HighValue Point Analysis--Compare With Traditional
  
   A Point Analysis
is the building block for all our four types of analysis.		    A Point Analysis, compared with the traditional method "site market study," is similar because both
  • Consider a single point, a potential site for a facility.
  • Can become a feasibility study by grafting a financial proforma on the result of the market analysis, net demand at price and amenity point.

The remainder of the page will detail the differences in method to arrive at the net demand figure.
   Point Analysis,
First Step		   First step, mapping and association:
  • The building block for all HighValue analyses is the point analysis. It is repeated three times for a comparison analysis; it is repeated up to 1,000 times for an area analysis.
  • The entire market area and surroundings are mapped in the computer. This typically consumes 30 megabytes of hard disk space.
  • Streets are converted to a network with intersections as nodes.
  • Each street segment is tagged with a rate (from its class) and length, allowing the computation of travel time.
  • The network is solved for (usually) nine travel time traces.
  • The traces are converted to bands.
  • The bands are used to identify block groups (the smallest, most precise Census boundary).
  • Both Supply (beds of competing facilities at price and amenity point) and Demand (from the demography) are then associated with a travel time band and block group so that the validation step can take place.
  Traditional Analysis,
Market Boundary Trace		    Traditional analysis usually just takes a pencil and a commercial road map and guesses at the market boundary. This arbitrary selection leaves no bands or segmentation that can be replicated. The justification for this arbitrary behavior is the "experience" and "judgement" of the analyst. They do not hold up to closer inspection.
   Point Analysis,
Second Step		   Second step, validation of the travel time weights.

Data are drawn from within the market area.

  • The data are plotted, relating travel time on the horizontal axis (the independent variable) and the proportion of the "enrollment from home" residents. Transfers are handled separately.
  • A regression line is computed that "explains the data distribution." Usually this correlation is over 80%.
  • The regression line is sectioned and then used to weight the data.
    100 beds of supply or demand in a band that accounts for 5% of the residents are weighted 5%. Example: 100 beds of demographic demand, weighted 5% is 5 beds of demand; 80 beds of supply weighted 5% is 4 beds of supply. The net is + 1 bed.
  • This process validates the "decay" of the importance of a unit of supply or demand as travel time increases.
  • The process assigns values to supply and demand data derived from data within the market area.
  Traditional Analysis    Traditional analysis has no comparable step; all data are considered to be of the same weight, whether next door or five miles away.
   Point Analysis,
Third Step		   Third step, validation of the demand model.
  • Data are drawn from within the market area.
  • A statistical process is used to test the predictive accuracy of the demand model (at price and amenity point) being used to forecast the total demand within the market area.
  Traditional Analysis    Since Traditional method analysis does not validate anything except supply from within the market area, Traditional analysis has no comparable step. A hypothetical figure (often 5% of the financially qualified people over 74 years of age) is selected (usually no rule given for this choice except "research," which may be valid or not, but is not tested within the market area) and assumed to be the contents of the market area.
   Point Analysis,
Fourth Step

   Fourth step, supply inventory.

Traditional analysts count beds as well as we do, and we prefer to have a local analyst take this inventory using our protocols.
"If it ain't broke, don't fix it."
Our protocols are necessary so the data can be used in our analysis, but they are not unusual. In addition to existing beds, they identify beds under construction and pending approval.
If no local analyst is available we can help to find a suitable one or, if necessary, we can do the work.
  Traditional Analysis   Traditional Analysis: see item above.
   Point Analysis,
Fifth Step.

   Fifth step, compute net demand.
 
Net Demand is computed by subtracting the supply of competing beds at price and amenity point from the demographic demand which was determined in the third step.