Hospital Marketing

By

Milan 63

Cristiel 83

Yash 99

Hospital Marketing

Overview of health care sector in India: India’s healthcare sector has made impressive strides in recent years. It has transformed to a US$ 17 billion industry and is surging ahead with an annual growth rate of 13% a year. The healthcare industry in India expected to grow in size to Rs 270,000 core by 2012. The healthcare industry employs over four million people, which makes it one of the largest service sectors in the economy of our country.

The healthcare industry in India has come a long way from the days when those who could afford it had to travel abroad. Today patients from neighboring countries, Middle East, UK and now even USA are flocking to India for specialized treatment.

Healthcare is dependent on the people served; India’s huge population of a billion people represents a big opportunity. People are spending more on healthcare.

I’s of hospital industry

Intangibility: Intangibility indicates that the service has no physical attributes and as a result, impossible for customer to taste, hears, feel or smell before they actually use it. Hospital industry is where the customers (patients) get treated for physical problems they have. The customers can’t really realize the service provided until they get well. For this they have to provide good supplementary services. The only way they can provide tangible clues to make the service provided a success. For e.g. the hospitals provide extra facilities like television, or then friendly personnel’s can make a difference.

Inconsistency: It’s also referred to as heterogeneity or variability. The inconsistency occurs largely because of• Different service providers perform differently on different occasions.• Interaction between customer and provider may vary from customer to customer.Standardization is hard to maintain. Every doctor is not the same and may not give the same diagnosis. Also a patient may not each diagnosis in a different way. Also since the quality of work done can be determined only after the service is performed the providers have to be well trained in case of performing the service process.

Inseparability: Inseparability means that the service can not be separated from the creator-seller of the service. Infact there are many services which are created, delivered and consumed simultaneously through interaction between customer and service producers.Here too the customer, i.e. the patient has to come up to the hospital to get the treatment. The customer has to be present when the service is performed. Infact in case of hospitals the service is created

and delivered simultaneously. The type of service to be provided depends on the customer. 

Inventory: Services can not be easily saved, stored or inventoried. This is all due to the perishable nature of the services. Also there’s inventory carrying cost associated with inventory. Here the costs are more subjective and are related to capacity utilization for e.g. if a doctor is available but there’s no patient during that period, the fixed cost of the idle physicians salary is a high inventory carrying cost.Also due to demand fluctuations the services can not be stored. E.g. there’s a lot of rush at the dentists clinic in December and January as that’s the time when there are lots of tourist visiting India.

Classification of Hospitals

On the basis of:1. OBJECTIVE Teaching cum research for developing medicines and promoting research to improve the quality of medical aid. General hospital for treating general ailments. Special hospitals for specialized services in one or few selected areas.

2. OWNERSHIP

Government hospital, which is owned, managed and controlled by governmentSemi-government hospital, which is partially shared by the government.Voluntary organizations also run hospitals.Charitable trusts also runs hospitals.

3. PATH OF TREATMENTAllopath which is the system promoted under the English system.Ayurved, which is based on the Indian system where herbals are used for preparing medicines.UnaniHomeopathOthers

4. SIZETeaching hospitals – generally have 500 beds, which can be adjusted in tune with number of students.District hospital – generally have 200 beds, which can be raised to 300 in contingencies.Taluka hospital – generally have 50 beds that can be raised to 100 depending on the requirement.Primary health centres – generally have 6 beds, which can be raised to 10.

Hospital marketing mix

The service marketing mix comprises off the 7’p’s. These include:

• Product • Price• Place• Promotion

• People• Process• Physical evidence.

Product Major inputs of health care industryThe major inputs of health care industries are as listed below:I. HospitalsII Medical insuranceIII. Medical softwareIV. Health equipments

The service product is an offering of a commercial intent having features of both tangible and intangible seeking to satisfy new wants and demands of the consumer, hospital industry is action oriented and there is a lot of interaction with the customers. The service products of the hospitals have the following features:

• Quality level Supporting services play an important role having the quality of Medicare. These services, which include laboratory, blood banks, catering, radiology and laundry, in a true sense determine the quality of services made available by medical and paramedical personnel.

• Accessories This is a very good way of segmenting customers. Many hospitals provide additional services such as catering, laundry, yoga sessions, cafeterias, etc. for the customers who are willing to pay extra. Hospitals have different wards-General and special. Certain hospitals provide services for the family members of the patients –when they are not the same-city for accommodating and catering.

• Packaging  It is the bundling of many services into the core service. E.g. Apollo hospital offers a full healthcare checkup to the patients.

• Product Line Hospitals through their services offer many choices to the patient and cover a wide range of customer needs. For example: Apollo has a dental department, cardiology department etc. and within the dental department it has dental surgery, root canal, etc.

• Brand name Hospitals, to differentiate themselves and their services from others use a brand name. The intangibility factor of the service makes it all-important for the hospitals to do so.

Hospitals today offer the following services:

1. Emergency services

Emergency services and care at most of the hospitals is unique and advanced.  The hospitals have state-of-the-art ambulances.  The CCU's on Wheels under supervision by medical and para-medical staff.  There is hi-tech telecommunication available to a patient in an emergency at any given time.

2. Ambulance services

Hi-tech ambulances linked by state-of-the-art telecommunications are fully equipped with doctors that are available to render medical attention and assistance in case of emergencies at the patient's doorstep.

3. Diagnostic services

Modern Hospitals are multi-specialty and multi-disciplinary, that can handle any kind of ailment, they offer a wide range of facilities for instance, Oncology, Orthopedics, Neurology, Plastic surgery and so on.

4. Pharmacy services

Most of the hospitals also have a pharmacy which is open 24 hours.  It caters to the needs not only of the inpatients and outpatients, but also patients from other hospitals who require emergency drugs.

5. Causality services

Causality service includes a 24 hrs. Causality department, which attends to the accident or emergency cases.

Generally, the service offering in a hospital comprises of the following levels:

1. Core level

It comprises of the basic treatment facilities and services offered by the hospital like diagnostic services, emergency services, causality services etc.

2. Expected level

It comprises of cleanliness and hygiene levels maintained in the hospital.

3. Augmented level

It comprises of dress code for staff, air conditioning of the hospital, use of state of art technology, services of renowned consultants.

PRICE

It is one of the most prominent elements in the marketing mix. Price charged must be able to target customers and it should co-ordinate with other elements of the marketing mix.  Price usually depends on treatment prescribed by the respective consultants and the facilities offered to the patient.

As a service is intangible, it is very hard for deciding the price of the particular   service offered.  Pricing strategy adopted does not depend on the price offered by competitors.  The pricing strategy is formulated after consulting the concerned heads of department.  Prices of various facilities revised every year depending on the change in technology.  Before fixing prices, government controls are also taken into consideration.

Pricing in Government / Trust Hospitals In the Indian setting where a number of persons are below poverty line it is challenging task to formulate a pricing strategy, which is successful in serving the social interests and generating profits. Hospitals need to invest a lot in sophisticated equipment and technologies to improve the quality of medical aid. Even the affluent sections of the societies expect; low cost services form the social institutions in general and hospitals in particular the task of services innovative in line with latest developments in field of physical sciences is difficult. It is due to this that the most government hospitals are in deplorable condition. The ex-checker finds it difficult to finance hospitals and further, the government regulations also close doors foe generating finance from internal sources. The ultimate sufferers are the society and specially the poorer sections. Since the affluent sections have the options to avail the expensive medical services made available by the hospitals. The societal marketing principles make can advocacy in favor of protecting the public interests but it not meant that the hospitals have a uniform pricing/fee structure for all the users. The fee strategy for all the hospitals should be in proportion to the incomes of users, which would engineer a sound foundation for qualitative or quantitative improvements.

For social institutions like government hospitals a discriminatory fee structure is preferred since it provides even the weaker sections of society, an opportunity to avail the quality medical services. This enables hospitals to innovate services to keep pace with the latest developments in the medical sciences.

Pricing in Private Hospitals

• Cost based pricing:

Price = Direct costs + overhead costs + profit margin. In hospital services, this method is cumbersome because the tracking and identification of costs are difficult. Fee for services, however can be used by doctors. Notwithstanding, some hospitals in the private sector follow this method.

• Competition based pricing:

Using other price as an anchor for the hospitals price, heterogeneity of service across and within providers makes the approach complicated.

• Demand based pricing:

Cost based pricing and competition based pricing do not consider certain criteria. Demand based pricing involves price setting consistent with customer perception of value. Prices are based on what will par for the services provided.

Differential pricing in the hospital industry happens

• Externally (between 2 hospitals)• Internally (within a hospital)

Externally:

Between two hospitals, even to provide the same treatment, the prices differ. Even though the operation to be done might be the same, pricing differs due to the kind of service provided pre and post operation. Cost is associated with the kind of service you provide, and so the hospital is bound to charge the patient for it.

Internally: There is a price differentiation even between the two wards of the same hospital. There is difference between the general ward and special ward where the rooms are air-conditioned and extra services are provided. Thus the pricing would be different. Even the doctors visiting fees/consultation charges are different. Sometimes if the patient is very poor then the doctor may halve his fees.

Experts feel that hospitals must do costing of all new services and review the fee for existing ones periodically. They are also of the opinion that activity-based costing (ABC) should replace market-based costing.

Ideally prices should be fixed based on a cost-plus formula, which includes indexed time cost of physicians, doctors & other staff. The mark-up over cost shouldfactor in things like urgency and seriousness of treatments, frequency, volumes, etc. Also, lumpsum (package) prices should be fixed for at least number procedures.

There is not a single Indian hospital which has packages for more than 8-10 procedures, at best. “For all other procedures, the hospital gives an estimate of cost - and 90 per cent of the time, the actual billed amount is higher than the original estimate

Hospital rates should be arrived at by logical process of first making a detailed study of all the costs involved. Costing should be done when a new procedure, equipment, or activity is introduced.

Prices are revised on a percentage basis every year, without doing actual profit and loss analysis on each item or procedure. New hospitals get price lists of existing hospitals and mark-up or mark-down is arrived at based on how they want to position the brand.

PROMOTION

Promotion function of any service organization involves the transmission of message to present, past and potential customers.  Customers need to be made aware of the existence of the service offered.  Promotion includes advertising, personal selling, sales promotion and publicity.    

Hospitals conduct camps in rural areas to give medical check ups  at a reasonable price so that the rural people approach the hospital again in the future.  They also sponsor frequent visits to the spastic society, old age homes, etc.  Hospitals generally advertise in health and fitness magazines

Though there are no specific strategies for hospital marketing, a systematic approach to marketing has evolved over the past few years. Unlike earlier, now the corporates prefer a long-term association with the healthcare institution

by signing a memorandum of understanding (MoU) Marketing experts believe that a sound Client Relationship

Management (CRM) forms the basis for soliciting corporate tie-ups, today.

Hospitals do not normally undertake aggressive promotion, they rely a lot on a favourable word of mouth.  To crease the clientele, a hospital may continuously introduce different health services like the accupressure clinic, master health programmes and diabetes health checkups apart from annual health checkups offered to different companies. (Corporate clients) 

Events, both indoor and out-reach programmes, play a significant role in marketing of healthcare institutions. Continuous medical education, awareness sessions for general public, check-up camps for public, organizing events on various health days, conducting interviews of specialists on visual media, informative and interactive website, printing and making readily available various emergency or appointment numbers

are the commonest marketing tools. Hospitals have even started various days like” Liver day” etc, which was aimed at educating and creating awareness amongst children and parents. It may engage in brand enhancement through publication, brochures, patient information material, corporate film, website, exhibitions, and camps. It can be associated with co-branding, which is association with other established brands for increased visibility and awareness and increase utilization.

Sponsorships/placement of advertisements in medical journals/magazines/news dailies. It may also do Public Relations i.e. press and media relations, VIP and visitor hospital tour and conduct patient satisfaction evaluation, loyalty programmes and outreach programmes through disease specific clubs / support group programmes. It also organizes market research for new facilities / services and

enhances market reach through franchising, expansion of ventures, medical tourism

As patients are the best ambassadors, it is important to take care of their needs and provide them with best possible care. Their apprehensions should be addressed so that they have the courage to come back to the same facility.In this business, every satisfied customer brings thousand new customers.

Although one fourth of our population stays in urban India, three fourth of the total doctors have engaged themselves in this part. One factor that is likely to have significant impact of the health care scene is the growing hospital chains such as Apollo, Birla health centers, etc. artificial heart transplants and other complex operations although are few in number and generate a small potion of the total revenue, they help in generating word of mouth which health care providers are actually interested. Many of these companies are spending a lot in corporate advertising for image building.

Some examples of promotional strategies adopted by world-class hospitals in India

Fortis, Noida

Fortis was the first hospital to organize an exhibition in the National Capital Region, wherein the general public could visit all departments of the hospital and get answers from experts. Secondly, Fortis launched a dialysis technician programme for women from the weaker section of society in which they were given free training by the hospital and they will be assimilated in the hospital itself.

Jaslok Hospital, Mumbai

The marketing strategy of Jaslok Hospital involves tying up with corporates, some of them being Oil and Natural Gas Commission (ONGC), Mumbai Port Trust (MBT), Bhabha Atomic Research Centre (BARC) and Air India. One of the most effective marketing tool is a

web site (www.jaslokhospital.net), which is constantly updated by their technical staff. Other marketing strategies involve that the hospital conducts free health check-ups like diabetes and cardiac check ups for the general public, inviting foreign faculty and holding joint symposiums with the foreign delegates to share their skills, knowledge and experience. The hospital has a tie up with Stanford University Medical Centre, US and they hold video conferencing every month with the doctors of the centre, who interact with the faculty of their hospital.

Apollo Hospital, Chennai

All marketing endeavours at Apollo are based on strict ethics, code of conduct and corporate social responsibility.

They interact with doctors on one on one basis. They regularly conduct seminars and continual education programmes to explain to doctors the advances in the medical sciences and the infrastructure that their hospital has.

To reach the consumers, they rely mostly on public relations. Whenever their doctors perform pioneering surgeries or winning awards for their achievements, they talk to the media and when people come to know about their achievements they get confidence to go for their services.

They regularly present various health programmes to the corporates who form a significant chunk of their customer base. Being a hospital chain, they have the advantage of leveraging their brand.

PLACE It refers to contact point between the customer and the service provider, who gets the benefit of the service.  This element in the marketing mix leads to the identification of a suitable location.

The two major issues considered regarding the decision of a place in case of hospital are accessibility and availability of the service to customers.  Accessibility refers to the ease and convenience with which a service can be purchased, used or received.  Availability refers to the extent to which a service is obtainable or capable of being purchased, used and received.

Factors influencing the placing decision are market size and structure by geographical regions, number and types of competitors in the region, location of potentially attractive consumer segments, local infrastructure, good road access facilities and public transportation network.  A hospital must be ideally located and must be easily accessible to all.

The kind of services a hospital is rendering is also very important for determining the location of the hospital.

Example:

Tata memorial hospital specializes in cancer treatment and is located at a center place unlike other normal hospitals, which you can find all over other places.In a country like India which is geographically vast and where majority of the population lives in the rural areas place factor for a hospital plays a very important role. A typical small village or town may be having small dispensaries but they will not have super specialty hospitals. For that they will have to be independent on the hospitals in the urban areas.

PEOPLE The People component reflects the important role played by individuals in the provision of services.  People are also an important element in the marketing mix.

Under hospital marketing mix people includes all the people involved in the service providing process which includes doctors, nurses, supporting staff etc. the earliest and best way of having control on the quality of people will be by approving professionally sound doctors and other staff.Hospital is a place where small activity undertaken can be a matter of life and death, so the people factor is very

important.Under hospital marketing a right person for the right job has to be appointed and they should be adaptable possess versatility. The patients in the hospitals are already suffering from trauma, which has to be understood by the doctors and staff. The people of the hospital should be constantly motivated to give best of their effort.It is necessary that the staff in the hospital are trained to offer quality patient care with human touch using state of the art technology.

The objective of offering quality service to the patients can be attained by:

Motivating employees to be efficient, dedicated and loyal to the organization.

Offering regular on-job training of employees to ensure continuous improvement in health care.

Utilizing services of professional competent medical consultants.

Use of latest technology.        

Motivation is not necessarily by giving high salaries.  There are many other ways to motivate the employees.  Concessions should be given to the employee's near ones.  There should be regular liaison with them at all times.  Knowing what the employees want is very important.  There should be active participation of the employees in the activities of the hospital.

In a hotel, where the clientele is happy, free from any kind of tension, the job of the staff becomes much easier, whereas in a hospital, the staff has to cater to the needs of sick, depressed and an agitated lot.  Warm ambiences with efficient and cheerful staff help make the experience of the public a memorable one.  Therefore, it is very important that

the staff of the hospital is friendly and comforting, always wearing a smile.

Government Hospital: In Indian government hospitals except a few almost all the hospitals and their personnel hardly find the behavioral dimensions significant. Hence even if the patients get the correct treatment they are often dissatisfied with the behavioral pattern of the staff.

Private Hospital: They have pleasing manners and behave softly with the patients. They provide timely care and are present always in times of need.

PROCESS  Process is a set of activities that take an input, convert it and add value to the input and finally create an output.  Process has only recently been given much attention in the service sector although it has been the subject to study in manufacturing for many years.  Processes are designed by blue a print, which sets a standard for action to take place and to implement the service.

In a hospital, the process is divided into three phases.

1. The Joining Phase

It includes the following:

* The arrival of the patient.

* Registration – where a patient has to make an initial deposit at the in-patient billing counter after which a file is opened in the patient's name to know the patient's medical history.

2. The Intensive consumption Phase

It includes the following: 

Diagnosis – where the consultant diagnoses the illness by making the patients undergo various tests.

Treatment – when the illness is treated with proper medication or surgery and so on.

Information about further actions – the consultant will instruct the patient regarding the diet to be followed, the medication to be taken, when to consult him again in the future and so on.

3. The detachment Phase

It includes the following: 

* Discharge of the patient – a patient can be discharged from the hospital on the advice of the consultant

* Payment – after the patient is discharged, the bill will be paid at the billing counter.

4. Feedback

At this stage, the patient is requested to fill an evaluation form, which assists the hospital authorities to know the level of satisfaction derived by the patient.  Patients' suggestions are always welcomed, valued and considered and many times are very useful for improving the services of the hospital.

General Process Organization in a Hospital

Within the hospital, each department is looked, it is noticed that each department serves the needs of another department, for example, the purchase department serves the needs of the stores, the billing department serves the needs of the finance department and so on.  So in a way, each department is a customer to another department, while at the same time it might be a supplier to another department.  Each department is an "internal customer" of the other departments.

Only when each unit of the hospital understands who their customers are and what their needs are, will the hospital develop basis for giving the best service in the most efficient way to the patient.

In a way, each department or unit should consider itself to be a service provider serving the needs of the customer department.  In a superficial level, it may seem as if each department is working as an independent unit rather than a team.  However, the world-over in many organizations that have used this concept, it has found that this kind of a customer-supplier relationship helps to offer an important system of checks and balances and gives the organization a more focused customer orientation. .

Government Hospital: There is lot of paper work involved in the whole

process. Hence the whole process from admission to discharge is tedious.

Private Hospital: With the advent of information Systems in hospitals all the paper work is reduced and the process is smooth and fast.

PHYSICAL EVIDENCE Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service.

Physical evidence plays an important role in hospital services.

Modern hospitals need to create a good ambience.  Right from the reception one finds very cordial and comforting staff.  The ambience plays an important role because when a patient walks into the hospital he immediately forms an opinion about the hospital.

The staff follows a dress code to show professionalism and to maintain discipline.  The staff is trained to be understanding, warm and comforting because the clientele that goes to the hospital is usually disturbed or unhappy.

It is necessary for a hospital to be well organized and segregated into different departments.  All the doctors should be offered with a well-equipped cabin.  The entire hospital requires to be centrally air-conditioned with good lighting.  Ventilation is taken care of by air-conditioning.

Special care should be taken to maintain hygienic, cleanliness and whole hospital must be well lit.  This is taken care of by

the housekeeping department.  A hospital has to keep in mind both the aspects of

physical evidence that is essential and peripheral evidence.  Physical evidence particularly plays an important role in the hospital where the patients are already depressed or traumatized and a good atmosphere could make all the difference.

Another reason that it plays an important role in the health care services because the core benefit the customer seeks is proper diagnosis and proper cure of the problem.Physical evidence can be in the form of smart buildings, logos, mascots etc a smart building infrastructure indicates that the hospitals can take care of all needs of the patients.

Government Hospital: Government hospitals have a huge building, but are not properly maintained; hence it creates a bad impression among its patients that the hospital is unhygienic.

Private Hospital: Private hospital like Bombay Hospital has got a smart building, which helps, in developing the minds of the people, the impression that it is the safest option among the different hospitals available to the people.

Market Trends

Over the last five decades India has built up a vast health infrastructure and manpower at primary, secondary and tertiary care in government, voluntary and private sectors. Currently private sector health services range from those provided by large corporate hospitals, smaller hospitals and nursing homes and clinics run by qualified personnel.

A majority of the private sector hospitals are small establishments with 85% of them having less than 25 beds. Private tertiary care institutions providing speciality and super speciality care account for only 1 to 2% of the total number of institutions while corporate hospitals constitute less than 1%. The private sector accounts for 82% of all out patient visits and 52% of hospitalization at all India level.

Of late India is becoming a preferred healthcare destination forneighboring countries and the West due to low cost and high quality of treatment available giving rise to the term medical tourism. This has had a cascading effect with more and more hospitals in the private sector upgrading their facilities to land a slice of this business.

Medical insurance which was non existent earlier has now opened up. More and more of the Indian population is taking up insurance which results in increased spending on healthcare.

Future Increasing private sector participation in healthcare services is stimulating change in the Indian healthcare industry. According to an ICRA industry report on Healthcare, India spends 5.1 percent of its GDP on health. The health market

is estimated at Rs.1, 408 billion ($30 billion) and includes retail pharmaceutical, healthcare services, medical and diagnostic equipment and supplies. Since healthcare is dependent on the people served, India's huge population of a billion people, represents a big opportunity. The middle-income group in this vast base is also a large 250 million. The proportion of households in the low-income group has declined from 58.8% in 1990, to 49% in 1996. At the same time, the middle & higher income-group has increased from 14% to 20%, in the same period.

People are spending more on healthcare. Today, a middle-level manager with a family of four, spends between Rs.8,000 and Rs.12,000 a year on healthcare - compared to just Rs.2,000 in the late -1980s. Most users of healthcare have been paying from their own pocket and preferring private services to government ones. The rise in literacy rate; the higher levels of income; and an increased awareness through the deep penetration of media, has constituted to greater attention being paid to health.

In view of the growing population and higher incidence of non-communicable diseases, it is estimated that the demand for quality healthcare in India will increase. The role of the private sector is likely to further increase with preference for private care and government’s constrains of limited resources. There are various gaps in the Indian Healthcare Market, which also present a vast opportunity. Good Healthcare in India is in extreme short supply and it is this gap that Corporates are looking to plug.