T H E H E A LT H C A R E I N D U S T RY I N I N D I AB Y -

S H A M I K B I S WA SP . S A I S W E T A

T O N Y A U G U S T I N EM E H U L P U J A R IS H I VA M S O D H I

A J A Y U P A D H Y A Y

INDUSTRY ANALYSISON

INTRODUCTION

India has embarked on a journey of healthcare system transformation

Growth in the next decade is going to be closely linked to the nature and the extent of reform

The Indian healthcare industry is expected to evolve substantially over the next decade, along with the country to make great progress towards achieving it’s long-term healthcare vision

SCENARIO IN INDIA

Source: Central Bureau of Health Intelligence, 2005 and 2010. McKinsey Analysis

Source: Central Bureau of Health Intelligence, 2005 and 2010. McKinsey Analysis

Source: World Health Organization, Global Health Expenditure database

A Conceptual Framework for Innovation in Healthcare

ESTABLISHED - 1975NUMBER OF BEDS - 1350NUMBER OF SPECIALTY SERVICES - 15NUMBER OF SUPER SPECIALTY SERVICES - 20NUMBER OF STAFF - 2007NUMBER OF MEDICAL PERSONNEL - 440NUMBER OF NURSING PERSONNEL – 950DAILY AVERAGE OUTPATIENTS - 1850DAILY AVERAGE ADMISSIONS - 148

St. John’s Medical College Hospital

SERVICE TRIANGLE

COMPANY(HOSPITAL)

PROVIDER( DOCTOR) CUSTOMER(PATIENT)

7P’S IN A HOSPITAL

PRODUCTIn order to provide effective and reliable services, the hospital is fully equiped with various facilities.The facilities in St. Johns Hospital areEssential medical facilities like x- ray and ultra

sound are available in hospital premises.There are 4 O.T and 2 labour O.T available .There are 11 bed ICU and % bed NICU.

PLACEUnder hospital marketing, distribution of medicare services plays a crucial role. In case of hospitals the location of hospital plays a very important role.Avoid inconvinienceAdequate transport and communication

facilitiesAvoid congestion

PROMOTIONHospitals for promotion use either advertisement or PR or both after taking into consideration the target customers, media type, budget and the sales promotion. PROMOTION PERSONAL TECHNIQUES IMPERSONAL

PRICE Super deluxe class: AC single occupancy with modern amenities and utmost ambience Private class: 2900rs per nightTwo patients in a room with decent facilities like washroom and sofas, etc. Cubical class: It’s a 4 and 6 beded partitioned room with open balcony and supervision of skilled staff. General class: It is a non ac room with no partition between different patients. Its accommodation charges are comparatively very less.

PEOPLEIt includes the doctors, nurses, supporting staff, patients, etc.The people in St. Johns hospital are constantly motivated to give the best of their effort. By providing regular on the job training of

employees to ensure continuous improvement in health care.

Utilizing services of professionally medical consultants.

Use of the latest technology.

PROCESSProcess generally forms the different tasks that are performed by the hospital. The process factor is mainly dependent on the size of the hospital and kind of service it is offering. There are 2 different types of processes:OutpatientInpatient

PHYSICAL EVIDENCEIt is the environment in which the service is delivered with physical or tangible commodities and where the hospital and the customer interacts. It does play an important role in health care services, as the core benefit a customer seeks is proper diagnosis and cure of the problem. It can be in the form of smart building. Logos, mascots, etc.

SERVICE FLOWER

CORE PRODUCTTreatment of patientsEXPECTED PRODUCTInfrastructure to support reasonable number of beds.Operation theatres.Equipment-like cardio-respiratory supportive

equipment.AUGMENTED PRODUCTAmbienceAutomation equipmentCentral air conditioning.

Services In St. John’s

Specialty services – Anesthesiology, general medicines, pediatrics, psychiatry

Super specialty services – Cardiology, Oncology, Neurology, gastroenterology

Diagnostic facilities – CT scan, X-ray, Radio therapySupportive service departments – Billing, IT, Laundry Ancillary service departments Specialized services – Outpatient services, daycareCounseling services Preventive servicesCredit services

Servicing process

Customer – Service = ExperienceOrganization – Service = Process design &

managed to create customer experienceProcess – Explains method & sequences in

which service operating system works and how linked together to create a value proposition to customers

Steps – Design blueprint Managing customers Creating a prompt service

Service BlueprintTo design new service or redesignWhat to be constructedWhat is visibleWhat are the fail pointsCreate – Key activities Linkage between activitiesDistinguishes – Customer experience – Front stage What activities staff do - Back stage

Service Re-design

Revitalizes the process that has been outdatedExternal – Technology, Competition, Customer needs,

New diseasesInternal – Customer complaints, extensive

information exchange, unnecessary proceduresResults :

Reduced service failureQuality

ProductivityCustomer satisfactionReduced cycle timeUpdated technology

Cost Reduction Schemes

Medical college – Cost reductionCampsImplemented Insurance systemRSBY scheme

Service Process Delivery

Internet Based Support System (for improving

Service Quality)

Quality as Payment schemes

  I T I S P R O V I D I N G C U S T O M E R S E RV I C E T H AT W I L L AT T R A C T A N D R E TA I N C U S T O M E R S A N D H AV E A P O S I T I V E I M PA C T O N T H E B O T T O M L I N E O F A N Y B U S I N E S S - - N O M AT T E R W H E R E I T I S

L O C AT E D O R W H AT P R O D U C T O R S E RV I C E I T P R O V I D E S

SERVICE RECOVERY

SITUATIONS

A family member complains about a long wait-time.

A patient demands a different doctor.An elderly patient refuses more tests.A patient demands a specific test.A patient accuses the staff of thievery.A patient objects to all the "foreigners" on

staff.A husband insists his test results be kept from

his wife.

STEPS FOR SERVICE RECOVERY

ApologizeSolve the problemGive the customer something of value as

compensationCreate a service recovery processTrain employees

Changing Factors/Indicators

Driven by consumer desires for choice but also bring a degree of consumer cost responsibility.

Changes in technology that allow for more direct to consumer marketing of health services: Laser eye surgery Complementary medicine Fast CT scans

Changing Factors/Indicators (Contd.)

Insurance Plans are offering “tiered” plans. Lowest cost (co-pay, deductible) to use lower cost

hospitals. More cost to use higher cost hospitals Highest cost to go out of network.

Pricing Strategies (Healthcare)

Comparative Pricing

Maintaining a relative position compared to competitors. Always 10% higher than the competition based on

perceived value in the market. Used in managed care (per diem) negotiations.

Problem – You need to know their prices.Problem – You need to make sure it does not

look like collusion.

Discount Pricing

For volume, for cash on the spot, etc.$199 each for Heart, Chest and Abdominal

CT’s – but $30 off if you take all three together. (Bundled package)

Introductory Offers

A certain amount off for the first 100 users of ---- A real offer from a Cosmetic Surgery practice.

Incentive Pricing

Reduced per diem to direct employees to a specific network.

Reduced prices to use services off hours. Diagnostic Imaging. Lab Tests Phase 4 Cardiac Rehab

“Two for One” – Contact lenses, massage therapy visits

Loss Leader

Optical shops (Lower price exam if you get glasses).

Dental practices (Low price cleaning to get other services).

Free or low price health screenings Itis a public service but it is also a loss leader.

Market Share Capture Pricing

Using deep pockets to buy share with a low price. Use lower prices in managed care negotiations to

keep a competitor out of the network. Use lower prices to be in the “low cost” tier to capture

volume.

Pricing on the Margin

Pricing at the direct cost of the next unit in the door.

A desperation strategy to capture share or generate cash.

Skim Pricing

Take advantage of cutting edge newness or exclusivity to skim off a quick profit First Fast CT in town First PET scanner in the market.

Year-End Cafeteria

Unique to health care (so far)Use up pre-tax cafeteria benefits before the

end of the year. Resulting in lots of elective-service advertising in

December.

Access Pricing

Paying per year for access to a boutique medical group (e.g. - $3,000 for a family gets immediate access).

Key Players

Promotional tools

Campaigns and exhibitionsWebsites Word of mouthBrochures Educational activities CRM

Special thanks,Dr.Kishore murthy MBBS, PGHSM, (IIM-B)M.philDepartment Of hospital administartion