Health Care Markets: What Matters and Why

Many factors, including rising health care costs, the transition to value-based payments, and technological innovations, are causing the health care landscape to change rapidly. Health care entities seeking to understand geographic market-level changes or to expand into new markets not only encounter an increasingly complex environment, but also must contend with the unique dynamics of each individual market. Leavitt Partners developed a framework that helps providers, payers, employers, investors, vendors, distributors, and other entities make evidence-based decisions that can guide when, where, and how to start, expand, or invest their business. The framework assesses geographic markets across five domains: population demographics and health status, provider characteristics, payer characteristics, the effect of competition on cost and quality, and health system transformation. Understanding the nuances of a market using these five categories can help entities make more informed, deliberate, and accurate business decisions.