By David F. Zirkle, PhD
Most healthcare organizations have caught up with their counterparts in other industries and now are awash in rich data sources to support planning and business development efforts. While new data sources have become available, a long-time standard has lost some of its shine and luster – namely demographics. While many of the new data sources offer exciting opportunities and insights into the marketplace, demographics should remain front and center in healthcare planning and business development projects.
Demographic data generally includes population estimates as well as a host of other variables such as age, gender, race/ethnicity, household income, education level, marital status, etc. At the same time, demographic data is readily available through a number of sources, many of which are free or in the public domain. Not surprisingly, the U.S. Census Bureau (www.census.gov) maintains a wealth of demographic information and numerous online tools to profile and analyze the data. Many states as well as business departments at local universities also maintain demographic data useful to most healthcare organizations. And of course, there are numerous vendors that analyze, process and repackage demographic data to support a variety of healthcare planning needs.
So, what can you do with demographic data? The first step is to conduct what is known as a “cohort” analysis. This approach breaks out population data by age and gender to better understand the structure of the population served by the healthcare organization. Common groupings for healthcare organizations include pediatrics (0-17 years), females of childbearing age (18-44 years), middle age (45-64 years) and seniors (65+ years). Other demographic variables such as race/ethnicity, education, income, etc. may be included when needed.
The next step incorporates trending to analyze population changes predicted to occur in your service area over time. The most common framework is a five-year time horizon, although longer-term projections are available. It should be noted that both current and future population estimates are projections derived from the last national census. So, current population estimates for 2009 as well as the five-year projection for 2014 are based and adjusted on census data obtained in 2000.
In order to analyze demographic data, benchmarks are crucial to provide a baseline for comparisons. For example, if the pediatric population in your service area is projected to grow 2 percent over the next five years, how does this compare to other areas of the country? National, state, county and zip code-level data should be used to determine if the changes in your service area are above, below or similar to other geographic regions.
Once the basic population structure and dynamics have been analyzed, the next step is to identify potential causes for the observed changes. While more difficult to obtain, data on mortality rates and migration patterns can be powerful tools in explaining population dynamics. Population changes are basically the result of two forces; 1) birth and death rates and 2) migration in and out of the geographic area. Careful analysis of this data can help identify how these two forces drive population changes in your service area.
Finally, demographic data can be used to support a wide variety of planning needs within your organization. Some of the most common include:
- Project Future Need and Demand – this includes many services that tend to be age-specific such as pediatrics, OB/GYN, cardiovascular, orthopedics, etc. as well as satisfying growing cultural and ethnic needs in the marketplace (e.g. growing Hispanic population). Demographic analyses can also be used to justify technology investments to support operations and clinical services.
- Facility Planning – at the core of most expansion efforts is a thorough demographic analysis to justify capital expenditures and estimate return-on-investment. The analysis can also assist with decisions regarding site selection, capacity requirements and service offerings. Demographic analysis is also used to support certificate of need (CON) applications for expansion and/or acquisition of a new facility in many states.
- Medical Staff Planning – population-to-physician ratios are commonly used to determine community need for particular specialties and support recruitment and succession planning within the organization.
- Use Rates – when market share data is not readily available, many organizations will convert their volume data to use rates e.g. volume per 100,000 population is a common conversion. In doing so, organizations can analyze use rate patterns across different service lines and geographic regions to identify growth opportunities. For example, if two adjacent zip codes have very different use rates, then the lower use rate zip code can be explored further for potential growth opportunities.
While new and exciting data sources have come on the scene, healthcare organizations will be served well by continuing to include demographics as a key component of their planning and business development efforts.