Buy Low: Growth in a Down Economy

I spoke this morning with two health system executives about the current economic downturn. Both shared the same message. October and November volumes missed budget by 4 - 6%. Bad debt and charity care will likely be up between 6% and 8% when things settle out. December is obviously not closed, but census at their hospitals is holding steady.

Both were already weighing significant cost reductions in the first quarter so that they can preserve resources for physician acquisition and IT investments. We discussed short-term tactics that can build a firewall around clinical niches where the hospital has market share strength and stronger margins. The objective is to target market those niches, and consumer segments within them, to maintain volume, revenue and margins.

One of the two shared an interesting observation: with her competitors largely shelving strategic marketing efforts in the third and fourth quarters, in response to leaner financials, she feels he can acquire market share in priority segments at a discounted cost. "We're still funding our strategy; we've just focused it more tightly around acquisitions and referral source management, and scaled back on advertising," she said.

This strategy of targeted investment in market segments and clinical niches is one of the most successful at delivering growth in the short-term, and, positioning you for significant market share expansion in the long-run. I'll keep in touch with my colleagues and report back on the outcome of their efforts over the coming months.