What now? Try remote OHS development

By Mike Grosh
President
Span Corp.
Ann Arbor, MI

Even if you are proud of your program, sooner or later, every successful occupational health program will face the question: What now? There are always new clients to be secured, new businesses developing in the marketplace, and new incremental services that should be integrated relative to regulatory changes and consumer need. But when utilization is at or near capacity and revenue and profits meet or exceed targets, it’s generally time to consider the "What now?" question.

Most such successful, mature programs are led by aggressive market-oriented management teams with a history and culture of new business development. In the highly competitive environment now facing most health care organizations, it’s hard to imagine suitable justification for simply resting on one’s laurels. Stagnation is not an option. Should the occupational medicine program go forward in different markets? Or with new products and services? Or should the program’s excess resources be reallocated to other parent programs that may benefit from the energy, momentum, and experience represented by that group?

The answer often is that you should look at expanding your services into another location. There are several strong arguments in favor of adjacent occupational health service development in this instance. Generally, the parent organization’s service area encompasses and far exceeds the service area of the initial occupational health program development. Therefore, secondary benefit to the parent, such as referral to specialists and inpatient/outpatient services, can be enhanced nearly as well in a remote occupational health program development as in the case with the first development. Also, in many instances, significant relationships with employers and payers originally secured through the successful initial development can be leveraged easily in the subsequent development in adjacent markets.

Clients may benefit from a second location

Client employers may have other locations or associations through trade groups and professional organizations with operations of a similar kind in the new market. Payers who have enjoyed a positive relationship with the initial occupational health program may themselves have employer/clients who could benefit from well-managed occupational health resources in their local markets. Likewise, marketing information management and financial management systems, which were initially developed to support the primary operation, will transfer easily to subsequent operations.

Consequently, unless the initial occupational health program exists in an island market, such as in some rural settings, sufficient opportunity exists to support developments of a remote cookie-cutter representation of the primary occupational health program. From a pure investment standpoint, subsequent developments enjoy an existing robust set of resources that you can leverage for expeditious and economical development in subsequent operations. Therefore, initial capitalization and return on investment should be significantly enhanced as compared to the original development.

Also, strategic and tactical advantage is gained for both the occupational medicine program and its parent organization in many instances through subsequent occupational health program development. Assuming that initial development took place in close geographical proximity to the parent hospital or health care system, subsequent development will further that system’s outreach into adjacent markets. Similarly, the remote occupational health program will provide a buffer to development by competition.

Consider the scenario in which two major health care systems are operational in a large metropolitan area, with primary hospital facilities positioned approximately 25 miles apart. Each has developed successful occupational health services on the main campus. Each program serves employers in a 10-mile radius around the occupational health facility. Each, then, has the opportunity to take a position in the adjacent market, which will both support the continued success of the initial occupational health program and secure a competitive outpost in the relatively underserved area that exists beyond the primary markets of both operations. Clearly, the first developer of subsequent facilities would realize strategic and tactical gain.

In another scenario, a rural hospital serving a community of some 50,000 individuals has developed an occupational health program intrinsic to its emergency department that services virtually all the employers in its community. The next closest small community is some 50 miles away and is serviced by a similarly configured community hospital and occupational health program. Little would be gained by the subsequent development of secondary occupational health resources by either institution in either market.

Location is key to success

Where should subsequent development take place? The late Tip O’Neill, former speaker of the House, said that "all politics is local." The same could be said for occupational health services. Therefore, one should appropriately apply the old real estate maxim: "location, location, location." In our experience, something on the order of 80% of employers surveyed across the country indicate that they use occupational health resources within a three-mile radius of their facilities.

Thus, one primary consideration when looking at location for subsequent development are the demographic conditions of the adjacent markets. Seek markets with a high concentration of employment. Distribution of that employment should favor density in the higher utilization industries such as manufacturing and transportation. Survey employers regarding their levels of satisfaction with current providers and perceived need for new resources. Profile and analyze existing competition.

Finally, give careful consideration to the parent organization’s development plans in its adjacent market. Are there plans for outpatient medical facilities, outpatient surgery centers, or additional rehab locations? Is the organization pursuing a primary care or other managed care network? Are existing insurance products offered by the parent institution, which may support certain geographical locations over others?

In the final analysis, the formula for site location is simple: Look for locations that offer maximum access to desirable populations, maximum visibility, optimal proximity to the desired market, minimal competitive threat, and optimal coordination with other parent organization outreach initiatives.

New facility may need to be more aggressive

So what will the subsequent operation look like as compared to the initial occupational health program development? Generally, the further away from the parent facilities, the more independent and robust the operation will need to be.

Where the original facility may have been able to support market need through limited hours of operation and coordinated use of the emergency department, a subsequent development may need to look at more extended hours or even a 24-hour availability.

Where the initial entity may have been able to coordinate physical therapy and diagnostics with local hospital-based resources, the subsequent and remote operation may need to integrate those services within the locus of the primary care operation.

Where possible, this manner of support services can be secured through close coordination with other system outpatient resources. But where no such opportunity exists, the occupational health program needs to consider carefully its ability to deliver a full-service, one-stop resource to the remote market. In some instances, systems for information management and billing will need to be developed for the first time in subsequent operations, where the initial development relied upon parent organization resources in its first iteration.

Additionally, occupational health program directors may be, for the first time, finding themselves dealing with more prosaic issues of housekeeping, security, laundry, and other matters. You will need to address these issues in planning as necessary resources to a secondary and remote operation.

Importantly, the dynamics of the occupational health program will change considerably with subsequent development as well. Marketing now needs to develop business relationships in environments that may not be as familiar with the parent organization and the associated occupational health program.

The medical director now faces the challenge of recruiting and supervising other physicians and health care professionals in a manner that will deliver a consistent and seamless program under the professional service of a variety of individuals.

So who should drive subsequent development in these instances? Clearly, the existing management staff in a successful occupational health program have great insight into all the salient issues that would come to fore in the consideration and planning of subsequent operations. They know their market, they know their competition, they know their capacities, and they know their program.

However, to ensure a full visibility of the forest as well as the trees, we strongly recommend utilizing outside resources to assist in feasibility study and planning site location to ensure a truly objective evaluation of the concept and optimal configuration of any such development.

Quick returns on your investment

To summarize, if the initial program has truly reached its stride and enjoys a state of excess capacity, it usually makes sense to consider subsequent development in adjacent markets. One must carefully analyze that development in terms of the opportunity, both to the occupational health program and its parent organization, and carefully plan the subsequent development on the basis of employer demographics, existing competition, and other critical, strategic, and tactical components.

When the conditions are right and the appropriate planning ensues, in all likelihood, subsequently developments will result in operations that require less capitalization and result in quicker return on investment than the initial developments.

[Grosh can be contacted at SPAN Corp., 2621 Carpenter Road, Ann Arbor, MI 48108. Telephone: (734) 973-7717. Fax: (734) 769-6268. E-mail: Mike @spancorp.com. World Wide Web: http://www.spancorp.com.]