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Journal of the Academy of Hospital Administration

Strategic Service Vision for Corporate Hospital in a Competitive Environment

Author(s): Rajiv Kumar Jain

Vol. 12, No. 1 (2000-01 - 2000-06)

Keywords : Strategic, Service, Vision, Target Market, Service Concept

Introduction

Indian health care industry is worth Rs. 73,000 crores today or roughly 4% of the country's Gross Domestic Product (GDP). In view of the economic liberalisation, there is likelihood of a boom in corporate hospitals and other associated activities in the economy. This shall result in increasing competition amongst corporate hospitals. Already the signs of the same are appearing in metropolitan cities like Mumbai, Bangalore, Chennai, Hyderabad and New Delhi. This requires development and implementation of strategic service vision on a dynamic basis for the corporate hospitals in order that these hospitals not only service but grow and at the same time satisfy and delight the customers.

In a service organisation like hospitals, service is produced and marketed at the same place and time, and often by the same person. Naturally, close coordination between operations and marketing management in these cases is essential. It is, therefore, imperative that strategies must be evolved to integrate the two activities at all customer contact points. This paper deals with elements of this strategy, strategic service vision, and an attempt to establish links amongst and between the elements with the hope that such an integrative attempt if implemented shall result in higher customer satisfaction and higher profit for corporate hospitals.

Elements of Strategic Service Vision:

Strategic service vision attempts to integrate operative and marketing functions at all levels of customer contact. Its elements consist of (a) identification of a target market segment, (b) development of a service concept to address targeted customer's needs, (c) codification of an operating strategy to support the service concept and (d) design of a service delivery system to support the operating strategy (Figure 1). Let us now examine each element.

A. Target Market Segments:

In order to identify the target market segment, following questions need accurate and valid answers:

  1. What are common characteristics of important market segments?
  2. What dimensions can be used to segments?
  3. How important are various segments?
  4. What needs does each have?
  5. How well are these needs served? In what manner? By whom?

B. Service Concept :

The development of a service concept in order to address the targeted customer needs requires study, elaboration and analysis of following factors:

  1. What are important elements of the services to be provided, stated in terms of results produced for customers?
  2. How are these elements supposed to be perceived by the target market segments? By the market in general? By employees as a whole?
  3. How do customers perceive the service concept?
  4. What efforts does this suggest in terms of the manner in which the service is (a) designed, (b) delivered, and (c) marketed?

Figure - 1 Strategic Service Vision For Corporate Hospitals ( See below)

Strategic Service Vision for Corporate Hospitals

C. Operating Strategy:

In order to support the service concept, it is essential to codify an operating strategy. This process involves finding answers to following questions :

  1. What are important elements of the strategy? Operations? Findings? Marketing? Organisation? Human resources? Monitoring?
  2. On which will the most effort be concentrated?
  3. Where will investments be made?
  4. How will quality and cost be managed? Measure? Incentives? Rewards?

D. Service Delivery System:

The operation strategy needs to be supported with a well designed service delivery system. This process requires answers to following vital questions:

  1. What are important features of the service delivery system, including (a) the role of people, (b) technology, (c) equipment, (d) layout, and (e) procedures?
  2. What capacity does it provide (a) normally and (b) at peak levels?
  3. To what extent does it:
    1. help ensure quality standards,
    2. differentiate the service from competition and
    3. provide barriers to entry by competitors?

Integration of Elements of Strategic Service vision

It is essential to link all the four elements of the strategic service vision in order that the vision is not only implementable, assessable and manoeuverable but also provides real value both to the customer as well as the hospital. It is natural to expect that the hospital positions itself in relation to both the target market and the competition. The concept of service and the operating strategy need to be linked so that policies and procedures leading to higher value of the service to the customers and lower cost of providing it are achieved. This only shall result in higher profit for the corporate hospital. Operating strategy needs to be linked with the service delivery system in order that vision becomes a reality on a continuing basis. Let us now examine the above integrative links in some detail.

A. Positioning

The positioning of the service concept with target market segments requires answers to the following questions :

  1. How does the service concept propose to meet customer needs?
  2. How do competitors meet these needs?
  3. How is the proposed service differentiated from competition?
  4. How important are these differences?
  5. What is good service?
  6. Does the proposed service concept provide it?
  7. What efforts are required to bring customers expectations, and services capabilities into alignment?

B. Value-Cost Leveraging

The service concept and the operating strategy needs to be linked in a manner that high-value addition to service does not result in high cost of service and thus making it un-implementable. Thus, high value to the customers must result in competitive cost of service delivery. This process of leveraging a value of service to cost of strategy requires answers to following questions:

  1. To what extent are differences between value and cost of service maximized by
    1. standardization of certain elements,
    2. customization of certain elements,
    3. emphasizing easily leveraged services,
    4. management of supply and demand
    5. management of quality through
      1. rewards,
      2. appeal to pride,
      3. visibility and supervision, and
      4. peer group monitoring,
    6. involving the customer and
    7. effective use of data?
  2. To what extent does this effort create barriers to entry by potential competition?

C. Strategy-System Integration :

The operating strategy and the service delivery system need to be integrated in order to achieve consistency and uniformity as well as higher competitive advantages. This integrative process requires answers to following questions:

  1. To what extent are the strategy and delivery system internally consistent?
  2. Can needs of the strategy be met by the delivery system? If not, what changes must be made in (a) the operating strategy and (b) the service delivery system.
  3. To what extent does the coordination of operating strategy and service delivery system ensure (a) high quality (b) high productivity, (c) low cost and (d) high morale and loyalty of servers?
  4. To what extent does this integration provide barriers to entry to competitions?

Conclusion:

In the deregulated competitive environment hospitals need to evolve and implement a strategic
service vision not only to survive but to grow and provide advantage. The essential elements of such a vision are (a) target market segment, (b) service concept, (c) operating strategy, and (d) service delivery system. These elements need to be linked through (a) positioning (b) value cost leveraging and (c) strategy-systems integration.

The vision needs to be oriented both externally as well as internally so that the vision is a shared one and achieve the results envisioned. Further research is needed to assess the effect of scale of corporate hospitals on the value and cost of service both to the customers as well as employees and organisation. There is also need to study the evolution of monitoring mechanisms for continuous quality improvements within the service vision implementation process.

References:

  1. Shenoy GV, Shmuganathan K. Successful attempt of TOM Implementation Indian Management 2000; 39 (1) : 52-57.
  2. Ketz, Ray, The TQM conflict, Work Executive Digest 1995 March.
  3. Heskett, James L. Managing in the Service Economy Harvard Business School Press, 1986.
  4. Scheider, Benjamin and Bowen D.E. New Services Design Development and Implementation and the Employee in New Services, American Marketing Association Chicago, 1985.

* Indian Railway Medical Service Senior divisional Medical Officer and Training Manager,
Northern Railway, Central Hospital, Connaught Circus, New Delhi - 110055.
E.mail : [email protected]

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