1. Why do healthcare organizations need to understand market share, and what developments in healthcare are increasing the significance of market share data?

2. What are some of the challenges healthcare organizations face in Calculating their market share?

3. Why is it important to go beyond overall market share and disaggregate data by patient type or procedure?

4. How did the SOC market share stack up against its competitors, and

in what area was SOC found to be relatively strong? Relatively weak?

5. In the absence of actual data, what approach might be used to develop proxy data as a basis for determining market share?

develop proxy data as a basis for determining market share?

6. What did the consultant conclude about the position of SOC in its market?

CASE STUDY 15.1 Market Share Analysis for a Physician Practice Southeast Orthopedic Clinic (SOC) had long been the premier orthopedic prac- tice in a midsize southern city. Over time, however, competition had become increasingly fierce, and concerns were growing over the perceived erosion of SOC's market share in the community. SOC asked its marketing consultant to analyze the practices and its competitors ' current market share. Because the consultant did not routinely calculate market share, it was necessary to gather data for this task. The calculation of market share is relatively straight forward // the required data are available. The formula for calculating market share is as follows: Volume for the practice - Total volume for the service area -Market share. The numerator could be presented as volume (e.8., office visits of hospital admissions), utilization (e.g., number of diagnoses of procedures), or revenue reported for the practice. The denominator could be the combined figure for the numerator selected (e.g., volume, utilization, revenue) for all providers in the service area. The figure for the practice is the divided by the total figure to generate the percentage of the market controlled by the practice The consultant did not know whether the data needed for the calcula tion were readily available. Soc was presumed to have reasonable data on its own volume, utilization, revenue, and so forth. Comparable data on compet- ing practices were not likely to be available, but data on volume for the total service area likely were. Fortunately for SOC, data on hospital admissions were reported to the state annually, allowing the consultant to determine the overall volume of orthopedic admissions for the service area as well as admissions for types of orthopedic diagnoses. Equipped with data from the state's repository, the consultant was able to determine that 10,000 orthope- dic cases were admitted in the previous year. SOC had admitted 2,000 cases during that time, so its market share of the area's orthopedic patients was calculated to be 20 percent. For confidentiality reasons, the state would not release data on the hospital admissions recorded by other area orthopedic practices. However, this information was available for individual hospitals, and the consultant was able to develop a reasonable estimate of the market shares of hospital patients for the players in the orthopedic arena. Had these data not been avail- able, the consultant would have had to assess the relative status of SOC on the basis of the relative size of the practices (e.g., was the 20 percent market share for SOC commensurate with the size of the practice relative to its com- petitors?). The consultant was able to further refine the estimate of market share by comparing revenue figures reported to the state by the practices The data acquired from the state were useful for refining the market share estimate of the types of patients treated. The hospital data categorized orthopedic admissions by the types of problems seen (e.g., fractures, back pain, torn ligaments). The consultant was able to calculate the practices dicated that soc maintained a market share of more than 25 percent share for each of the major categories of orthopedic services. The ditional orthopedic services (e.g. hip replacement and back surgery) oled less than 15 percent of the market for newer Services (e 8.. pscopic surgery. sports injuries, and knee replacement). Despite the usefulness of this information, the consultant was con- ar these data did not capture the market share for ambulatory ser e orice visits. Office visits for orthopedic services were much more on than hospital admissions, especially because orthopedic care had Whited from the inpatient setting to the outpatient setting. In this com las elsewhere, no repository of data existed for ambulatory services. consultant was forced to turn to a colleague who provided software- ated estimates of the utilization of different types of services. Using othms developed on the basis of known utilization rates, the consultant etmelined the expected volume of office visits for the community , along with breakdown of those visits by diagnosis. SOC's share of office visits was relcent and, as with the hospital data, the share was higher for traditional enkes and lower for contemporary services. The consultant reported back to the SOC that, overall, its market share for hospital care was consistent with the size of the practice, but its share of mbulatory patients was lower than anticipated. On both the inpatient and out- patient sides, SOC was more prominent among patients with traditional prob- es but less prominent among those who sought contemporary treatments. CASE STUDY DISCUSSION QUESTIONS Why do healthcare organizations need to understand market share, and what developments in healthcare are increasing the significance of market share data? What are some of the challenges healthcare organizations face in calculating their market share? Why is it important to go beyond overall market share and disaggregate data by patient type or procedure? How did the SOC market share stack up against its competitors, and What area was SOC found to be relatively strong? Relatively weak? In the absence of actual data, what approach might be used to develop proxy data as a basis for determining market share? What did the consultant conclude about the position of SOC in its market? CASE STUDY 15.1 Market Share Analysis for a Physician Practice Southeast Orthopedic Clinic (SOC) had long been the premier orthopedic prac- tice in a midsize southern city. Over time, however, competition had become increasingly fierce, and concerns were growing over the perceived erosion of SOC's market share in the community. SOC asked its marketing consultant to analyze the practices and its competitors ' current market share. Because the consultant did not routinely calculate market share, it was necessary to gather data for this task. The calculation of market share is relatively straight forward // the required data are available. The formula for calculating market share is as follows: Volume for the practice - Total volume for the service area -Market share. The numerator could be presented as volume (e.8., office visits of hospital admissions), utilization (e.g., number of diagnoses of procedures), or revenue reported for the practice. The denominator could be the combined figure for the numerator selected (e.g., volume, utilization, revenue) for all providers in the service area. The figure for the practice is the divided by the total figure to generate the percentage of the market controlled by the practice The consultant did not know whether the data needed for the calcula tion were readily available. Soc was presumed to have reasonable data on its own volume, utilization, revenue, and so forth. Comparable data on compet- ing practices were not likely to be available, but data on volume for the total service area likely were. Fortunately for SOC, data on hospital admissions were reported to the state annually, allowing the consultant to determine the overall volume of orthopedic admissions for the service area as well as admissions for types of orthopedic diagnoses. Equipped with data from the state's repository, the consultant was able to determine that 10,000 orthope- dic cases were admitted in the previous year. SOC had admitted 2,000 cases during that time, so its market share of the area's orthopedic patients was calculated to be 20 percent. For confidentiality reasons, the state would not release data on the hospital admissions recorded by other area orthopedic practices. However, this information was available for individual hospitals, and the consultant was able to develop a reasonable estimate of the market shares of hospital patients for the players in the orthopedic arena. Had these data not been avail- able, the consultant would have had to assess the relative status of SOC on the basis of the relative size of the practices (e.g., was the 20 percent market share for SOC commensurate with the size of the practice relative to its com- petitors?). The consultant was able to further refine the estimate of market share by comparing revenue figures reported to the state by the practices The data acquired from the state were useful for refining the market share estimate of the types of patients treated. The hospital data categorized orthopedic admissions by the types of problems seen (e.g., fractures, back pain, torn ligaments). The consultant was able to calculate the practices dicated that soc maintained a market share of more than 25 percent share for each of the major categories of orthopedic services. The ditional orthopedic services (e.g. hip replacement and back surgery) oled less than 15 percent of the market for newer Services (e 8.. pscopic surgery. sports injuries, and knee replacement). Despite the usefulness of this information, the consultant was con- ar these data did not capture the market share for ambulatory ser e orice visits. Office visits for orthopedic services were much more on than hospital admissions, especially because orthopedic care had Whited from the inpatient setting to the outpatient setting. In this com las elsewhere, no repository of data existed for ambulatory services. consultant was forced to turn to a colleague who provided software- ated estimates of the utilization of different types of services. Using othms developed on the basis of known utilization rates, the consultant etmelined the expected volume of office visits for the community , along with breakdown of those visits by diagnosis. SOC's share of office visits was relcent and, as with the hospital data, the share was higher for traditional enkes and lower for contemporary services. The consultant reported back to the SOC that, overall, its market share for hospital care was consistent with the size of the practice, but its share of mbulatory patients was lower than anticipated. On both the inpatient and out- patient sides, SOC was more prominent among patients with traditional prob- es but less prominent among those who sought contemporary treatments. CASE STUDY DISCUSSION QUESTIONS Why do healthcare organizations need to understand market share, and what developments in healthcare are increasing the significance of market share data? What are some of the challenges healthcare organizations face in calculating their market share? Why is it important to go beyond overall market share and disaggregate data by patient type or procedure? How did the SOC market share stack up against its competitors, and What area was SOC found to be relatively strong? Relatively weak? In the absence of actual data, what approach might be used to develop proxy data as a basis for determining market share? What did the consultant conclude about the position of SOC in its market