HOSPITAL SECTOR Major inputs of health care industry The major inputs of health care industries are as listed

below: I. Hospitals II Medical insurance III. Medical software IV. Health equipments Overview of health care sector in India: Indias 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. Healthcare is dependent on the people served; Indias huge population of a billion people represents a big opportunity. People are spending more on healthcare. PEST ANALYSIS Political factors Most of the healthy nations are also wealthy nations. In India even after 53 years of independence we all have to accept that government has failed to provide basic healthcare. Healthcare is the neglected field, only meant for slogans by our politicians. To improve healthcare facilities we have to provide special assistance to private healthcare sector. The reality in private healthcare sector is that as an industry it has long gestation period and so most of the bigger projects fail. Government has to give certain concessions to private health sector. It can be in the form of free land for small hospitals at district levels or concession in power tariff. Government later on gets back revenue in the form of tax when these institutions start making profits. Concessions can be limited to first five years or so.Maharashtra government is playing an important role in the development of the hospital sector. Economic factors The Indian healthcare is the next boom in the country after the IT euphoria. Setting up hospitals is not an easy task. The amount of hospitals in India is very less when compared to the other developed countries. Even the urban areas do not have enough medical facilities. In the rural areas one village has only one doctor, who may not be very well qualified. The other governments of other states should take up a cue from the Maharashtra government, in setting up similar Joint ventures all over the state with the assistance of World Bank. The World Bank can make available funds of around Rs 700 crore for state health systems and development projects. The people in India do not avail of the hospital facilities very soon. This is because of the high cost related to it. However this may all change because of the increasing deployment of third party payment either in the form of Medical and Allied Insurance, or in the form of reimbursements from the State. This in turn will increase the employment opportunities to many people. Social Factors 1. Certain percentages of beds have to be kept for poor people. E.g. in Bombay 20% of beds has to be kept reserved for poor people. 2. Look after the needs of local poor people. 3. Open counseling and relief centers. 4. Teach hygiene, sanitation among the poor masses. 5. Safe disposal of hospitals wastes like used injection needles, waste blood etc. and taking due care of environment. 6. Spreading awareness about various diseases through campaigns and free medical check ups. 7. In brief the social aspect of hospitals industry is to see that latest treatment and medicines are

available to people at large at concessional rates or free of cost and that its activities are not only restricted to rich people. Technological Factors We are witnessing Information technologies transforming the way health care shall be delivered. Innovations such as computer based hospital information systems, medical records; decision support systems, health information networks, telemedicine, real time image transfers and newer ways of distributing health information to consumers are beginning to affect the cost, quality, and accessibility of health care.The technologies today can support vast databases, network communications, quick distribution and reliable image transfers. CLASSIFICATION OF HOSPITALS The classification of Hospitals on the basis of objective, ownership, path and size. 1. On the basis of the OBJECTIVE there are three types: 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. On the basis of the OWNERSHIP, there are four types: Government hospital, which is owned, managed and controlled by government Semi-government hospital, which is partially shared by the government. Voluntary organisations also run hospitals. Charitable trusts also runs hospitals.

3. On the basis of PATH OF TREATMENT, there are: Allopath which is the system promoted under the English system. Ayurved, which is based on the Indian system where herbals are used for preparing medicines. Unani Homeopath Others 4. On the basis of the SIZE, there are: Teaching 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.

IS 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 cant 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 personnels can make a difference. Inconsistency Its 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 upto 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 theres cost also associated with the carrying of inventory. Here the costs are more subjective and are related to capacity utilisation for e.g. if a doctor is available but theres 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. theres a lot of rush at the dentists clinic in December and January as thats the time when there are lots of tourist visiting India. 7.1 - PRODUCT 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. Government Hospitals: This as a product is fairly good. In some hospitals like J.J. hospital, Mumbai they provide quality services at cheaper rates and also is technically well equipped. But most of the government hospitals in spite of government grants do not provide quality service. Hence it is perceived as of low quality. Private hospitals: Private hospitals like Bombay Hospital, Apollo are well equipped and the services provided are of good quality but they charge huge price for it. Hence the middle-income group perceives them as elite class hospitals. 7.2 - PLACE Incase of hospitals the location plays a very important role. 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 hey will not have super specialty hospitals. For that they will have to be independent on the hospitals in the urban areas. 7.3 - PEOPLE 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. 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. 7.4 - PROCESS Process generally forms the different task that are performed by the hospital. The process factor is mainly dependant on the size of the hospital and the kind of service it is offering. 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.

7.5 - PHYSICAL EVIDENCE It does not play an important role in the health care services, as 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. 7.6 - PROMOTION Hospitals for promotions use either advertisements or P.R or both after taking in to consideration the target customers, media type, budget and the sales promotion. The health care field has become very competitive. Although one fourth of our population stays in urban India, three fourth of the total doctors have engaged themselves in this part. Word of mouth plays an important role during information acquisition stage of the customers, as there are no objective performance measures to judge the various alternatives available to them. Therefore satisfied past patients of the hospital can bring more number of patients to that hospital than a number of advertisements.

In a competitive market place the images of the firms will affect their competitive standing. 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. Government Hospital: They do not undertake major promotion programmes and hence are not very popular among the masses. Private Hospital: They undertake extensive promotion. Along with this they undertake massive complex operations which if successful create a good brand value of the hospitals.

7.7 - PRICE 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.

1. 2.

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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.

Perceived Value What customer perceive about value Service offered accordingly Value is low price Could be offered on weekends Health spas in off season Differentiated as incentives Free consultation by dentist/doctors Value is everything I want in service Prestige pricing-health club Bombay hospitals of Arabs (value is high quality) Value is the quality I get for the price I pay Market segmentation pricing based on affordability to pay, value is affordable quality Value is all that I get for what I give Value is getting excellent treatment in shortest possible time e.g. treatment in Bombay hospital, Breach Candy, Jaslok.

Perceived value is the customers overall assessment of the utility of a service based on perception of what is received and what is given. 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. In a hospital the process is divided into the following phases: The joining phase, The intensive consumption phase, and

 The detachment phase and feedback. Now we will be considering the process blueprint of an Emergency / Police Case

Price and quality Price is the indicator of service quality. It is an attraction as well as a repellent variable. Customers use price as indicator of quality depends on many factors including other information available to him. When service cues to quality are readily accessible when brand names provide evidence of reputation of hospital, customer may use their cues instead of price. Otherwise they think that the price is the best indicator of quality. It should convey appropriate signal regarding quality. Pricing too low can lead to inaccurate inferences about the quality, pricing too high can set expectations that may be too difficult to match in the delivery. Price is used to judged quality because of the experience and credence properties of services as opposed to goods. Excellent hospitals like Mayo Clinic, Massachusetts General, TMH, and Sloan Kettering are a mega brands. They have a great brand reputation and can charge a premium based on sheer perception of quality because of socio-economic issues, poverty levels, government owned hospitals cannot think of profit objectives. It is a social marketing process of enhancing the well being of individuals. Off late however the government has proposed to state government that those who are above poverty line should pay the cost for treatment. In private hospitals, where the profit is most important objective, premium can be charged. The price paid by customers depends on how he perceives the quality of service. E.g. Bombay hospital, Breach Candy and Jaslok they have a high reputation for quality services. THE SERVICE MARKETING TRIANGLE

Company: Here, the hospital is the company that dreams up an idea of service offering (treatment) which will satisfy the customers (patients) expectations (of getting cured). Customer: The patient who seeks to get cured is the customer for the hospital as he is the one who avails the service and pays for it. Provider: Doctor, the inseparable part of the hospital is the provider, as he is the one who comes in direct contact with the patient. The reputation of the hospital is directly in the hands of the doctor. A satisfied patient is a very important word of mouth promotion for the organization.