Niche marketing — Finding that special population

All healthcare marketers know that identifying the patient niches that can benefit from our products is critical to success.  As the cost of product development rises — to $1.5 billion (2011 dollars) [1] for drugs or $30 million dollars or more for a medical device [2] — finding all appropriate patients becomes an ever increasingly important part of our job.

A recent MedSpan Research study examined the opportunity for a new drug in three alternate site settings: nursing homes, assisted living facilities and intermediate care facilities for the intellectually disabled (ICF/ID).  While most drug utilization would be outside of these settings, we wanted to determine if these markets could provide incremental utilization of the drug.

The nursing home and assisted living markets present potential opportunity as the prevalence of the therapy’s indication increases as a function of age.  The ICF/ID market presents potential opportunity as there is an association between the indication and intellectual disability.  These relationships between the indication and age and condition have been documented in numerous peer-reviewed studies.

A number of times over the years, MedSpan Research has found clients looking past the nursing home industry as a potential marketing target.  At 1.5 million residents, it may not be as large a market segment as others for many healthcare products.  But, for the right product, it may be a niche that affords incremental revenue that warrants marketing attention.  No client has ever asked us to look into the ICF/ID market.  Therefore, kudos to our client for identifying these potential markets and having the curiosity and drive to investigate them.

For our client, MedSpan Research first profiled the three markets (i.e., nursing homes, assisted living communities and ICF/IDs) via secondary research.  We then conducted a series of telephone interviews with administrators and clinicians in each market segment.

Let’s take a look at the nature of the nursing home industry.  Its facilities and their residents are easy to access to deliver education about healthcare products and services to executives and clinicians.  The residents have common characteristics, such as age (an average of 85 years old), gender (73% female), ethnicity (83% white) and incidence of disease (see epilepsy/seizure disorders mentioned above; 57% have hypertension).  The number of nursing home residents has been stable at approximately 1.4 million since 2000 but is expected to almost double by 2030 if facility capacity grows as fast as the over-65 years old US population.  Most residents have insurance coverage.  Care is delivered within the facility by employed and consulting clinicians.

The ICF/ID market has a few, important similarities to the nursing home market but many specifics are different.  As with nursing homes, IC/ID facilities and their residents are easy to access to deliver education about healthcare products and services to executives and clinicians.  Care is delivered within the facility by employed and consulting clinicians.

88% of the 6,500 ICF/ID facilities in the US are privately owned and small (mean of 11 clients per facility).  In contrast to nursing homes, the number of clients is small at approximately 85,000 and declining as more clients move to care settings outside of ICF/ID facilities (i.e, HCBS waiver facilities based in the community).  The residents have few common characteristics besides their disability and associated co-morbidities.

The assisted living market segment has few characteristics in common with the nursing home and ICF/ID market.  Very little care is delivered by the assisted living facility staff.  Residents seek care from community-based providers.  The number of residents is half that of the nursing home market at approximately 733,000 but growing quickly.  The nursing home and ICF/ID populations are stable or decreasing, respectively.  There are few commonalities among residents of assisted living communities besides their age, the mean of which is similar to that of nursing homes (87 vs. 86, respectively).

Given these characteristics, the nursing home and ICF/ID markets present attractive niches.  Without clinicians providing care within the facilities, the assisted living market segment is not attractive.  Given the limited number of residents and clients, low-cost marketing techniques are appropriate.

For pharmaceuticals, within the nursing home and ICF/ID markets, the attending physician typically controls the prescribing decision.  Therefore, the primary target for marketing efforts is the prescribing physician.  Having data available that supports use of your drug product in these niche markets would enhance adoption and utilization.  Education and data also should be shared with facility-based nurses and pharmacists as they may influence the prescribing decision.

For other healthcare products, such as DME or supplies, the director of nursing and staff nurses are likely to be the focus of marketing activities.

As this case study illustrates, niche marketing can deliver incremental revenue.  In today’s competitive world where every little improvement in ROI is critically important, targeting small market niches can prove the difference between average performance and a step closer to success.

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