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Determining Service Area BoundariesUnderstanding the geographic boundaries is important in defining the service area, but is often difficult because of the variety of services offered. In an acute care hospital, the service area for cardiac services may be the entire state or region, whereas the service area for the emergency room might be only a few blocks. Thus, for a health care organization that offers several service categories, it may be necessary to conduct several service area analyses. For example, the Des Moines, Iowa, market has two geographic components: the metropolitan area of the city as well as the suburbs of Polk County (population approximately 350,000) and the 43 primarily rural counties of central Iowa that surround the capital (population about 1 million). The opportunities and threats for each of these multiple service areas may be quite different; therefore, considerable effort is directed toward understanding and analyzing the nature of the health care organization’s various service areas. At the same time, for some organizations, defining only one service category may suffice (such as in the case of a long-term care facility). Service areas will be different for different organizations. A national for-profit hospital chain may define its service area quite generally, but even then there may be different strategies in place. For example, HCA–The Healthcare Company’s strategy is to become a major health care presence in highly concentrated markets, whereas Health Management Associates’ strategy is to only enter nonurban markets. An individual hospital, home health care organization, or HMO may define its service area much more specifically. In general, health services are provided and received within a well-defined service area, where the competition is clearly identified and critical forces for the survival of the organization originate. For instance, hospitals in rural areas have well-defined service areas for their particular services. These hospitals must be familiar with the needs of the population and with other organizations providing competing services. Some of the competitive challenges of small community hospitals are discussed in Perspective 3–4. Similarly, the service areas for public health departments vary within a state, depending on whether they are metropolitan or rural, and may suggest quite different opportunities and threats.15 Determining the geographic boundaries of the service area may be highly subjective and is usually based on patient histories, the reputation of the organization, available technology, physician recognition, and so on. In addition, geographic impediments such as a river, mountains, and limited access highways can influence how the service area is defined. The definition of communities (see Perspective 3–5) is often helpful in determining a service area.
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