How To Get the Most from a Physician Needs Analysis: Ask the Right Questions!

One size doesn’t fit all when developing a Physician Needs Analysis. While similar base components are always included, the scope, data elements, methodology and resulting analysis should reflect the questions the study is designed to answer.

At HSG, this is a typical physician needs analysis inquiry from a prospective client: “I’m looking for information on how you create a Physician Needs Analysis, how long it will take and how much it will cost?”

While it may be considered rude to answer a question with a question, there are occasions – and this is one of them – when it’s absolutely appropriate. We need to know what decisions the analysis will be used to support, such as:

Do you need documentation for private practice recruitment?

What are your goals? To expand your geographic footprint? Better understand the risk of adding physicians to an employed practice? Provide direction for your primary care strategy or subspecialty clinics?  Respond to the needs of a growing submarket? Ensure your service lines are supported by the appropriate mix and number of physicians?

Understanding the question(s) to be answered helps us establish the analysis’s service area, the market for which supply and net needs will be determined. We’re all familiar with Stark Law requirements for service area determination relative to documenting community need in support of private practice recruitment assistance. But its value is limited. It has little relevance to medical staff planning issues other than determining gross market needs and support for recruitment assistance. If you have other questions that need answers, we need to be more creative in our analysis. Here are two examples.

Question: Our employed endocrinology practice wants to add a physician. The group feels the market has experienced a huge increase in diabetes incidence. We’re in an urban market and the physician needs analysis completed for the hospital last year indicated an oversupply of endocrinologists. Because it’s an employed practice, our decision isn’t tied to the Stark law definition of documented community need, but we want to manage our resources and spend wisely. How should we respond to their request?

Response: Because endocrinology is primarily an office-based specialty, the practice’s service area might be very different from the hospital’s service area that was defined according to hospital discharges. We recommended looking at a service area based on the practice’s geographic reach. By trending three years of “unique” patient origin pulled from the practice management system, we defined a service area that reflected actual referral patterns to the practice with a geographic footprint quite different from the hospital’s. In addition to looking at needs for the full market, we broke the service area into trade pattern/community corridors, and built a provider inventory to match.

When we researched diabetes incidence, we discovered the defined service area was experiencing rates 25 percent higher than the national rate. Comparison of crude diabetes mortality rates supported that finding. Because the physician-to-population models are national and don’t necessarily reflect local demand, we adjusted the endocrinology models to better reflect local demand based on actual incidence and mortality rates.

The final analysis supported additional endocrinologists in the practice’s full market, as well as highlighted opportunities for the development of satellite locations. Our client had the information necessary to move forward with a decision.

Question: We have a piece of land ready for development in a quickly growing submarket of our metro area. It’s important that we establish a viable presence, one that positions us to build and protect market share. Staffing will be accomplished through employment or other arrangements not subject to federal “community need” regulations. We know we want to include primary care, but what other providers and services should we place there?

Response: Our first challenge was to define the site’s service area. It needed to reflect trade patterns and reasonable drive times for primary care and other direct patient access providers. With signoff from the client, we then looked at the service area’s demographics and socioeconomics. What we found were primarily upwardly mobile, financially stable, young families. In addition, we looked at market share trends within the service area and compared our client to the competition for both inpatient and outpatient services.

Based on these findings, we recommended physician specialties for analysis. The needs analysis looked at the current physician supply in terms of age, office locations and hospital affiliations, and included model adjustments to reflect the area’s demographics and disease prevalence. In addition, we looked at potential physician office visits and supportive ancillary volumes, based on national studies adjusted according to trends in market share to create “low” and “high” projections.

From this analysis flowed recommendations for the site’s initial physician specialty and ancillary services complement, as well as future development goals.