Strategic management in healthcare

Health Care

A target market is defined as recognizable segments that make up the market, and the target market consists of the groups the organization wants to focus on (Swayne, Duncan & Ginter, 2008). There are a number of ways that a target market can be understood. The main breakdowns in health care are geography, demographics, payer and specialty (Gandolf, 2010).

Geography is perhaps the simplest one. It reflects the service radius that the hospital wants to serve. In Emanuel's case, does it want to serve mainly Turlock, or does it consider its playing field to be broader. Is it competing for customers in the major towns in the area? In some respects, the other competitors in the market are defining for Emanuel what its geographic target market is, since they are winning customers away from Emanuel.

Demographics reflects the ways of describing the people in your target market. The senior care home that Emanuel runs has a target market of seniors, Cypress, which is different from Emanuel's hospital. The change in target market brought about by EMTALA has changed Emanuel's business somewhat, and perhaps the company has not made adjustments to the way it does business to better align with its new target market. If Emanuel is seeking to focus on Turlock and surrounds, it will not have a demographic target because the potential market is too small. But if it wants to specialize and target people from the larger towns, then it should have a demographic target market in mind.

Payer is another way of understanding the target market for health care. In most businesses, the payer is the user, but in health care the payer is often not the end user. There are a number of different payers -- private individuals, insurance companies and various government programs. Emanuel can choose to cut any payer on which it consistently loses money Or, if it realizes that a particular payer is the most common, maybe it tailors its service offering to that payer. For example, Emanuel may have mainly government payers. It might complain about not having money to invest in new equipment, but a predominantly government-pay model means high volumes and low margins, including less frequent investments in equipment.

Lastly, there is specialty. Many health facilities develop specialties, either because they have competency or because they feel there is a market need. If there is something that is underserved in the Emanuel catchment area, then the company can look to specialize in those types of patients. Like an area with a lot of seniors might specialize in gerontology or in ailments that target seniors, for example.

So there are a number of different ways for Emanuel to better understand its target market. Should the company so desire it will be able to utilize target marketing to streamline its operations, market to specific markets, and hopefully just better align its business philosophy and service approach with the needs of its chosen target market, or markets.

Student #2. There are a few approaches that Emanuel can take to define its market. The company right now seems to have relied on its geographic positioning, being in a small town, but as it seen a lot that is not enough. People are more than willing to drive farther to save some money or to get better service. Thus, it is important for any health care provider to start thinking like a marketer and really get a better sense on who it is that they serve.

Now, among the ways to break down and define the market is by age, income, job status, insurance status, and other demographic factors. The key might be for Emanuel to find targets that are not being served as well -- when you find an underserved market it might represent a market opportunity (McQueen, 2007).

Emanuel -- and every other health care provider -- also already thinks about their markets in terms of payers. This is because of the paperwork involved, and because different payers will pay different rates. Emanuel might find that government payers are not profitable, but that they are 80% of its market. A situation like that would have some pretty significant strategic implications, like it would have to streamline its costs to get under the reimbursement point. Remember that right now the company is only making money on its investments -- it is suffering an operating loss. So by understanding who is currently using your business, and who could potentially use it in the future, Emanuel can have a better sense of the strategy that it needs to undertake.

Student #3. Understanding the markets that an organization serves is integral to its success. Emanuel already has most of this information, but there is little evidence to suggest that it has actually built its strategy around the idea of understanding its customer base. Rather, Emanuel just sort of lets the world happen to it. But if strategy is not effective, aligning independent physicians, payers, patients and staff, then the result will be market failure, which implies a lack of profit (Dranove & Satterwaite, 2000).

Thus, Emanuel already has demographic information, payer information, what it treats, and breaks that down by payer. Basically, all of the data that Emanuel collects at intake provides it with a sense of who is actually using the hospital now. What it needs to do then is to figure out who is not using Emanuel, and why, because that is a market they might be able to target, and bring in new customers. Or it could simply be that they need to focus their energies on servicing profitably and effectively the people who are already using Emanuel.

Emanuel just needs to start to conceptualize their customers a little bit better than maybe they are doing right now, and take the time to understand all the patterns and the variables that come into play here. If they are able to do that, they will be able to use this information a little better. You have to treat different customers different ways -- you can't be rude like to that little girl because it's a sick kid. You have to know your customer and not make those kinds of mistakes.