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EXAMPLE: Service Market Analysis

A short-term acute care hospital in a community of 325,000 people explored the potential for developing its orthopedic service line. A Service Market Analysis examined three other hospitals in the community that offered orthopedic services. (Hospital A was the inquiring hospital and Hospitals B-D were the peer hospitals in this analysis). It was based solely on AHD data for a recent year and included patient volumes, average charges, market share, and attending physicians with a focus on hip and knee replacements (MSDRGs 469-470).

  Hospital A Hospital B Hospital C Hospital D
Beds 382 202 731 148
Orthopedic Surgery Patients 445 324 512 120
Total Patients 5,313 3,259 7,011 1,030
MS-DRG 469 Patients 12 17 35 13
MS-DRG 470 Patients 45 132 175 259
Total "Hip & Knee Patients" 57 149 210 272
MS-DRG 469 Avg Charge $146,215 $59,320 $90,153 $59,800
MS-DRG 470 Avg Charge $77,395 $35,776 $60,317 $36,900
Weighted Avg Charge $91,883.42 $38,462.23 $65,289.67 $37,994.49
Market Share (Percent of Total) 8.3% 21.7% 30.5% 39.5%
Total Orthopedic Surgeons 279 172 269 701
Admissions for Top 3 Attending Phys. 154 97 129 251
Percent Total for Top 3 Physician 55.2% 56.4% 48.0% 35.8%

The search for peer hospitals and numbers of patients in various categories were taken from standard AHD online reporting and entered in a spreadsheet for analysis. Peer hospitals were filtered on CITY, STATE, TYPE=short term acute care, and SERVICE PROVIDED=Joint Replacement. Totals and weighted averages were calculated in the spreadsheet. The numbers of patients with the Hip & Knee MSDRGs were taken from the online Inpatient report for each hospital and the share of the total market was calculated for each hospital. With a market share of only 8.3%, hospital A appears to have a remarkable opportunity to increase its share of the "Hip and Knee" joint replacements in the community.

Average charges were also compared among the four hospitals. Though charges are not a meaningful measure of payments or costs, they are sometimes used in public comparisons and hospital A was conspicuously high.

Using AHD's Provider Analysis app, the physicians attending patients for orthopedic surgery were ranked according to numbers of patients for each hospital. The percentage of total admissions was then determined for the top three attending physicians. Hospitals A and one of its peers might be concerned that more than half of their orthopedic patients were from their top 3 physicians. The data also revealed that one of the top physicians for Hospital A had a MSDRG complication coded for all of their patients. The reason for this 100% complication rate should probably be investigated.

Using AHD's Ambulatory Surgery Center Profiler app, the community was searched for all ASCs that are providing orthopedic services. Six such centers were identified even though none were currently providing joint replacement surgeries. Since there is currently a migration of many services from hospitals to ASCs, this was examined on a precautionary basis.