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Solucient, part of Thomson Healthcare

Located in a booming healthcare market, Denton Regional Medical Center’s key challenge is choosing the right capital projects, based on accurate projections of growth opportunities. Since 1996, the hospital has relied on Solucient to help make projections that have been used to plan a replacement hospital, an outpatient imaging center and various other projects.

BUSINESS CHALLENGE

Located in a booming healthcare market, Denton Regional Medical Center’s key challenge is choosing the right capital projects, based on accurate projections of growth opportunities. Since 1996, the hospital has relied on Solucient to help make projections that have been used to plan a replacement hospital, an outpatient imaging center and various other projects.

As part of Nashville-based HCA, one of the largest healthcare systems in the nation, Denton Regional potentially has access to a great deal of capital for expansion, but HCA leadership wants to make sure projections are as accurate and dependable as possible before funding will be approved. “If you can’t show the numbers on the table, you don’t get the millions of dollars that have to be committed to these projects,” says Nancy Horvat, vice president of business development at the hospital. Horvat says HCA leadership has been impressed with the quality of Solucient projections. Solucient also helps train staff on how to use its products and helps them choose the right reports. Solucient data is especially useful because it is built around local use rates.

Population in Denton County, 30 miles north of Dallas, has been growing by 1.5 percent to 4 percent a year. “We’re in a real hotbed here,” Horvat says. Hospitals in stagnant markets would give their eyeteeth for such growth, but Horvat says it presents real dangers, too. A boom market has attracted competition trying to wrest away market share from Denton Regional if it fails to plan proactively.

CHALLENGE #1: KEEPING PACE WITH A FAST-GROWING HEALTHCARE MARKET

Result: Opened $100-million replacement hospital

In the mid-1990s, top management at Denton Regional realized that if the hospital did not upgrade and expand services, it could lose market share. Horvat was put in charge of planning an entirely new hospital to replace the existing facility. “It was fun but also quite scary,” Horvat recalls.

Her major challenge was to develop accurate estimates of future healthcare needs in the area so that the hospital could meet growing demand without creating underutilized services that would lose money. “We’re in a stiff competition with other hospitals in the area, so the dollars are critical,” Horvat says.

She recalls that HCA regional and corporate offices asked for “a high burden of proof” that goals could be met, and Solucient data helped her meet those demands. “The Solucient data was so much more precise than what we had in-house,” Horvat says. “This gave me a lot of credibility with HCA.” With accurate projections, she adds, “you don’t waste your time” developing proposals that will turn out to be unfeasible.

Denton Regional’s new replacement hospital, the largest healthcare facility between Dallas and Oklahoma City, opened in the fall of 1999, well before two competing hospitals could open. “Since the facility opened, it has met or exceeded our goals for occupancy and revenue,” reports Horvat. “The hospital continues to dominate the market even after the opening of new competitive hospitals.” A 16-bed surgery hospital, started by physicians, opened in 2004 across the street from Denton Regional. Another competitor opened a $100-million, 200-bed hospital in 2005.

CHALLENGE #2: IMPROVE OUTPATIENT ACCESS TO IMAGING SERVICES

Result: Opened new outpatient imaging center

Once Denton Regional’s new replacement hospital opened, Horvat and top management could turn their attention to retooling outpatient services. They decided that a top priority should be building an outpatient imaging center, which would be the first in the HCA system.

At the time, all imaging patients at Denton Regional went through its crowded inpatient imaging center. Turnaround times were slow and emergency cases constantly bumped scheduled outpatient appointments. The center was losing market share to a growing number of more nimble, freestanding imaging centers in the area.

“We were losing business because the doctors and the patients just wouldn’t wait,” Horvat says. But she believed that patients would return if Denton Regional opened a center that could be as accessible and as efficient as freestanding facilities. While the freestanding facilities are basically limited to MRIs and CTs, the hospital center would offer a wide range of imaging services and thus offer “one-stop shopping,” Horvat says.

Horvat asked Solucient to help estimate the projected number of procedures for the outpatient imaging center. In many ways, she says, this was more challenging to produce than estimates for the replacement hospital. Because less data are available, estimates for outpatient services can’t be as precise, so “you have to do a lot of projecting,” she says.

Using The Market Planner® Plus, Horvat developed overall projections for major outpatient imaging from 2001 to 2006, and constructed specific projections for CT and MRI utilization, the key components of the business.

As the chart below indicates, during that period, a simple population-based forecast would have predicted just a 20 percent increase in demand for CT services and 18 percent for MRI. However, Solucient’s Techtrend forecasting methodology predicted a much greater increase over the same period. Accounting for local market shifts in technology adoption and practice patterns as well as population increases, this model predicted a potential 81 percent increase in CT demand and an 88 percent increase in MRI demand.

Although the Solucient estimate of outpatient imaging volume was much higher than HCA corporate estimates, Horvat says it proved to be correct. Denton Regional opened its $6.5-million imaging center in February 2004. In the first full month of operation, the new center processed 1,099 images, just below the Solucient projection of 1,120 images, she says.

More expansion plans

Horvat says Denton Regional continues expansions and upgrades, using Solucient data to establish accurate utilization estimates. Horvat was involved in planning a new $1.2-million cardiac catheterization lab, which opened recently. She has also been planning an expansion of the hospital’s emergency department, which began in July 2005. A $19-million expansion of their facility was recently approved, based on encouraging use rates and population growth data provided by Solucient.

In addition, the hospital developed a full-service cancer and outpatient radiation center and a new outpatient ambulatory surgery center. Opened in April 2005, these facilities were joint ventures with doctors to compete with the new specialty hospital. A $2-million neurosurgery center, building on the hospital’s recent recruitment of a neurosurgeon specializing in cranial operations, began operation later in 2005.

Denton Regional also uses Solucient’s utilization rates to recruit new physicians to the growing Texas community. “Every prospective physician wants to know if there will be sufficient business for a new practice,” Horvat says, “so this information is very impressive to candidates.”

About Solucient and Thomson Healthcare

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