2014 Hospicemed Company Market Expansion Analysis (Research Paper Sample)

2014 Hospicemed Market Expansion Analysis
COMPANY INFORMATION
Hospicemed is a hospice pharmacy benefit management (PBM) company that provides operational solutions to hospices that assist in consolidated ordering as well as cost reduction techniques. This company is currently in the position for expansion into new geographical regions and has instituted this market analysis to determine new viable markets for growth.
METHODOLOGY
This market research analysis uses secondary data sources to assess the market potential for the expansion of Hospicemed’s services. Using the provided criteria, R19 assessed the following:
1 Areas with the greatest density of hospices
2 Areas where competitors do not offer the same level of service
Target Market Condition: Density
R19 measured ‘density,’ by assessing the top 5 states with the greatest overall number of hospices. Next, using GoogleMaps application tool, we visually assessed the distribution of hospices across the top 5 states previously identified and chose the top cities with the greatest number of hospices. Finally, we calculated the exact number of hospice agencies within a 15-mile and 30-mile radius around each of the city centers.
Competitive Analysis: Level of Service
R19 conducted a data search of all hospice-specific PBMs and analyzed their websites for comparative data.
Additional Analyses: Hospice Characteristics
Additional analyses were conducted regarding characteristics of the hospices and their geographical regions that may determine future growth of Hospicemed. Wemeasured ‘level of service’ at the city level by assessing delivery of care.
‘Delivery of care’ was assessed by calculating how many hospices have nonprofit status. Finally, we calculated how many hospices provided the following in-house services that may subsequent need a PBM:
*
* Physician services
* Counseling
* Medical Social Services
* Home Health Aide
* Nursing Services
* Medical Supplies
* Volunteers
‘Cost management’ was assessed by reporting the results of existing studies of the average cost of hospice care per beneficiary, the average drug costs and the average drug costs billed to Medicare in each of the top 5 states. These variables play a role in assessing which locations are in most need of a PBM.
RESULTS
RESULTS: Areas with Greatest Density of Hospices
Overall Region Analysis
Abts Associates showed in a 2014 report on Medicare payment reform that the Southern US reported the highest payments to Medicare for hospice services in 2012 representing $6.1 billion. Shortly following is the Western region reporting $3.2 billion. When assessing average daily Medicare payments for hospice related services, the Western region reports $179.84/day and the Northeastern region reports and average of $170.77/day, which are above the national average, $163.57, of daily Medicare payments.
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Average Daily Medicare Payments($163.57)
National Average ($163.57)
The Southern and Western regions of the US are the prime geographic areas for expansion of the cost management services provided by Hospicemed.
State Analysis
The Kaiser Family Foundation reported statistics that shows the states with the greatest number of hospice care services and they are the following:
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Texas & California show the greatest number of hospices across their states at 410 and 348, respectively, and both of which are located the Western region. California & Florida report serving the greatest number of persons at 112,332 and 108,828, respectively, and both of which are located in the prime geographic regions of the South & West.
City Analysis:
3642360612775-83820612775Considering the top 5 states with the greatest number of hospice agencies across their states, we assessed their cities with the densest population of hospice centers with 15 miles and 30 miles around that city center.
Texas: Dallas/Fort Worth and Houston show the greatest density of hospice agencies within a 30-mile radius at 66 and 59 respectively.
California: Los Angeles shows the greatest number of hospice agencies within 30-miles at 133.
Florida: Although Florida serves the greatest number of persons in hospice, there are no real dense areas for hospices. These agencies tend to be distributed across the state.
Pennsylvania: Philadelphia and Pitsburgh show the dense population of hospices at 55 and 36 respectively.
Georgia: Atlanta is the only city showing a large number of hospice agencies at 57 within 30 miles of the city.
Mississippi: This state was entered into this analysis because of cost management and in-patient care and may be assessed later in this report.
Overall, the top 5 cities with the greatest density of hospice agencies are Los Angeles, Dallas, Houston, Philadelphia, Atlanta all showing greater than 30 agencies within a 30-mile radius around the city center.
Competitive Analysis
The below competitive analysis demonstrates the variety of services provided by the top hospice pharmacy benefit managers. Additionally, the PBMs have various degrees of reporting their specific services.
Further analysis of competition shows that most companies provide the same basic services. However, the larger companies may have proprietary software and IT systems to manage their clientele. Additional analysis also shows that differences in ‘true’ cost reduction capabilities by these companies as shown below:
Hospice bythe Numbers (2012)
231692094Sources: Multiview Incorporated "Hospice by the Numbers" Report: /hospice-numbers-pharmacy-vendor-comparison
This table shows that WiseHospice reported the lowest median pharmacy expense from their clientele.
A June 2014 article titled "OnePoint Patient Care Announces Significant Growth and Further National Expansion of its Hospice Pharmacy Services." This article reported that one point intends to expand to Orlando, Florida, northern California, southern California, and Dallas, Texas.
Larger PBMs offer the benefit of significant price negotiation with pharmacies that smaller PBMs may struggle to provide.
This competitive analysis demonstrates the expansion potential to Texas, California and Florida for Hospicemed offering equivalent cost management services to hospices. However, a competitive advantage for Hospicemed is to provide personalized customer service, qualified advising by PharmDs only as opposed to Pharmacy Technicians and a larger pharmacy network.
Conclusion
Based on a geographic and competitive analysis the following cities are recommended as the prime locations for a Hospicemed expansion:
1
2 Dallas, TX
3 Houston, TX
4 Los Angeles, CA
5 Sacramento, CA
6 Philadelphia, PA
7 Pittsburgh, PA
8 Atlanta, GA
These locations offer the greatest density of hospices within a 30-miles radius and are located within states that also have the greatest density of hospices within that state
If it is in Hospicemed’s best interest to avoid areas with potential to compete with larger PBMs, the following locations may be advisable:
1 Houston, TX
2 Philadelphia, PA
3 Pittsburgh, PA
4 Atlanta, GA
SOURCES
1 Abt Associates (2014): Medicare Hospice Payment Reform: Analyses to Support Payment Reform
2 "one point Patient Care Announces Significant Growth and Further National Expansion of its Hospice Pharmacy Services" http://finance.yahoo.com/news/onepoint-patient-care-announces-significant-135523992.html
3 Multiview Incorporated (2012). "Hospice By the Numbers-Pharmacy Vendor Comparison" /hospice-numbers-pharmacy-vendor-comparison
4 Hospice Analytics, Inc. National Hospice Locator /#
5 Carlson, Bradley & Morrison (2010). Geographic Access to Hospice in the United States. Journal of Palliative Medicine, 13, 1331-1338
6 Kaiser Family Foundation. Medicare Service Use: Hospice Services http://kff.org/medicare/state-indicator/medicare-service-use-hospice-services/
Additional Analyses to Consider In Choosing Expansion Areas
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