Table of Contents
Without continual growth and progress, such words as improvement, achievement, and success have no meaning – Benjamin Franklin
Growth strategies used by Indian Corporate Hospitals:
Indian healthcare industry’s growth is accelerating, driven by diversification strategies in Indian healthcare and the growing demand for home healthcare services in India. As per IBEF, entire healthcare market ( hospitals, nursing homes and diagnostics centres, and pharmaceuticals) constitutes 65% of the overall market. So hospitals can contribute overall to this profitable market in the country that is estimated to grow at 23% CAGR and reach a size of $312 billion by 2028. Growth is loved and dreamed by all, but it requires great efforts to give balanced and sustainable growth. Indian health care industry has the following positive points:
India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep.
Diversification as growth strategy:
Hospitals have always used diversification strategies in the Indian healthcare sector for their growth.. It could be diversifying in terms of expanding their outpatient scope. Market outside organization’s core business is seen to offer substantial growth. This way they can expand in the present market or diversify in new markets. This diversification could be related to its present operations or unrelated and outside the health care industry.
Related Diversification / Concentric Diversification:
The classic example would be Apollo Hospitals. They have started multiple Apollo clinics all over India to directly reach the community. Eg Apollo geriatric clinic, rehabilitation centres, psychosocial counseling clinic etc which serve as a spoke model. Lots of corporate hospital chains perform outreach programmes to increase health awareness and reach out to more people. Eg mobile vans, providing transportation services from peripheral rural areas, setting up emergency response centre, screening clinics in the periphery etc.
Home Health Care:
Home healthcare services in India are an extension of hospital services and have a huge scope. It is presently initiated by new healthcare players, start ups or people from non medical background. Its at a nascent stage but expected to grow tremendously due to rise in chronic health problems especially amongst geriatric population.
Unrelated Diversification:
It has its own risks since one is entering into a business which is totally out of their expertise zone. eg hospital entering into restaurant business or shopping centres, office buildings, parking lots etc.
Forward Vertical Diversification:
Forward vertical integration in hospitals is when the healthcare moves towards its patients / consumers – eg Wockhardt primarily being a pharmaceutical company had entered into hospital business and directly catering to patients.
Backward Vertical Diversification:
Backward vertical integration in hospitals occurs when healthcare moves towards its suppliers or takes up distribution channels. For example Aravind eye hospital started manufacturing their own IOLs. This got them to reduce the operative cost tremendously, improved quality and delivery at the right time without getting dependent on the distributors. Moreover there is a huge demand of the Auro IOLs in African countries as well.
Market Development Strategy:
Market development in healthcare involves entering new markets with existing services.. In this new geographic areas are targeted or new market segments are targeted in the present market. These strategies will definitely help to increase volume and increase the scope of services. Aravind eye care, Narayan hrudralaya have developed lots of peripheral primary care centres to provide seamless system of care. Market development in healthcare is crucial for expanding hospital services into untapped regions.
Horizontal Integration:
It’s the method of acquiring / affiliating the practice of the direct competitors. It has its advantages like increased access to capital, improved patient access, easy availability of man power, already set patient base, economies of scale etc. Vasan eye care used to generally expand by acquiring the practice of the local ophthalmologist.
Product Development:
Product development in Indian healthcare focuses on introducing new services in the current geographic market. For example lots of MOTHER AND CHILD care hospital chains are coming up wherein they keep adding lots of products and services in the area of women’s health.
Market Penetration:
An attempt to better serve the present market with current products and services only. It helps in increasing the market share and hence enhances the patient volume. For this organizations try various promotional channels, various pricing strategies etc. For example, various pharmaceutical industries have used e-detailing ie electronic physician education concerning drugs.
Mergers, Alliances, Acquisitions:
All these cooperation strategies are known to increase efficiency and effectiveness, enhance financial position, overcome concerns about survival.. Larger companies have the advantage of economies of scale for purchasing their various raw materials, for delivery of services and for customer satisfaction.
For instance, St. Luke’s Hospital and Health Network recently unveiled their acquisition of Phillipsburg’s Warren Hospital and with it their plans to revive their maternity services and pump six million dollars in the hospital’s intensive care unit, thus making such a merge beneficial both to the staff on hand and the patients seeking care.
With these strategies companies are able to reduce their operating cost, enjoy wider customer base, have a better market share and widen their geographic area as well as scope of services.
Differential Strategies:
- Hospitals can differentiate from the others by recruiting the best physicians in town. A hospital is as good as the clinicians it has. The brand value of the topmost physician can contribute a lot to the hospital business.
- Secondly, if the patients are regularly demanding any particular service, it is always advantageous to start the new service line.
- Efficient running of a hospital’s ER and organs transplant programme is a tricky issue to say the least. But if one can handle it efficiently, it can give you the edge over your competitors and help in developing a strong social position.
- Cost differentiation is one more way. Competitor analysis and costing of our services accordingly can give you the cost advantage over the others. At the same time cost containment is the key. Especially after the COVID 19 episode, which has caused severe economic crash globally, cost containment on marketing & branding, drugs and consumables, reduction in operational cost, administrative cost will have to be worked out.
All the above strategies will help to build a sustainable and profitable organization. Further, integrating latest technology in the healthcare pipeline will further elevate the health sector as a whole. The integration of artificial intelligence (AI) in healthcare is anticipated to experience substantial growth leading up to 2028. According to Stratview Research, the AI in healthcare market was valued at approximately USD 10.43 billion in 2022 and is projected to reach USD 98 billion by 2028, reflecting a compound annual growth rate (CAGR) of around 44.99% during the period from 2023 to 2028. Increasing cost burden from chronic health conditions and aging population will be the chief driver for digital health solution such as RPM devices, telehealth platforms, PERS, and mHealth applications.
Other Quality References for Growth:
- Donabedian Model: Structure, Process, and Outcome for Healthcare Quality Assessment
- Healthcare Quality: Key Determinant for Improved Health Outcomes and Patient Satisfaction
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