Seeking your attention on the broad and provocative statement that is valid for a vast majority of private hospitals and doctors in the country:
“Stop buying business, focus on building It”
In the present market situation, most players are focused on ultra-short-term tactics to develop business and drive revenue to substantiate this, lets understand a few “Marketing Strategies” that hospitals are using for driving revenue and growth:
Strategy Number 1: Acquiring “STAR” Medics
Engaging and acquiring“STAR” i.e. high value doctors by poaching them from other competitors. So, HOW is a “STAR DOCTOR” defined?
The main considerations are:
Size of doctor’s patient base, number of surgeries/procedures done by the doctor and the amount of revenue that is now generated by the doctor
The doctors are chosen based on these criteria. They are then enticed to join the hospital by providing them with a range of incentives. These incentives include an increase in their earnings. This could mean an increased basic guarantee or an increase in revenue share. There are also promises of individual marketing. Doctors are promised the latest medical equipment of their choice. There is also a promise of providing manpower of their choice, and so forth. In other words, the strategy is to offer a more lucrative package. This package is more attractive than what they presently get. It is offered irrespective of financial viability. Very little thought is given to the speciality. Consideration of gross margins is minimal. The ability to keep the patient base is often neglected. Increasing the volumes is not really considered at this time of “wooing the bride”. There are many examples of doctors being lured by fancy promises. These promises were not financially viable. They were persuaded to join the hospital. Over time, when the expected financials did not accrue, the relationship between the hospital and doctor began to deteriorate. Each side blamed the other for failing to keep their commitments and promises. This ended with a bitter divorce.
-Strategy Number 2 Growing the referral network.
No private hospital brand in India can claim they drive patients on their own. Most patients while seeking treatment for major diseases depend on word of mouth recommendation. One of the powerful influencers in this decision is the local physician.
The system works like this. The hospital incentivizes the local physician to refer the patient to them for treatment. This incentive is usually monetary and is linked as a percentage of the bill. The hospital aims to have many “referring physicians” in their network. These physicians refer patients for treatment to the hospital. The key lever for growth is the number of referring physicians in the hospital’s network.
What is interesting is that all hospital in the region are doing exactly the same. They are going to the same set of doctors and providing similar incentives to refer patients. In other word hospitals are buying patients by paying the referring doctor differentially. So, now the thinking and the strategy is focused on increasing the absolute number of such referring physicians. Another focus is incentivising them differently from other hospitals.
How much referral fees are we paying them? Can we entice them to refer more patients by increasing the payouts? Interestingly, it does not seem to matter that all the hospitals in the geography are having the same conversations with the same set of doctors.
Strategy Number 3 Empanelment:
This strategy aims to get empanelled with many corporates and public-sector organizations. The goal is to become their recognized hospital for treatment. The key is not only to get empaneled. It is also crucial to incentivize the medical officers in these companies differently. This will motivate them to refer patients to your hospital. Again, it does not matter that all the hospitals are doing the exact same thing. The key lever is the maximum percentage that one can offer over the competition. (Sounds familiar!!!).
Strategy No 4 International business:
Another huge area of interest for hospitals is the International tourism business. How does this work? There are a number of patient facilitators of different kinds who are bringing patients into India or picking them up from the airports and then bringing them to hospitals for treatment for a commission. This commission could be at times as high as 40 to 50% of the bill. If you visit the four metro airports of the country at night, it will be revealing. You’ll see the flights from Iraq, Afghanistan, and the Middle East landing. It would show the pathetic state of this “business”. Again, the key lever for the hospitals is how attractive your incentive (commission) is to these “facilitators.” Is it more appealing than the incentives offered by other hospitals? This question is becoming repetitive.
-Strategy No.5 BTL activities:
This is too do with conducting BTL (Below The Line) activities Iike:
CMEs (Continued Medical Education) programmes with the local physicians (domestic and International) so that they refer patients to the hospitals. Most of these CMEs are subsidized by pharma and device companies.
Unfortunately, the focus is more on the social interaction and less on the academics. Conduct camps and outreach OPDs. The metric of success is not the number of patients that were screened and needed treatment at the hospital but the volume of patients that attended the camp,
-Miscellaneous activities. These include walks, health talks, other community education and interaction activities, etc.
So, I have just given an executive summary of any Private Hospital’s Strategic And Marketing plan. All one needs to do now is create an excel sheet. Then, plug in requisite numbers on these metrics. Now, you are ready to go.
The main point is this: most hospitals focus on “buying the business.” They prioritize this over developing their marketing strategy.
It is tragic that most private hospitals have the same mind-sets. They are doing the same things desperately. Somehow or the other, they expect to achieve different results.
(Dr Naresh Purohit is Executive Member, Federation of Hospital Administrator. The views and opinion expressed in this article are those of the author)
