You could hear the regret in his voice. Over coffee at a local Starbucks, my latest client Joseph complained that a recently opened medical office building hadn’t produced what they thought it should, given their proven business model, upscale exterior, and location in the heart of affluent suburbia. “We knew that this market had experienced hot growth in the last four years, and that oncology wasn’t available until you got outside of a twelve-mile radius from the center of town. The only alternative was to go to a general practitioner or travel to downtown Phoenix to one of the major hospitals. I just don’t know why we aren’t getting the traffic.”
Many medical groups experience this same surprising lackluster financial performance on their MOB projects when they fail to take into account the needs and perceptions of would-be clients. Discounting the likelihood that they are simply not making themselves known to the area – a very real possibility – the decision team usually discovers a lack of knowledge about clientele prospects, and many times, after all the investment has been spent. Indeed, the choice to develop a specialty medicine at any particular geographical site should be precipitated by a thorough Market Study.
When performed by a capable market research firm, a market study provides mission critical information and accompanying recommendations that decision-makers can use to fine-tune their project success. The typical market study can include such vital information as:
- Medical needs by population segment, correlated with payment and insurance statistics
- Current market demographics that either support or sink revenue projections and pricing structures
- Near- and long-term market growth projections to indicate the local growth of populations
- Neighborhood and city MOB construction factors, especially regarding site selection
- Unit sizes for optimal physician diagnostic, office and treatment spaces
- And determination of mix-use occupancy proportions
Would this information have helped Joseph and his team to establish a better model for his business practice? Here’s where leveraging strong communication with a market research firm can really help. A Practice Group can make the study more meaningful by asking the research firm to capture additional data:
1. Customer Profiles
2. Niche Needs
3. Market Positioning
Customer Profiles --- these are attributes used to describe each potential market segment. A customer profile tells us who our likely clients are, what characteristics of lifestyle and status set them apart from other customer segments, what and by whom they are influenced, their buying behavior, their medical requirements and more specifically, how they make use of the medical services they buy. By understanding buying and usage behavior, correlated with the characteristics of age, income, education, gender, race, lifestyle, communication preferences, and common beliefs, MOB owner/developers can create medical team projects that satisfy both clientele and economic concerns. These profiles can also help you segment your customer types into classes, so that you can grow your services according to the mix of classes you target.
Customer profiles reach their full potential when target customers are identified by the key characteristics named, allowing medical groups to communicate awareness and differentiation, and ultimately connect with this core customer.
Niche Needs --- when business owners discover specialized needs of their ideal customer, they can create serving opportunities that set them apart. Another oncology group we worked with discovered that their typical cancer patients aren’t looking for a quite place of respite – often called a healing garden, and quite expensive for owner/developers to incorporate into their projects – in fact, they would rather have dignity and relative anonymity in their treatments, so that they can peacefully enter and leave the premises without much fanfare. After further discovering that the competition had an extensive and unused healing environment, the decision team opted for drop-offs and walkways that respected confidentiality and ease of arrival and departure. This oncology group now boasts the highest client services/square foot within eight miles.
Market Positioning --- this tells the decision team where the sweet spot is for their ideal constituent, both physically and philosophically. When medical groups determine the customer profile most suited for their services, they have defined the true market need as a combination of mission with constituent.
Mission clarifies our purpose and names the recipient class of our finest outcomes. Market Positioning enlightens people where best to locate the MOB, the kinds of perceptions about us we want the ideal client to express, the type of media channels that will reach them, and the kinds of messages most appealing and compelling them to choose us, the way they are likely to refer others to us, plus information on pricing structures, physician preferences, and innovations in treatments. If the decision team listens carefully and modifies their operational and service plans to meet the demands of their ideal client, the project can expect to reach a position in the market that is comprehensively aligned with their customer.
By leveraging a market study that integrates Customer Profiles, Niche Needs, and Market Positioning, owners and developers of MOB projects can meet client needs more precisely, and will more successfully launch their projects.
This article appeared in the Spring 2006 edition of AZ Medical Office, and is reprinted (including updated title and content) with permission from Square Foot Magazine. See my web site to learn more about strategic research and the success of physician group practices. Just click on the link at the left or go to www.michaelharrisgroup.com. Thanks for listening!
-----Michael
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