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The main aim of the study was to determine how can private hospitals respond to current competitive challenges in an Indian city. To address this primary research question a basic demand created which made secondary research question in relation and that is how is it important and what are the key competitive challenges faced by the private hospitals in an Indian city. By creating the survey the research primarily discovered the natural taxonomy of the Porter's five competitive forces of the private hospitals in India of Indian city by combining and in the pure form of it. Then the research examined that whether different types of strategies were associated with various organizational levels and performance, even varying the size and location and other factors , which makes the argument i.e. they influence the healthcare unit's performance. The finding denotes that the CEOs were mainly concerned about the six factors which were mainly preferred and chosen by them in the survey and they were as lowering the cost then the competitors, maximizing the services, procedures and facilities with cost efficient way, coordinate with other departments as they save time and cost, analysing the best possible way of staff utilization with best service providence, improvising the cost factor further which increases the performance carrying altogether with other departments and lastly keeping the watch on the new advanced techniques, tools and equipments for better and accurate diagnosis and treatment with the cost efficient way. But some CEOs preferred they focus mainly in their practise daily then they replied that mainly they focus on three points which are as first targeting the customers, Secondly make the particular segmented services to targeted customers and thirdly target the particular market segment which helps them to work better and makes them different from their business rivals. Thus the study concludes by stating that research made for the body of knowledge can be considered and was relevant for the healthcare institutions in India of Indian city, which can be utilized by the healthcare CEOs or the supervisors or the managers in the formulation of the strategy procedure and as well as in the further researches for exploring the hindrances and adaptation in relation to the respond for the competitive challenges faced by the Indian city's private hospitals by orienting strategically.
"A functional design can promote skill, economy, conveniences, and comforts; a non-functional design can impede activities of all types, detract from quality of care, and raise costs to intolerable levels." ... Hardy and Lammers.
Chapter 1 Introduction -
Hospital institutions plays a vital role in serving and providing health services and to promote the better quality and standard of living in the human societies. By the term healthcare explaining that "the prevention, treatment, management of illness and the preservation of mental and physical well-being through the services offered by the medical and allied health professionals." Since the time of self-medication healthcare industry of India has been contributing and served till the current time of modernization. In this sector within India has emerged proving as one of highest demanding and service sector in comparison with other sectors.
Healthcare management is a process that deals the way to manage the healthcare institutions and to keep a check so that the regular procedures are organized in the proper manner within the institution. Healthcare management was introduced in 1934 at University of Chicago in United states of America and by the year 1978 it became an independent profession(Stevens 1999). These are the two main elements of the healthcare system across the globe. In the current scenario, fast changing world the surroundings and the environment of the healthcare institutions demands many things under the pressure of incomparable challenges and changes i.e. services and facilities in competition with other healthcare private institutions. These forces demanding clients, changing world, increasing pressure from government and the raising competition. To overcome all these forces and demands the healthcare institutions need to study the external environment and to make the scenario planning by thinking a step ahead i.e. by a sight of future vision so the healthcare institutions should work on their fundamental changes and keep a regular inquire about the new actions so that they withstand in the competitive market even though these health care institutions are like information intense process. Talking about the pressures faced by the managers of the healthcare institutions is increased by the today's scenario as institutions these days looking forward for to reduce costs without compromising quality of services and added facilities, improve further more quality and able to come in reach of common person for easy access. So the healthcare institutions have to further coordinate more consciously with today's modern technology by overcoming the complicacies in running them in day to day life. By use of the modern technology hospitals get an assurance that they at consistent growth in this competitive world across the globe.
India has been ranked as the 2nd in the largest population in the world and out of them 70% population lives in the villages, where the medical services are available properly as they should be for proving as a boon for population living there (Matt 2011). Here in India healthcare system is mainly divided into two private or public which have large market unexplored. Even Indian Government is trying hard to provide medical aids in backward areas but still difficult. Private hospitals are available in those areas but they are costly treatments (Paul 2004). So Indian government is trying to help those below poverty line by giving free medicines on regulatory methods (Paul 2004) and Indian government also have option of alternative medication form like Allopathic, Homeopathy & Ayurvedic (Helman, 1990). According to the surveys and records by National Commission on Macroeconomics and Health (NCMH) of India in 2005, India contributes 20 percent towards the global disease burden and it ranks 171 out of 175 in the list of spending towards the public health spending. The most common diseases are cardiac and diabetes which contribute towards world capital this shows an emergency need of facilities in India.
Indian healthcare industry is a very big industry which contributes about 5% towards the GDP it also noticed that the growth has increased by 8% according to survey in 2005 and by this it makes as the third largest sector and this sector is also least affected by the recession due to continuous demands increasing day by day (CRISIL 2008). In India the bed ratio is about 1 per 1000 and it should be 1 per 300 as recommended by WHO norms and regulations which proves to have a huge and large potential sectored industry of about 75000 to 1000000 more beds required. Its (CAGR) compound annual growth rate is about 15-17 % and healthcare industry of India has lucrative amount of 1,80,000 crores of projects by the year 2012. In this sector central and state government also provides some subsidies which includes hospitals, healthcare insurance, software of medical profession, health equipments and pharmacy. Healthcare industry of India counts for the sector's revenue to be as estimated is around $22billion USD and expected growth would be around $32 billion. The average household consumption would increase about 7% per annum and the overall expenditure on the healthcare sector in India is likely targeted to grow at 10% (WHO 2008). Even the number of insurance is likely to jump from 100 million to 220 million as now-a-days number of players in the field of healthcare in India has increased like hospitals, medicine retail, clinics, diagnostics and research. The Indian government is also making decision with the help of private investors and players to make investment of about USD 1.2 billion and make the industry at top five rank in the field of healthcare industry (CRISIL 2008).
In India there are different zones according to which hospitals and other health related bodies are categorized. The share of the private organizations which they make the expenditure is about 80% over the past decades and is expected to increase more than $40 billion by the year 2012 (Srinivisan 2007). The expected potential return is estimated around 30-40% and there will be decrease in public sector investment and thus in future the healthcare sector in relation to India will be dominated by the private hospitals. The estimated figure is nearly 75% of mostly all the hospitals and around 40% of hospital's bed in the country India are in the private sector. The private healthcare sector of India take care almost 60% of all the outpatients in India and 40% all inpatients care (CRISIL 2008).
Hospitals now-a-days are very important as other daily care things and the healthcare industry in India has been providing patient treatment under the supervision of specialized staff and help of advanced equipments. Hospital management is also an emerging field in the healthcare industry in India and the demand of the field is very much these days. In fact it is seen and given importance as a necessary thing to study the functionality of the hospitals and the other players related in the industry, as what impact and impression they leave on the society.
So in this research I will try to show various administration aspects and various strategies of governing the hospital. In India many healthcare units face many challenges these days. Now-a-days competition is raising day by day and hospitals have to adopt some other strategies. Many hospitals which are termed as renowned for their facilities, equipments, services, medical expertise, excellent nursing care and quality diagnostics but all require hospital administration which is controlled by feedback and is like a chain system. These days the panel of hospital's doctors include some highly reputed and obliged doctors in the medical faculty team.
Now we will try to focus on the main research question :
How can private hospitals respond to current competitive challenges in an Indian city? Therefore a necessary secondary research question is important to understand and that is what are the key competitive challenges faced by private hospitals in an Indian city?
For doing this research some of the analysis should be performed to get the desired goal and achieve success in relation to the private hospitals in India.
a) Porter's five forces
b) Viable model system
Now for analysis and the comprehend the business model of the players in hospital industry. So in order to analyse the situations and critic of the situation we have to analysis the weakness, strength, opportunities and threats of the concerned hospital and the strategies , scenario planning, the external and the internal environment of the healthcare private hospital of India.
Chapter 2 Literature Review :-
According to Thomas Fuller Healthcare managers or the professional's coordinates, leads, make plans, makes strategies for better supervision and make various tasks in executable form for a healthcare institution. Healthcare management is highly disciplined job which connects and maintains the regular check on the public and business administration for the betterment and increasing the reputation of a healthcare institution. According to a survey of business magazine, today's healthcare industry is 70% preferred by the executives and other member of the society for their some role in healthcare management as an employee while on other hand rest 30% prefer and think other sectors like engineers, IT, finance and law etc are important so they want work in that sector. Several journals and books have been printed about the researches but still the researches are going on in this field of healthcare for the betterment of tomorrow. To control it healthcare management is the most important role which makes these researches fruitful by adopting them into their daily practises.
"The Health policy in Britain" book about the health policies, the processes of healthcare in policy making and how to make the utilization of these health policies for daily practise and implementation. This book also give an introduction to an student towards (N.H.S.) National Health Service. It also makes the student familiar with the history of the healthcare industry of Britain i.e. how government took interest and got involved with healthcare. Also shows that how government created NHS in nineteenth century 1948 from the public health legislation. Future how development took place of the NHS in early fifty years of its creation and then how it got modernized. Actually in this book the author also has stated about the model of Easton which describes the usefulness about the analysis of the policy processes and the way to approach the safe and merit way of conceptualizing the study of policy making. This Easton system was the first process which was used to create and then follow the demand offered by the policy making. This can used in my research to analyse the critical perspective of the structure, the working and whole process of the institution. (Christopher Ham)
"Brain if the firm" is the favourable book of mangers and university students because this book acts like the heart of enterprise which demonstrate how necessary is the deep thinking. Like the studies have showed the human nervous system shows the insight likewise this book shows the insight of the firm how that can managed and administrated by the sight of concepts, models and the rates of work intellection. As there was some problems in reference to the Easton's process so Stafford Beer introduced a new process of Viable system. This viable system was very advanced that time and was improved from the lacking that were there in that system or process offered by the Christopher Ham. The author has described about the viable system and in that he has described that viable system has three major parts environment, operations performed by any organization in this environment and the activities such as planning, coordination and the goals set to achieve by the organization. Then this system further says that it then divides into subsystems for the better performance and is divided into 5 systems. This system focuses mainly on the individual operating units which should be like an autonomous process if possible. This system also tell that how much important is this because this works on the feedback system which in all improves the system regularly by getting the feedback reports from all the other departments involved.(Stafford Beer)
The opportunities and the threats commonly noticed while practising healthcare management. Shlian also speaks about the benefits of the leadership and challenges which are also type of threat for healthcare institutions. Further the author says about the mergers and acquisitions taking place now-a-days commonly in the healthcare organizations as step towards decrement in the rising costs and pressures due to it. This (New frontiers) is also helpful for my studies in order to analyse the different alternative to run a healthcare institutions and understand demands of the healthcare to overcome by using the alternative sources and methods to move ahead by overcoming the difficulties.(Deborah Shlian)
The author Wolper in the book "Healthcare Administration" speaks about the healthcare administration and the management control. This book have also discussed about the ethical issues which are connected or related to the healthcare system. The author also tells about some other key issues in his previous editions related to the healthcare system like the delivery system of healthcare institutions, healthcare related to the Information technology in the modern Era, facilities designing and planning and the focus on the hospital like how it should be designed and the departments considering the technicalities as required. This is a relevant text which supports my study to understand the requirements and how to make more efficient system of delivery of facilities and services.(Lawrence Wolper)
As compared to the recent years the healthcare work zone has changed drastically so everyone has to adopt these changes and move with them. So healthcare managers are required for delivering these high quality and diversified work environment. In this book "Healthcare management" author speaks about the level different levels, different roles of managers and different challenges faced by them. This can also help in my study to rectify the challenges which comes from the feedback of every department in order to manage them by the managers to provide more efficient services to the clients. (Schermerhorn J. R.)
The book "Haimann's healthcare management" tells about the roles, duties and the functions of the managers and the supervisors involved in the healthcare institutions which helpful in my studies as well because it indicated and describes the roles, duties of every person like managers and supervisors which take care of the healthcare institutions to run and check the daily tasks efficiently without any error. (Dunn R.T.)
The book "Advances in healthcare management" is about the some research projects and some proposals which reviews and proposes about some specific topics about the healthcare industry. So it is directly helps in writing the research by getting some ideas to write about my topic of research.(Blair J.)
This book "The next generation of the healthcare delivery" states about the changing services and facilities of the healthcare organizations. To make the updates regarding patterns of changes in development like cost and quality of services in healthcare industry which can be delivered as soon as possible. It is important because helps in scenario planning by make a strategy planning.(Michael A.M.)
In the book "Healthcare Management: Organization behaviour and design" author describes about the decision making by the managers of the healthcare institutions in their fields respectively. The author also tell s about how to motivate the workers for better services and effective efficiency of work to done in the healthcare institution. The writer has also provided some suggestions for the healthcare managers to motivate their staff for better efficient work. As this provides the tips and motivational factors for the betterment of staff and efficient working within the institution so it is important for my study.(Stephen M. Shortell)
There are various editions of this book "Risk management handbook for healthcare organizations" in which author speaks about how risk management implementation can be done within the healthcare institutions. Manager should take care of the risk then imply the changes in the healthcare organization. The author also tells about the general information about the legal, regulatory update to the new managers in the field of healthcare industry. This also tells about upcoming risks and techniques in the healthcare industry. Lastly the author speaks about the patient safety, risk, error reduction and other responses.(Hardcover, et.al)
This book "Show the management principles for the healthcare professionals" is about the management principles of healthcare industry for practitioners. The activities of the managers or supervisors like planning, organization, decisions, motivation and the budgeting of funds are well defined and explained with help of examples so that the students can easily understand the concepts, techniques and various models for the practicality in practise. The book also tells about the realistic orders and instances with the multidisciplinary backgrounds in the day to day practise of the manager of the healthcare institution. (Joan Liebler et.al.)
In this article the writer describes that there are ten different ways of managerial control of healthcare environment and these ten ways are basically categorized into three categories which are control, operation effectiveness and the operational control. This helps healthcare workers to manage and help the institution to run efficiently. (Ayers Jim, 1995)
Many healthcare workers faces many management challenges and this article shows that how can these workers tackle the current and day to day situation which arises in the normal routine of the healthcare unit. They can use various management tools and methods which are discussed in this article in their practise for the better and efficient performance. (Anon., 1994 )
For every healthcare institution the key to success is people and there is high competition in all the healthcare organizations but the new innovative ideas and rewards makes the difference in working from others which very necessary to prove each other's difference. This article is need to understand because it gives an idea to evaluate the current performance and the development required for an employee's satisfaction and to enhance the competition among them to raise the working efficiency. (JamesB.A., 1998)
In this study main emphasis is about the performance of state medical boards by identifying some factors. In this study they are analysing by doing some tests and study the factors that impact the progress. In the last they are suggesting some suggestions for better performance which is important for my study in order to make analysis which further can make progress by overcoming their drawbacks. (Leibert, n.d.)
In this article writer describes about the healthcare delivery which requires information technology to diagnose the disease, planning and administration of treatment, patient's outcome performance, services and costs. It also says that article has two main keys which are to identify healthcare deliverance within the parameters of (WHO) World Health Organization for the healthcare information systems and secondly the key identifiers which are used in the healthcare institutions as a daily part for delivery services and facilities by the managers and supervisors while choosing the any software for analysis and delivery. This will help in distinguishing and choosing the right product for better delivery as there are many sources available in the market. (K.D.Snyder, n.d.)
This study is done to analyse and then design the communication and networking within the healthcare institution in an impressive way for better and efficient way. This study is based on long term planning. This is important because when there is networking between the departments then it will be easy to get responses and work can be done fast with accuracy. In this study Viable system model is also used to analyse which is also important for my study. (Laumann, n.d.)
In this article author has described about the clinical governance which was established first in U.K. in 1998 by NHS. This was established with some aims and objectives like quality care, effective and cost efficient delivery system. The author also speaks about the new techniques for better process of care within the professional boundary and the study also took in trust hospital where (B.P.R) Business Process Re-engineering was introduced. As a result of this there was improvement to patient care with the removal of overheads. The important change is in tools of quality control and content in the system. (C. Davies, n.d.)
In this report the PricewaterhouseCoopers have tried to demonstrated the facts about growing population, economy, about the diseases, pharmaceuticals, infrastructure, healthcare divisions, market, manufacturers and pharmaceuticals research. They have given the generalised idea about the healthcare industry and all the others that are indirectly or directly attached to it. This is important for my studies to analyse the generalized data and figure which they have demonstrated in their report in relation to growth of sector, population, infrastructure of hospitals and their delivering system and economic condition for further refining my research and to move ahead in collection of data which can make my research more attractive and finished research. (PricewaterhouseCoopers, n.d.)
forecast for growth.JPG
Forecasted about expected growth in next 45 years.
Source : Goldman Sachs
This all about the strategy, by following the strategy unique activities performance achievements, sustainability and positioning, competitive advantage, how the activity system mapping is done, Vanguardââ‚¬â„¢s activity system, profitable growth, the role of leadership, the five competitive forces that shape strategy, industry analysis in practice, implications for strategy, typical steps in industry analysis, competition and value, building companyââ‚¬â„¢s vision, core ideology, core values, core purpose, reinventing business model and elements of a successful business model these are the relevant to my study and research for gaining and implementation for a new hospital business. These are the tools through which the business success is dependent when they are applied and process a positive direction. (M.E. Porter, 1996)
This article is about the office environment and especially for the offices which have adoption of the technology by using a case study for example to elaborate like alternative workplace strategies. This will further show how to improve the quality of service for children those are handicap and how to express themselves to everyone around them. This is important as this has alternative method utilization for better delivery of service by the healthcare institutions i.e. another method for the making a attraction point which can be utilized for better services and facilities by mutual cooperation. (D.J. Gilleard, n.d.)
In this article of the international journal of organizational analysis the author wants to highlight about the environmental turbulence of the healthcare sector which has provided a new growth in strategic management and redesigning. The author also tells about the delivery system by his ways of examination of healthcare hospital strategies and alternatives to approach the work redesign. In the last the author has described his framework of organizational elements for improvement of hospital's deliverance. This study which has been done in this field is important for my research because it demonstrates the alternative strategies and the organizational element's framework and tells how we approach the strategic management, redesigning the work and better deliverance so that healthcare institution can gain more profits and be the choice for deliverance of services and facilities required. (C.M.Tonges, n.d.)
In this author has developed his framework and he wants to apply that as an effective way of strategy in making business environment more competitive. The framework which author wants to apply can applied for healthcare industry as a business tool. This is crucial for this research because it demonstrate the framework and the business tools which are beneficial for the healthcare industry to run in success and profitable margins. (P.Autry, n.d.)
This was written to examine the porter's strategies and its effects on healthcare industry. In this study they also have studied and examined the different types of strategies that were related with different healthcare institution's performance. These were used by the hospital's managers to formulate the strategy in a process and to research that hinders and what are different contingencies on hospital's strategy orientation. This will help to find out that how further research can make be made to improve further in the India taking cases and implementing on them like local hospitals of the some town area. (Boisture, n.d.)
In this author has described about how strategies concept evolved and came to existence. In this research author also have described the approach towards operational strategic management. This highlights the key points about the history of strategy and the way to approach it in different ways which is important to analyse and include in this research. (J.Bracker, n.d.)
In this research author has discussed about the concept of strategic advantage and differentiates it from competitive advantage. Further author also have described about the competitive advantage, classification of resources emerges and demonstrated that rents are more important than profits of sustainability in relation to competitive advantage. (K. Chaharbaghi, n.d.)
In this article the researcher has mentioned that he got some problems in obtaining aim in the some specific area of organizational performance specially in private firms due to irregular data availability. All the other business units involved which are interwoven with each other corporate-wide data and this article also emphasis on the performance measures in order to get the good management team even when problems are faced they can manage them with the accurate and appropriate way to approach it without hindering the performance. This article is important to analyse as this contains how approach statically even when there are problems and how to manage them by getting the polished and top management team. (G.G Dess, n.d.)
This report highlights some key points of the complication of public sector which are related to the management strategy formation quality. As this study was having some mission and incumbency to fulfil of the sector as influence of stakeholders, nature of clients and the decision makers. Later author compares with commercial sector, then raises challenges of quality movement and how to improve further. (M. Donelly, n.d.)
In this article author has proposed a framework in order to define the competitiveness way that allows organizational measurement of competitiveness position by the process mapping. This will redefine competitiveness concept, sustainability competitive concept and show the factors which have the conflicting nature, to create a concept of mapping positional competitiveness of the industry and competitors, construct the framework of competitiveness measurement and lastly ways by which positional competitiveness mapping can be used and implied for making and execution of business strategies. These all are important tools for business to grow and long run success with profit so can be used in this research. (R. Feurer, )
In this article author has highlighted on four major classes of organizations which makes them differentiated between "the classical private profit making firms and the strictly government agencies: private for-profit, private non-profit, private quasi-public, and public". These all types vary from each other's different management functions as they get their response and support from different sectors of society. As it depends on group on organization's members because it may vary from one to another depending upon the case and values of it. In the form of result differences may occur due to different managerial processes of implementations. So this can show various cases consider and what was their results. (M.D. Fottler, n.d.)
This an interesting article as this has been written with consideration of 58 strategic business units which have great marketing, sales experience, risk takers and have high tolerance in regard to strategic business units general managers contribution. In this article author has put emphasis on the effectiveness of strategy implementation at the (SBU) Strategic Business Units level like characteristics of general managers at S.B.U., the nature of corporate control and organization's internal environment. These are the strategic business units which are makes the article with analysing deeply and critically by studying every aspect of organization so this is important for better understanding and writing with reference with studying many the cases. (A.K. Gupta, n.d.)
This article was written to show and highlight the struggling for long term strategically direction beneficial and response from competitive pressures which were generated by N.H.S. reforms. These challenges for the trust like long term strategic direction and methods for implementation. The author has also discussed about the negative and positive aspects in relation to N.H.S. internal market. Author has examine the strategies which were best suited for the organization and he explored the importance of it. This text help in identifying the best suitable strategy for the organization to run in profit without problems. (M.C. Hacket, n.d.)
In this article the author has described about the movement of the investor of healthcare corporation like they have moved towards the healthcare unit's market for profit unlike previously where privatization was for non profit. The author has also talked about the examination in detail about the issues that are key like controversies of the charity care and the communal benefits, capital access, government role in regulation and quality of the healthcare institutions. So this will help in understanding how the movement took place what was the cause behind it and why it took place. (G.W. Josephson, n.d.)
In this article author has put emphasis about the concept of generic strategies and gaining the competitive advantage. Author has also put highlight about the two main key issues which are considered the most like the low cost positioning and differentiated positioning. In this research the author also has given importance oligopolistic position by theoretical and given the analytical support in relation to these generic strategies to make the research more fine and fruitful by proving that from cost or differentiation positioning there can be a another factor which can lead to larger market share and high profitability. This research might take this research further more refined to serve better. (A. Karnani, n.d.)
In this article author has mainly put his concern about the strategies types which are mainly concerned with the hospital industry in various forms of porter's like pure and hybrid form. This also examines the performance of hospitals by strategic types like which follow the cost strategy, leadership strategy, general strategy which might have various performance measures. In this article author also discussed the topic of hospital administration and implications for it. This is a crucial article which has vast range of knowledge and information regarding the strategy followed in hospital industry. (K. Kumar, n.d.)
In this article author has used the Porter's generic strategies to refine his business strategies in order to simplify the complexity of the strategy patterns. As this research is Australia based so it was noticed that manufactures were following these strategies very much and they were in high demand among them. This is important for the research because this will show the result that how and why they were taking this into account and how it proved to them taking in consideration. (R.E. White, n.d.)
In this article the author describes that he examined about 97 firms and the firms were having an average annual sales about $20 million and they were in high relation and believe between the planning formality and performance. Additionally the relationship was grandly based on strategies and implications of formalized strategy planning which were associated with various levels of institutions or organization's performance. This is important because it has been examined on almost 97 industries which are running successfully with good amount of profit generation to understand and analyse how and why they are running so well and what are the factors and the business models which these industries are following and which were the most successful pattern used for improving the performance. (J.A. Pearce, n.d.)
To conclude the literature review after going through these articles and books and researches in the field of healthcare industry. None of these articles really depicts or addresses the competitive challenges of the Indian healthcare units of the Indian city. So research is necessary and for doing research a perfect methodology is desired to follow.
Chapter 3 Research methodology :-
The research idea -
To find out that how do private hospitals respond to the competitive challenges in the Indian cities and what are the key competitive challenges faced by these private hospitals of an Indian city.
Objectives of the Research -
To find the management of private hospital how they react when competition raises and effects the institution , then how can they survive and overcome the situation and how much is the success rate if they follow the viable model system with porter's five forces. How are they important and useful for the Indian hospital industry of the cities. Strategy for everyone differs like Porter also said that positioning a business to maximise the value of the capabilities that distinguish it from its competitors (Porter, 1985). Strategy means different things to different people (Bracker, 1980). Like according to Porter values of the business firm can be distinguished and pursued only in three generic strategies which are cost leadership, differentiation and lastly the focus. He also said that the business firms of any industry which follows more than one generic strategy are referred to as 'stuck in middle'. Talking about some researchers group who contradicted the Porters view and said that "under certain conditions a combination of strategies may be the best way of creating a sustainable competitive advantage(Karnani, 1984; Miller and Friesen, 1986; White 1986;Hill, 1988; Mathur, 1988; Murray, 1988; Miller, 1992; Dess and Miller, 1993;Johnson and Scholes, 1993; Feurer and Chaharbaghi, 1994). Even they were having the differences in their thoughts but they were having one thing common which is maximising performance by improvising the positioning strategy in respect to other organization which are working on the same level and standards of the sector (Feurer and Chaharbaghi, 1997).
The positioning school is one of the oldest schools but derives its newness from Porter's enormously influential book, Competitive Strategy (Porter, 1980). It also known that Porter drew an efficient industrial economics framework which is very simple but effective(Shortell and Kaluzny, 1994).
Market Structure ââ€ ' Firm Conduct ââ€ ' Performance
Here the main conduct is to extract the performance by combining the market structure and firm conduct which is led by Porter in 1980 and 1985. Then Gradually the concern shifted from strategic planning to strategic management which made the concepts and framework further wide and targeted the sustainable competitive advantage by exploring the new business opportunities. Porter argued and said that institutions have to make choice out of these generic strategies if they like to get an achievement of competitive advantage by implementing a new concept to the industry know as industry analysis. According to this industry analysis Porter gave an insight view of the structures within the different competitive environment where scenario planning can be done accordingly. The concept includes the five competitive forces and provide the lucrative option for the industry.
(1) Barriers of entry into the industry.
(2) Threats of substitute products.
(3) Bargaining power of buyers.
(4) Bargaining power of suppliers.
(5) Rivalry among existing competitors in the industry
So further going ahead we will be discussing the case of a healthcare unit in India which is very demanding these days. This study of the case is based on the Porter's five competitive forces implication. This study will give an idea how can Porter's five competitive forces useful in analysing the Indian healthcare industry of Indian city.
Study based on Porter's five competitive forces -
Now taking a case study of the Apollo hospital India for the Porter's five competitive forces analysis. This healthcare institution Apollo was established by Dr. Prathap C Reddy as the founder chairman of the Apollo hospitals. The chain began in the year 1983 and started its first healthcare unit consisting 150 beds. But now-a-days total group has many of its own diagnostic centres, pharmacies and crossed over 8065 bedding facilities in around 46 healthcare units in India and across. (Apollo 2009)
After this huge success of running the healthcare units and other services. Apollo is targeting to make the success globally not just to become the country's lucrative healthcare provider but also helping India to become the excellence centre in global healthcare industry. The group is taking the active participation in serving the nation on a large scale with the quality of healthcare. Up to now the group has been successful in helping and serving the people around 10 million in the backward areas where medical reach is poor. (Apollo 2009)
As these days Apollo group is taking the active participation the and it has been the major player these days so it also named for scripting the medical landscape of the country India. (Apollo 2009)
As the demands of today's world understanding this Apollo Group has done the scenario planning, studied the external environment and came with the idea of developing the administered hospitals, diagnostic clinics, dispensing pharmacies and consultancy services. Additionally this group offered visits to patient's doorstep, clinical & diagnostic services, medical business process outsourcing, third party administration services and health insurance. In order to make the boosting performance and cliental the group supported the best possible way they can for the healthcare sector or industry. For example they opened and encouraged for researches, training programmes and also hosted the non profitable projects too.
Healthcare industry analysis and understanding -
Healthcare industry overview -
In this industry Particularly in relation to this group the services which are offered mainly are biotechnology, diagnostic substances, drug delivery, drug manufacturers, hospitals, medical equipment and instruments etc. (Apollo, 2009) This is the only industry which has less effect when there are changes in the economy which might be due to any relatively inelastic demands. (Apollo, 2009) Now we will be discussing about the facts of Porter's five forces in health care industry. (Dobson et al.)
Threats of the new entrants -
Healthcare units these days experiencing a very high barriers for the entry because these days they are been highly normed by the government rules and regulations. The government these days are strict so with the rules and regulations. The government also doesn't allow a healthcare unit if there is already established healthcare in that area or nearby. This is done in order to prevent the healthcare units to capture the healthcare technology so they avoid it from entering into the market. As this is very much dependent that why it is known as services providers by the healthcare units. Some of the healthcare providers just able to serve the basic clinical treatments to the patients. These type of the healthcare units serve the patients which come for the various treatments either from the resident doctors or the visiting doctors. There are certain set goals and standards by which healthcare institutions provide the medical, surgical or clinical and the treatments for those who are the sufferers. The institution which serves all these services and facilities are referred to healthcare institution.
Power of the supplier -
The power of the suppler is very vital in the healthcare industry. It is like a huge cluster of various companies in this sector of healthcare which is very active and it interacts with each other in this manner.
Companies of the drugs serve to the healthcare institutions and the pharmacies and further these hospitals serve these patients to the companies of the insurance. The healthcare units have less bargaining power i.e. less power over the suppliers. Healthcare units are provided with medicines and equipments by the pharmaceutical companies. As these companies have the power that they might or might not provide their goods to healthcare units or the pharmacies or they can directly send their goods to patients.
As in India no such rule or prescribed channel that the medicine are to be sold only by the pharmacies or the healthcare units and similarly for the case of the healthcare equipments, the industries or the companies which doesn't want to sell their healthcare equipments then no one can force them to sell their goods to anyone particularly but this can't be so big threat as in India there are many suppliers for the same product.
The pharmacies also suffer one big issue that they have to be dependent on the supplier. As availability is the main factor which lies in the hand of supplier either it is medicine or its substitute. As if the substitute is available then pharmacies have lesser difficulties. But here in this case competition is much more so more power lies in the hand of pharmacies because they have substitute. (Apollo, 2009)
These pharmacies also have the additional power by which they can fluctuate price up and down of the product. The only part where these pharmacies face the problem is that the companies which supply these medicines or equipment s have their patented products. So the companies have right to sell or not sell their products at lower price and they can charge these pharmacies for higher price.
Power of buyer -
This part comprises of the companies which are directly or indirectly involved to the healthcare industry i.e. means serving it in any manner either by providing the healthcare services and effecting the economy. Even the price of the drugs or the services may vary i.e. increase or decrease then also now-a-days people doesn't give much concern as they have become least bordered for the price and can spend more. So we can say that healthcare industry remains unaffected by the power of the buyer. As economy doesn't affect the health or the healthcare services for the people i.e. if the a person is sick and has to undergo some treatment then economic crisis can't effect it. But this may vary for the people below poverty line or poor. So we can say that poor people seems to be less concern or less healthier as compared to the rich people.
Substitute as a Threat -
This industry healthcare has no substitute. i.e. in case a person's health demands healthcare attention then only this healthcare sector can only provide the aid no other means can provide it. (Apollo, 2009)
Secondly if the person is needed to be attended then there can't be a substitute for that. There are substitute for the treatment in choice but not over the modern technique i.e. there are substitutes within the healthcare industry. Some companies faces problem as when the patent expires. Companies take the monopolistic benefit within the patent period but when this expires they start losing it. On other hand their competitors take benefit of this as they charge less for their substitutes.
Threat of rivalry competitiveness -
The healthcare units are best and proves to be essential tool of utility for people. The healthcare units face some little less competitive business rivalry because they are less in count in the certain area. In case they are some in number in a particular area or city then they serve the people in various departments according to their demand and need. In order to avoid more competition and in this way they can be comfortable and thus can share or provide the business to each other. Even it is also noticed that some healthcare units share the same price so that it can be covered by the insurance. Thus there will be no business competitive rivalry.
For an Organization scenario planning is important and for scenario planning institutions should learn, study and plan accordingly the environment. So in order to resist these fast changes the institutions should adapt and move forward with the dynamic strategy development (Feurer and Chaharbaghi, 1997). In order for better understanding and analysing in this competitive world the developed concepts and framework structure has been simplified for better strategy use. So it was thought of porter's generic strategies can be counted and practised in Indian hospital industry for gaining knowledge.
Porter's generic strategies -
Michael Porter in the year 1980 developed the term strategy which made strategic management literature dominant. Porter mainly said there are two types of competitive advantage cost leadership and differentiation and both of these were referred to as porter's generic strategies. A third strategy which is focus was the subset of both the other strategies.
Cost leadership -
This is the strategy which has the main theme of cost reduction throughout the strategy implemented. This strategy facilitates, the operations, overheads, cost saving by experience and some areas of R&D, sales, service and the training and development.. "The factors that lead to a low cost position also provide substantial entry barriers in terms of scale. Finally, a low cost position places the firm in favourable position vis-a-vis substitutes. Thus a low cost position protects the firm against all five competitive forces''(Porter, 1980).
In this type the strategies are created on the basis of fundamental differences in various type like buyers can get contrasted knowledge about market services or products of the firm with its rivals. The firms which are successful in creating this difference and can demonstrate well then they are marked for their uniqueness and are awarded and also these types of firms can differentiate by defensible position against the porter's five competitive forces. "Differentiation yields high margins with which to deal with supplier power and clearly mitigates buyer power since buyers lack comparable alternatives and are thereby less price sensitive. Finally, the firm that has differentiated itself to achieve customer loyalty should be better positioned vis-a-vis substitutes than its competitors". (Porter, 1980)
It is the last but not the least out of three of the generic strategies. It is a type of strategy where market is targeted and this strategy makes it further narrow not the whole market is targeted. In this strategy cost factor or the differentiation is taken in account but the main accountability is done based on scale of market. Though these focus cost or the focus differentiation specific targeted segment can be exploited by the organizations and thus comparison between competitors can be beaten back in competition. When the firms are directed to a specific segments then it means that the manager or the focuser wants to take competitive advantage but doesn't want whole market to get involve only the specific targeted segment. One prerequisite for a focus strategy is that the target segments are somehow different than other segments in the market. (Porter,1980) In the year 1980 Porter gave emphasis and said that business of any firm or sector should commit and follow strictly only one generic strategy and if the firm fails means struck in middle like firm might "the market share, capital investment, and resolve to play the low cost game, the industry wide differentiation necessary to obviate the need for a low cost position, or the focus to create differentiation or low cost in a more limited sphere".(Porter, 1980)
Organization's performance and Porter's types -
For a firm whether its healthcare or any other sector firm Porter said and gave his emphasis on the three main strategic orientations which depicts the fundamental alternatives for an organization to be successful taking the competitive advantage. Those organizations which "stuck up in middle" are due to failure of the generic strategies. In other words the meaning of the "stuck up in middle" can be explained as which firms take benefit might has a point in the time ahead which is unlike to be sustained. Here likely to add a information like the firm of these types become a sufferer of blurred corporate culture, strained activity system, and conflicting business activities. However when a new researcher took privileged to evidence and he indicated that "Porter's generic strategies are not mutually exclusive and that each strategy may be linked to a variety of strategic means". (Murray, 1998 )
The group of some researchers (Karnani, 1984; Miller and Friesen, 1986; White 1986;Hill, 1988; Mathur, 1988; Murray, 1988; Miller, 1992; Dess and Miller, 1993;Johnson and Scholes, 1993; Feurer and Chaharbaghi, 1994) fights Porter's oppugnancy of mutual exclusivity of strategy types and further made argument that combining of both the strategy i.e. cost leadership and differentiation might lead towards sustained competitive advantage.
When (Kumar et al., 1997) researched for the U.S healthcare industry then he concluded by saying that structure for the healthcare industry favours organizations which followed Porter's generic strategies. As we know that U.S healthcare industry is differ from the Indian healthcare industry. The second research question which was framed was what are the key competitive challenges faced by these private hospitals of an Indian city.
For this study particularly the data has been collected from the December 1999 to May 2012. This study has been done on the basis of list of healthcare units of India based on various organizations survey and reports of the healthcare information providers like: (O.I.F.C.) Overseas Indian Facilitation Centre, (C.I.I.) Confederation of Indian Industry and (N.C.M.H.) National Commission on Macroeconomics and Health Ministry of Health & Family Welfare Government of India (2005) etc. These healthcare units have an average length of stay for all patients is near about 30 days and care is provided for about short-term patients treatment. This report of healthcare unit of India consist of bed facility is about 30 and the hospitals which have less 30 beds are not included as they have very scope of application of the strategies of the porter's generic strategies (Kumar et al., 1997). These institutions also provide intense care for some diseases like respiratory, cardiovascular etc. but are not included in this study as the main focus is the strategy.
The main administrators overviewed the finest sources of specific business practices and then calculated the organization's performance (Pearce et al., 1987). Some specific set of questions were asked to the five chief administrators and then it was found that very less number of changes were required for the set of questions. These chief administrators of the Indian hospitals were personally interviewed and was told to them that it is only for the study purpose and all the details will be kept personally and will not be disclosed. The response is kept and can be utilized to understand and analysis can be done. As all the responses are gathered so there is no non-response bias. (Gupta and Govindarajan, 1984)
Measures of Study -
This research is made by combining thoughts of Kumar et al., 1997 and updates on internet of articles, journals, researches on the Porter's generic strategy and the survey with the CEOs of the healthcare units which suites the Private healthcare industry of Indian city.
Competitive based strategy of differentiation and this was measured by using the survey questions and that were to be asked by respondents CEOs of the healthcare units for their point of view which might show a new indications that were practised in gaining the competitive activates going on like:
Introduction of the new facilities and the services or the procedures
Highlighting the services and facilities from the business rivals or competitors
Analysing the new service and facilities by understanding the market demands
To lower the cost on the basis of the competitive strategy these respondents made their reply on using survey in relation to institution how it involves the organization in six activities like which are discussed as :
Lowered cost services then the competitors.
Maximizing the services, procedures and facilities by most cost efficient way.
Co-ordination with all the departments in relation further analyse the time and the cost factor.
Further making the analysis on the utilization of staff, equipments, tools, services and facilities which are available.
Analysis on the cost for improvising and analysis for increasing the performance with various departments.
Utilizing the latest technique tools and equipments for the diagnosis for better and accurate service given within the cost control methods.
One the healthcare institution's utilization was measured asking to highlight the key point on the seven point scale like what they focus upon then in reply :
Target the particular set of customers
Particular services and facilities
Targeted particular market segments
Quantitative and Qualitative Methods in Health Care Management
Quantitative approach of research -
This type of research method which is an approach of the scientific numeric value of the study. In this the researcher makes the relation taking the advantage of the numeric values. In this the statistical analysis can also be used for implementation and to figure out the scope and sucess of relationship (Creswell, 2009).
These finding from the quantitative research which are in numeric values are easy to explain and brings more accuracy in work.
In this if the researcher wants to make comparison then it can be done very easily in a hypothesis form.
The researcher can make test on the basis of quantitative method by making simple observations too.
In this type if there is any false numeric value then it might lead to wrong direction the research study and its purpose.
This type of study is more complicated while the quantitative type of research is very easily done.
It makes an artificial environment which is unnatural in setting the numeric values.
Qualitative approach of research -
Management of the healthcare which includes the monitoring, coordinating with services and facilities and planning according. In the health care institutions the supervisors or the doctors or other professionals work in the environment where constant increment in the cost is demanded for new innovations like in technology regulations from the government. The healthcare sector also works with the third party like the insurers and the healthcare policies providers. So it's like bit complicated network and structure. In order to understand it better then there are some other methods like various qualitative methods which can assist us better to understand the system of healthcare management.
Performance Measurement -
In this study there are four main measures used for analysis which are specifically important for a healthcare unit as advised by Kumar et al. 1997. Efficiency of any healthcare institution is dependent on the critical analysis of the performance because economic and political likely meet the expected demands of the stakeholders which make them satisfactory and the points are like :
Retaining the patients : In this type the factors which make a count are quality deliverance, patient satisfaction and the behaviour of the employee.
Controlling the operational expense : In this the efficiency is measured and how the resources are utilized are mainly concerned.
Revenue growth overall: The growth representation of the Indian healthcare industry mainly of the cities by the healthcare organization is to satisfy the stakeholders that allocate the budgets for further use and progress. It also shows the healthcare unit's ability to progress from that finance through the renting, making attractive concerns for donors and researchers with new ideas of projects. These are quality function and staff attitudes dependent.
New services or facilities return: In this type the main concern was to match the requirements of the external stakeholders which includes the community, patients and the buyers are characterised by this means. So by this efficiency can also be measured.
The of the study has been chosen to be subjective as it would help in assessing the performance of the organization. This type of approach is mainly dependent on respondent's response for assessing the various measures of the healthcare organization. For making the approach more successful and fruitful to find the opinions and appropriate responses for the study. A research survey form is made so as to find and analysis the data or the feedback from the clients for managers to make scenario planning by understanding the feedback and to take the benefit of the competitive advantage from Porter's generic strategies. The researcher should while designing the questionnaire should be concerned like how the questions should be more sensitive that can be asked. After that arrangement of the set of questions like what will be order of questions that are to be asked. The questionnaire which has mainly the multiple type of questions and these questions have the general questions which includes the managerial type which might give a sight for researcher to analyse and refine further of use in the study. This also depicts the performance of the organization by taking the advantage of the Porter's competitive strategy against their business rivals. The research questionnaire is purely based on the healthcare organization to gather the opinion about the availability and the quality of the healthcare deliverance in the community under the supervision of healthcare managers. These all are important as they make the study or research more fruitful and understanding.
Research ethics -
This research ethics in the research is vital matter that should be considered. It can be evaluated by certain basis like the difference between acceptability and unacceptability. The most important significant point of the ethical issue is safety of the data which is gathered from the various sources like patients or the interviews or the managers of the firms and healthcare institutions. The managers and CEOs made their first condition that not to disclose their names. The particular thoughts what they told were personal view of comments and thoughts. As these records are confidential and can't be disclosed to anyone. Precision should be followed in such a manner that hospitals and healthcare organizations follow certain rules, regulations and ethics. To take care of all these one of the hospitals in India has taken step and given instructions like while giving information to any advertising firm also they have to be particular and restricted. But the information and the data which will be shared that should not be false as it may be hazardous for institutions reputation. The main aim behind the marketing and advertising is make the healthcare firm more desirable so demanding among the people. As profit is vital but should not be the basic principle for the organization.
This part gives ideas for the methods to be followed. What can be the best possible way to follow and get the desired result by following various the methods. There are various tools and implications for the business but which method can be the best possible. In order to analyse this the researcher has fo