Date: September 15, 2016
Life Traffic – Podcast
Listen to the Podcast
In a previous chapter, I have discussed the impact of traffic on a practice in determining a site. Life traffic is NOT the same thing as regular traffic. In fact, I wanted to keep the issues it introduces as separate from traditional traffic rules as possible.
When we considered in the Basics of Traffic, it should be clearly understood that we meant how many cars pass in front of a site. That is a reasonable statistic to track, particularly for primary-care providers. Obviously, there is no minimum threshold we should have to consider. Nevertheless, when we are contrasting particular locations, this will matter as a factor in comparison. And, yes, commute numbers count.
It is related to traffic as defined in the paragraph above but it is not the same thing and the calculations of measurement are different. Think of “Life Traffic” as what people do for errands. It does not usually include commute patterns. This might be considered as those places one travels every day while running errands. Demographers would consider them “daily destinations” even though they are run either alone or in conjunction with other locations that people go. To illustrate, let’s talk about shopping. The most common “life traffic” destination would be a grocery store. Most people shop for groceries between one and five times per week. Another example would be taking the children to school. And yet another might be going to the laundry, post office, or ATM. The idea is to consider these little destinations are places that people travel on a daily or near-daily basis.
Having a practice near a life-traffic center is desirable primarily for primary care providers (general dentists, urgent care facilities, and pediatricians) or consumer based professional services (like tax preparation and chiropractors). If one is using the services of a cardiologist due to heart-issues, it may be necessary to see them every month or more which puts them in the category of a life-traffic hub. The point here is to illustrate that different people will use professional services at different times of the year (tax preparation and allergist) or at different times of the life (gerontologists or gynecologist). It is frequent use of these offices and practices that make them part of one’s personal life-traffic.
It is necessary to consider locations for these types of practices that have strong life-traffic flow. Going back to schools, as an example, traditionally practitioners who work with children and adolescents will want to put their practices somewhere near the appropriate life traffic destinations. But to be realistic, the block that houses a school may have four sides (like a square) but these sides are not equally desirable. Usually, one of these sides is going to be more desirable than the other three for a practice to be placed upon. It will be the side that is used to drop-off and pick-up children. There is frequently a second side that will provide a good secondary access point to the school. Therefore, while simple proximity to the school is desirable, it may not be the best option. All of this is true of assisted living facilities, shopping centers, post offices, and other life-traffic sites.
It is also true that not all life-traffic sites are equally desirable. Without getting into specific store brands (usually the anchor stores) there are some that are decidedly more upscale than others. But that doesn’t make them necessarily bad choices because large number of patrons may still visit these stores. It is the busyness of the site rather than the demographic character of the patrons that has to be a primary consideration. Certainly, this character should not be ignored but the number of shoppers or patrons will tend to trump their patron’s demographic character.
Now, you are going to have to put on your big-girl panties because we are going to get into a concept that most professionals never consider but it will have a great deal to do with the desirability of a location, especially for practices that are primary care or service providers. The term is “leakage.”
In an ideal world, residents in an area will not have to go outside of their life-traffic hub to get the goods and services the need and want. It occurs when there is an “unsatisfied demand” within the shopping area (or practice boundaries) so that people have to go elsewhere to shop. Imagine a very small town that does not offer many goods and services and therefore, people have to drive to another town to get what they need. This is what is referred to as “retail leakage.” If there is a doctor’s office in a town like this, that practice will likely suffer due to the leakage. In other words, people will just go elsewhere to shop. That is why there has been such a move to welcome big-box stores like Walmart, K-Mart, and Target because it tends to staunch this leakage. It is interesting how politically correct thinking has influenced some cities to want to restrict these stores because they don’t like their union stance of these stores (which is why they tend to be more affordable than smaller, more specialized retailers).
The Reader might assume that I am all in favor of big-box stores and professional practices associating with them. Well, one must take these retail outlets into account and the attitudes of politicians to business in general and make the appropriate decision. There is not blanket opinion I have that will cover all eventualities. Still, as one who provides market research in every part of the United States, leakage is still a big factor to consider. A real-life example was Sacramento, CA. Its politicians decided they would not stand for a Walmart or Ikea in the downtown area. The City Council and Mayor’s Office were decidedly against these retailers. Ironically, the little (and poor) town of West Sacramento just across the river had no such pretenses. Therefore, they welcomed the new Walmart (and its regional distribution center) and Ikea with open arms. The retail leakage of Sacramento has never entirely been resolved even years after their decision. West Sacramento has been enjoying the sales and property tax windfall ever since.
Indeed, it helps professional practices to look at the trends regarding if and how income exists a local economy rather than staying within it (in other words, to track leakage). Now, I am going to sound a little political but it is not my purpose to criticize anyone. It is just common sense that some communities will have a more favorable or business friendly attitude. Some areas can be downright hostile. Now, in the name of fairness, some states and counties have raised the minimum wage by doubling the Federal minimum wage rate. This is not a decision made by market forces. Normally, wages increase as jobs become more plentiful. Employers are nearly forced by these forces to increase wages in order to retain workers and to get quality employees. But in an environment in which labor participation rates are low (meaning there are many potential employees sitting on the side lines) or unemployment is high (meaning that there are few jobs out there) increasing the minimum wage will have a negative influence on the entire job-market. Several states have enacted legislation to do this. At this writing, they include New York, California, Washington, and others. The local effect will be to raise the price of nearly everything, particularly those things that are touched by many workers. But the bigger effect will be leakage from one state to another. Will large employers open sites with many jobs in places where it is twice as expensive to hire as another? It seems unlikely. That is why economists are predicting that economic conditions will greatly improve in some places and be challenged in others. This is a message that should not be lost on professional practice owners.