Subscription/membership Business Model

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Subscription/membership business model

Thesubscription business modelis abusiness modelwhere a customer must pay a subscription price to have access to the product/service. The model was pioneered bymagazinesand newspapers, but is now used by many businesses and websites.

A hospital can come up with packages wherein the hospital will treat the subscribed patients free of cost for a defined subscription period.

Rather than selling products individually, a subscription sells periodic (monthly or yearly or seasonal) use or access to aproductorservice. Thus, a one-time sale of a product can become a recurring sale and can buildbrand loyalty. It is used for anything where a user is tracked in both a subscribed andunsubscribedstatus.

Membershipfeesto some types of organizations, such astrade unions, are also known as subscriptions.

A common model on web sites, colloquially becoming known as thefreemiummodel-consultation free but paid IPD, OT, wellness packages etc. is to provide content for free, but restrict access to premium features (for example, archives) to paying subscribers.

Hub & spoke model

Thehub-and-spoke distribution paradigm(ormodelornetwork) is a system of connections arranged like achariotwheel, in which all traffic moves alongspokesconnected to thehubat the centre.

Hub and Spoke model can to be used to increase the volume of patients which in-turn will help to increase the revenue of the hospital.

The hub-and-spoke model is most frequently compared to thepoint-to-point transitmodel.

Point-to-point transitrefers to a transportation system in which a plane, bus, or train travels directly to a destination, rather than going through a centralhub. This differs from thespoke-hub distribution paradigmin which the transportation goes to a central location where passengers change to another train, bus, or plane to reach their destination. For eaample keeping ambulances at accident prone places like highway turnings etc.

Bringing in Lean and Six sigma techniques in your hospital

Lean and Six Sigma have fuelled the recovery of organizations in other industries and should be considered an option in hospitals.

The programs have a proven track record of cutting costs and increasing operational efficiency. These are two items that are of great importance to the hospital industry at this time.

Six sigma is a quality improvement program originating in the Motorola Corporation.

Six Sigma’s main philosophy is to limit defects in outputs by eliminating wasteful steps and the variation in an operation.

The program seeks to achieve 3.4 defects per million opportunities, and relies greatly on the statistical analysis of processes (Fitzpatrick & Rogers, 2003).

Six Sigma’s primary goal is to satisfy the customer and create customer loyalty to a product or organization.

Six Sigma differs in that it relies heavily on the statistical analysis of processes and utilizes that analysis to eliminate defects or inefficiencies in an operation (Fitzpatrick & Rogers, 2003)

Lean is a quality management program originating in the Toyota Corporation.

Lean’s main philosophy is to concentrate time and effort on identifying and refining steps in an operation that the customer deems valuable, and to eliminate wasteful or unnecessary steps in a process (Lee, Olson, Lee, Hwang, & Shin 2007).

The program relies heavily on the observation of processes by management, as well as the importance of clean and efficient work spaces.

The philosophy of Lean is similar to Six Sigma in that it seeks to eliminate waste.

However it relies heavily on identifying what is valuable to the customer (Hodge, Goforth,

Joines, & Thoney, 2011)

Lean differs in that it does not require the infrastructure of trained people and leaders to implement (George, 2003). The Lean way to determine value is whether or not customers will pay for that step in the process (Irani, 2011).

For example, a clean hotel room is something that a customer may hold valuable. Along the process of cleaning and preparing a hotel room, steps occur that the customer may not perceive as valuable. It is the goal of lean to eliminate the steps that the customer is not willing to pay for, and at the same time can be eliminated from the process without affecting the end product or service.

Along with above, the following Quality and service improvement tools can be used:

Full Time Specialist System (FTSS)ensuring easy availability and access to dedicated specialists exclusively attached to the Hospital (ex. KDH)

Using Protocol and Care Pathway based treatment models ((ex. KDH)) to ensure the best outcomes for patients. This can be made possible with Full Time Specialist System that ensures availability and access to dedicated specialists exclusively attached to our hospital.

Protocol based care enables (National health services) NHS staff to put evidence into practice by addressing the key questions of what should be done, when, where and by whom at a local level. It provides a framework for working in multi-disciplinary teams. This standardisation of practice reduces variation in the treatment of patients and improves the quality of care.

The system brings together resources, expertise and capabilities in various specialties under one roof to better meet the needs of the growing number of patients with multi-systemic diseases

FTSS enables us to deliver excellent, cost-effective and evidence-based patient care.


The importance of strategic planning in health care is apparent. Health-care experts recognize the need for more systematic planning to deal with the evermore dynamic market, regulatory and economic environments. Yet, there is a clear need for a systematic definition of strategic planning and how it is accomplished in the health-care setting.

Best practices associated with high-performing health system include the following:

  • Presence of a system wide strategic plan for quality and safety, with measurable goals that are linked with operating and financial performance
  • Aligned quality goals and incentives, with individual performance accountabilities and compensation for administrative and physician leaders across the system
    • Leverage of data and measurement across the organization to set and monitor quality goals, populate and use dashboards to increase transparency of results, and promote timely identification of variances so that action to address problems may be taken quickly
    • Standardized care processes and active dissemination of best practices across the health system, including provision of staff education and skills development.

The concept of overlaying a hospital environment with a business model is admittedly new and may be perceived as being arbitrary. The development of such a model is, however, based on the steady evolution of the industry from its philanthropic roots to a cost-motivated, competitive endeavour.

The strategic planning model developed in this research is based on business models, and additionally addresses the divergence that exists in the hospital industry.

Strategy for survival vs. strategy for continued growth-some hospitals are merging with larger healthcare systems out of a need for survival, having suffered steep budget cuts and shrinking patient volume. These hospitals may need to close if they don't find a partner, so they pursue a merger as a strategy for gaining capital and continuing to offer care in the community. For larger hospitals and health systems, mergers and acquisitions are a strategy to increase market share, improve quality, gain efficiencies and reduce costs by eliminating unnecessary duplicated services. For these institutions, a merger or acquisition expands their reach in the community, giving them access to more data on the local population, which can be used to manage population health.

Strategy begins with values

In order to recommend any operational strategy the board must begin by a realistic evaluation of the underlying values on which the hospital’s existence is based. Values drive mission statements, and the mission of each type of hospital can be clearly different.

Hospitals are faced with the challenges of providing quality care at competitive prices. It is important that efficiencies of the production process be controlled, while constantly monitoring effectiveness of services, in order to attain a competitive advantage, or, in some circumstances, in order to survive. The hospital’s mission, therefore, must establish the services to be offered while considering pricing and delivery of those services within a reasonable level of profitability.

Combining strategies-While each of these strategies implemented alone may achieve some goals, hospitals need to use multiple strategies in tandem to see lasting, meaningful change.


References: Journal of Management in Medicine 9,2 34

Adapting a strategic management model to hospital operating strategies

A model development and justification

Kerry Swinehart and Thomas W. Zimmerer

East Tennessee State University, Tennessee, USA, and

Sharon Oswald

Auburn University, Alabama, USA