A market analysis can help pave the way for strategic planning and business operations within your practice.
Dermatologists must be keenly aware of what competing practices are doing as well as practices outside of their catchment area. Practice management requires a firm focus on the competition and identifying the practice’s strengths and vulnerabilities is crucial. Running a successful practice requires decision- and action-based situational awareness; therefore, identification of your competition’s expectations and preparations is also important.
Because the health care landscape is changing rapidly, accurate and timely information regarding what competing practices are doing is a prerequisite for success. It is said that Field Marshal Erwin Rommel (a German WWII commander dubbed the “Desert Fox”) once said, “It is not that one general is more brilliant or experienced than the other; it is a question of which general has a better appreciation of the battlefield.”
Thus, knowledge of your competition is a key function of effective practice management. Practice management is about making and executing decisions, but a market analysis can help support a smart decision-making process. The market analysis process identifies and evaluates existing conditions and capabilities, estimates possible competitive courses of action, and assists in the development of your practice’s course of action.
Information gathered during the course of running a practice is essential to the development of a timely and accurate market analysis.
Information you will want to gather on your top 10 competitors includes: location (including ease of access), staffing level, services, social media integration, reputation, etc. In some areas of the country there is a high density of practices within a small radius. Consequently, it may be more productive to focus on a top 10 list of competitors within your catchment area instead of all practices within a certain radius.
All staff members are involved in information gathering and thus their knowledge should be tapped. Whether it is front office staff or aestheticians, there are many touch points with the patients and some of these conversations can glean information about other dermatology practices in the area. Professional colleagues can provide input as well.
In addition, you may want to hire a qualified consultant, who would have access to multiple markets, associations, networks, and resources. They also can prepare a detailed analysis based on your specialty and service and can gauge the market due to their independent status. For example, in working with dermatology practices, I like to look at how the competition is approaching patient acquisition, how are competitors using social media, and most importantly, what is their unique value proposition.
Interpreting the Information
Once you have obtained the information necessary to build a picture of the competitive landscape, you must properly interpret the information. Many mistakes in market analyses often are not the result of a failure to collect the correct information, but rather a failure to discern the correct meaning from the information collected.
In working with dermatology practices, some mistakes I encounter is when practices tend to overestimate their own strengths (believing they have a competitive advantage when they do not), underestimate a competitor’s advantage, and overlook a weakness in their own practice (eg, staff friendliness, weak social media presence, etc.).
Admittedly, any assessment of the competition’s intentions is an estimate. While a good market analysis can identify the possibilities and probabilities, there will always be an element of uncertainty. However, when properly focused and given adequate time and resources, a market analysis can come close to meeting these standards. Gaps in our knowledge of the competition are a natural and unavoidable characteristic of operating within the health care industry. A competent market analysis can help reduce some of that uncertainty and help pave the way for strategic planning and business operations within your practice.
Mr Hernandez is the chief executive officer and founder of ABISA, LLC, a consultancy specializing in solo and small group practice management (www.abisallc.com).
Disclosure: The author reports no relevant financial relationships.