Market Opportunity
PATIENT ROOM CONSTRUCTION
70,000 to 80,000 patient rooms are constructed or undergo renovation every year. Of that total number, about 35,000 to 40,000 rooms present an opportunity for Herman Miller Healthcare.
Not all of those opportunities will result in a successful Compass engagement and sale. Some potential customers will decide that their room designs or applications are outside the scope of Compass applications. Examples include bone marrow transplant areas or a desire for custom floor-to-ceiling millwork. In other cases, the value of the Compass system, particularly its flexibility, modularity, and aesthetics benefits, will not be fully valued by potential customers. And there will be situations where a customer's target price may not be possible to meet with the Compass system, either because a customer has a price point that Compass can't meet and still deliver its benefits or the level of customization a customer desires negates a reasonable Compass solution and price point.
For these reasons, the Compass opportunity-and our goal-is to capture 10% of the 35,000-40,000 room opportunity.
THE OPPORTUNITY
The market segment for patient room casegoods and furnishings is approximately $625 million. Our current share of that segment is about $20 million, primarily due to Nemschoff casegoods sales. Adding in our patient room seating brings our share to between $30 and $50 million in annual sales.
This segment is dominated by custom millwork, but competitors have been making efforts to increase their share.
Herman Miller Healthcare's knowledge of clinical environments, our experience working with architects, facilities managers, and planners, and the systems logic of our products position us well to capture more of this market segment. Current trends in healthcare operations, combined with the opportunity to innovate in the patient room casegoods/furnishings segment, position us well to start increasing share.
INCREASING THE COMPASS SELLING OPPORTUNITY
Without the Compass system, the Herman Miller Healthcare, Brandrud, and Nemschoff collective product offering provides an opportunity to capture $4,500 of the total patient room spend.
Compass adds up to $10,000 to that customer spend opportunity.
Combining our current product offering and Compass to the portfolio, your opportunity within a patient room is now $14,825.