Phoenix: A Race to the Bottom
In this exercise, we’re looking at the downtown Phoenix market…showcasing a small portion of what you can learn in 30 minutes with Franklin:BI.
We’re curious about this market since Phoenix is often ranked #1 in population growth. It also has many facilities and systems in and around the downtown area.
Looking at the downtown market area, we’re going to snapshot 5 facilities performances.
Starting with the Profitability question, we see an unhealthy downtown. Tenet’s Phoenix Baptist—the furthest from the city center shows the only positive but modest margin after a recent turnaround. Dignity’s St. Joseph’s surprises with a very negative Operating Profit % on a very large book of business and trending down.
Yet all have a large Overhead expense…measured conservatively at Admin and General Salaries. Maricopa and Banner take the cake here with their high levels. There are no downtown facilities with modest overheads.
Interestingly, the reasonably new entrant Mayo at the edge of the loop has a level that’s 10x smaller….shown below. Moreover, as you’ll see, their quality performance outstrips any of the downtown facilities.
Hospitals outside of the direct downtown area are much more profitable and HonorHealth, a 5 hospital Phoenix/Scottsdale system leads the way.
So, how about growth? Total Revenue growth for downtown facilities is as high as +8.11% at Good Sam with the laggard Maricopa at a CAGR of (-1.43%) over the past 5-years. Patients are being siphoned away from downtown facilities by those further out…especially Mayo at ~+10% CAGR and Scottsdale Healthcare (HonorHealth) at over +9%.
This can be seen by share losses at Banner Good Sam from 2015 to 2018. And outside of 60 miles, they are pulling 200 fewer cases per year in three short years.
Is the market share problem found in the quality profiles of downtown facilities versus those outside? St. Joseph’s and Banner Good Sam are nothing to write home about…St. Joseph’s Complications and Mortality metrics average a 2-star rating (bottom 2 quintiles). Good Sam is average.
This poor/average performance is in stark contrast to the Mayo Clinic here in Phoenix…and if you think it’s just because it’s smallish, we’ve put the Mayo Clinic from Rochester MN (scored versus these same hospitals) next to it. Big Difference!
So, we’ve been able to scope out quite a bit in these 30 minutes—and there’s much more Franklin:BI can do.
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