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Journal of the Academy of Hospital Administration

Hospital's Perception of the Quality of Equipment and Services Provided by High Technology Medical Instrumentation Industry

Author(s): G.Unikrishnan*, U S Rao**

Vol. 14, No. 1 (2002-01 - 2002-06)

Key Messages:

  • Customers of High Technology Medical Equipment require financial advice.
  • Companies need and design low cost products with basic features without compromising on quality. Optional upgrades should be available.
  • Companies need to focus on strengthening their after sales service on 24/7 basis.
  • Spares Parts Management needs considerable improvement.

Abstract

Technology has helped medical science in diagnosis and treatment of patients and its role is increasing in providing quality healthcare to patients. There exists a large gap between demand and supply of hospital facilities. Opening up of the Medical insurance sector and quality awareness of patients has provided the opportunity for Private Sector to enter this field. Medical Instrumentation Industry is poised for growth with these developments. However, there are challenges too. Globally there is pressure to cut down healthcare costs. Emerging technological trends are posing both challenges and opportunities for this industry. Strategy formulation in medical instrumentation industry becomes critical as it has to take into account various factors pertinent to high technology sector such as innovation, customer satisfaction, productivity, logistics, high quality, application support and strict safety standards. This study has been undertaken to study the market position and the customer perception of the quality of equipment and services provided by the High Technology Medical Instrumentation Industry. Primary data has been collected in the form of exploratory interviews with leading Hospitals to assess the market, competition and suggest measures to improve the quality of equipment and services provided by the High Technology Medical Instrumentation Industry.

Keywords: High Technology Medical Equipment, Quality Perception, After Sales Service

Introduction

The need for providing quality healthcare to humanity is ever increasing. With advances in medical sciences the role of technology is becoming increasingly important to provide diagnosis and treatment to patients. The market for companies dealing with high technology medical equipment is expected to grow rapidly. This is especially true in developing countries like India where there is a gap between demand and supply of quality healthcare facilities. The opening up of medical insurance sector is expected to create further interest for private sector participation in healthcare infrastructure projects. According to a recent Business World Report the total annual business in medical instrumentation industry alone would be 1800 crores in India with an expected growth of 10% annually.

Globally there is also pressure to cut down healthcare costs. This pressurizes High Technology Medical Instrumentation industry to be cost effective in their product offerings. Emerging technological trends are posing both challenges and opportunities for this industry. Strategy formulation in medical instrumentation industry becomes critical as it has to take into account various factors pertinent to high technology sector such as innovation, customer satisfaction, productivity, logistics, high quality, application support and strict safety standards. Recently the market for medical instrumentation industry has become highly competitive resulting in reduced margins. Multinationals such as GE, SIEMENS, PHILIPS, are pursuing different strategies such as acquisition, setting up of manufacturing facilities in developing counties, e-commerce, developing Medical software solutions etc. to remain profitable. Innovation, deploying latest technology, shortening of development time, providing high quality after sales service become critical success factors for this Industry. Customer satisfaction and loyalty have special significance in this industry as healthcare professionals are a closely knit community. Primary data has been collected in the form of performance. In this context high technology means both technical sophistication and high value of the equipment. Secondary data has been collected from various websites, catalogues, journals, newsletter etc. Though effort has been taken to minimize errors in formulation of questionnaire the study is subject to all limitations associated with an exploratory interview approach. The scope of the study is limited to high technology medical equipments such as:

  1. Computed Tomography Scanner (CT-Scanner)
  2. Magnetic Resonance Imaging Systems (MRI Systems)
  3. Cardiac CAtheterisation Laboratory (CATHLAB)
  4. Nuclear Medicine Systems
  5. Ultra-Sound Scanning Systems

Major Players in Global Scenario:

The major players in high technology medical instrumentation industry are multinational companies having a diversified portfolio. The main companies involved in manufacturing and selling of high technology medical equipment are:

a) Philips, b) General Electric, c) Hitachi, d) Toshiba, e) Siemens

However, there are also few other companies such as Elscint, Picker, Varian, Shimadzu, Hewlett Packard who deal with high technology medical equipments though they do not deal with the entire range of medical equipments taken up for the study. For example Elscint, a company with its headquarters in Israel is well known for its Nuclear medicine products such as Gamma Camera Scanner. Similarly, Hewlett Packard is well known for its Patient Monitoring Systems and Ultrasound systems. Varian is well known for its Linear Accelerator treatment planning system. Apart from the above companies in the Ultrasound Scanning machines sector there are a number of small players as the market is large and the capital required to set up a plant manufacturing Ultrasound machines is considerably small.

High Technology Medical Instrumentation Industry Scenario in India:

The major players in the Indian Scenario dealing with high technology medical instrumentation industry are the same multinational companies who deal in the global level though there are differences in the way they operate and size of their capital investments. There are however, Indian companies like Larsen and Tourbro and BPL who manufacture and market certain medical equipments. For example Larsen and Tourbro has a plant at Mysore to manufacture patient monitoring systems and Ultrasound scanning machines. Similarly BPL manufactures and markets ECG machines. It may be noted that the equipments manufactured by Indian companies form the low end spectrum of high technology medical equipments. The major players are:

  1. Philips Medical Systems Ltd.,
  2. Wipro-General Electric Ltd.
  3. Hitachi-Blue Star Ltd.
  4. Toshiba-Erbis Engineering Ltd.
  5. Siemens Ltd.

Competition between different Players:

Computed Tomography Scanners:

The total market size for Computed Tomography scanners is expected to be around 150 crores in the year 2000. There exists tough competition in the Computed Tomography modality between the different players. Broadly CT Scanners systems can be divided into spiral and non-spiral segments.

Spiral segment:

In the high end segment the competition is mainly between General Electric, Siemens and Toshiba. Philips is trying to enter this market with its new series of CT Aura and Secura Systems. However, it is not considered as a major player in the field since it has not been successful in the non-spiral segment and hence has to prove its performance in the market. Among the three main players Toshiba has price advantage over the others as its units are priced in the range of Rs.3 crores compared to the price of Rs.3.5 crores of its competitors. Siemens enjoys the advantage of having the maximum number of installed units in this segment. In the subsecond and I sec segment, the competition is between the above players with Hitachi also offering its models in this segment. Market enquiries reveal that Hitachi CT units are very sturdy compared to other competitors and hardly require service or maintenance. Siemens expects to maintain a market share of 70% in the high end spiral segment and around 20% in the medium and low end of the spiral segment.

Non-spiral segment:

General Electric are market leaders in the non-spiral CT segment. This is because of their strategic move to manufacture non-spiral CT scanners in their manufacturing facility at Bangalore and market them aggressively. General Electric has been highly successful in penetrating and establishing market leadership in this segment. General Electric is able to sell non-spiral CT scanners (Wipro-GE CT Max 640 manufactured in India) for around 65 lakh rupees which is not matched by any competitor in the segment.

Toshiba does not offer any competition in this segment as it does not manufacture non-spiral scanners except on specific orders or requirements. This means that usually customers are not satisfied with the product life of Toshiba units in this segment as they fear spare parts and service complexities. Hitachi also does not provide much competition in this segment. Siemens does offer some competition to General Electric in this segment by offering refurbished systems. Market enquiries reveal that Siemens has a favorable advantage of having superior patient image quality. Siemens expects to capitalise on this competitive advantage and secure a 25% market share in this segment.

Magnetic Resonance Imaging Scanners:

The total market size for MRI scanners is estimated to be around 85 crores in India. MRI scanners may be segmented into two categories viz., Permanent Magnet and Super conducting magnet. Further segmentation could be carried out on the basis of the Magnetic field strength offered by different models. In the high end 1.5 tesla market segment the market potential is expected to be around 11 crores. The average price in this segment is around Rs.3 to 4 crores. In the 0.5 tesla segment the market potential is expected to be around 8 crores with average price per unit around Rs.2 to 3 crores. In the 0.2 Tesla segment the total market size is expected to be around Rs.10 crores with average price per unit being around Rs.2 crores. Another segment which is coming up in this modality is Dedicated cardiac MRI systems. This dedicated cardiac system is expected to provide a market potential of Rs.6 crores.

Competition between different players:

The main competition in he high end 1.5 Tesla segment is between Philips, General Electric and Siemens. Philips has been successful in penetrating this market recently by getting orders from corporate hospitals which were earlier strong holds of Siemens and General Electric. However, Siemens has an edge over others in this segment as the number of installed units are higher than its competitors. In the 1 Tesla segment also Siemens are market leaders closely followed by Philips and General Electric. Toshiba has entered into a technical collaboration with Siemens for manufacturing Magnetic Resonance Imaging Scanners and does not provide much competition in the 1 Tesla segment. In the 0.5 Tesla segment competition mainly exists between Philips and General Electric. Siemens does not offer much competition in this segment. In the low end Permanent Magnet system Hitachi poses tough competition for General Electric and Philips. Siemens does not concentrate much in this segment compared to its focus on high end systems.

Cardiac Catheterization Laboratories:

The total market size of Cardiac Catheterization laboratories is estimated to be around 110 crores. There is a possibility of increased activity in this segment as heart diseases are on the increase in India and speciality centers are being established exclusively for treating heart ailments in the private sector. There exists a tough competition between Philips and Siemens in this modality. General Electric is the new entrant in this field as far as India is concerned and is keen to establish a market in this segment. Recently General electric has been able to make a few breakthroughs in this segment as it has received a few orders including one at Southern Railway Hospital, Chennari. General Electric is able to provide Cathlabs at a price which cannot be matched by either Philips or Siemens. Though Wipro-GE may be a threat to established leaders such as Philips and Siemens, its equipment performance is still under evaluation.

Philips has a tremendous advantage in this segment as it has a long established brand image in this segment. It has a favorable opinion of providing the best image quality in the market. Siemens provides tough competition to Philips by matching features and image quality. Siemens expects to capture around 25% of he total market in this segment.

Toshiba does not provide much competition in this segment. The total number of toshiba Cathlab installations in India is only around ten units. However, it may be noted that Toshiba has to its credit more than 3000 installations world wide in this segment.

Hitachi is also a low profile player in this segment and does not provide much threat or competition.

The approximate average price of cardiac Catheterization Laboratories ranges from 2.5 crores to 4 crores. However, the price depends on whether the unit is a Single plane or a Bi-plane system and the various options provided with the offer.

Nuclear medicine systems:

The total market size of Nuclear Medicine systems is estimated to be around 14 crores in India. The average price of Nuclear Medicine system depends on whether it is a dual head or a single head system and on the spect options provided. The average price of a dual head system with SPECT facilities is around 1.8 crores.

The market for this modality is limited as it has to follow strict radiation safety measures stipulated by the Bharat Atomic Research Centre (BARC). Further guidelines are strict regarding isotope handling which results in skilled and qualified personnel requirements to set up this modality. However, slowly this modality is gaining increased acceptance as it is the only one which can provide functional analysis of organs. There is a market in India for refurbished/remanufactured units in this segment as Nuclear Medicine Consultants are interested in setting up their own scanning clinics at a relatively lower capital investment.

Competition between different Players:

The competition in this sector is mainly between Elscint, General Electric and Siemens. In a way it can be said that competition mainly exists between Elescint and Siemens only. This is because General Electric has entered into a technical collaboration with Elscint recently and henceforth all its units are manufactured by Elscint Corporation. Another competitor in this field is the US based SOPHA company. However their presence in the market is limited to a few customers all over the country.

Hitachi also has a few installations to its credit mostly supplied through aid from Japan. Hitachi systems have a price disadvantage when compared to Siemens or elscint Corporation.

It is interesting to note that the manufacturing base for Nuclear Medicine systems for Siemens is at Gammosonics, United States. Siemens are clear market leaders in this segment with more than 70% of installed units supplied by them in India. Siemens has also started marketing remanufactured systems to capture the market potential in this segment. However, recently General electric and Elscint are providing tough competition to Siemens in this sector. Elscint Corporation has gone to the extent of starting a hospital in Bangalore to study the needs of patients and doctors with an intention to provide appropriate solutions suiting to Indian markets. Siemens expects to maintain a market share of more than 50% in this modality.

Ultrasound scanning systems:

Ultrasound scanning systems have a very high market potential in India. Moreover the growth in this segment is expected to increase rapidly as the health needs of the population is ever increasing in India. Realising its potential all major players are keen to establish leadership in this market. The market size of this modality is expected to be around Rs.120 crores. It is important to note that this modality leads the rating as far as market potential is concerned being only next to Computed Tomography Scanners whose market potential is around Rs.150 crores. The Ultrasound market can be segmented into different categories such as low end Black and White scanners, Medium end Black and White scanners, Medium end Colour Doppler nits, dedicated Radiology scanners, dedicated Cardiology scanners and high end Colour Doppler systems capable of performing both Cardiology and Radiology applications. The price per unit in low and B/W scanners ranges between Rs.4-5 lakhs. These units are usually small portable units with limited applications. In the medium range the price is around Rs.5-8 lakhs. The market potential for this unit alone is expected to be around 200 units per year in India.

In the medium end High end B/W Scanner systems the price range is around Rs.10-11 lakhs. The market potential for this segment is estimated to be around 400 units in India. In the low end Color Doppler scanners the price range is around Rs.20 lakhs. The market potential is expected to be around 150 units. Medium end Colour Doppler systems are priced around Rs.25 lakhs. It has a market potential of around 75 units. The price of High end Doppler Scanner systems capable of handling both Radiology, Cardiology and a host of other applications ranges between Rs.35-50 lakh. There is a market potential for about 50 units in this segment.

Competition between various Players:

In the low end B/W Ultrasound scanners the major players are Wipro-General Electric, Larsen and Tourbro, Aloka and ATL. Larsen and Tourbro offers most economical model in this sector priced around Rs.3-4 lakhs. However, there is feedback from the market about its poor resolution of patient image which may affect its further sales. LandT has especially been successful in capturing a sizeable market in Kerala in this segment. Aloka, ATL (Philips) and Wipro-GE are also very active in this field. Wipro-GE has facilities in India at its Bangalore plant to manufacture low end Ultrasound machines. Wipro-GE is very aggressive in this segment to penetrate the market. Similarly Siemens also manufactures Ultrasound machines at its Goa factory. Though Aloka has a reputation of providing good image quality recently its image suffered due to frequent changes in partnership agreements in India. Initially Aloka machines were sold and serviced by HCL India. Afterwards Aloka decided to sell and service their machines directly. Recently it has found another partner Trivitron to carry out its Indian operations. In the medium end B/W segment apart from the other players Siemens also offers competition. However, Siemens has a market share of less than 10% in this segment. In the Colour Doppler segment the main players are Aloka and ATL (Philips). However, companies like Ge, Siemens and Toshiba provide competition in this segment. ATL (Philips) are market leaders in this segment. It is important to note that Philips has acquired ATL in 1999 as part of its strategic decision to become market leader in this segment. ATL has the advantage of having machines from lower end B/W systems to the higher end Colour Doppler systems.

The market feedback about performance of ATL machines is extremely favorable. In the medium end Color Doppler systems the competition is again between Aloka, ATL, General Electric and Siemens. However Siemens has not been very successful so far in capturing this market. In the High end dedicated Ultrasound systems the main players are Hewlett Packard, ATL (Philips), Aloka and Toshiba. Toshiba offers competition to Hewlett Packard and ATL in this segment. Siemens is trying to market the complete range of Ultrasound machines with renewed interest though it has been late to wake up to market realities. Ultrasound market cannot be neglected by any major player in high technology medical equipment as it provides various strategic advantages to market other high end systems.

Customer Perception:

Methodology adopted in selecting Hospitals:

Hospitals were selected depending on the High Technology medical equipment facilities available in them. In this connection it may be noted that the total number of large hospitals using High technology medical equipments are limited. Further in order to receive an unbased feedback about the quality of services expected and received, care was taken to select hospitals which have equipments from different suppliers such as Philips, General Electric, Siemens etc. Interviews were conducted with expert consultants who have considerable experience in their field and are exposed to using machines supplied by different companies. The opinion of other support staff about quality of services offered were collected in an informal way. Interviews were conducted both in the Private Sector Hospitals as well as in the Public Sector Hospitals to find out the priorities and needs of both the sectors.

List of Hospitals:

The following list specifies the names of the Hospitals in which interviews were conducted:

  1. Appolo Hospitals, Chennai.
  2. Appolo Cancer Hospitals, Chennai
  3. Malar Hospitals, Chennai.
  4. Sri Ramachandra Medical College and Research Institute, Chennai.
  5. Port Trust Hospitals, Chennai.
  6. Guest Hospitals, Chennai.
  7. Tamilnadu Hospitals, Chennai.
  8. Madras Medical Mission, Chennai.
  9. Vinayaka Scan Centre, Chennai.
  10. Sri Sathya Sai Institute of Higher Medical Sciences, Puttaparthi.

Questionnaire design:

Though exploratory interviews were conducted personally in all the select hospitals mentioned above, the interviews themselves were based on a questionnaire in order to have uniformity in data collection.

The questionnaire was designed to evaluate the two aspects of Service provided to the customer namely:

  1. Pre-sale services such as response to sales enquiries, information provided, demonstration or explanation of essential features, information provided on essential spares, and interest shown to provide financial advice.
  2. Post-sale services such as installation, application support, after sales service and maintenance offered.

Apart from these certain questions were put forth to find out the perceptions of customer on quality and other issues.

Findings from exploratory interviews:

Pre-sale Services offered:

It is fond that there is very less difference in the ratings of companies in terms of Pre-sale services provided. However, it is found that Wipro-Ge is more aggressive compared to its competitors in responding to sales enquiries and tracking them. Similarly, Siemens has scored a slightly higher overall rating in providing adequate information to the customer.

Price of High Technology Medical Equipment

The perception of customer regarding pricing of high technology medical equipment exhibits differing patterns. While 60% felt that it is overpriced, 25% felt that it is reasonable and 15% felt that it was value for money.

Reasonable Guarantee period of High Technology Medical Equipment Companies:

It was found that most customers opined that the reasonable guarantee period of High Technology Medical Equipments should be at least 3 years.

Post Sale Services offered:

In terms of timely completion of installation all companies were rated similar though it is noted that Philips and Toshiba have a better rating in this aspect. As far as Image quality offered in Cardiao Catheterization Laboratories, Siemens has been rated high with regard to image quality in all other modalities. Wipro-GE has been rated high by most of the customers with respect to the overall after sales service delivered. With regard to Application support provided all companies have been rated similar though Siemens has secured slightly better rating than other competitors. It is found that Wipro-GE and Philips provide the best response to breakdown calls. Most customers felt that cost of spares supplied by all companies is unreasonably high. It was also opined that some companies purposely reduce the product life by refusing to supply spares in the name of obsolete units.

Perception of quality of indigenously manufactured high technology medical equipments:

The general perception of quality of high technology medical equipments manufactured in India according to customer opinions expressed is either average or poor. This includes the high technology equipments offered by companies like Siemens, Wipro-GE and Larsen and Tourbro. However, certain customers felt that it was value for money.

Single supplier for all medical equipment needs in a hospital:

Most of the customers felt that a single supplier for all high technology medical equipments is not desirable though it may simplify administrative procedures. Customers felt that each company processes certain core competencies and hence a single supplier would not satisfy the quality needs.

Service Contract (Annual Maintenance Contract) offers:

Around 50% of the customers feel that Service Contracts are overpriced. 35% feel that it is reasonable and 15% feel that is value for money. Among the various competitors Wipro-GE and Siemens have a favourable opinion regarding viability of Service Contract offers. However, it is noted that customers are becoming increasingly aware of Service contract costs and are trying to contain this cost by negotiating with the company at the time of original purchase itself. Also Hospitals are becoming more quality conscious about the after sales service and preventive maintenance procedures carried out. This is especially true in private sector hospitals where internal quality control procedures have become mandatory to obtain ISO certification. Further hospitals are expected to follow guidelines stipulated by regulatory boards of Government such as Bharat Atomic Research Centre in Radiology and Nuclear Medicine equipments towards quality control assurance.

Comprehensive Service Contract:

The opinion about accepting a comprehensive service contract proposals have been divided. About 60% of the customers felt that it is better to accept Comprehensive Service Contract offered by companies. About 40% felt that it is better to go in for Comprehensive Insurance cover instead of Comprehensive Service Contract. However, the is a general opinion that Comprehensive Service Contract offered by companies are highly expensive.

Most of the customers are agreeable to pay 5-10% of the equipment cost towards Comprehensive contracts from third year of operation.

Turnkey Projects:

Around 30% of the customers believe that it is better to offer turnkey projects to companies supplying high technology medical equipment as they felt that companies would be able to perform professional work compared to others. However, others felt that allowing the company to set up the complete infrastructure required for installation would be highly expensive and unwarranted cost.

Ethical behaviour of Companies:

Most of the customers offered no comments regarding ethical behaviour of the companies. Some felt that the ethical behaviour of all companies were equally bad. Some felt that under the present circumstances ethical behaviour of all companies were equally good.

Factors leading to purchase of High Technology Medical Equipments:

According to the rating provided Quality was pointed out to be the first prime factor in purchasing an equipment. The second important factor rated was after sales service. This was followed by price of the equipment and Maintenance costs. It may be noted that some customers gave equal rating to all the factors.

Major Findings from Data Analysis:

  • It is found that customers expect companies to provide financial advice and assistance in purchasing High Technology Medical Equipment especially in the Ultrasound Scanner Segment.
  • Most Customers feel that High Technology Medical Equipments are overpriced. Though data analysis shows that the Quality is the first prime factor in purchasing an equipment, informal views expressed point out that the market is price sensitive especially in the low end segment of High Technology Medical Equipment.
  • Customer feedback clearly indicates that the minimum guarantee period expected by the customer is 3 years with spares.
  • Customers are becoming increasingly aware of costs and quality of after sales support offered by; companies. In future most Customers would demand compensation for downtime of equipment.
  • Perception of quality of indigenously manufactured high technology medical equipments is either average or poor.
  • It is found that 60% of the customers are willing to accept Comprehensive Service Contract from companies paying 5- 10% of the equipment cost. (Starting from end of 3 years).

Conclusion:

Though all companies are striving to improve customer satisfaction the findings from exploratory interviews shows that there are many opportunities to improve customer satisfaction further. The suggestions given by some customers reflects the current expectations and probably the future demands which the medical Instrumentation Industry has to tackle. High Technology Medical Instrumentation Industry will have to face challenges due to technology Medical Instrumentation Industry will have to face challenges due to technological developments and increased customer expectations and needs. With regard to Customer satisfaction the following need to be taken into account.

  • Customers expect the companies to provide information about essential spares and accessories at the time of purchase itself.
  • There is growing discontentment among paramedical staff that adequate application training is not provided to them.
  • Customers expect companies to provide financial analysis, advice and assistance especially in the Ultrasound Segment.
  • Indian market for High Technology Medical Equipments is price sensitive. Though price alone may not give a sustainable competitive advantage for a company it is felt that pricing strategy has to be worked out meticulously. It may be necessary to device product strategy to meet the essential needs of the customer before planning pricing strategy.
  • Customers would demand extended Guarantee period than the standard one year offered by companies. Also there would be pressure to reduce Annual/Comprehensive Service Contract charges. Customers would demand compensation for downtime of equipment.
  • Though companies have established Call Management Centres it is found that customers are not satisfied with the response given to breakdowns.
  • Spare parts Management in this Industry requires much improvement. Though this may be partially subscribed to the procedural formalities to be carried out in importing spare parts much can be done to improve the situation.
  • High end equipments will have to offer Remote Diagnostics facilities to reduce the downtime of the equipment.
  • The quality of indigenously manufactured High Technology Medical Equipments has to improve as customer perception is either negative or neutral in this regard.
  • In the low end segment service offered by third parties, authorized dealers needs to be well planned as the image of the company can suffer due to their actions.
  • There is a significant market potential for Comprehensive Service Contracts especially in the High end segment of High Technology Medical Equipment Industry.
  • Companies will have to possess the enterprise for carrying out turnkey projects especially in major hospitals.
  • With regard to emerging trends in High Technology Medical Equipments Companies will have to face challenges such as reduced product development time, meet networking requirements, possess image transfer functions and provide options such as Image Fusion.
  • There are also opportunities in the form of Picture Archival Systems for integrating the complete imaging requirements and providing inputs for Telemedicine projects.
  • Another major opportunity is to provide the necessary expertise and systems for Hospital Information Management in line with Enterprise Resource planning modules. It is found that there is major opportunity for Software development in medical Instrumentation industry.

Suggestions, Strategies for High Technology Medical Instrumentation Industry in Indian Scenario:

Pricing Strategy:

Pricing Strategy is of prime importance in Indian Markets due to the following reasons:

  1. Hospitals take longer time to reach break-even point for their investments made of High technology medical equipments. This is because of affordability factor of patients. Furthermore, medical insurance is not well developed in India.
  2. Government Hospitals and Primary Health Centres are constrained of Funds to meet the infrastructural expenditure required for Healthcare.

It is suggested that Companies design low cost products with basic features. However, it is necessary to satisfy the expectations and needs of the customer expected form such a unit. It will also be desirable to provide optional upgrades to the basic unit on specific requests.

Wipro-GE-Non-Spiral CT Scanner:

In this connection the product strategy of Wipro-GE to manufacture and market non-spiral CT Scanners in India is interesting. When all over the globe companies switched over to latest Spiral technology GE-Wipro saw an opportunity to market non-spiral CT Scanners in India. The price advantage of Ge-Wipro could not be matched by any other competitor. Further other competitors could not offer any model in this segment before Siemens came out with the strategy of marketing refurbished Spiral CT Scanners. Even then the price offered by GE-Wipro were found to be competitive. GE-Wipro also exports these CT Scanners to select developing countries. Since GE-Wipro has selected India as a manufacturing base there could have been certain cost advantages to offer competitive prices.

However, it may be added that sustainable competitive advantage cannot be gained by price alone especially in the high end segment.

After Sales - Service:

It is suggested that companies implement round the clock call management centers to attend breakdown calls. In this regard Service Contract offers could be differentiated for 24 hours service, service rendered on holidays, and service rendered during normal working hours. It is suggested that companies simultaneously take care of Human Resource development aspect of Service Engineers so that they are motivated to discharge their duties with a sense of commitment and dedication. Up-time Services with facilities such as Remote Diagnostics would improve service provided to customers.

Equipment Financing with Banks/Financial Institutions:

It is suggested that companies enter into strategic financial agreements with Banks/Financial Institutions to provide financial assistance to the customer. It is found that such assistance can improve sales especially in the Ultrasound scanner segment. Some companies already have taken some steps in this regard. Examples are:

  1. Siemens has an agreement with Citibank to clear loans for its indigenously manufactured Ultrasound equipment.
  2. Similarly Wipro-GE has a tie-up with GE Capital to provide financial assistance to qualifying customers. It is interesting to note that GE Capital (India) performs the function of accessing Customer credit worthiness and clearance of loans for GE's world wide operations.

Equipment Leasing Opportunities:

High Technology medical Equipments would come under big ticket leasing. The activity of Leasing of Medical Equipment is negligible in India. However, in developed countries like U.S. Leasing finance alone accounts to $7 billion.

It is suggested that Companies study this opportunity and provide offers which are carefully formulated. Much attention should be given in framing the leasing agreements as issues such as equipment down time, maintenance provided, spare parts availability, upgradation, working environmental conditions, Personnel handling equipment, safety aspects etc., become critical factors when leasing High Technology Medical Equipments.

Equipment Upgrade Offers:

It is suggested that companies encourage customers to upgrade their systems by offering attractive terms and conditions. This will help the company to retain the customer and also generate sales.

Service support for low end segment of High Technology Medical Equipments:

It is suggested that company appoint authorized service personnel on a contract basis in the low segment. Since overheads of these authorized personnel would be lower than multinationals the company would be able to reduce its costs in serving this segment. However, selection and training of these authorized personnel should be done in a professional manner as the image of the company is affected by the service offered by them.

Spare parts management:

Spare parts management can be improved by devising three strategies and a combination of them.

  1. Encourage customers to purchase essential spare parts at the time of purchase itself.
  2. Stock essential spare parts at company's premises. Again in this regard consolidated list of spare parts required by different regions could be worked out so that inventory holding cost can be reduced.
  3. Convince customers about the need to carry out Inter-Hospital spare part management.

Relationships with Government:

Companies should maintain good relationship with Government as it plays a significant role in providing health care infrastructure especially in the Indian Scenario.

It is suggested that companies sponsor certain programmes of Government Institutions such as holding seminars in the field of Continuing Medical Education (CME) and related research work to generate goodwill with Government. The number of Hospitals, Primary Health Care Centre (PHCs) run by Government constitutes a major market opportunity at present and even more in future as economy of the country improves.

Strategies/Suggestions to tackle the technological impact in markets:

  • It is suggested that companies determine the life cycle of the product so that after sales support can be provided at least for reasonable period. Some companies promise after sales support for ten years from the date of purchase. This is especially critical for developing countries as they cannot afford to invest huge capital. Other methods could be to introduce buy back schemes so that customers are also benefited by new technology.
  • The product design should take care of Networking requirements. It is important that equipments adhere to open and systems as in future customers would demand interconnection between equipments supplied by different companies. For example GE MRI scanner should possess features to be connected with a Philips CT scanner. In this effort equipment manufacturers are using a standard protocol namely DICOM (Digital Interchange Code in Medicine) so that such future networking is possible.
  • New Technologies such as Image Fusion has great promise in near future. However, since the development costs for such features would be phenomenal such features could be provided on an optional basis to customers.
  • When selling expensive new high technology equipment care should be taken that the infrastructure, personnel and after sales support systems are geared up to minimize the downtime of the equipment. Otherwise the company is bound to lose in credibility.

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* Siemens (India) Ltd.

** Principal and Dean of School of Business Management, Accounting and Finance, Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam, Ananthapur Dist. AP

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