the time prescribed by health insurance guidelines.

Moore says that once this information came to light, other departments within the network, such as the Quality Assurance and Utilization Review staff, did their own analyses to determine whether the length of stay problem was one of test scheduling, patient management, or patient complications.

"It was a catalyst for further investigation in key areas by the appropriate departments, for example the Finance people or Utilization Review people, who said 'Let's use our systems to look at the detail relative to a case, and do some analysis there.'

"They found that changing the management in that particular case would certainly be beneficial. Patient management becomes critical with prospective pricing and the reimbursement we now receive from Medicare and some of the other insurers, because the length of stay is determined and if you go beyond that, you have to absorb those costs."

Keeping track of variables such as length of stay is critical, Fred Towns says, because at the same time that healthcare expenditures are rising, pressure is being applied by outside forces to hold them down.

"The biggest issue facing us, is the one that's facing everybody: The squeeze is on the part of the third party payers- the government, the HMO's-and the easy place for them to squeeze is the hospital because so much of healthcare is oriented to the hospital environment. So we're seeing a demand to hold our costs down, but at the same time we have an increasingly complex technical environment and usually with an increase in technology comes an increase in cost," he says.

Consumer research

To complement its extensive market data tracking and analysis, St. Joseph's also does a great deal of consumer research, including focus groups and an ongoing consumer attitudes survey.

This survey, a telephone survey of 450 respondents, provides a base of information on St. Joseph's competition as well as the network's image and community awareness of its various services.

"That's been very useful to us in determining strategic approaches to introducing new products, reinforcing existing ones or bundling existing services into a product line. We also do focus groups to show us where we need to go with our more in-depth data analyses and surveys," Towns says.

This information performs the important task of getting the St. Joseph's staff and administration to think in terms of consumer wants as well as needs, an aspect which Towns says healthcare professionals sometimes overlook.

"Healthcare providers know what people need in terms of health care and proper service, but it's difficult for them to realign their thinking into a consumer oriented mode, to think more in terms of, Yes, maybe the public needs a particular service, but that may not be what they want...how can we realign our product so that it fits into the public's vision of what they actually want?"