As the healthcare industry continues to consolidate, many healthcare systems are gaining hospitals and physician practices in new, less familiar markets. With so many priorities clamoring for a piece of the ever-shrinking margin, how should health systems prioritize where to expend their limited resources first?

HSG suggests starting with a system-wide primary care strategy by evaluating every market the health system serves. This six-step process includes:

Step 1: Define the Markets

Define the markets where your system strategically needs to be competitive. Don’t accept old definitions of “primary” and “secondary” as canon. Instead, identify the markets that make sense for the system in both a fee-for-service and a population management environment.

Step 2: Identify the Physicians

Within each market, identify the active physicians and mid-level providers by:

  • Name
  • Practice Name
  • Location
  • Specialty
  • Opportunity as defined by age, health system affiliation, and referral loyalty

Accurate provider counts are also necessary to perform a physician needs analysis in every market and identify opportunities for placement of new primary care providers.

Step Three: Prioritize the Markets 

Define and review market-specific data that will help prioritize how resources are allocated. This analysis can include:

  • Demographics, such as population size, growth and density, income or insurance coverage measures
  • Current and future demand estimates for key service lines
  • Competition
  • Inpatient and primary care market share
  • FTE need for primary care providers
  • Distance to a system inpatient and outpatient facility

This data should be laid against strategic objectives to prioritize the markets where the system should ideally spend resources to maximize the bang for the buck.

Step Four: Prioritize Physicians for Alignment 

Within each market, define the practicing physicians who are available for alignment and prioritize them. If competitors are knocking on their doors, mitigate risk by concentrating on aligning loyal physicians. If you’re trying to boost referrals, prioritize physicians who have not historically referred to your system.

Step Five: Determine Recruitment Needs 

Define the number of new primary care physicians that need to be recruited in each market, based on both the physician needs analysis and the age of existing providers. If there aren’t enough unaligned physicians in the market to meet demand and achieve the system’s strategic objectives, recruitment becomes a priority.

Step Six: Develop a Financial Impact Statement

Examine the financial impact of the plan, including downstream revenues and the costs of recruitment, employment or alignment subsidies. This will determine whether the plan’s system-level impact will be worth the expense or the plan must be reworked.

Travis Ansel

Chief Executive Officer and Managing Director, Strategy