HA 630 Unit 2 service area market analysis example

About 766 Eligible, 164 Enrolled: A Service Area Market Analysis for Cardiac Rehabilitation Across Five Kentucky Counties

Student Name

Health Care Administration, Herzing University

HA 630: Marketing and Strategic Growth in Healthcare

Instructor Name

January 22, 2026

About 766 Eligible, 164 Enrolled: A Service Area Market Analysis for Cardiac Rehabilitation Across Five Kentucky Counties

Defining the Service Area

This analysis draws its boundaries from the hospital's own records, not from a radius on a map. Over the last two fiscal years, 81% of the hospital's discharges for heart attack, coronary stenting and heart failure came from three counties, labeled here A, B and C; these form the primary service area. Another 13% came from two adjoining counties, D and E, which form the secondary service area, where the hospital competes with the regional heart center and a smaller hospital to the west. Patients from outside the five counties are excluded. Counties rather than ZIP codes are used because the eligibility rate applied below and the population estimates are both available at county level.

Population

Cardiac rehabilitation eligibility rises steeply with age, so the analysis starts with residents aged 65 and older. Figures below are illustrative for this composite area; in practice they come from the Census Bureau's county population estimates by age for the most recent vintage.

Estimating Demand

Step 1: Medicare-eligible patients. In a national study of Medicare fee-for-service beneficiaries, the number newly eligible for cardiac rehabilitation in a year was highest in the East South Central census division, which includes Kentucky, at 14.8 per 1,000 beneficiaries (Ritchey et al., 2020). Applying that rate to residents aged 65 and older, as a stand-in for Medicare beneficiaries: 36,200 × 14.8 ÷ 1,000 = 535.8, or about 536 eligible patients a year aged 65 and older.

Step 2: patients under 65. The Medicare rate does not cover younger adults, who make up a real share of heart attack and stent patients. In the hospital's own qualifying discharges last year, 30% of patients were under 65. Assuming the same share across the area, total eligible patients = 535.8 ÷ 0.70 = 765.4, or about 766 a year.

Two assumptions deserve testing. The fee-for-service rate may not match Medicare Advantage members, who are about a third of local beneficiaries; and the under-65 share could differ in outlying counties. If the under-65 share were 25% instead of 30%, total demand would be 714; at 35%, 824. A reader can substitute a local figure at either step.

Demand by County Against Current Volume

The same two steps applied to each county give the eligible estimate. Current volume is the program's new enrollees last year by county of residence.

Benchmarks

The program's overall rate of about 21% is close to the regional pattern, not far above it. Nationally, 24.4% of eligible Medicare beneficiaries attended at least one session, and in the East South Central division the figure was 18.6%, the lowest of any division (Ritchey et al., 2020). An earlier analysis found participation ranging from 3.2% to 41.8% across states and from 3% to 75% across hospitals, which shows how much depends on local practice (Beatty et al., 2018). The Million Hearts initiative has set a goal of 70%, a useful direction but not a realistic one-year target for this area.

Payer Mix and Income as Limits on Realizable Demand

Not every eligible patient can realistically attend. The payer mix of last year's qualifying discharges was Medicare fee-for-service 44%, Medicare Advantage 26%, commercial 20%, Medicaid 8% and uninsured 2%. Traditional Medicare patients owe 20% coinsurance per session unless they hold supplemental coverage; Medicare Advantage and commercial members often face a per-session copay. Attendance falls as copays rise, with a measurable drop in sessions for each added $10 per visit in one health system's patients (Farah et al., 2019). Median household income in counties C, D and E runs well below the state median, and those counties are also the farthest away, so cost and distance compound each other there.

The analysis treats these as reasons why realizable demand is less than 766, not as reasons to ignore the outer counties. A reasonable three-year target, used in later units, is 40% participation in the primary area and 25% in the secondary area.

The Gap and Where It Is

At those targets, the program would enroll 0.40 × 516 + 0.25 × 249 = 206 + 62 = 268 new patients a year, compared with 164 now, a gap of 104 patients. County A is already near the primary target, at 36.6%, and can add only about 9 patients. The largest gaps are in county B (28 patients to reach 40%), county C (31), county D (18) and county E (18). The pattern is clear: penetration falls with driving time. Counties C, D and E together hold 357 eligible patients a year, nearly half the total, and the program enrolls 38 of them.

The underpenetrated part of the market is therefore not a population that needs to be persuaded that cardiac rehabilitation is worthwhile. It is a population that lives 40 minutes or more from the only site, faces copays three times a week, and is often referred by surgeons and physicians outside the hospital. The next unit segments that population by the factors that predict whether each group can be reached.

Data Sources and Their Limits

Three sources feed this analysis, and each has a weakness the reader should know. The eligibility rate comes from a national study of fee-for-service claims for 2016, so it reflects practice patterns of nearly a decade ago and excludes Medicare Advantage members. The age share of qualifying discharges comes from the hospital's own records, which miss residents treated at the regional heart center; if those patients are younger, as bypass patients often are, the under-65 share is understated. The enrollment counts come from the program's scheduling system and are reliable. Before the plan is funded, the analysis should be refreshed with the state's all-payer hospital discharge data, which would count qualifying events for residents of all five counties regardless of where they were treated, and would replace the national rate with a local one.

References

Beatty, A. L., Truong, M., Schopfer, D. W., Shen, H., Bachmann, J. M., & Whooley, M. A. (2018). Geographic variation in cardiac rehabilitation participation in Medicare and Veterans Affairs populations: Opportunity for improvement? Circulation, 137(18), 1899-1908. https://doi.org/10.1161/CIRCULATIONAHA.117.029471

Farah, M., Abdallah, M., Szalai, H., Berry, R., Lagu, T., Lindenauer, P. K., & Pack, Q. R. (2019). Association between patient cost sharing and cardiac rehabilitation adherence. Mayo Clinic Proceedings, 94(12), 2390-2398. https://doi.org/10.1016/j.mayocp.2019.07.018

Ritchey, M. D., Maresh, S., McNeely, J., Shaffer, T., Jackson, S. L., Keteyian, S. J., Brawner, C. A., Whooley, M. A., Chang, T., Stolp, H., Schieb, L., & Wright, J. (2020). Tracking cardiac rehabilitation participation and completion among Medicare beneficiaries to inform the efforts of a national initiative. Circulation: Cardiovascular Quality and Outcomes, 13(1), Article e005902. https://doi.org/10.1161/CIRCOUTCOMES.119.005902