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Do You Really Know Your Catch Basin? Part 2 – The Right Strategy For Geographic Expansion

We have many clients with multi-location practices. Some of our clients continuously expand geographically, while others simply want to open another location in order to expand their footprint. Using one of our clients at Points Group as an example, here are some of the challenges, needs and the approach for one such case:

The practice had over 20 locations and wanted to continue to grow through office location expansion. They had some general ideas where they would like to open the next office locations, but in recent history, that had opened locations that were not performing so well.

In order to develop a more sophisticate approach and target list for growth, we used a specially designed software.

Step 1: Catch Basin Analysis:

First we analyzed the catch basin for each of the locations. This included demographics (population density, race breakdown, average household income and more), average distances of patients by catch basin level and overlapping catch basins between office locations.

Step 2: Determine Catch Basin Patterns:

Based on the analysis we determined demographic patterns for high performing locations and for low performing locations. The purpose of this exercise was to specific characteristics needed for a high performing location.

Step 3: Find Target Areas:

With the help of the software we searched for areas that had the same characteristics as the high performing practice locations.

Since implementing this approach, the company had a much higher success rate with their new office locations.

Common mistakes

Often clients have preconceived ideas in what area they want to expand. Some of the common mistakes that we see are:

  • New locations too close to the current location – Example: If your core catch basin radius is 5 miles, your new office location should be well beyond the 5 mile radius distance. If you assume a similar core catch basin radius for your second office, then the two offices should be at least 10 miles apart.
  • Population Density and average household income: Depending on what specialty your practice is, population density and average household income have a huge impact on your practice performance and on the catch basin.
  • Take into account your competition, but also your referral base. Both should weigh in on the location decision.

Conclusion

It is absolutely essential for you to understand your catch basin. For marketing purposes, it is important that you don’t waste valuable marketing dollars in areas that don’t matter.   For the geographic growth and expansion of a practice you must to understand where the opportunities and risk areas are.

If you are interested in learning more about how to do a catch basin analysis for your business, please, send me an email at thofstetter@pointsgroupllc.com or call us at 973-998-8008.

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