Market Share: Three Common Fallacies

Market share is “top of mind” for every savvy health system executive in America, even if definitions of market share are imprecise. Most often, health system executives think about market share in terms of the “PSA” and “SSA”, which is an elegant way of referring to ZIP Codes around a facility.

There are three common fallacies to traditional thinking about market share in health care:

  1. Most health systems lack the data required to understand market share in any segment beyond inpatient care.
    Given that more than 50% of all care is delivered in outpatient settings, trying to understand market share based solely on inpatient volume is akin to pretending that the only teams in the AFC East are the Bills, Jets and Dolphins.

  2. Most executives contemplate the opportunities to improve market share solely through the lens of physician loyalty.
    Are “our” physicians referring their cases to our hospitals? Are the independent physicians in my market happy with our services and referring to us? While physician loyalty is a barometer of market share trends, it is impacted by numerous variables.

  3. Patient engagement is not the same thing as consumer engagement, and neither is the same as consumer loyalty.
    Patient engagement is a hoax perpetrated by EMR vendors. Consumer engagement is a tactic to increase loyalty, but once again, consumer loyalty is impacted by numerous variables. Billboards are pretty low on that list.

As 2019 approaches, I am reminded of Christmas wishes that will not come true for health systems: deductibles will not decline, and pharmaceutical companies will not stop developing and marketing new therapeutics, and physicians will not magically become loyal, and payers will not stop steering patients, and employers will not stop asking brokers for narrow networks. 

In fairness, health systems have behaved in a perfectly rational manner for decades. Reimbursement has focused on transactions called surgeries and encounters, and health system executives have focused their efforts on the people who perform surgeries and encounters. The Federal government has trained us to focus on the actual event – surgery on the head, shoulders, knees or toes, or maybe even a heart—because that is how to get paid. And so, billboards trumpet hip surgeries and ER wait times, thinking that a billboard is the way to the heart of the consumer.

The stark reality of focusing solely on physician loyalty is that it is never enough. A health system theoretically could do everything right to win the hearts and minds and loyalty of its medical staff and still lose market share due to consumer preference. Given that no health system has ever done everything right to win the hearts and minds and loyalty of its medical staff, understanding consumer decision-making at a level of detail that could influence that behavior is paramount.  

Instead of wishing upon a star this season, I suggest that hospital executives understand market share the way that other industries do and begin to understand consumer loyalty. Consumer loyalty is the product of many influences, some of which are innate and others of which are subconscious and many of which anchor a decision months in advance of a consumer’s need for healthcare.

The consumer is impacted by its entire experience with the hospital and its greater network, but that is only a part of what influences their decision. The stakes are high, and  becoming much more cognizant about “nurturing” their patient populations throughout their respective “customer journeys” is the ante to be in the game.

As competition for the commercial patient increases, hospitals can’t afford to just think about physician loyalty. To treat the heart and mind of the consumer requires that you first win their heart and mind. Consumer-focused companies calculate share of wallet for their best customers. Do you?