Unlocking Market Potential

Total addressable market (TAM) is a term that describes the maximum amount of revenue that a product or
service can generate if it captures the entire market. It is a valuable metric for both new and existing businesses
to evaluate the potential of their products or services and decide how much resources or funding they should
allocate.​
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Organizations must define their target market to calculate TAM and estimate the number of customers and the
average revenue per customer per year. For example, suppose a company sells an electronic health record into
the health and human services not-for-profit market. Sales leaders must fully understand how the market is
divided, the levels of care, and the amount organizations have budgeted for technology expenditures within a
given year. ​
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Some additional data points that must be evaluated:

  • Annual Revenue (not-for-profit 990 forms)​
  • Payor Mix (Medicaid, Medicare, Commercial)
  • Health and Human Services Market Segments​
  • Not-For-Profit Agencies / For-Profit Organizations​
  • Levels of Care (IP, OP, IOP, Residential, Methadone, Community, Homebase, etc.)
  • Service Mix (Individual & Group, Psychiatry, Medications, Per Diem etc.)​

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Navigating Market Realities

New companies and investors must keep drilling into the market to understand the yearly TAM thoroughly.
According to the Substance Abuse and Mental Health Services Administration (SAMHSA), there are roughly
70,000 individuals and organizations across the country that provide mental health and substance abuse
services, but this does not mean all these organizations represent your ideal buyer. Many of these are part of
larger health systems or private one-person shops. The actual behavioral health-focused market in the ONC-
certified EHR market is closer to 5,000 organizations nationally. ​

If their yearly technology spend is roughly 4% of AR and only 2% goes towards actual technology, how do
you plan realistic goals for 2024?​ Evolve provides the education, skills, and mindset so your team will be ready to meet realistic revenue targets for 2024.