Marketing Plan For a Healthcare Setup
Healthcare industry traditionally has been a considered as luxury which only a few fortunate lucky enough people could afford especially in the developing city of Jakarta (Indonesia) but not anymore. Thanks to the rapid Globalization, the Government deregulations and subsidization and the increased burgeoning of dedicated Healthcare insurance companies like IFFCO Tokyo and TATA AIG towards this sector.
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Healthcare has started changing since 1999 when insurance was opened to private sector with a minimal capital of around $ 8 Million for startups. In the past the government owned insurance companies instead of giving discount on fire and other accident policies used to extend the employee healthcare plan as a freebee and thus the healthcare insurance remained a very peripheral segment for most of the big insurance companies however due to the recent deregulations a lot of money and thought has been pouring into the healthcare arena.
Also rapid Globalization has increased both the purchasing power and capacity of the middle class further defragmenting it from “Lower, Lower” to “Upper-Upper levels” with seven distinct categories in between. Those beyond the 3rd and 4th level category not only have more ready money at there disposal as a result of being better paid in there lucrative multinational jobs but also have easy access to attractive healthcare management systems and schemes, installment plans in addition to the freely available plastic money such as credit cards etc which enables them to think pragmatically beyond money before making the all important healthcare decisions for themselves or their family.
Also there is a sea change in the way the middle class consumer is perceiving the healthcare today. Today it wants not only a good quality time effective diagnosis and treatment but a better overall experience and satisfaction and doesn’t mind paying a bit more for it(especially if it is a third party). Hence big companies and multinational want to cash in on this opportunity putting in huge sophisticated infrastructure to attract the customers and thus in the process threatening the very existence of the older smaller units like ML.
Hence it has become imperative for a small healthcare facility like ML running on traditional “me too” approach to evolve a customer oriented “niche” marketing approach through proper product and market segmentation, the SWOT and ETP analysis of the emerging macro and micro economic environmental threats and opportunities in order to survive the intense competition and to grow more in the ripe market.
Company Overview: The Medica Lastari Clinic(MLC) located in Jakarta(Indonesia) has been recording a consistent decrease in sales and hence lower profitability over the past few years being victimized by overriding emerging competition of both large and small scale units proliferating in the vicinity. An analysis of the past 5 year period( 2002 To 2007) revealed that sales have nose dived by over 50% The number of enquiries has drifted from 10,000 a year to below 5000 mark till Nov2007 resulting in losses of over 20% per year. Moreover the patients have been consistently complaining of poor quality infrastructure and service as compared to other competitors and the rude callous behavior of the OPD staff. Some customers have even threatened to go elsewhere the next time promising to provide better healthcare service at the same or lower cost. Although the management has put in some efforts to transform the clinic to a 25 bed hospital with round the clock OPD, they are now sufficient to bail ML through if the present crisis situation as even the basic amenities like a well equipped pharmacy is not available. Sadly due to heavy losses incurred in the past the management is not left with enough money to pay its staff satisfactorily let alone to invest huge sums in infrastructure and new technology equipment purchase. The major problem before the management today is how to increase the sales and override the competition at a negligible cost.
Strengths: ML has been operating for past 13 years and therefore has many a loyal long term customers who can vouch for it with more confidence in terms of quality and cost even vis-à-vis the huge technologically advanced set ups burgeoning in the Jakarta. Also a lot of present well known Doctors in Jakarta have at some point in time been directly or indirectly associated will MLC and won’t hesitate to recognize its contribution to the society to any patient when asked for . Over the years the hospital has really earned the reputation of being responsible in every facet of humanness from High quality treatment and medication to being socially active. Hence it is very well known in the target area and has a good top of the mind recall among the influencers in the area.
New and Improved: Recently it has metamorphosed a full fledged 25 bed hospital with the additional staff 24 Hrs on duly at the OPD. Better and more qualified doctors, some new equipments to serve patients better. The management recently acquired new IT equipments High speed broadband internet connections along with Hospital Management software from Siemens in line with HIPPA regulations.
The hospital recently has also registered with some of the top focused insurance companies government organizations under the employee healthcare scheme..
Weaknesses: Somehow ML is positioned as a lower end player in the market catering to the lower middle class and not for the rich and affluent. The poor people who could not afford go elsewhere due to huge costs involved came to ML. While this was a good USP in the past when the means for most the middle class were limited, it does not hold good today because of rapid globalization and developments in the recent past. Also most of the existing systems are out of date and obsolete and ML today cannot boast of a good quality as it used to earlier. Also ML was designed to be a clinic in the first place and nether has neither financial muscle nor the experience of becoming a good full fledged hospital suddenly. A lot is required to be done especially in pharmacy, OT, Pathology etc so as to challenge the competition. Doing all this would be virtually impossible for company especially at this stage when it already incurring loss. Also the hospital is neither well built not centrally located but is in a remote invisible area known only by those who have a sole purpose of coming to the hospital. Recently many experienced doctors have left ML for greener pastures as a result the hospital is in urgent need of experienced and dedicated medical staff.
Opportunities: As a result of globalization and rapid development in Jakarta, many new opportunities have been emerging in the healthcare sector as a result of government support, Insurance privatization and purchasing power for the middle class due to plenty of finance, installment and plastic money options available. Also cheaper technologies like internet, GSM, GPRS and WAP. Healthcare software and CRM solutions promising to reduce the cost by over 10 %, Improve profit Margins and sales by efficiently managing the available resources. The latest technology being offered is software as a service (SAAS) requiring paying as you use with minimal basic IT infrastructure at the client side by outsourcing the database maintenance and upkeep. Also there has been a proliferation of medical colleges providing quality education and training and churning out good qualified doctors which was not there in the past. Also the recent aids and subsidies by the Government, convenient loan options for infrastructural development in the hospitals can be good growth opportunities.
Threats: Intense competition: Many new hospitals entering the arena have a far more attractive setup and are equipped with the latest technologies in the medical arena with a better trained and experienced staff as a result of them being paid better Further changing perception and mindset of the middle class towards the healthcare as a result of better and growing price insensitivity towards healthcare especially among the upper middle class..
Target Audience for ML: An in-depth demographic, financial and ailment specific categorization and analysis of the patients coming to ML for the past 5 years was made. This primary data was supplemented by questionnaires and in-depth interviews with some of the current and earlier patients. The following interpretations were made:
1) Majority of the customer base (over 50%) was of the Poor customers with average monthly income less than USD 500 per month.
2) Only around 15% of the current patients were covered and paid through ordinary insurance and low value 3rd party healthcare policy schemes.
3) 40% of the patients were those who came for elementary easy to diagnose problems such as minor throat infections, bacterial and fungal infections not of a serious nature and involved minimal diagnosis and treatment.
4) Out of the remaining 60% approximately with advanced diseases of critical nature, 35% of the patients had circulatory diseases which topped the list. Remaining were for digestive, urological, injury, eye, Neoplasm, Arthropathes, and others treatment in that order( BT top health problems- Page 222)
5) Of the patients coming for check ups and reports, approximately 15% were of those coming for HIV voluntary testing and counseling services. This was due to an awareness drive jointly launched by the health workers and the government recently.
6) The patients referred by a physician and other influencers known to the hospital was around 47%
Target Audience for ML:
– Poor customers with a net income of less than US $ 500
– Lower middle class and middle-middle segment covered with ordinary insurance and other group policies
– Patients affected with elementary or advanced circulatory problems
– People coming for voluntary testing and counseling.
ML Niche: An in-depth analysis of the type of patients coming to the hospital revealed that the type of patients coming for circulatory diseases topped the list .A little further proactive analysis revealed that this was because of the new machines for blood purification being installed at the hospital The hospital also had a two very eminent MD’s specialists in this field. Also as a result of the efforts of these doctors, the medical diagnostic lab had the latest apparatus and the pharmacy had virtually all the medicines available for the treatment of such diseases. With the in-depth interviews with these specialists, it came out that the hospital could become fully equipped to handle any kind of circulatory ailments with an additional investment of around $ 1 Million in a phased manner and could then compete with the best of the best in this arena. Further ML was still cheaper by more than 20% vis-à-vis the other new hospitals in the vicinity owing to its lesser overheads and cost conscious approach.
Marketing Mix for ML: ML would do well to have an appropriate marketing mix of product price place and promotion for its services for each category of its target audience with special reference to its marketing niche.
Marketing Mix for poor customers: With this category ML could continue to work as before with the objective of providing high quality service at low cost. The poor section of society would be very sensitive to the price and ML would do well to give good discount in there treatment and medication . ML could put up a special wing for these people where the treatment, operational and medication cost could be kept at the minimal. In addition ML could organize free medical check up camps both within and outside the hospital from time to time. ML could do a mass scale advertisement of such activities though indirect mediums such as SMS, Virus Mails, Radio, Cable TV, Banners, Leaflets and emails to generate more awareness interest evaluation trial and adoption.
Marketing Mix for the people coming for voluntary testing and counseling: The deadly disease of AIDS has become very rampant and there is a need for early diagnosis to avert its deadly consequences. ML could organize a free AIDS testing and counseling centre on a certain day in a week for the rural people in order to contribute socially to the environment in which it is operating in.
Lower Middle class: Unlike in the past the today’s middle class has a better amount of purchasing power as it can better manage to pay for its medical bills. Management has to think of innovative ways to attract this population which is growing day by day. ML already has done well to tie up with some of the insurance companies and government organizations in this regard and would do still better to work on developing better relationships with these insurance companies by not only putting up with there recommended guidelines but also apprising them about the latest happenings and developments within or ourside there hospital so as to get a top of the mind recall amongst these influencers. For these people quality would be of utmost importance
and also efficient networking would be very important. In this segment ML cam expect upto around 45% of the patients through networking. The networking should be done in the following ways:
– By being in regular touch with the medical practitioners especially those specializing in respiratory deseases could be contacted in the surrounding areas who can refer the patient to ML should the prevailing basic treatment fail to deliver results or for some additional extra tests and expert opinions. This could be done by mailing them through the internet, inviting them to be visiting doctors in the hospital, collaborating with them in some other social activities etc.so that ML is on top of their mind whenever they have to refer some patient to the hospital. Also they should be called for the work shops and any particular respiratory related research and development carried out in the hospital and should be apprised of the new and latest equipment whenever it is put up in the hospital.
Also interviews from the patients should be taken and published in the magazines and newspapers shown on cable TV etc for better word of mouth. At the same time the mailers and emails should be sent to those who do not know about what is happening in the hospital.
-Business Today page 220 To 223 December’ 16 2007
-e-marketing strauss, Ansari, Frost, PHI 3rd edition
-http://www.expresshealthcaremgmt.com/20011031/medtech9.htmMarketing plan –effective tool to reach operational targets