Location, location, location. Real estate hounds repeat that refrain to emphasize a major factor behind a property's value. According to Marc Halley, president and CEO of Halley Consulting Group, a physician practice management and consulting firm, the same phrase applies to hospitals and their partnerships with primary care physicians. Mr. Halley explains that if a hospital wants to align with PCPs, there are certain ways hospitals can maximize market share — the most of important of which is where to place PCPs.
The importance of primary care providers
People go to their PCP first whenever they have a medical issue. Patients visit their PCPs several times every year, and when patients need a more invasive or diagnostic procedure, the PCP will refer them to a specialist or hospital. Mr. Halley says this basic sequential understanding of how people end up at hospitals makes it easy to realize that specialty practices and hospitals are dependent on primary care referrals, but he also acknowledges the importance of the emergency department as an access point. It only makes sense for hospitals to align with the PCP practices.
Finding the right location
Mr. Halley says there are tried and true "neighborhood" locations that any hospital should pursue: near schools and suburban outposts. This relates to how healthcare decisions are made. He says women still make the majority of healthcare decisions for a family, and when they are selecting their children's physician in particular, they want the PCP to be within a short distance of their home and the children's schools. "When they get that call from the school nurse midday, they can arrange their schedule to get back to school and home without having to drive back through town," Mr. Halley says. He adds that more than half of patients in an urban or suburban area usually live within the same or adjacent zip code of their PCP, and those quick, 10-minute drives show the driving force: convenience.
There is a basic primary care "retail strategy" a hospital must take into account when affiliating with and establishing a PCP practice. "It is easy to distinguish an intelligently designed primary care market share strategy from a hospital that will just snap up any warm body," Mr. Halley says. Instead of scooping up any and every PCP practice in any location, wise hospital executives will find or place certain practices in geographies to meet mission objectives, to meet strategic objectives or to address payor mix tactics, he says.
For example, if a PCP practice has the mission to serve the poor or uninsured, a hospital is likely to put a practice in an area with lower household income, giving access to people who might otherwise be destined for the emergency room at a much higher cost. However, Mr. Halley says to continue that mission, the hospital must also place practices in well-insured neighborhoods with higher household incomes. "If I'm a smart hospital executive, I'm going to affiliate with a nice bell curve: find those in need of care as well as those who can pay for care," he says.
A hospital must also look around to see if a competing hospital already has affiliated PCP practices in that market or neighborhood. Beating everyone to the punch in a popular market could be the difference for that practice's initial success. "If I can get in a neighborhood first with a quality primary care physician, then that practice fills up, and the hospital captures that market," Mr. Halley says. "If competition comes in later, my practice isn't going to empty out as long as the staff provides high-quality care and caring."
Location and beyond
Once a hospital finds an ideal location, there are several other factors to consider. Having a great location for a primary care practice doesn't mean a whole lot if a system can't find the right physicians, Mr. Halley says. For a practice to be at full capacity, patients need to be able to easily access the practice — and also feel comfortable with the physicians. The primary care sector relies heavily on people referring friends to their physician, and he says a hospital's practice needs to have well-trained, caring physicians with quality reputations, outgoing personalities, the ability to work well with partners and a solid work ethic.
There are ways to assess if a physician is struggling in a well-located practice. Mr. Halley says observing the new patient ratio is a key indicator of whether the practice's physicians, and location, are thriving. The new patient ratio is the number of new patients who visit a PCP divided by that physician's total number of patient visits for the same time period. Depending on the community, Mr. Halley says the new patient ratio for a new PCP after one year of practice should still be between 35 and 40 percent. As the practice settles down and matures for two or more years, the new patient ratio is expected to be between 7 and 8 percent. Analyzing these figures can help a hospital understand if a market is oversaturated or if a physician should be moved to a different neighborhood.
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The importance of primary care providers
People go to their PCP first whenever they have a medical issue. Patients visit their PCPs several times every year, and when patients need a more invasive or diagnostic procedure, the PCP will refer them to a specialist or hospital. Mr. Halley says this basic sequential understanding of how people end up at hospitals makes it easy to realize that specialty practices and hospitals are dependent on primary care referrals, but he also acknowledges the importance of the emergency department as an access point. It only makes sense for hospitals to align with the PCP practices.
Finding the right location
Mr. Halley says there are tried and true "neighborhood" locations that any hospital should pursue: near schools and suburban outposts. This relates to how healthcare decisions are made. He says women still make the majority of healthcare decisions for a family, and when they are selecting their children's physician in particular, they want the PCP to be within a short distance of their home and the children's schools. "When they get that call from the school nurse midday, they can arrange their schedule to get back to school and home without having to drive back through town," Mr. Halley says. He adds that more than half of patients in an urban or suburban area usually live within the same or adjacent zip code of their PCP, and those quick, 10-minute drives show the driving force: convenience.
There is a basic primary care "retail strategy" a hospital must take into account when affiliating with and establishing a PCP practice. "It is easy to distinguish an intelligently designed primary care market share strategy from a hospital that will just snap up any warm body," Mr. Halley says. Instead of scooping up any and every PCP practice in any location, wise hospital executives will find or place certain practices in geographies to meet mission objectives, to meet strategic objectives or to address payor mix tactics, he says.
For example, if a PCP practice has the mission to serve the poor or uninsured, a hospital is likely to put a practice in an area with lower household income, giving access to people who might otherwise be destined for the emergency room at a much higher cost. However, Mr. Halley says to continue that mission, the hospital must also place practices in well-insured neighborhoods with higher household incomes. "If I'm a smart hospital executive, I'm going to affiliate with a nice bell curve: find those in need of care as well as those who can pay for care," he says.
A hospital must also look around to see if a competing hospital already has affiliated PCP practices in that market or neighborhood. Beating everyone to the punch in a popular market could be the difference for that practice's initial success. "If I can get in a neighborhood first with a quality primary care physician, then that practice fills up, and the hospital captures that market," Mr. Halley says. "If competition comes in later, my practice isn't going to empty out as long as the staff provides high-quality care and caring."
Location and beyond
Once a hospital finds an ideal location, there are several other factors to consider. Having a great location for a primary care practice doesn't mean a whole lot if a system can't find the right physicians, Mr. Halley says. For a practice to be at full capacity, patients need to be able to easily access the practice — and also feel comfortable with the physicians. The primary care sector relies heavily on people referring friends to their physician, and he says a hospital's practice needs to have well-trained, caring physicians with quality reputations, outgoing personalities, the ability to work well with partners and a solid work ethic.
There are ways to assess if a physician is struggling in a well-located practice. Mr. Halley says observing the new patient ratio is a key indicator of whether the practice's physicians, and location, are thriving. The new patient ratio is the number of new patients who visit a PCP divided by that physician's total number of patient visits for the same time period. Depending on the community, Mr. Halley says the new patient ratio for a new PCP after one year of practice should still be between 35 and 40 percent. As the practice settles down and matures for two or more years, the new patient ratio is expected to be between 7 and 8 percent. Analyzing these figures can help a hospital understand if a market is oversaturated or if a physician should be moved to a different neighborhood.
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