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Overview of treatment sector in Iran:
Iran’s healthcare and treatment sector has made rapid progresses in recent years. It has changed to a US$ 1.7 billion industry and is growing with an annual growth rate of 13% a year. The healthcare industry in Iran expected to grow in size of Rls 27,000 billion by the end of 2012. The healthcare industry employs over nine hundred thousand people, which makes it one of the largest service sectors in the economy of Iran.
Healthcare services depend on the people who have been served; Iran’s population of 70 million people represents a big opportunity for the investors of this industry.
In Iran even after 30 years of revolution we all have to accept that government has improved to provide basic healthcare services in whole the country.
To improve healthcare facilities we need to provide special attention to the private healthcare sector. The reality in private sector is that as an industry it has long gestation period and so most of the greater projects run incorrectly.
Government has to give certain attention to private health sector. It can be in the form of delivering the free land for small hospitals at lower levels or concession in tariffs. Government can later get back revenue in the form of tax receiving when these institutions start making profits. Concessions can be limited to five years plans and the government will play an important role in the development of hospitals in private sector.
The Iranian healthcare system is the third boom in the country after the oil and telecommunications. Setting up hospitals is not an easy subject.
The number of hospitals in Iran is very low in comparison to the other developed countries. Even the large cities do not have enough modern medical facilities.
On the other hand in the country sided areas one village has only one doctor, who is not usually well qualified.
The people in Iran do not reach the hospital facilities immediately. This is because of the high costs and distances related to it. However it may all change in the future because of the increasing deployment of direct payments in the form of Medical insurances. This in turn will increase the employment opportunities for many people.
- Certain percentages of beds should be saved for poor people. E.g. in Tehran, 10% of beds have to be kept reserved for poor people.
- We shall Look for the needs of local poor people.
- To Open consulting, counseling and relief centers.
- Teaching hygiene, primary health services and sanitation among the poor masses.
- Safe disposal of hospitals wastes like used injection needles, waste blood etc. and taking care of our environment.
- Spreading public awareness about different diseases through campaigns and free medical screenings and check ups.
- In brief the social aspect of hospitals industry is to see that final treatment and medicines are available to all the people at large concessional rates or free of charge and those activities should not be only restricted to the rich people.
Now we are the witness of Information technologies transforming the way health care services shall be delivered to people. Innovations such as computer based hospital information systems, medical recordings; decision making support systems, health information networks, telemedicine, real time image transfers and modern ways of distributing the health information to customers are beginning to affect the cost, quality, and accessibility of health cares.
The technologies today can provide vast databases, network communications, quick distribution and reliable image transfers.
CLASSIFICATION OF HOSPITALS:
The classification of Hospitals are on the basis of objective, ownership, and size.
1. On the basis of the OBJECTIVE, there are three types of hospitals :
- Teaching and researching hospitals for developing medicines and promoting researches to improve the quality of medical services.
- General hospitals for treatment of general diseases.
- Special hospitals for the specialized services in one or some few selected fields.
2. On the basis of the OWNERSHIP, there are four types of hospitals:
- Governmental hospitals, which are owned, managed and controlled by the governmental system.
- Semi governmental hospitals, which are partially shared by the government.
- Voluntary organisations also run hospitals.
- Completely private hospitals.
3. On the basis of the SIZE, there are:
- Teaching hospitals – generally have around 500 beds, which can be adjusted according to the number of students.
- Private hospitals – generally have around 200 beds, which can be increased to 300, in special conditions.
- Primary health care centers – generally have 6 beds, which can be raised up to 10.
I’S OF HOSPITAL INDUSTRY:
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 can’t 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 personnel’s can make a difference.
It’s also referred to the heterogeneity or variability. The inconsistency occurs mainly by:
• Different service providers act differently on different situations and occasions.
• Interaction between patients and providers may vary from patient to patient.
Standardization is hard to reach. Every physician is not the same and may not make the same diagnosis and treatment methods. Since the quality of service can be determined only after the service is done, so the providers have to be well trained in the service process.
Inseparability means that a service can not be separated from the creator (seller) of the service. In fact there are many services which are created, delivered and consumed simultaneously through interaction between customer and service provider.
Here the customer, (i.e. the patient) has to come to the hospital to take the service (treatment). The customer has to be present when the service is performed. In fact in case of hospitals the services are created and delivered simultaneously. The types of services to be provided depend on the patients (customers).
Services can not be easily saved, stored or inventoried. These are all due to the diversified nature of the services. Also there’s always the cost associated with the carrying of inventory. Here the costs are more subjective and are related to the capacity utilization, for e.g. if a doctor is available but there’s no patient during that period of time, the fixed costs of the physician’s salary is a high carrying cost.
Also due to the demand fluctuations, the services can not be stored. E.g. there are so many patients at the cardiologist’s clinics in December to March as it is the time for the peak of heart attacks and strokes.
The service product is the offering of a commercial issue having both the features of tangible and intangible looking for the satisfaction of new requirements and demands of the customers, hospital industry is mainly action oriented and there are a lot of interactions with the customers. Service products of the hospitals have the features below:
• Quality level
Supporting services play an important role in the quality of Medical care. These services, which include laboratories, blood banks, catering and laundry, radiology, etc., in a real sense determine the quality of services made available by medical and paramedical staffs.
It is a very good way for segmentation of the customers. Many hospitals provide additional services such as catering, laundry, cafeterias, etc. for the patients who will pay extra. Hospitals have different facilities, General and special. Certain hospitals provide services for the family members of the patients, when they are not from the same city for accommodating or catering.
It is the bundling of many services into the core service. E.g. Kasra hospital offers a complete healthcare checkup for the patients.
• Product Line
Hospitals offer many choices through their services to the patients and cover a wide range of customer needs. For example: Atieh has an Urology as well as dental department, cardiology department etc. and within the dental department it has root canal, dental surgery, etc.
• Brand name
Hospitals use the brand name, to differentiate themselves and their services from the others. The intangibility factor of the service makes it more important for the hospitals to do this.
As a product that’s fairly good. In some hospitals like Shariati hospital-Tehran, they provide quality services at lower rates and is also technically well equipped. But most of the governmental hospitals do not provide quality service in spite of government grants. Hence it is regarded as of low quality.
Private hospitals like Erfan Hospital, are very well equipped and the services provided are of high quality but they charge with high price for it. Hence the middle-income group call them as Luxury class hospitals.
The hospital’s location plays a very important role. The kind of services a hospital is delivering is also very important for determining the location of hospital.
Example: Imam Khomeini hospital specializes in cancer treatment and is located at a central area unlike other normal hospitals, which you can find all over other city.
In a country like Iran which is geographically wide and where majority of the population live in the large cities place factor for a hospital plays a very important role.
A typical small village or town may have small clinics but they will not have super specialized hospitals.
For hospital marketing mix, people includes all the people involved in the providing process of services which includes doctors, nurses, supporting staff etc. the first and best way of controlling the quality of people will be by approving professionally trained doctors and other staffs.
Hospital is a place where small undertaken activity can lead to life and death, so the people factor is very important.
Under hospital marketing, a right person for the right job has to be determined and they should be adaptable easily. The patients in the hospitals are already suffering from diseases, which has to be understood by the doctors and staffs. The staffs of the hospital should be constantly motivated to give their best efforts.
In Iranian government hospitals except a few, almost all the hospitals and their staffs hardly find the behavioral dimensions significant. Even if the patient gets the correct treatment, they are often dissatisfied with the behavioral pattern of the hospital staff.
They have pleasing manners and usually behave softly with the patients. They provide timely care and are available always in case of need.
Process generally forms the different tasks that are performed by the hospital. The process factor is mainly depended on the size of hospital and the kind of service it offers.
There is a lot of paper work involved in the whole process. So the whole process from admission to discharge is too complex.
With the usage of information Systems in hospitals all the paper work is reduced and the process is smooth and rapid.
It does not play an important role in the health care services, as the main benefit the customer seeks for is the proper diagnosis and proper cure of disease.
Physical evidence can be in the form of smart buildings, logos, etc., smart building infrastructure indicates that the hospitals can take care of all needs of the patients.
Governmental hospitals usually have huge buildings, but they are not properly maintained; therefore it creates a bad impression among the patients that the hospital is unhygienic.
Private hospital like Erfan 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.
For promotions hospitals use advertisements after taking in to consideration the media type, target customers, budget and the sales promotion. The health care field has become very competitive. Although one fourth of our population stay in large cities of Iran, 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 the image of the firm 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 Parsian health centers.
Artificial heart transplants and other complex operations although are few in the number and generate a small portion of total revenue, but 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.
They do not undertake major promotion programs and so are not very popular among the masses.
They undertake extensive promotion. Along with this they undertake massive complex operations which if is successful, creates a good brand value for the hospitals.
Pricing in Governmental Hospitals
In Iran setting where a number of persons are below the poverty line, 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 services. 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, the most governmental hospitals are in deplorable condition. The ex-checker finds it difficult to finance hospitals and further, the government rules also close the doors for generating finance from internal sources. The ultimate sufferers are the society and specially the poorer layers. Since the affluent sections have the options to avail the expensive medical services made available by the hospitals. The social marketing principles can make 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 governmental hospitals a discriminatory fee structure is preferred since it provides even the weaker sections of society, an opportunity to avail the qualified medical services. This enables hospitals to innovate services to keep pace with the latest developments in the medical sciences.
Pricing in Private Hospitals:
• Cost based pricing: Price = Direct expenses + overhead expenses + profit margin. In health care services, this method is complicated because the differentiating and identification of expenses are difficult. some hospitals in the private sector follow this method.
• Competition based pricing: using other hospital’s prices as an index for the hospital’s pricing, of course the heterogeneity of service across and within providers makes the approach sophisticated.
• Demand based pricing: Cost based pricing and competition based pricing do not consider a certain criteria. Demand based pricing involves price setting consistent with customer perception of value. Prices are based on what will pay for the services provided.
What customer perceives about the value of offered service accordingly:
Value is low price that can be offered on weekends
Health spas in off season
Differentiated as incentives
Free consultation by dentist/doctors
Value is everything I want in service
In Day hospital value is their high quality
Value is the quality I take for the costs I pay
Value is affordable quality
Value is all that I earn for what I give
Value is getting excellent treatment in shortest possible time e.g. treatment in Day, Erfan, Kasra, Bahman, and Atieh hospital.
Perceived value is the customers overall assessment for the utility of a service based on perception of what is received and what is paid.
Differential pricing in the hospital industry happens
- Externally (between 2 hospitals)
- Internally (within a hospital)
Between two hospitals, even to provide the same treatment service, the prices differ. Even though the operations to be done may be the same, but pricing may differ due to the type of services provided before and after operation. Cost is associated with the type of service you provide, and so the hospital is obliged to charge the patients for it.
There is a price differentiation even between the two units of the same hospital. There is difference between the general unit and special unit where the rooms are air-conditioned and also extra services are provided. Therefore the pricing would be different. Even the doctors visiting fees/consultation expenses are different. Sometimes if the patient is poor and the doctor may reduce his fees.
In a hospital the process is usually divided into the following steps or phases:
- The joining phase,
- The intensive care phase, and
- The detachment phase and feedback.
Price and quality
‘Price is the indicator of service quality’. It is an attraction as well as a variable. Customers regard the price as an indicator of quality that depends on multiple factors including other information available for them.
When service cues to quality are simply accessible and when brand names provide the evidences of reputation for the hospital, customers may use their cues instead of price. Otherwise they may regard the price as the best indicator of quality. It should convey appropriate signal regarding quality. Pricing too low can lead to inaccurate perception about the quality, and pricing too high can set expectations that may be too difficult to match in delivery. Pricing is used to judge the quality because of the experience and credence properties of services as opposed to goods. Excellent hospitals like Mayo Clinic, America are a mega brand. They have a great brand reputation and can charge a premium based on sheer perception of quality because of socio-economical issues, poverty levels, government owned hospitals cannot think of profit objectives. It is a social marketing process for enhancing the well being of individuals.
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 customer depends on how he perceives the quality of service. E.g. Atieh hospital, kasra and Erfan 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 customer’s (patient’s) 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.
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