The healthcare industry is going through a period of transition, where disruptive technologies and empowered customers are shaping the business landscape. Strategic planning is therefore imperative for survival and sustainability.
Introduction
The concept and perspective of healthcare is changing worldwide - and not all of it is cosmetic. Several factors - economic and social - are at play to bring about intrinsic changes in this industry. In a global context, governments, insurance firms, employers and patients form the broad mix of consumers for this service.
In the USA, for instance, the government, insurance companies and employers are feeling the pinch of high cost healthcare. Demand for better performance at lower cost is driving changes here. In India, where healthcare is not provided by the government, shifts in economic and social landscape dictate the direction of change for the healthcare sector.
And these changes are no less dramatic. Socio-economic shifts in terms of higher disposable incomes and increased exposure have brought about significant nutritional and demographic changes. As a result, India is seeing an increased prevalence of lifestyle and chronic diseases. The demand for acute care has given way to long term care of these conditions. This means a shift from hospital stays to more consultative, long-distance care, amply supported by technological advances as well. Medical equipment, treatment procedures and the Internet have all metamorphosed the way health care is delivered.
Given India's burgeoning middle class, which is aware and willing to pay for healthcare, competition is on the rise. India is emerging as a strong healthcare destination for a global audience as well. In a nutshell, disruptive technologies and an empowered consumer are reshaping the business landscape in healthcare dramatically. Strategic planning is vital to sustainability and, indeed, survival of these healthcare providers.
Strategy Development in Healthcare
The healthcare sector in Indian has been taking what can be euphemistically called a strategic vacation. The demand for healthcare is almost recession proof. But that is no reason for complacency. While technological and knowledge advances have been rapid, the business of running healthcare services has not kept pace. Today, it needs an infusion of business and management tools in nearly all areas - operations, service delivery, procurement of materials and equipment, and the design and maintenance of facilities.
Typically, strategy development in hospitals goes through three stages, namely, facilities planning (heavily oriented towards design and construction of physical infrastructure), institutional planning (involving the design of programs and departments of a hospital) and strategic planning (as a tool of top management to set goals and achieve them). Most hospitals get caught in the first two stages and -+ seldom reach the third level.
Part of the reason why strategic planning was adopted late, and perhaps reluctantly,' by the industry is the variable, intangible nature of the service. Quality of delivered healthcare is not easy to measure, and certainly not easy to benchmark. The good news is that healthcare providers have. caught on and are working on imbuing these elements into their strategy.
Healthcare Strategies and Management Tools
While spiraling cost is the driver in the USA and much of the Western world, competition is the motivating force in India. Interestingly, both drivers are directing the industry in these countries towards similar objectives.
Strategic shift in healthcare -In the past, hospitals focused on attracting more patients, leading physicians and technologies. Strategies were tailored to deliver higher billing to more patients. Doctors were given a free rein in delivering services and there was limited scope for innovation. Today, the focus is on reducing cost to meet customer demand, improved service quality and striking a balance between cost and patient stay. This results in shorter stays, fewer tests and less expensive treatments. Hospitals are also endeavoring to balance physician loyalty with investment and use of world-class technology. Innovation in all aspects of hospital management is being encouraged.
One strategy that big, full service, general hospitals competing with smaller and more agile new entrants are looking at is planning strategy based on service lines much as organizations form strategies based on business units. When hospitals build competencies in few service lines they tend to be more productive, improve the quality of their service, and attract better medical professional talent. They also build brands and market share. By doing so, they go off-line on non-priority services, shoring up surplus capital for building their in-focus service lines. Over time, they could' perhaps build a network of hospitals each dedicated to different services. For this strategy to be effective, however, they need to have a clear understanding of the current market, competition, their competencies and potential for referrals and cross-selling in the service lines they choose.
Logistics and just-in-time ideas are also being implemented in hospitals to reduce waiting and long queues at several traditional bottlenecks like registration, consultation and operation theatres. Work processes and operations planning are occupying center stage, as is the focus on bulk procurement to reduce costs and keep a tab on quality.
Balanced Scorecard - Among the tools being adopted by the industry, the Balanced Scorecard (BSC) is perhaps most closely linked to strategy. Deriving a set of performance metrics from the hospital's strategy, the BSC helps these organizations translate their goals and objectives into simple and achievable tasks for employees. It helps strategy stay patient-focused; provides a communication and collaboration platform; assigns accountability to all areas of the hospital; facilitates, monitors and assesses implementation of strategy and provides a feedback mechanism. Implemented well, it provides healthcare service providers with more control over their operations.
The scorecard measures are based on hospital-relevant inputs, outputs and outcomes. For instance, inputs could be its staff, supplies, facilities and equipment. Outputs would be the services it renders with these inputs and the outcome would be the status of health of patients, length of care and so on. Efficiency would be calculated as the ratio of inputs to outputs (number of consulting hours per patient, average cost of a treatment to the bill amount raised).
Listening to the Voice of the Customer - It's never a wrong time to focus on the customer, but this time round customer centricity is critical in healthcare. Why? Because of forces like direct-to-consumer drug advertising, increasing prevalence of outpatient care, alternate therapies and an explosion of Internet sites that speak the language of speed, empowerment and information. Simply put, hospitals have yet to catch up in these areas.
Hospitals have been operating with some myths, all of which need debunking in the current scenario. Here is a quick look at some of them.
Better quality can only be obtained at a higher cost - Some of this quality is actually a given, yet customers were used to paying more for them. Not anymore, say many studies on customer empowerment.
Doctor knows best - Yes, but patients want to be partners in the healing process and demand to be educated on their conditions.
Patients will always come back - The era of the family doctor is over; patients routinely switch doctors they are dissatisfied with.
Patients cannot judge quality healthcare - Wrong again. With so many resources online, patients come with far more information and can assess quality of healthcare.
Given the fact that decisions on healthcare are extremely complex, customers often seek to simplify it - by choosing healthcare options that are comfortable and convenient or are highly recommended by people significant in their lives. This makes customer satisfaction both easy and difficult to achieve for healthcare providers. Easy, because they know what they need to do, difficult because it is very difficult to create comfort, convenience or referrals without sustained delivery of services.
Hospitals are increasingly looking to mainstream tools for understanding their customers - market research through surveys, focus group discussions (of physicians, patients and relatives), customer and employee feedback and more. Consumer centricity is set to touch healthcare in a significant way - from facilities management to registration, clinical services to billing, website planning to out-patient care.
Emerging Trends - Keeping an Ear to the Ground
Hospitals also took some time to realize that the scene of action had moved from the operation theatre to the front end of the business. As mentioned earlier, acute care gave way to chronic care and health management. Preventive healthcare is another emerging area which several players in India are focusing on. This involves health checkups, consultation with dieticians, nutritionists and counselors. It also means that aseptic, sterilized hospital rooms give way to swank and friendly work areas.
There is greater focus on transparency in terms of cost, performance and quality. This defines competition and also differentiation between service providers. While hospitals in India are often more in tune with hi-technology changes in treatment and care, they also need to keep an ear to the ground as far as the competition, the customer and the economic conditions are concerned. Here are a couple of significant changes in healthcare delivery that emerged as a result of these factors:
Specialty and boutique hospitals - Globally, boutique hospitals stand for high cost, convenient facilities. In India, they are often the same as small super-specialty hospitals that deliver limited services and are often driven by one or a few well-known medical professionals. There is a market for such initiatives in India and we see a number of these boutique hospitals mushrooming in urban centers, especially in south India. Key success factors include the ability to build sustained high levels of operational efficiency and delivery of high quality personalized care.
Taking healthcare online - Hospitals can leverage the power of the Internet to deliver added value to patients. While most hospitals merely put their brochures online, tying up on-line tactics to broader strategic objectives would help them in the long run. Services like online appointment scheduling, library content or knowledge centers, online newsletters, heath risk assessments etc will help hospitals increase market share, reduce costs and improve patient satisfaction.
- Hospitals have been operating with some myths, all of which need debunking in the current scenario. Here is a quick look at some of them.
- Better quality can only be obtained at a higher cost - Some of this quality is actually a given, yet customers were used to paying more for them. Not anymore, say many studies on customer empowerment.
- Doctor knows best - Yes, but patients want to be partners in the healing process and demand to be educated on their conditions.
- Patients will always come back - The era of the family doctor is over; patients routinely switch doctors they are dissatisfied with.
- Patients cannot judge quality healthcare - Wrong again. With so many resources online, patients come with far more information and can assess quality of healthcare.
Healthcare Best Practices
India has a number of success stories in healthcare. The increasing numbers of medical tourists to Indian shores is proof of this fact. Indians too are increasingly demanding and getting the kind of quality healthcare hitherto not associated with a “Made in India” tag. Here are a few examples of hospitals that employed management techniques to expand and deliver customer satisfaction:
Hinduja Hospital implemented Six Sigma after they got their ISO accreditation and felt they needed to refresh their patient centric approach and develop a new outlook to their quality initiatives. The hospital identified as many as 77 problem areas. These were narrowed down to 6 critical ones that were first on the start line. Two of them are discussed here. Peri OP care, or patient care immediately prior to the operation was the first area to be addressed. Here, the focus was on patient satisfaction - while consent forms are administered, information is given to the patient, the operation site is marked, anesthetists and nurses attend to the patient etc. The team addressed issues like noise, temperature control, waiting time and staff response time in this zone. Similarly, the OT Supplies Support project ensured that problems in supply of material, bio-medical and support services were ironed out. Six Sigma not only helped the hospital resolve problems, but also helped them recognize, measure and continuously monitor these metrics in a scientific manner.
Apollo Hospitals and Dr. Prathap Reddy are the pioneers in modern day healthcare in India. After consolidating its position in the hospital space, the group ventured into primary care, armed with the simple logic that most of healthcare expenditure is done outside the hospital. In an unusual move, they chose the franchising model for their clinics, each of which has a 24-hour pharmacy. The group looked closely at three growth areas, namely, developing integrated delivery networks for healthcare, developing the medical tourism market and international hospital management. It has entered the health BPO and health insurance segments as well.
Bumrungrad, Bangkok, established around 26 years ago, set itself apart from the rest of Bangkok's health tourism industry, by hiring foreign doctors and management expertise. In a bid to counter and preempt the possibility of saturation in the domestic market and foreign healthcare tourists, the hospital has put its international strategy in place. It has added “International” to its name and is taking its brand overseas as well. With treatment costs 50% to 70% lower than USA, Australia, Europe and Hong Kong, several government departments and agencies in the Middle East are sending their employees to Bangkok. Bumrungrad has tied up with an investment company in the UAE to build a 250- bed hospital in Dubai. The hospital, listed on Thailand's stock exchange, believes its international arm will grow faster than the domestic one and is focusing on the Middle East, South and South-east Asia, and China.
Conclusion
Globally and in India, healthcare is in for some very interesting times. India's growth, spearheaded by increasing global interest in terms of medical tourism as well as improved economic conditions of Indians, is especially noteworthy. The industry is poised for a take off, and now is the time, if ever, for healthcare service providers to undertake strategic planning exercises and leverage the industry conditions for future sustainability.
CREDITS: Suresh Lulla, Founder & Mentor, Qimpro Consultants Pvt. Ltd.