Market Share describes the total sales a company captures within an industry. This metric allows a business to evaluate itself against its competitors to determine how well it’s performing in its industry category. Like all other businesses, hospitals also assess their growth and achievements by using their market share percentage-amongst other criteria. Comparing a hospital’s market share from current periods to past corresponding data can provide insight on their competitive stance in the market. The provided acumen can then be used to make adjustments where needed or develop new avenues to become more competitive.
Making Honor Roll
The healthcare industry is based on helping those in need of medical care. One would think that the market share percentage of each facility wouldn’t matter, as long as they provide quality care for their patients. This does ring true; however, U.S. hospitals get ranked yearly, and the top 20 are placed on the U.S. News Best Hospitals Honor roll. The hospital would need to serve a pre-determined number of patients dependent on specialty criteria and rank for a set amount of adult specialties to be evaluated. For example, if a hospital is to be considered for the orthopedic ranking, a requirement would be to treat 313 patients to be considered. If a facility would like to be competitive in the field, a good starting point would be to determine their current market share in the healthcare industry to assess if the population constraints give room for growth. Let’s take Adventist Health Tehachapi Valley; they achieved total revenue of $72,173,228 in 2018, which provides it with a 0.006% U.S. hospital market share for 2018. Since the hospital is located in a sparsely populated rural area, increasing market share could be a difficult task as smaller hospitals usually only serve their immediate community.
However, large hospitals like the Mayo Clinic have developed substantial brand equity that their market share goes beyond the local community. High ranking and notable hospitals tend to draw patients from across the world looking for premium care. Patients look to the U.S. News Best Hospitals Honor Roll as a source for creditable organizations to entrust their lives. The Mayo Clinic has achieved the ranking of the number one hospital in the U.S. for 2019-2020. The organization has a 1.2%
market share of the U.S. Hospital industry generating 13.82 billion in revenue for 2019. The number two spot went to the Massachusetts General Hospital in Boston. The organization achieved a 10.592 billion in revenue for 2019, giving it a 0.88% U.S. market share. Massachusetts General could set a goal to increase its market share in hopes of de-crowning the Mayo Clinic.
Hospitals are a business and must remain profitable and competitive to be seen as industry-leading. Many facilities are privately held organizations and answer to stakeholders; the market share metric could be used to prove growth trends and success. Take a look at your local market and determine your practice’s market share and assess its competitive stance compared to your top local competitors. The insight could provide prospective and drive your business decisions. If you haven’t already check out my last blog on using the census data for healthcare.