Strategy from Best-Selling Management Book Leads the Way to Increased Home Care & Hospice Business
Achieving sustainable success in today’s home health and hospice industries will take more than competing with other agencies for market share. Providers will have to find ways to set themselves apart from their competitors and create new market niches rich with growth opportunities. In other words, you’ll need to adopt a Blue Ocean Strategy. In this month’s feature, we briefly discuss Blue Ocean Strategy and offer ways both home health and hospice providers can implement this strategic concept to create and capture new business opportunities.
Red Versus Blue Ocean Strategy
In their 2004 book – Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant – Professors W. Chan Kim and Renee A. Mauborgne introduced metaphoric Red and Blue Oceans to describe the world of markets. By studying the strategies of 30 industries spanning more than 100 years, they suggested that:
- Companies involved in cutthroat competition for market share ended up in a bloody “red ocean” of rivals fighting for a shrinking pool of profit.
- Companies that used “value innovation” to provide a new customer experience and meaningful value to the end-user successfully generated new market space – “blue oceans.” In this way, demand is created and not fought for, while the opportunity for growth is profitable and rapid.
Cirque de Soleil and Callaway Golf are two examples presented as successful Blue Ocean companies. By redefining the circus, Cirque de Soleil has created entertainment that appeals to a much broader audience including an upscale crowd. Callaway Golf focused marketing efforts on non-golfers who were intimidated by the sport – introducing a club with a huge head – and in the process attracted dedicated golfers, too.
Reach Beyond the Existing Market Demand
Although home health and hospice were not among the industries studied by Chan and Mauborgne, the Blue Ocean Strategy is a viable approach for growth in these industry sectors, as well. In general, both home health and hospice providers have historically done a poor job in differentiating themselves in the minds of clients and referral sources. This is exemplified by the use of the term “Visiting Nurse Association” in reference to any and all home health agencies.
So how can your agency create value innovation and growth opportunities in your market? Here are examples of what some home health and hospice are doing today:
Home Health Value Innovation
- Direct Efforts on Increasing Home Rehab for Joint Replacement Patients
As an administrator for a rehabilitation hospital once told me: Joint replacement patients go home on the West Coast, while on the East Coast they go to a facility – either a rehab hospital or a skilled nursing facility. If the Centers for Medicare and Medicaid Services’ Demonstration Project regarding post-acute care under Medicare shows that joint replacement patient outcomes are similar between rehab with home care and a facility, you can make a case to physicians in your market to refer these patients directly home from the hospital. In this value innovation example, the value you create is a better experience for patients, since home is typically a patient’s first choice for recovery.
- Implement Telemedicine Programs
Some home health agencies have focused on reducing nursing visits for Medicare patients with chronic conditions – such as heart disease and chronic obstructive pulmonary disease – by implementing telemonitoring systems. Because these programs also help reduce patients’ hospitalizations and emergency room visits, firms like Cardiocom are contracting with managed care companies to pay for in-home monitoring. Partnering with companies that provide telemonitoring services provides home health agencies with a new way to expand their markets, improve the quality of care for patients, as well as reduce overall medical costs.
Hospice Value Innovation
- Increase Flexibility Regarding Cancer Patients’ Access Criteria
In some markets around the country, hospices have changed their access criteria by abandoning the parochial view that terminal patients must drop all curative care immediately upon admission to hospice. Greater flexibility on the part of hospices with regard to transitioning away from providing only palliative care has enabled them to admit more patients on their service that may otherwise be turned off by the “cold turkey” approach to care.
- Expand Focus to Include Non-Cancer Patients
The hospice benefit was primarily created as a vehicle of care for terminal cancer patients. In recent years, however, many hospices have expanded the scope of their services beyond cancer patients by aggressively marketing to referral sources for patients with other terminal conditions including heart disease, dementia and amyotrophic lateral sclerosis. In fact, research by Healthcare Market Resources, Inc., shows an 80% correlation between Medicare benefit utilization and the percentage of patients on the benefit with non-cancer diagnoses: States with the highest levels of Medicare hospice benefit utilization have a higher percentage of non-cancer patients in hospice.
These are just a few examples of ways you can begin to reach beyond existing demand, break away from your competitors, and create new growth opportunities. Healthcare Market Resources can help. Click here or give us a call at 215-657-7373 for more information about how Healthcare Market Resources’ in-depth, local market data – Home Health Industry Reports and Hospice Industry Reports – can be used to help implement an effective Blue Ocean Strategy for your agency.
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