Responding to Tomorrow Today:
Profiling the Competition and
Developing Strategies
May 1, 2014
Noel Luell, MBA, MHA, Manager, Strategic Planning
Brandon Luten, MHSA, Planning Associate
Prepared by Strategic Planning Office
Session Overview
●
Learning Objectives
●
Identifying Geographic Markets
●
Emory Healthcare’s Profiling Process
●
Developing Targeted Market Strategies
●
Articulating Assumptions & Framing Decisions
●
Implementing a Plan
●
Lessons Learned
●
Q&A
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5/1/2014
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Learning Objectives
●
Utilize little known or overlooked publically available
information to paint a compelling and informative profile of
your competitors
●
Identify dynamics that differentiate geographic markets and
determine if an offensive or defensive strategy is appropriate
●
Select the right combination of hospital, physician, ancillary,
and other strategies
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Our Organization
●Emory Healthcare (EHC) is the clinical delivery arm of
the Woodruff Health Sciences Center (WHSC) of
Emory University, which includes:
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Emory Healthcare and Health Sciences
Mission:
To serve humanity by
improving
health through
integration of
education, discovery,
and health care

School of Medicine

School of Nursing

School of
Public Health

Yerkes

Winship

Comprehensive
Centers

Allied Health
WHSC
Mission
●
●
●
Education
Research
Clinical Care
Emory Healthcare
 EUH
 EJCH
 EUHM
 EC
 EWWC  ESA
 EUOSH  EHN
 ESJH
 SRMC
 EAH
Partners
 Grady  Ga Tech
 CHOA  CDC
 VAMC  Others
Atlanta  Georgia  Southeast  National  International
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Emory Healthcare Network
Largest and most comprehensive health system in Georgia, drawing
patients from the Southeast.
Emory
University
Hospital
Emory
Clinic
Emory
University
Hospital
Midtown
Emory
Johns Creek
Hospital
Emory University
Orthopaedics &
Spine Hospital
Wesley Woods
Geriatric
Hospital
Emory
Saint
Joseph’s
Hospital*
Emory
Adventist
Hospital*
Southern
Regional
Medical
Center**
*Joint venture hospitals
EMORY HEALTHCARE
● Delivers care at more
than 200 sites in the state
● Generates $1.9 billion
net revenue annually
● Comprises 1,918 beds
(including JVs)
● Employs 14,582
individuals
● Includes Winship
Cancer Institute, the
only National Cancer
Institute-designated
center in Georgia.
● Provides telehealth
services providing
access to clinical care
throughout rural
Georgia.
**Southern Regional affiliates with Emory through its CIN and Management Agreement
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Our Office
● The role of the Strategic Planning Office is to:
– Develop and lead the annual planning cycle and strategic management activities
for the WHSC, EHC, and system strategic priorities. Included in this role is plan
formation, communication, evaluation, and updates.
– Facilitate and prepare strategic, program, business, and financial plans for
system-wide research, teaching, and clinical priorities.
– Evaluate trends and changes in the internal and external environment and
anticipate new issues and opportunities to be addressed by the academic health
sciences center.
– Serve as a trusted and objective advisor on strategic issues and provide strategic
services for the academic health sciences center to include: decision support
analysis and dissemination, healthcare volume forecasting, Certificate-of-Need
(CoN) activity oversight, system-based survey coordination and review (AHA, US
News & World Report), retreat facilitation, and project management for strategic
priorities.
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Why Profile Other Providers?
● Amid
market consolidation and ACO development,
EHC needed to develop an organized and structured
way to:
–
Constantly assess market opportunities
–
Monitor the activities of other hospitals and healthcare
organizations
● On
an annual basis EHC develops
–
Profiles of competitors
–
Scans of other “hospitals of interest" and other healthcare
organizations
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Identifying Geographic Markets
●
EHC identified its core geographic markets prior to determining
which hospitals to profile
●
Primary Service Area (PSA)
●
–
STARK regulations governing physician recruitment
define the PSA as the set of contiguous ZIP codes
from which a facility draws 75% of its inpatient
admissions
–
Due to a wide geographic service area, EHC defines
its PSA at the county level
EHC uses the same method to define the
service area for profiled hospitals
Secondary Service Area (SSA)
–
STARK does not provide formal guidance for defining the SSA
–
EHC defines its SSA as the area from which EHC draws the next 15% of
its inpatient admissions
●
EHC draws 90% of its inpatient admissions from its PSA and SSA
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Competing in the Atlanta Market
●
●
The Atlanta marketplace is dynamic and competitive
–
Providers are fragmented
–
In the EHC PSA, EHC has a 19% share of discharges and the top 6
systems have 61% combined
EHC operates in a large and diverse
service area
–
–
Primary Service Area (PSA)
Secondary Service Area (SSA)
35 Mile Radius
90 Mile Radius
Primary Service Area

15 Counties

4.9+ million population

51 Hospitals
Secondary Service Area

57 Counties

2.4+ million population

55 Hospitals
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Georgia has 159 counties, the 2nd
highest number of counties in the
nation behind Texas
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Tracking Market Dynamics
●
Understanding the dynamics of one’s market is key to a system’s growth and
survival
●
EHC keeps its pulse on the market and other hospitals by tracking four main
types of information:
Volume & Service Lines
Financial Position
•
•
•
•
•
•
•
Beds & Occupancy
Case Mix Index
Service Line Mix & Volume
Discharge Trends
Inpatient/Outpatient Mix
Quality Indicators
Income Statement Elements
NPSR, Operating Income, EBITDA
−
•
Performance Measures
Operating Margin, Days Cash on
Hand
−
•
•
Bond Ratings
Payer Mix
Service Area
•
−
Demographics
Competitive Position & Intelligence
Population Size, Growth Rates,
Racial Mix, Age Mix, Median
Income
•
•
•
Employment
•
−
Overall Position
Service Line Position
Wallet Share
Top Employers, Unemployment
Rate
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ABC Hospital – Overview
Beds
XX% Occupancy
CY12 Top Service Lines
XXX
Service Line 1
Service Line 2
Service Line 3
xx.x%
xx.x%
xx.x%
xx.x%
(all 2012 patients)
Johns Creek
(2012 Medicare)
EUOSH
EUHM
Acute Care Discharge Trend
EUH
Wesley Woods
10,000
9,000
xxx
xxx
xxx
Market Position
Quality Indicators
Main
EUH/
EUHM
Risk Adjusted 30-Day
Readmission Rate
Heart Attack
Heart Failure
Pneumonia
xx.x%
xx.x%; xx.x%
xx.x%
xx.x%; xx.x%
xx.x%
xx.x%; xx.x%
Risk Adjusted 30Day Mortality Rate
Heart Attack
Heart Failure
Pneumonia
xx.x%; xx.x%
xx.x%
xx.x%; xx.x%
xx.x%
xx.x%; xx.x%
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xx.x%
xx.x%
CY08
Wallet
Share
Market
Position
Hospital 1
xx.x%
1
Hospital 2
xx.x%
2
Hospital 3
xx.x%
3
Hospital 4
xx.x%
5
Service
Line
Service Line 1
Patient Satisfaction:
Overall Hospital
Rating
Would
Recommend the
Hospital
System
(# of Hospitals)
xx.x%; xx.x%
xx.x%; xx.x%
10,500
10,000
9,500
CY09
CY10
CY11
CY12
EHC Data for Service Area
NPSR from Svc Area
$xxx,xxx
Top Service Lines (CY12 GHA)
Wallet Share by Service Line
xx.x%
x.xxxx
CMI
Cath Volume
Diagnostic
Therapeutic
x.xxxx
CMI
Discharges
% of EHC
Svc
Area DCs
Wallet
Share
SL 1
xxx
xx.x%
xx.x%
SL 2
xxx
xx.x%
xx.x%
Wallet Share
Market
Position
xx.x%
1
SL 3
xxx
xx.x%
xx.x%
SL 4
xxx
xx.x%
xx.x%
Total
xxxx
100.0%
xx.x%
Service Line 2
xx.x%
1
Service Line 3
xx.x%
2
Service Line 4
xx.x%
1
# Referring Physicians
County 1
5/1/2014
Xx
County 2
xx
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Overview: Volume & Service Lines
●
EHC pulls hospital specific information from multiple sources
Georgia
Hospital Association
(patient level data)
American
Hospital Directory
(ahd.com)
State Hospital
Licensing websites
State Service Specific
Surveys

Cardiac catheterization, open
heart surgery, radiation
therapy, ASC, etc.

Typically available in states
with Certificate of Need
regulations
CMS Quality Indicators

Readmission rates

Mortality rates

Patient satisfaction
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Wallet Share
● EHC does not use the traditional approach to calculate share
(e.g., discharges)
●
Discharges count an OB
delivery the same as a
heart transplant
EHC use “Wallet Share,” based on percent of charges, to gauge market
position using charges as a proxy for acuity
–
Wallet share is calculated using information available on state-wide average
charges per DRG and cases from the Georgia Hospital Association patient level
data
–
If charges are not available, but DRGs by hospital are available a proxy might be
overall share based on CMI cases
Hospital D had a low
acuity
Hospital E had a high
acuity
Strategic Planning Office
FY09 Market Share
Discharges Charges
EHC
7.1%
10.1%
Hospital A
9.7%
9.6%
Hospital B
6.8%
7.8%
Hospital C
6.2%
6.0%
Hospital D
7.3%
5.6%
Hospital E
3.4%
5.3%
Hospital F
4.1%
3.8%
5/1/2014
FY09 Market Position
Discharges Charges
3
1
1
2
4
3
5
4
2
5
11
7
7
11
13
ABC Hospital – Financial
Moody’s Rating – xxx
S&P Rating – xxx
Fitch Rating – xxx
$10,000
$xxx,xxx
Operating Income
$xxx,xxx
Operating Margin
x.x%
EBITDA
EBITDA %
Days Cash On Hand
Debt to Capitalization
$15,000
$15,000
NPSR
Excess Margin
$xx million
$20,000
Audited FY12 Financial
Information
Net Income
Total LT Debt
Operating Income
$5,000
FY06
ABC Payer Mix
(Discharges)
FY07
FY08
FY09
FY10
Medicare
$x,xxxx
x.x%
$x,xxx
x.x%
Xx
Xx%
20%
20%
Revenues
Outpatient Revenue as %
of Total Patient Revenue
xx.x%
% of Non-OB Admits
Thru ED
xx.x%
20%
20%
20%
Medicaid
Self Pay
Managed
Care
Other
COMPETITIVE INTELLIGENCE
● Intelligence provided by hospital websites, local newspapers, Bond Prospectus, Chambers of
Commerce, Economic Development Councils, Certificate of Need requirements, and other sources.
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Financial Position
●
EHC gathers financial data to gauge the financial health of other hospitals
and assess market opportunities
Financial Information
See the Appendix
for additional feebased financial
sources

EMMA - A free source for bond statements and annual audits

IRS Form 990s - Available for free on GuideStar and ERI

Certificate of Need applications

American Hospital Directory - Fee-based service providing profiles of hospitals
nationwide based on cost report data
Bond Ratings

Available for free on rating agency
websites (Moody’s, Fitch Ratings, and
S&P)
Always check the footnotes on financial sources
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Electronic Municipal Market Access
(EMMA)
●
EMMA is one of the most valuable (and cheapest!) resources
for EHC
EMMA: http://emma.msrb.org/
●
EMMA provides audits and bond prospectus for municipal
bonds (most non-profits issue municipal bonds)
●
Effective July 2009, municipal bond issuers were required to
post audits on EMMA
Bond Prospectus
Appendix A
includes:

Financials

Utilization Statistics

Service Area

Facilities

Patient Services

Corporate Structure
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Non-profits Tips:


Figuring out the
issuing body on
EMMA can be a
challenge (often a
county or city)
Municipalbonds.com
provides a list of
hospital/health system
municipal bond issuers
by state
5/1/2014
For-profits Tips:

Information is not
available on EMMA

Other sources include
SEC filings available
on EDGAR
(sec.gov/edgar.shtml)
and the investor tab of
a company’s website
16

What other sources are
used by your
organization?

Are there other elements
that your organization
tracks?
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Market Dynamics
● EHC gathers market dynamics information from sources
including:
– Georgia Hospital Association (GHA) inpatient
patient level data for all hospitals in Georgia
Other states including NC
and FL offer databases.
Fees vary by state.
– State Surveys supporting health planning
“Snapshot” market
dynamics information
– Certificate of Need applications
– Media including:
“Continuous” market
dynamics information
 Google “Alerts”
 Hospital websites
 Local newspapers
An ongoing searchable Word
file of media stories is kept in a
central shared location with
multiple departments
contributing.
 Grapevine
 Physician liaisons
 Bond Prospectus
 GHA Newspaper clipping service
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ABC Hospital – Service Area
Racial Mix
Service Area Discharges
(CY13 – xx,xxx)
Service Area
% of ABC
Discharges
ABC Mkt
Share
County 1
xx.x%
xx.x%
County 2
xx.x%
xx.x%
Total
xx.x%
xx.x%
57%
Demographics
Atlanta MSA
55%
34%
30%
9%
White
Black
Goods Producing
County 2
Service Producing
Government
Strategic Planning Office
40.0%
70.0%
40.0%
20.0%
Top Employers – 2013
County 1
20.0%
10.0%
15%
All Others
Employment Industry Mix
County 1
Service Area:
County 1
County 2
County 2
Company 1
Company 1
Company 2
Company 2
Company 3
Company 3
Company 4
Company 4
Company 5
Company 5
5/1/2014
2013 Population
Raw Growth 2013 – 2018
% Annual Growth
Xxx,xxx
xx,xxx
xx.x%
Median Income
% of GA Median Income
$xx,xxx
xx.x%
% of
Medicaid/Charity/SelfPay
Discharges
xx.x%
% Ages 65+ - Service Area
% Ages 65+ - Georgia
x.x%
x.x%
Unemployment Rate,
December 2013
10.0%
8.0%
County 1
County 2
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Service Area
● EHC utilizes multiple sources of information to understand demographics
and employment trends for the service area of each profiled hospital
Demographics


Truven Health Analytics Market Expert, a
fee-based service that utilizes Claritas
data
Census Bureau reports
Primary Service Area (PSA)
 Contiguous ZIPs producing 75%
of IP admissions
Secondary Service Area (SSA)
 Contiguous ZIPs producing next
15% of IP admissions
Employment Trends

State Labor Profiles created by Georgia
Department of Labor

U.S. Bureau of Labor Statistics

Dun & Bradstreet, Hoovers.com, and
other fee-based business information services

Local Chambers of Commerce

Local Economic Development Councils
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
What other sources are
used by your
organization?

Are there other elements
that your organization
tracks?
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ABC Management
ABC Management and Board Members
● ABC Management
–
CEO: Name
–
CFO: Name
–
COO: Name
–
CIO: Name
–
CNO: Name
ABC Hospital Authority
‒ Name
‒ Name
‒ Name
● Board of Directors
–
Name
– Name
–
Name
– Name
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Hospital Management
●
EHC also gathers information on hospital management
–
Management information is particularly important for “hospitals of interest”
EHC compiles information from:
 Hospital websites
 American Hospital Directory
 Dun & Bradstreet – Hoovers.com
 State registered authorities
directory
 Bond prospectus
 IRS Form 990s
●
●
Beware of information lag time.
Different years may be available on
each source.
Economic Research Institute (ERI)
Guidestar.org
 Details related party transactions (e.g., physician partnerships,
lease agreements with physicians)
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Profiling Other Healthcare Players
●
EHC has extended its profiling process to non-traditional
competitors including health plans with associated physician
groups (e.g., Kaiser Permanente), ambulatory surgery centers,
and community hospital corporations
●
To profile a non-hospital competitor, EHC uses other
information sources including:
–
Annual Reports filed with the Georgia Office of Insurance and Fire Safety
Commissioner
–
Health Plan websites
–
Plan Booklets
–
Marketing collateral
–
Dun & Bradstreet, Hoovers.com
–
SEC filings available on EDGAR
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Physician Market Dynamics
●
While EHC’s competitor profiling process is hospital centric,
keeping a pulse on physician activities in the market is also
important but poses challenges
Information on attending and operating physicians is available
from the GHA data and is used to determine referral activity
–
 The value of data from the attending physician field is diminishing as
more facilities use hospitalists
The use of the operating physician field to determine where
surgeons perform inpatient surgeries is important
–
Physician Liaisons


Internal Sources
EHC employs liaisons in areas around
its hospitals to manage relationships
with community physicians
The liaisons are often a good source for
information on physicians

EHC also turns to internal
sources and its physician
community to understand
physician market dynamics
and happenings
EHC also uses products (e.g., Crimson Market Advantage by The Advisory
Board) to track physician referral activity
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Developing Hospital Profiles
● EHC uses its competitor and market assessments to:
– Develop internal growth strategies
– Identify where opportunities for affiliation or acquisition may arise
– Assess affiliation and acquisition opportunities
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Articulating Assumptions
● Market
strategies should be rooted in a set of
assumptions
● Different
assumptions will lead to different strategies
and guide the overall development of strategies
Assumption
Implication
Consolidation will continue as
hospitals struggle
Profiling hospitals will pave the way for
strategic moves
Primary care physicians will drive
ACOs
Hospitals need to develop relationships with
primary care practices
The rate of technology
dissemination will increase
Opportunities for technology driven
partnerships with physicians will arise
The number of private practices
will continue declining
Time should be devoted to
understanding practices in core and
outlying markets
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Framing Decisions
●
A well-articulated vision for the future environment is key to
assessing strategic opportunities
●
A number of important questions need to be considered as
hospitals devise strategies and assess opportunities including:
What market strategy will best
accomplish the organization’s role and
support its mission/vision?
Where should your organization focus
its growth efforts (e.g., geography,
service lines)?
How does your organization
pursue growth in targeted
areas?
What is the desired/required
scope and size necessary to
support the goals?
Is the primary focus on growth at
existing sites, new sites, or a
combination?
What is the right combination of hospital,
physician, ancillary, and other service
strategies? What are the access points?
What
are the top priorities
among the strategies?
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Developing Targeted Market Strategies
● EHC uses its hospital scans to inform its strategies in different
markets
Market A (xxx miles from EHC)
Market
Dynamics




Strategy
Offensive


Assess financial position of local hospitals
Describe market dynamics
Consider population growth rate in the area
How many patients come from area to EHC for care?
Increase business in the area
Develop relationship with the local hospital and physicians
Market B (xxx miles from EHC)
Market
Dynamics




Strategy
Defensive
Strategic Planning Office


Assess financial position of local hospitals
Describe market dynamics
Consider population growth rate in the area
How many patients come from area to EHC for care?
Protect referral stream and revenue from the market
Engage in outreach efforts with current referring physicians
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Selecting the Right Combination
of Strategies
●
EHC supports its market strategies with a combination of
hospital, physician, ancillary, and other strategies
●
EHC often has to explore multiple strategies to attain its goals,
especially in markets located within its 35 mile radius
Hospital
Ancillary
Are facilities affiliated with another
system? Are there any hospitals to
partner with or acquire?
Is there a need for any services in
the area – ASC, Imaging, other? Is
a CON required? Is a facility with a
CON available for purchase?
Specialists
Primary Care Physicians
Other
Do any multi-specialty groups
want to become part of a clinically
integrated network? Does is make
sense to hire certain specialties?
Launch a new practice?
Acquire existing?
Educational pipeline for
future workforce
Develop clinically
integrated
network
Example of Combination of Strategies: Target PCP growth
and open freestanding ASC
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Implement a Plan
● Challenges must be considered when implementing any market
strategy including:
–
Ensuring buy-in of strategies at all
levels
–
Attaining the tools, resources, skill
set, and coordination activities
necessary to enable each set of
strategies (e.g., capital, IT
connectivity/availability)
–
Developing global strategies to
ensure long-term success (e.g.,
relationship management)
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Lessons Learned
● Tracking
market dynamics is an ongoing process
● EHC’s
hospital profiling process is extensive and
continues evolving to meet the needs of the system
and the market
● Hospitals
can benefit from investing time in tracking
any piece of the market dynamics puzzle
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Questions
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Contact
Noel Luell
Manager, Strategic Planning
Emory Healthcare
noel.luell@emoryhealthcare.org
404.778.4312
Strategic Planning Office
Brandon Luten
Planning Associate, Strategic Planning
Emory Healthcare
brandon.luten@emoryhealthcare.org
404.778.3102
5/1/2014
34
Appendix: Sources
Data Sources
Data Element
Source
Data Element
Source
Licensed Beds
Office of Regulatory Svcs
www.ors.dhr.state.ga.us
# Referring Physicians
EHC Financial System
ADC/Patient Days
GHA Database
Credit Ratings
Moody’s, Fitch Ratings, and
S&P
Cath Volumes
DCH State Survey
NPSR and Financial Ratios
Audit from EMMA
Quality Indicators
CMS website
www.hospitalcompare.hhs.
gov for 9/30/09 to 9/30/10
Operating Income Trend
Graphs
Audits from EMMA
Top Service Lines
GHA Database
OP Revenue as % of Total
AHD
Distance from EUH
and Other Facilities
Google Maps
Admits Thru the ED
GHA Database based on
admission source=7
Market Position
GHA Database
Hospital Payer Mix
GHA Database
Merritt Research
Services
Wallet Share by
Service Line
GHA Database
Competitive Intelligence
EHC Competitive
Intelligence file
merrittresearch.com
$50/report
Discharges
GHA Database
Service Area Discharges
GHA Database
CMI
Medicare – AHD.com
All Pts – GHA Database
Employment Mix and
Unemployment rate
US Bureau of Labor
Statistics; Georgia
Department of Labor
profiles
EHC NPSR
EHC Financial System
Top Employers
Georgia Dept of Labor
EHC Top Service
Lines from Service
Area
GHA Database
Demographics
Thomson Reuters Market
Expert
GHA Database for Service
Area Payer Mix
Management and Board
Members
Hospital website – Mgmt
and Board;
www.dca.state.ga.us –
Hosp Auth
Note: All data derived from GHA Database data
WHSC Strategic
Planningdischarges
Office
excludes
of those ages 0-14.
Strategic Planning Office
5/1/2014
Fee-based
Financials
Cost Report Data
costreportdata.com
$90/report
5
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