Fortis Escort 483t6j

GAUHATI UNIVERSITY A Training Report submitted in partial fulfillment of the required for the award of the Degree of the Master of Business istrative (Industry Integrated), GAUHATI UNIVERSITY of FOR FORTIS ESCORT AT JAIPUR

Under organization guidance of : Guidance of: Mr. Binod Singh Sales & Marketing Manager FORTIS ESCORT Management Science.

Under Institutional Mr.Raj Kapil DEAN Global School of

Prepared and submitted by. Deepak Kumar Singh G.U. Registration No.10-01-0177 of 2010-2012

CERTIFICATE This to certify that Deepak Kumar Singh, a student of Gauhati University has prepared his training report

entitled

““Value

chain

analysis

in

Healthcare Sector”

(marketing) FORTIS ESCORTS” under my guidance. He has fulfilled all requirements under the regulations of the MBA (IIP) Gauhati University, leading to the MBA Degree. This work is the result of his own investigation and the project; neither as a whole nor any part of it was submitted to any other University or Educational Institution for any research or diploma.

I wish him all success in life. Mr. Ral Kapil DEAN, GLOBAL SCHOOL OF MANAGEMENT

SCEINCE.

2

STUDENTS DECLARATION

I hereby declare that the Training Report conducted at

FORTIS ESCORTS, HEAD OFFICE S NEW DELHI. UNDER THE GUIDANCE OF Mr. Raj Kapil Submitted in partial fulfillment of the requirements for the degree of MASTER OF BUSINESS ISTRATION (Industry Integrated) TO GAUHATI UNIVERSITY, GUWAHATI Is my original work and the same has been not been submitted for the award of any other Degree /diploma /fellowship or other similar titles or prizes.

3

Place: NewDelhi

Deepak kumar Singh Date: 9/3/2012 No.10-01-0177

Reg.

ACKNOWLEDGEMENTS I hereby acknowledge and thank to my beloved parents, my religion, & saints who have always inspired me to be honest and diligent. I would also like to thank my friends and batch mates who always stood beside me during age of time and it is their belief in me that I`ve been successful in academics and now a student of global school of management science, New Delhi department of MBA under the gauhati university. I extend my sincere thanks to Fortis Escorts. For giving me this wonderful opportunity and to perform Winter internship. I acknowledge the warm relationship of staff and dealers of the esteemed concern where I could hard on project assigned to me contribute to organization with my efforts and get essential credits for my profile before I enter the corporate world. I thank my project guide Mr. Binod Singh Sales & Marketing Manager ,Fortis Escorts Mr. Alok agarwal North Zonal head for giving me the opportunity to work on alive project that holds strategic importance to the organization. I am really grateful to both of them. I appreciate the fact that they connect very well with the people of my generation, understand them well and is like a mentor who teaches

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PREFACE In spite of theoretical knowledge gained through classroom study, a person is incomplete if not subjected to practical exposure of real corporate world and the challenges and problems that one has to face at the actual work place. In this context the study has been taken to make the person aware of the happenings of the real business world. The Master of Business istration (MBA) program is considered to be one of the most reputed professional courses in the field of management. Under this, industrial internship is a part of the curriculum of MBA program. Every student has to undergo a training of approximately 45 days and give a brief of the work he/she has performed during training. The training gives a practical exposure to the environment of the business world to each student and also confronts students with practical knowledge. It also gives an opportunity of exposure to that particular field of specialization in which he/shewants to specialize in. Therefore every trainee gets the freedom to decide his/her particular field of interest. It also gives a trainee, chance to have an interaction with people at real workplace who are working at different positions with different authorities and responsibilities. The project is an attempt in this direction, in which we have tried to assimilate and depict inference drawn during the study. We hope that it will be fruitful to the company and the company can modify/implement its strategy accordingly.

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INDEX Sr. no.

Particulars

Page No.

Part-1 of Project work 1.

Introduction of Industry

8-11

2.

Introduction of Organization

12-26

3.

Research methodology

27-28

Title of the study Duration of the project work Objectives of the study Type of research Scope of the study Limitations of the study 4.

29-34

Introduction of value chain

5.

Introduction of Value chain analysis

6.

Value chain analysis in Health Care Sector 6

35-39 40-51

7.

Value chain in Hospitals

52-54

8.

Conclusion

9.

Introduction of Porter’s 5 forces model

55-59

10.

Porter’s 5 forces model analysis of FEHJ

60-63

11.

Introduction of SWOT analysis

64-66

12

SWOT analysis of FEHJ

67-69

13.

Conclusion

14.

Part-2 of Project work

54

70 71-79

Responsibilities handled during training 15.

86

Bibliography

7

INTRODUCTION OF THE INDUSTRY (PART-1) 8

Healthcare sector in India

In a nation like India, where there is no formal social security system in place, notwithstanding the high tax rates, healthcare and health insurance become that much more crucial. One of the fastest growing and most potent sectors in India is the healthcare sector. India has become a hot medical destination for patients in the Middle East, Africa and even the West. Word is fast-spreading that Indian hospitals can provide world-class care at competitive rates. India today has big names in healthcare like the chain of Fortis Escort Hospitals. A vibrant and dynamic healthcare sector is imperative for the new human resource intensive world. Quality healthcare is vital for the growth of any nation. The key objectives of an effective healthcare system would be to enhance average life expectancy and to improve quality of life and productivity. The sector today has a radical outlook with major emphasis on high skill sets that can leverage technology and medical science, and needs to cater to a critical and inevitable customer need at an affordable cost. It works on the principle of network economics touching innumerable lives.

Recent developments India is very well placed to tap the growing potential of the healthcare sector. It has the relevant skill-sets with adequate human resources to become the preferred healthcare 9

player in emerging countries across the globe. Increasing urbanization, superior demographics, better health consciousness and higher life expectancy has enhanced the demand for quality healthcare. Although the Indian government-run public sector has taken lot of initiatives in regards to the development of healthcare facilities, it isunable to do much now, which has brought the private sector into the picture. This in turn, has brought in more capital, better technology etc. The recent Union Budgets too have been favorable to the healthcare sector.

There has been reduction of customs tariffs on life saving medical equipment, reduction of excise on certain critical drugs and abolition of duty on drugs and materials imported for clinical trials. Permissible depreciation rates for medical equipment under the Income Tax Law have been increased to enhance cash flows of the corporate hospitals in the private sector. Lower interest on lending for private sector hospitals exceeding 100 beds will improve access to low cost funding for hospitals. But the biggest leap has been the community-Based universal health insurance scheme for the poor whereby a cover of Rs 30,000 is available for as low as Rs 2 per day with the Government contributing Rs 100 per annum for families below the poverty line. Competition has proven to be the biggest blessing in the sector. Notwithstanding the healthy competition, several big corporate houses have ventured into the sector. The availability of various equipments has proven to be life saving many times. The formation of many big hospitals is the hint of the boost in this Sector. The entry of big pharmaceutical companies into this segment is a clear sign of corporate focus on this sector. Earlier many diseases did not have any cure for them but today such diseases have no longer remained a big threat to mankind. The implementation of newer and better technology in hospitals has helped save many lives.

What is driving the sector? The increase in expenditure by government towards enhancement of medical facilities is a big plus, as is the involvement of large corporate houses. The reduction in customs and excise duties on various items is proving to be of great help to the sector resulting in the formation of the healthy competition. Constant research and development have led to the discovery of new and better life saving drugs while the development ofinfrastructure and various incentives provided by the government is proving to be a great booster. The government has also come up with various insurance schemes, which could help the sector and this is aided by the formation of various institutes, which have given the country the best of the doctors.

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BARRIERS One of the biggest barriers is the fact that the cost of many of the required equipments in this segment is too high. Resultantly, small healthcare centers cannot afford them and lag behind. Similarly, many people are unable to enjoy the benefits of the new and advanced technology as the cost of treatment by these advanced equipments is very high which is often not affordable. Finally, there are many dealers in the market who dupe people by selling them outdated medicines. However, the government is using legislation to place serious curbs on this malpractice. Notwithstanding proliferation in the urban areas, the lack of good healthcare facilities in the backward rural areas is a cause of concern. It is undisputable that the total available healthcare centers are lesser in number than required. Finally, though there has been a reduction in duties, there have also been certain changes in the excise norms, which affect pharma companies.

FUTURE Healthcare is a fast-growing sector which is developing at a very fast pace. People are becoming health conscious and are demanding better quality healthcare measures. Many hospitals have been formed for the purpose of providing quality healthcare to the people. Huge investments are being made in R&D which has led to development of new and better life saving drugs and equipments. The government has reduced certain duties, which has brought down the cost of various drugs and equipments. There has been a constant focus by the government on the development of the healthcare sector. The future of this sector looks bright and promising. Both, the government and private sector enterprises are ing hands to boost the Indian healthcare sector. Overall, the prospects appear very bright and reflect the old adage 'health is wealth'.

11

INTRODUCTION OF THE ORGANIZATION

12

FORTIS ESCORTS HOSPITAL, JAIPUR

13

Vision "Creating a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with comionate patient care".

Late Dr. Parvinder Singh (FOUNDER)

Mission “Making quality healthcare services widely available to the community at large”.

About Fortis healthcare Fortis Healthcare Limited, Asia’s largest private healthcare provider with a network of 64 hospitals has a vision of "creating a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with comionate patient care" From the pursuit of this mission emanates a ion to excel. At Fortis Healthcare they assembled the finest talents in medicine, be they doctors, nurses or technicians, and even management professionals across a wide spectrum. Enabling them to deliver 14

the highest quality of healthcare are state-of-the art facilities and infrastructure at each. Fortis commissioned its first hospital in 2000 at Mohali. The 2010 acquisition of a strategic stake in Parkway Holdings Limited makes Fortis Asia’s largest healthcare network. Fortis Healthcare Limited is one of the leading chains of Hospitals and a leader in healthcare consultancy in India which is benchmarked to International standards achieving quality through the relentless adherence to the protocols observed in some of the world's leading hospitals. The hallmark of Fortis hospitals, distinguishing them from their contemporaries, is the 'patient-centricity' that you will discern all over: in hospital design, services, and programmes and most significantly in the caring approach of our people. The Fortis Healthcare circle of caring is fast expanding, spreading the name of Fortis Healthcare, India... reaching out to distant communities, welcoming patients from beyond India's shores. In its continuous effort to be the number one in healthcare consultancy, Fortis has expanded its wings into foreign shores with an aim to provide quality and affordable healthcare starting its journey from Mauritius. Fortis Healthcare has a major presence in North India with a network of world-class hospitals. In each of our facilities the ultimate focus of our services is the health and happiness of people, our patients and their near & dear ones. You will experience this sensitivity whether you are an in-patient attending an OPD or simply accompanying a family member. In the patientfriendly environment we have created in Fortis hospitals, the layout of departments has been planned so as to save patient time and minimize in-patient movement. Our Hospital Information System (HIS) and Electronic Patient Record (EPR) instantly provide patient history details and latest test results to the desktop of the Fortis Healthcare specialist you are consulting, saving valuable time. Welcoming guest relations officers and counselors at the Fortis hospital we visit will assist us in accessing the services we seek - even such conveniences as the cafeteria, ATM or prayer room. This section of the site provides helpful informationforvisitors and also highlights some of the special services available to our patients and their families.

15

Core values:

Vision: Imbibe and share the vision. Integrity: Lead through honesty and integrity. Respect: Earn respect Trust: Gain patient trust. Understanding: Commit to comion, care and understanding. Own: Own quality excellence. Uphold: Uphold innovation and continuous improvement. Share: Develop and share success

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Hospital Network

The Fortis hospital network is central to our mission of making Quality Healthcare services widely available to the community at large. The Fortis Healthcare network encomes 68 running hospitals. All part of our grand plan to deliver world-class medical care with comion across India and abroad. 17

The list of the some hospitals of Fortis group is following

Fortis Hospital - Mohali

The Fortis Hospital at Mohali in Punjab with a 250 - bed capacity was the first facility of its kind in the region. It is one of the internationally recognized hospitals in India and amongst other specialities; it runs the largest Cardiac Program in North-West India.

Fortis Escorts Hospital - Amritsar At Fortis Hospital, Amritsar, we offer the most comprehensive medical facilities. The hospital has all the essential services at one location. This is a first for the city.

Fortis Hospital - Noida The

Fortis

Hospital,

Noida

is

a

350-bed

facility

providing

Super

Speciality treatment and care in Orthopaedics and Neurosciences.

Fortis Jessa Ram Hospital - New Delhi Established in 1952 by the late R.B. Seth Jessa Ram, the hospital is a 100-bed, multi-specialty facility. It is located in the heart of New Delhi at Karol Bagh. F Flt. Lt. Rajan Dhall Hospital - Vasant Kunj, New Delhi The Fortis Healthcare facility at Vasant Kunj is a 200 bedded hospital with specialized departments for five super specialties - The Fortis Heart Institute, Fortis Healthcare institute for Renal Sciences, Fortis Healthcare specialty Centre for ts, Fortis Healthcare lung Centre and Fortis Healthcare centre for Diabetes. 18

Delhi Fortis Escorts Hospital - Faridabad It is a 210 bedded, Multi Speciality hospital providing primary to tertiary medical services.

Hiranandani Fortis Hospital- Navi Mumbai It is a 150 bedded state of the art, tertiary care Multi Speciality hospital. It has 5 Operation Theatres and 42 critical care beds.

Fortis La Femme - New Delhi A hospital in Greater Kailash-II in the South Delhi region with a focus on delivering specialist services in the Women's Health arena.

Fortis Escorts Hospital - Jaipur Fortis Escorts Hospital Jaipur (FEHJ) is brought to the people of Rajasthan by India’s fast growing Healthcare Group-FORTIS Healthcare.

Fortis Malar Hospital - Chennai Malar Hospitals Limited is a Multi Specialty 180 bedded hospital, founded by late DR S Ramamurthy, in the year 1992. The strategic location of the Hospital, in the bustling, up market and residential area of South Chennai coupled with eminent 19

Consultant Doctors has made Malar one of the largest corporate Hospitals in Chennai

Escorts Heart Institute and Research Centre Limited - New Delhi The Escorts Heart Institute and Research Centre (EHIRC) at New Delhi is a 350bed facility providing a whole gamut of specialized medical services. This facility has long been a leading and internationally recognized hospital

Group companies of Fortis group •

Religare Enterprises Limited

•

Super Religare Enterprises Limited (SRL)

•

Religare Wellness

•

Religare Technova

•

Religare Voyages Limited

Things that makes Fortis different from other hospitals •

Fortis Healthcare was established with the very clear aim of achieving excellence in healthcare that is worthy of global recognition.

•

Fortis league of physicians has accomplished a landmark of 18,000 cardiac procedures.

20

•

IT enabled HIS & PACS Systems allow speedy access to patient information from anywhere within the network and hence speedier diagnosis.

•

Fortis have maintained world standards in healthcare by keeping the nursepatient ratio of 1:1 in ICUs.

•

Fortis hospitals have large bed-to-floor space ratios in patient rooms, lending a healing environment to patients.

•

The Fortis Healthcare inn provides convenient on-campus accommodation for a patient's family, as well as for the post-operative patient during rehabilitation.

Future Plans of Fortis Escorts Hospital Fortis Healthcare intends to have 40 more hospitals with 600 beds by 2012. Two Green –field hospital are under construction, these are: 1-

A Super-Speciality hospital in Shalimar Bagh, west side, with specialization in Cardiac care, orthopaedics, neurosciences, renal sciences, mother and child Care and gastroentereology (1st Phase-250 beds)

2-

Fortis international institute of medical and biosciences (FITMBS medicity) with Two Multi Speciality hospital having 750 beds along with a medical college for 500 Students. FIIMBS medicity, Gurgaon have a focus on trauma, oncology, and mother and child care, orthopaedics and neuron sciences (1st Phase-35beds)

21

Fortis Escort Hospital Jaipur (FEHJ)

The Fortis escort hospital Jaipur (FEHJ) is a unit of India’s fastest growing healthcare group Fortis. The Fortis group comprises a network of 68 hospitals across India, which includes the Escort Heart Institute & Research center in Delhi, India’s internationally renowned heart hospital. In delivering healthcare the organization inspired by its founder’s vision to create the world class integrated healthcare delivery system in India, entailing the finest medical skills combined with comionate patient care. With Fortis Escort Hospital, the arrival of world class medical care in Jaipur is a reality. Medical excellence redefined not just for patients in the pink city, but patients all over Rajasthan. Fortis Escort Hospital is multi-super specialty with cardiac science, neuro sciences, renal sciences, and Gastro intestinal diseases as super specialties, back by a range of multi-specialties .Fortis have faculty of high experienced physicians & surgeons who provide treatment across the wide range of specialties. Fortis services are among the most comprehensive available in Jaipur, all under one roof, with treatment ed by state-of-art facilities and system. Fortis bring a special emphasis to critical care that is so crucial to a patient’s recovery ,through advance dedicated ICU’S for the trauma cases , and patient receiving treatment for critical illnesses , and most significantly ,one will experience a patient sensitive approach to medical care , that is part of Fortis’s ethos.

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KEY PERSON’S IN MANAGEMAENT ZONAL DIRECTOR

:

MR. SANJEEV VASHISTHA

HEAD MEDICAL SERVICES

:

DR. SHRIKANT SWAMI

HEAD OF ISTRATION

:

MR. PRATEEM TAMBOLI

HEAD OF SALES & MARKETING:

MR. RISHI KAPOOR

HEAD HR

MR. SUBRATA DAS

:

Comprehensive advanced facilities- under one roof 23

Ensuring quality medical treatment at FEHJ are the most comprehensive facilities available which include high end diagnostic equipments like 64 slice CT Scan machine, Touch Screen Monitors, world-class Dialysis facilities and a Flat Cath Lab, to name a few. Super Specialty

•

Cardiology & Cardiac Surgery

•

Gastro Intestinal diseases

•

Neuro Sciences

•

Renal Sciences

Multi Specialties •

Anesthesia

•

Critical Care

•

Dental, Cosmetic & Plastic Surgery

•

Dermatology

•

Diabetes & Endocrinology

•

E&T 24

•

Gynecology & Obstetrics

•

Internal Medicine

•

Ophthalmology

•

Orthopedics & t Replacement

•

Pediatrics & Neonatology

•

Physiotherapy

•

Physiotherapy and Preventive Health Check

•

Psychiatry

•

Pulmonary Medicine

•

Radiology

•

Pediatric Neurology

•

Pediatric Cardiology

Facilities FEHJ provides following Round the clock services for visitors and patients 25

•

Round-the-clock Emergency Services

•

24-hour Ambulance Service

•

ICU Specialized Post Operative and Emergency Care

•

Operation Theatre

•

Imaging and Diagnostics

•

One of the most Advanced Pathology Labs in the country

•

24- hour Chemist Shop

•

Cafeteria

Research Methodology•

Title of the study“

Value Chain Analysis in healthcare sector” 26

•

Duration of the Project- The duration of the fulfillment of my project work was 45 days i.e. from 1st June – 15thJuly.

•

Objectives of the study- The main objectives of my project work are to identify1. Does value chain exist in health care sector? 2. What is the use of value chain analysis in health care sector? 3. What are the problems of health care industry in respect of value chain?

•

Data Collection- The required data and information to complete my project work has been collected through secondary sources.

•

Type of research- To fulfill the main objectives of this project work ‘descriptive research’ method has been used.

•

Scope of the study- The scope this study include the health care sector in respect of value chain analysis and its benefits. This project report is divided into two parts i.e. first one is related to the title of my project work and second one is related to the responsibilities handled by me during training.

27

•

Limitations of study-

One of the limitations of this study is that it describes an industrial organization which essentially buys raw materials and transforms these into physical products. Notably, at the time when the model was introduced (Porter, 1985), service industries in the western countries employed lesser workforce compared to today’s statistics of the same. Academics and practitioners alike have critiqued the model and its applicability in the context of service organisations. Partnerships, alliances and collaboration along with differentiation and low costs are common drivers of value today. The limitations of the study include the fact that ‘value’ for the final customer is the value only in its theoretical context (Svensson, 2003), and not practical . The real value of the product is assessed when the product reaches the final customer, and any assessment of that value before that moment is only something that is true in theory. Despite this limitation, analysts can effectively use the value chain model to determine the value to the final customers in a theoretical way. Use of other planning tools and techniques like Porter’s generic strategies, analysis of critical success factors etc. is recommended in conjunction with the value chain framework for a more comprehensive analysis of a company’s strategy and planning.

VALUE CHAIN 28

(INTRODUCTION)

Definition of value chainA high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers

29

Inbound Logistics Includes receiving, storing, inventory control, transportation scheduling.

Operations Includes machining, packaging, assembly, equipment maintenance, testing and all other value-creating activities that transform the inputs into the final product.

Outbound Logistics The activities required to get the finished product to the customers: warehousing, order fulfillment, transportation, distribution management.

30

Value Chain model of Michael Porter: Marketing and Sales The activities associated with getting buyers to purchase the product including channel selection, advertising, promotion, selling, pricing, retail management, etc.

Service The activities that maintain and enhance the product's value, including customer , repair services, installation, training, spare parts management, upgrading, etc.

Procurement Procurement of raw materials, servicing, spare parts, buildings, machines, etc.

Technology Development Includes technology development to the value chain activities, such as Research and Development, Process automation, design, redesign.

Value Chain model of Michael Porter: Human Resource Management The activities associated with recruiting, development (education), retention and compensation of employees and managers.

Firm Infrastructure Includes general management, planning management, legal, finance, ing, public affairs, quality management, etc.

Purpose and use of the value chain framework MSME’s employ the majority of low-income people in many developing countries and actively participate in global supply chains. Such enterprises are important vehicles for poverty reduction as they stimulate private ownership, generate employment, and promote income distribution. MSME’s vary by size and industry, as they also operate in both informal and regulated sectors. The value chain framework seeks to overcome these constraints by identifying different entry-points and linkages that small and medium enterprises can leverage in a given 31

production or supply chain. A value chain traces the full range of activities required to bring a product or service from its conception to end-use, including the design, production, marketing, distribution and delivery to the final consumer. While these activities can be contained within a single large firm, in an economy where borders are porous and production inputs and assets dispersed, they are likely to be shared by specialized firms of varying sizes and cost-structures, working in different locations. Exactly how businesses participate in the production process of a given industry determines their competitiveness and growth, as well as the strength of the overall chain. The literature on value chains distinguishes two types of inter-firm relationships, vertical and horizontal, that define this strength. Vertical linkages are at the core of any production process and constitute the relations between input suppliers, manufacturers, distributors and retailers of given product or service. These linkages define a value chain’s fundamental efficiency. Horizontal linkages tend to be ancillary—they lead to collective efficiencies and reduce transactions costs. These may be achieved through grouping individual firms in a network and partnering with a business development service (BDS) provider to realize economies of scale.

of Value Chain: Across firms engaged in trading relationships, a value chain is concerned several theorized objectives: • Optimizing the overall activities of firms working together to create bundles of

goods and services.

•

Managing and coordinating the whole chain from raw material suppliers to end customers, rather than focusing on maximizing the interests of one player.

•

Developing highly competitive chains and positive outcomes for all firms involved. 32

•

Establishing a portfolio approach to working with suppliers and customers; that is, deciding which players to work with most closely and establishing the processes and information technology (IT) infrastructure to the relationships. That is, value chains are supposed to be collaborative partnerships between adjacent players engaged in economic exchange. Such collaborative activity includes coordinated planning of production and distribution to meet the customer’s needs on a just-in-time basis that reduces inventory levels and delays in product availability. It is also designed to create a lowest-total-cost solution for the end customer and the manufacturer. Lowest total cost is achieved using demand planning, which relies on information gathered from the customer that “pulls products.” Demand planning works backward from the customer toward the manufacturers and their suppliers and original equipment manufacturers (OEMs). This is all in contrast to traditional supply chain management, which starts with the manufacturer that “pushes product” (for example, using marketing and advertising campaigns) and works forward toward the customer. Here the manufacturer’s aim is not achieving lowest total cost but increasing product sales, greatest product differentiation, and lowest delivered cost.

Value Chains and Extended Enterprises Value chains are also supposed to develop as strategies of competitive advantage in which one set of trading partners (input supplier–product manufacturer–distributor) seeks to create more value (for example, higher quality and/or lower-cost products and services) than a rival set of trading partners. Recent research on value chain alliances suggests some of the essential ingredients for success.

•

One key ingredient is dedicated asset investments in one’s supply chain partners in order to increase productivity. These can include dedicated managers and representatives who accumulate substantial understanding and knowhow through long standing relationships with trading partners. Another type of asset investment is the development of capital investments tailored and customized to a specific trading partner.

•

The second key ingredient is effective management of knowledge and knowledge owes among trading partners. This requires sharing of information (both explicit and tacit knowledge) rather than secrecy. This is accomplished through supplier associations, learning teams, on-site consultation, t-study groups, problem-solving teams, and interfirm employee transfers. In this manner, suppliers provide input to product development and process improvement initiatives. 33

•

A third key ingredient is trust among trading partners. The presence of trust lowers the necessity for contract enforcement and surveillance and thus reduces transaction costs. Specific means to foster trust include selection of suppliers based on their capabilities and track record for performance (rather than competitive bidding) and previous contracting relationships, establishment of longterm contracts, stability of employment of managers involved in con tracting, extensive two-way communication, financial investments in one another, and evaluation of the relationship on a broader scale than just unit price of inputs. Research on the auto industry suggests that the presence of these three ingredients allows the formation of extended enterprises that span manufacturers and their suppliers. Such enterprises achieve competitive advantage over other manufacturers (that lack such alliances) in of the speed of product development, product development costs, transaction costs in procurement,productcosts, quality, market share & profitability.

VALUE CHAIN ANALYSIS 34

(INTRODUCTION)

MEANING OF VALUE CHAIN ANALYSIS-

35

Value chain analysis is a powerful tool for managers to identify the key activities within the firm which form the value chain for that organisation, and have the potential of a sustainable competitive advantage for a company. Therein, competitive advantage of an organisation lies in its ability to perform crucial activities along the value chain better than its competitors. The value chain framework of Porter (1990) is “an interdependent system or network of activities, connected by linkages”. When the system is managed carefully, the linkages can be a vital source of competitive advantage. The value chain analysis essentially entails the linkage of two areas. Firstly, the value chain links the value of the organisations’ activities with its main functional parts. Then the assessment of the

contribution of each part in the overall added value of the business is made . In order to conduct the value chain analysis, the company is split into primary and activities. Primary activities are those that are related with production, while activities are those that provide the background necessary for the effectiveness and efficiency of the firm, such as human resource management.

HOW TO DO A GOOD VALUE CHAIN ANALYSIS? The ability of a company to understand its own capabilities and the needs of the customers is crucial for a competitive strategy to be successful. The profitability of a firm depends to a large extent on how effectively it manages the various activities in the value chain, such that the price that the customer is willing to pay for the company’s products and services exceeds the relative costs of the value chain activities. It is important to bear in mind that while the value chain analysis may appear as simple in theory, it is quite time-consuming in practice. The logic and validity of the proven technique of value chain analysis has been rigorously tested, therefore, it does not require the to have the same in-depth knowledge as the originator of the model (Macmillan et al, 2000). The first step in conducting the value chain analysis is to break down the key activities of the company according to the activities entailed in 36

the framework. The next step is to assess the potential for adding value through the means of cost advantage or differentiation. Finally, it is imperative for the analyst to determine strategies that focus on those activities that would enable the company to attain sustainable competitive advantage. It is important for analysts to to use the value chain as a simple checklist to analyse each activity in the business with some depth (Pearson, 1999). The value chain should be analysed with the core competence of the company at its very heart (Macmillan et al, 2003). The value chain framework is a handy tool for analysing the activities in which the firm can pursue its distinctive core competencies, in the form of a low cost strategy or a differentiation strategy. It is to be noted that the value chain analysis, when used appropriately, makes the implementation of competitive strategies more systematic overall. Analysts

should use the value chain analysis to identify how each business activity contributes to a particular competitive strategy. A company may benefit from cost advantages if it either reduces the cost of individual activities in the value chain or the value chain is essentially reconfigured, through structural changes in the activities. One of the problematic areas of the value chain model, however, is that the costs of the different activities of the value chain need to be attributed to an activity. There are few costing systems that contain detailed activity level costing, unless an Activity Based Costing (ABC) system is in place in the company (Macmillan et al, 2003). Another relevant area of concern that analysts must pay particular attention to is the customers’ view point of value. The customers of the firm may view value in a generic way, thereby making the process of evaluating the activities in the value chain in relation with the total price increasingly difficult. It is imperative for analysts to note that the overall differentiation advantage may result from any activity in the value chain. A differentiation advantage may be achieved either by changing individual value chain activities to increase uniqueness in the final product or service of the company, or by reconfiguring the company’s value chain. The difference between a low cost strategy and differentiation in practice is unlike the rigidity that is provided regarding the same in theory. Analysts must note that the difference between these two strategies is one of the shades of grey in real life 37

compared to the black and white that is offered in theory. For example, Emerson Electric, which is a cost leader, has quality as a strategic concern in achieving its ‘best costs’ strategy (Pearson, 1999). Ivory Soap, a leading product of P&G, is a broad differentiator that turned into a cost leader. Quality is a strategic concern for managers of Ivory Soap, along with delivering a high value product consistently. Note that in a company with more than one product area, it is appropriate to conduct the value chain analysis at the product group level, and not at the corporate strategy level. It is crucial for companies to have the ability to control and make most of their capabilities. In the advent of outsourcing, progressive companies are increasingly making their value chains more elastic and their organisations inherently more flexible (Gottfredson et al, 2005). The important question is to see how the companies are sourcing every activity

in the value chain. A systematic analysis of the value chain can facilitate effective outsourcing decisions. Therefore, it is important to have an in-depth understanding of the company’s strengths and weaknesses in each activity in of cost and differentiation factors. The strategy of Wal-Mart worked when the company improved its business through innovative practices in activities such as purchasing, logistics, and information management, which resulted in the value offering of “everyday low prices” (Magretta, 2002). It is important to note that refining business models on a constant basis is as critical to the success of the company as its business strategy. Notably, both the strategy and business model of an organisation are crucial for the robustness of the overall value chain.

WHERE TO FIND INFORMATON FOR VALUE CHAIN ANALYSIS? Analysts can explore various sources to find information necessary for conducting the value chain analysis. Up to three years of annual reports of the company can be analysed to see how the costing of the activities are changing over the period and whether they are in unison with the competitive strategy of the firm. These annual reports of the company can be compared to the annual reports of the key competitors

38

in order to see how competitive strategies differ between the companies, along with finding the difference in the contribution of activities to the company’s profitability. In order to gain knowledge about the core competence of the company, analysts can look at the company and competitor websites. SWOT analysis of the companies done by companies like Datamonitor etc. can help the analyst to understand the key strengths and weaknesses of the company and how the firm differs from its competitors. Furthermore, journal articles, trade publications and magazines are useful sources of information to identify how value is created in the particular industry in which the company operates and which activities play a key role in the generation of that value.

VALUE CHAIN ANALYIS IN 39

HEALTH CARE SECTOR

Do Value Chains Exist IN Health Care Industry?

40

In the health care industry, this view represents more aspiration than realIty. Despite all of the attention paid to the health care supply chain over the past decades, few of the elements just outlined exist today. To be sure, there are organizations operating at each stage in the supply chain. Among producers (manufacturers), there are pharmaceutical

companies, medical-surgical products companies, device manufacturers, and manufacturers of capital equipment and information systems.Among purchasers (intermediaries) there are group purchasing organizations, pharmaceutical wholesalers, medical-surgical distributors, independent contracted distributors, and product representatives employed by some manufacturers. Among organized provider customers (hereafter referred to as providers) there are hospitals, systems of hospitals, integrated delivery networks (IDNs), and alternate site facilities (for example, physician offices and ambulatory surgery centers). What is lacking, however, is coordinated effort 41

among these parties, widespread strategic alliance formation, knowledge sharing, inter firm trust, and competing value chains oriented to delivering the greatest customer value at lowest total cost.

42

43

Use of value chain framework in the health sector-

Value chain analysis can be used to improve efficiencies in the health sector by mapping and responding to the constraints and opportunities faced by health care businesses in a particular market. The size and complexity of the private health sector is increasing in developing countries; health sector reform and decreasing government health budgets uuuuuhave meant that private sector providers are playing an increasingly critical role in the delivery of healthcare. In this context, improving access and quality of services and promoting contraceptive security through private channels is an important goal of public health practitioners and the donor community. The complexity of the private health sector is reflected in the relations between cadres of different service providers, product suppliers, manufactures, policy makers, government ministries, and consumers. Sector-wide assessments of health care provision and

44

product distribution are necessary to develop strategies that can facilitate private sector growth and increase the utilization of health services and products. The value chain framework can be adapted for this purpose. It will serve as a tool to identify bottlenecks along the health sector supply chain and harness synergies between different provider firms, professional associations, manufacturers, distributors and other stakeholders— towards expanding the overall supply and quality of health services and products in the private sector. PSP- One can benefit from applying the value chain framework to advance the role of the private sector in providing RH/FP services and products. Rather than analyze different pieces of the value chain in isolation, such as by service provider networks or generic product distributors, the tool will offer a way to approach an entire health sector through a total market lens. It will enable PSP- One to analyze each component of the value chain, identifying bottlenecks and opportunities to expand the private sector’s role in supplyingRH/FP services and products. In particular, it could potentially be an important tool to address contraceptive security in the private sector,examining opportunities and barriers to linking contraceptive manufacturers to distributors to health providers to the end s. In taking a systemic market approach that is critical for scaling-up any private intervention, the value chain framework can directly PSP- one’s work in achieving scale.

Towards applying the value chain framework for RH/FP products

I)

Following are the primary components in utilizing a value chain approach for heath care provision. It is a starting point to map the different factors relevant to the private health care market and to identify potential areas for strengthening the overall supply of health services and products. 1).Upgrading at the firm level Firms need to improve their overall efficiency and/or the quality of their services in order to gain competitiveness. Upgrading relates to technology improvements as well as the clinical capacity of a health care business. •

Improving competitiveness and productivity: Healthcare businesses can become more competitive by enhancing the quality and menu of their services or by becoming more efficient and cutting operating costs. Service providers may diversify their line of services to offer curative or specialized diagnostic care as a way to enhance productivity; alternatively, medium or large health providers may outsource a particular laboratory service that is costly to retain in-house.

2). Leveraging horizontal linkages 45

Horizontal linkages ensure that small firms cooperate to reduce transaction costs and benefit from economies of scale. •

Networks of health providers: When organized into affiliations or networks, individual providers can benefit from economies of scale with easier access to training and ancillary services such as credit, business development, or marketing, etc. Networks may be comprised of homogenous or differentiated providers, depending on context. Referrals between different specialized providers, such as drug retail shops and midwife clinics, can facilitate cooperation among small firms and ensure that consumers have knowledge about reputed providers and are able to easily access a “bundle” of quality health services. Networks can also serve as a mechanism to bring generic manufacturers into the supply chain through pooled procurement agreements.

•

Institutional linkages to facilitate learning: Strong information channels can generate knowledge among providers and improve the quality of their services. Formal linkages between institutes of higher learning, ministries of health and associations of individual providers are useful to facilitate learning and build capacity. These relationships can be global (with different donors) and/or national, but the idea is to develop a local market for this knowledge over time. Providers should recognize the value of this knowledge and be willing to pay for it. From a policy standpoint, incentives to spur the growth of local educational/training institutions are important to enhance learning and innovation.

3) Leveraging vertical linkages Vertical linkages are important to generate growth by increasing efficiency and competitiveness. These linkages demonstrate a direct relationship between the input supply and the final consumer market, and may be confined within local and/or national boundaries or linked into global markets. •

Linkages to address contraceptive and drug security: Segmenting the market to ensure the appropriate targeting of commercial and/or subsidized products is necessary to ensure that consumers have continued access to a full range of affordable health services and products. South-to-south linkages with product manufacturers can increase competitiveness of the private health sector and lower costs to targeted consumers as well as southern-based generic manufacturers.

•

Linkages between different types of healthcare business: Relations between different specialized providers whose inputs are directly integrated into the supply chain – including laboratory or diagnostic services, etc – may be strengthened to improve the overall efficiency of the chain.

4) Developing the market for ing services 46

The existing market for ing services will affect the strength of the health care value chain—in many developing countries this market will need to be stimulated. •

Business development, financial and sector specific services: Ensuring that health care service providers have access to financial services, updated technology and information, including clinical and other health training, is necessary to upgrade their businesses.

•

Insurance mechanisms: The market for private health insurance is an important factor in expanding utilization of preventive services. Private providers can be financially incented to offer preventive services through a capitated scheme for which there may be little consumer willingness to pay upfront. Private HMOs that are ed through employer or private contributions, national insurance schemes that contract with private providers, or community based risk-sharing arrangements are several ways to encourage the supply and utilization of health care, and particularly of preventive RH/FP services.

5) Ensuring an enabling environment The role of governments and donors in setting and shaping policy is important to ensure an environment conducive to the private sector provision of health services. •

National quality standards/accreditation: Enforcing and monitoring quality health standards require that individual providers – whether individual businesses or larger hospitals – are required to upgrade the quality of their health services. Nationally enforced standards also serve an incentive to develop the market for local institutions to offer training and clinical .

•

Service supply: The broader policy environment should the participation of small and large private health providers. Incentives to private health insurance, or contracting with private providers within a national health insurance program are examples of such , and can serve as a mechanism to license and regulate health care business.

•

Product supply: The regulatory environment is probably the most critical factor influencing the availability and quality of contraceptives. The lack of a sustained supply of affordable products can immediately constrain the growth of the private health sector, and arrangements with generic manufacturers may be needed to enhance supply and lower prices to the end consumer. In countries where the market for local generic manufacturers is non-existent, incentives to Encourage south-to-south cooperation with regional manufacturers can be developed, for example, by relaxing import taxes or negotiating long-term agreements with a particular pharmaceutical firm. 47

6) Facilitating end-market opportunities Stimulating demand among consumers and providers is often necessary, especially around the provision of RH/FP services. Demand is interdependent with service provision and strategies to generate demand should be institutionally linked with their supply. •

Partnerships with different stakeholders: Public sector ministries, large firms, schools, community based institutions, etc., can play important roles in stimulating demand for preventive health services, especially related to RH/FP service utilization. Commercial pharmaceutical companies may also partner with NGO’s and direct information campaigns to a particular consumer group in exchange for increased market share.

•

Demand-based financing mechanisms: Targeted vouchers or savings based micro- insurance products can be used to attract clients who are less inclined or able to pay out of pocket. Other forms of private or employer based insurance and risk-pooling mechanisms can also increase demand for and utilization of RH/FP services.

•

Diversifying service mix: Private health care providers can stimulate demand for preventive health care services by offering services for which there is higher immediate demand. Such curative, lab, or other diagnostic services are also more lucrative for the provider.

II)

Initial considerations in applying the value chain framework to the health sector

•

Many inputs in the health service sector are soft, variable and specialized. Beyond the supply of drugs and equipment, production inputs in the health sector relate to human capacity. For example, clinical skills, experience and even individual motivation are important factors that determine the initial make-up of the supply chain. In a conventional product-driven value chain the inputs at the smallfirm level tend to be physical assets or resources such as crops or rawmaterial, whose quality are readily determinable. The process of building and measuring the quality of human capacity assets in the health service sector is incremental, and potentially complex and expensive.

•

Demand for services in the end market may need to be stimulated. Underlying inefficiencies in the market for public health goods, particularly for preventive health care services, mean that these services are under-provided and underconsumed. Typically, the public sector and non-governmental organizations have provided these services in the form of free or subsidized care. While consumers are increasingly using private sources and paying out of pocket, consumer 48

demand for preventive care still needs to be stimulated. Likewise, incentives for providers to offer services for which there may be inadequate immediate demand, or where consumers are unable to pay for such services, will need to be considered. Conventionally, the value chain framework is applied in growth-oriented industries that are driven by consumer demand. The end- articulates clear price, quality and product preferences that different suppliers in the value chain, often globally dispersed, are able to respond to. For example, local coffee producers in Kenya may supply quality organic coffee for a niche international consumer market. The end-market for preventive health services, however, is always local and may not be immediately driven by consumer demand.

Health Care Sector’s Problem-

There are several explanations for the health care industry’s short comings as a value chain. First, unlike other industries, products are often ordered by workers on the front line of health care delivery, such as physicians, nurses, and so on. Purchasing is thus not an organizational competence, let alone a core competence, but rather the domain of nonbusinesspeople. Products are ordered in a way that maximizes their availability when needed, rather than minimizes the costs of holding inventory. Moreover, the end 49

ordering products is not typically the buyer (that is, paying for the product). Product demand is thus based heavily on the clinical preference of physicians rooted in their medical training, not on any formal cost-benefit analysis or budgetary constraint. Under the older cost plus reimbursement environment (prior to DRGs), it did not really matter what the physician ordered or what the hospital paid for supplies. Despite the age of the Prospective Payment System in 1983, this attitude may still be part of the culture and mentality of older generations of practitioners. Second, the provider industry overall is largely based on nonprofit ownership. Until recently, there has been no real emphasis on budgeting, and no culture of process improvement to reduce costs. Business practices have crept into the system incrementally over time and have encountered strong resistance from professional norms of patient care and provider autonomy, as well as public goals regarding patient access and quality of care. Thus, professional training in procurement and logistics has never been a hallmark among providers, given the prominent role of clinicians and their preferences for branded items. Moreover, since a heavy portion of provider revenues owe from federal and state governments, some believe providers have developed a welfare mentality rather than a strong profit-and-loss mindset. In this regard, the BBA is seen as “kicking providers off the welfare rolls.” Nevertheless, providers have been buffered from this rude shock by philanthropic donations, their foundations, and the rising value of their investments due to the surging stock market in the late 1990s. Third, despite all of the consolidation, it is still a fragmented industry with no real leadership at any stage. Fragmentation complicates the task of connecting the thousands of parties involved at each stage in the chain, and standardizing the formats and content of their business transactions. Fragmentation also makes it difficult for one large, leading firm to catalyze the rest of the industry by changing the business model (for example, Wal-Mart). Coupled with this fragmentation is decentralization of decision making to front-line professional workers and moderate decentralization of provider system. Consequently, there are lots of autonomous hospital systems and IDNs that themselves are composed of autonomous units and professional fiefdoms within. Fourth, providers have historically made their technological investments in patient care rather than information systems and infrastructure. Procurement and other functions are based in dated legacy systems, with little direct connectivity with manufacturers. Product master catalogs are often paper based, and their contents (product descriptions, prices) typically differ across players in the chain due to time lags in relaying and ing new product and contract information. The result is a lot of inaccurate data and thus errors in business transactions. There are few widely accepted industry standards regarding product identifiers or communication standards, and few decision-making tools to assess product spending and utilization, particularly at 50

the point of care. All of this is deadly for an industry that is transaction intensive and facing an exploding knowledge domain. As a consequence of these factors, the health care industry has been slow to change. Indeed, nonprofit ownership and government regulation buffer health care from market forces. The nonprofit basis has retarded ows of capital, recruitment of business-trained professionals (for example, in IT), and investments in IT needed for change to occur. The presence of third-party payment buffers physicians and patients alike from the immediate financial consequences of their decisions. The presence of professional and accrediting bodies resists the incursion of market forces and any changes that threaten professional prerogatives. And the regionally based character of health care delivery resists uniform technological solutions and standards.

VALUE CHAIN ANALYSIS 51

OF HOSPITALS

VALUE CHAIN ANALYSIS OF HOSPITALS It is true that we never get a second chance to make a good first impression, and hospitals have many opportunities to do so. Or not. At several junctures along the trek of accessing services, the patient confronts a series of opportunities to continue in the system or not, based on the success of the interaction. These touchpoints are not created equal, and it is important to know which has the greatest impact. Here, we can focus the Service Line Growth strategy. As a tool to understand the impact of each touch point, value-chain service analysis maps the process to help us decide where to focus strategic intent. Hospital business planning adapts a model developed by Michael Porter, who defines the value chain as a means to analyze an organization’s strategically relevant activities 52

to understand how to influence performance and cost. He breaks the activities of the firm into primary and activities. Primary activities—which, for most firms involves inbound and outbound logistics, operations, sales and marketing—are ed by an infrastructure of underlying activities, including HR, IT, and purchasing. How the product or service is ultimately developed and delivered to the customer depends on the effective interaction of these variable activities.

Business development is primarily focused on growth—that is, how do we build Service Lines and target distribution channels to generate increasing levels of patient volume. In early planning stages, well before we incorporate operational aspects of service delivery, we need to understand how customers navigate the system. For most businesses, this is a relatively straight forward process that involves identifying the customer, cost effectively creating the product/service, and marketing the service. Value chain service mapping depicts how the customer accesses and uses services along a linear path, purportedly gaining value at each stop. The hospital value chain is diverse and complex. Our service offerings are far from clear cut, varying sharply between service lines. Each specialty and disease category has a distinct value chain to be flowcharted and analyzed prior to understanding where we can impact choice by creating value. In most cases this is at the physician referral point where patients make initial decisions. This may be a primary care physician or a specialty care physician who is directly involved in managing the hospital encounter. In most cases, it is the loyalty of the physicians and their attitude towards the hospital that determines the direction of the process. Some services have very short timeframes, such as emergency/trauma care and sudden illness. Others unfold over a long period, such as cancer, congestive heart

Failure, and COPD, allowing the patient-customer the luxury of an extended period of time to make informed choices. These offer the most opportunity for getting it right, but also the highest risk. The value chain for oncology services involves primary care referrals, a diagnosis of a malignancy, then a series of choices based upon a multi-disciplinary approach that may include surgery, chemotherapy and radiation therapy. Depending on where your business unit is focused, the key touchpoints could be early (primary care) or late, perhaps after a cancer diagnosis is confirmed. An extensive primary care network could 53

be an effective method for engaging patients up-front and shepherding them through the emotional process of dealing with cancer. Hospitals that identify themselves as downstream, high-level specialty providers like fortis escorts hospitals would focus their strategy on attracting the patient after the malignancy diagnosis through excellent service and ease of access. This analysis is a good tool for getting stakeholders on the same page. It helps focus planning efforts and gets to the key issue of where to go and what to do. This leads us to the question— what business are we in, and where do we strategically want to focus our efforts, which is the essence of strategy.

Conclusion The value chain framework has been used as a powerful analysis tool for organisational strategic planning in health care sector. The value chain framework shows that the value chain of a company may be useful in identifying and understanding crucial aspects to achieve competitive strengths and core competencies in the marketplace. The model also reveals how the value chain activities are tied together to ultimately create value for the consumer. The five primary activities and four activities form an interdependent system that is connected by linkages. Analysts conducting the value chain analysis should break down the key activities of the company according to the activities entailed in the framework, and assess the potential for adding value through the means of cost advantage or differentiation. Finally, it is important to determine strategies that focus on those activities that would enable the company to attain sustainable competitive advantage. It is important to analyse the value chain of a company with the core competence at its very heart. The nature of value chain activities differs greatly in accordance with the types of companies and industries. The value chains of companies have undergone many changes in the last two decades due to advancements in technology facilitating change at a very rapid pace in the business environment. Outsourcing will cause major changes in organisations and their value chains, with significant managerial implications.

54

PORTER’S 5 FORCES (INTRODUCTION) 55

56

The Original Five Factor: Threat of New Entrants The easier it is for new companies to enter the industry, the more cut-throat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include: • Existing loyalty to major brands • Incentives for using a particular buyer (such as frequent shopper programs) • High fixed costs • Scarcity of resources • Government restrictions or legislation • Entry protection (patents, rights, etc.) • Economies of product differences • Brand equity • Switching costs or sunk costs • Capital requirements • Access to distribution • Absolute cost advantages • Learning curve advantages • Expected retaliation by incumbents Power of Suppliers This is how much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then they hold substantial power. Here are a few reasons that suppliers might have power: • There are very few suppliers of a particular product • There are no substitutes • The product is extremely important to the buyer, they cannot do without it • The supplying industry has a higher profitability than the buying industry • Supplier switching costs relative to firm switching costs • Degree of differentiation of inputs • Presence of substitute inputs • Supplier concentration to firm concentration ratio 57

• •

Threat of forward integration by suppliers relative to the threat of backward integration by firms Cost of inputs relative to selling price of the product

Power of Buyers/ Customers This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then they hold substantial power. Here are a few reasons that customers might have power • Small number of buyers • Purchases of large volumes • Switching to another (competitive) product is simple • The product is not extremely important to the buyer, they can do without it for a period of time. • Customers are price sensitive • Buyer concentration to firm concentration ratio • Bargaining leverage • Buyer volume • Buyer switching costs relative to firm switching costs • Buyer information availability • Ability to backward integrate • Availability of existing substitute products • Buyer price sensitivity • Price of total purchase Availability of Substitutes What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses to be a serious threat. Here are a few factors that can affect the threat of substitutes: • Buyer propensity to substitute • Relative price performance of substitutes • Buyer switching costs • Perceived level of product differentiation • Fad and fashion • Technology change and product innovation • The main issue is the similarity of substitutes. For example, if the price of coffee rises substantially, a coffee drinker is likely to switch over to a beverage like tea because the products are so similar. • If substitutes are similar, then it can be viewed in the same light as a new entrant. Competitive Rivalry 58

And last but not least, this describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from: • Many players of about the same size, no dominant firm. • Little differentiation between competitors products and services.

•

• • • •

• • • • • •

A mature industry with very little growth. Companies can only grow by stealing customers away from competitors. For many industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. Number of competitors Rate of industry growth Intermittent industry overcapacity Exit barriers Diversity of competitors Informational complexity and asymmetry Fixed cost allocation per value added Level of advertising ex

59

PORTER’S 5 FORCES MODEL ANALYSIS OF FEHJ 60

Threat of New Entrants -

FORTIS HOSPITAL, Jaipur can face a tough competition in future from the big hospital chain networks like APOLLO hospitals etc. and other small hospitals and clinics. These competitors challenge the present market position of Fortis escort hospital, Jaipur. To reduce the threat hospital can use the following strategies•

Create a marketing / brand image (loyalty as a barrier)

•

Patents, protection of intellectual property

•

Alliances with linked products / services

•

Tie up with suppliers

•

Tie up with distributors

Power of Suppliers For the smooth functioning of operations, Fortis escort hospital depend on suppliers of medical equipments, service facilitators etc. which can create pressure on a business company's margins and volumes, then they hold substantial power.

To reduce the threat hospital can use the following strategies•

Partnering

•

Supply chain management

•

Supply chain training 61

•

Increase dependency

•

Build knowledge of supplier costs and methods

•

Take over a supplier

Power of Buyers/ CustomersAnother threat which hospital can face is from its customers. Since the target customer mainly comprises of higher and upper middle class and tae propotion of which is less in the society therefore they have a large enough impact to affect a company's margins and volumes, then they hold substantial power. To reduce the threat hospital can use the following strategies•

Partnering

•

Supply chain management

•

Increase loyalty

•

Increase incentives and value added

•

Move purchase decision away from price

•

Cut put powerful intermediaries (go directly to customer)

Availability of SubstitutesSince all hospitals depend heavily on technology and techniques used in treatments, operations etc. and we all know that there are lot of researches going on in health care sector globally therefore these things changes rapidly and substitutes the present ones and may be comparatively at cheaper rates so this is the most crucial threat about which the hospital should taken care off. To reduce the threat hospital can use the following strategies•

Legal actions 62

•

Increase switching costs

•

Alliances

•

Customer surveys to learn about their preferences

•

Enter substitute market and influence from within

Competitive Rivalry Fortis escort hospital, Jaipur facing good competition from few big competitors like Durlabh ji hospital etc. and other small clinics due to which hospital earn low returns because the cost of competition is high. To reduce the threat hospital can use the following strategies•

Avoid price competition

•

Differentiate your product

•

Buy out competition

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Reduce industry over-capacity

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Focus on different segments

•

Communicate with competitors

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SWOT ANALYSIS (Introduction)

SWOT ANALYSIS- Meaning A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, straightforward model that assesses what an organization can and cannot do as well as its potential opportunities and threats. The method of SWOT analysis is to take the information from an environmental analysis and separate it into internal (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve desired results.

64

Internal factorsS- Strength w- Weakness

External factorso- Opportunity T- Threat

65

66

SWOT ANALYSIS OF FEHJ

67

SWOT ANALYSIS OF FEHJS- STRENGTH

•

Brand Image

•

Technologically Developed

•

Highly Expertise Doctors

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High Quality Service

•

Geographical Location

W- WEAKNESS •

Market Positioning

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Low customer retention

O- OPPORTUNITY • Mass market expansion • Rural and neighbouring districts • Corporate tie ups 68

• Strategic alliances with competitors

T- Threat •

New and existing competitors

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Saturated existing market

•

Decline in market share

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Small clinics

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New government in rajasthan

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CONCLUSIONOn the basis of above analysis i.e. porter’s 5 forces analysis and SWOT analysis we can conclude that FEHJ HAS•

Good brand image

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High quality service

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Dedicated work force

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High expertise doctors

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High growth rate i.e. 50%

Have to do•

Reposition the image of FEHJ in market.

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Optimize the stocks

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Measure and managing the software reliability growth

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Human resource manager use various motivational tools to maintain the motivation of employees.

•

Explore new market opportunities

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Re positioning the brand image in market

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Responsibilities Handled During Training (Part-2)

In 45days fruitful training I did following activities•

Actively participated in C.S.R. programs of FEHJ-

71

CSR at Fortis Healthcare means creating a framework for the organization’s systemic and sustained future engagement with the community at large. These engagements must transcend all segments of society and have transparent, auditable objectives and outcomes. Towards this end, they are committed to and have created robust mechanisms to record, review and measure outcomes of their initiatives to the community at large. This not only ensures the efficacy of their programs but goes a long way in guaranteeing that they continue to be significant, relevant and sustainable so that we derive maximum benefit from our effort as equally importantly, we are proud of their contribution to the society. Our CSR endeavors are driven by the Fortis Healthcare vision and mission which is encomed within our values which serve as a guideline for the routine conduct of each Fortisian. The Fortis Healthcare VIRTUOUS values guide and determine our day to day interaction with others and channelize our internal

Energies towards exhibiting the behaviors that demonstrate these values both within the organization and community to the large. As a trainee in FEHJ, I actively participate in following C.S.R. activities-Awareness talks

CONCEPT OF THIRD PARTY S  Third party s are the new breed of intermediaries in the sector, introduction of whom will benefit both the insured and the insurer. While the insured is benefited by better service, insurers are benefited by reduction in their istrative costs. 72

 Introduction of Third party s comes as a succsesor to the

insurancecompanies which have been searching for ways and means to get their management expenses in line with the specifications laid down by IRDA. Insurers can now outsource their istrative activities, including settlement of claims, to Third party s, who offer such services at a cost. It may be noted that TPAs are remunerated by the insurers and so policy holders should welcome such a move since they receive enhanced facilities at no extra cost.

Once the policy has been issued, all the records will be ed on to the TPA and all the correspondence of the insure will be T.P.A

 TPA license can be granted to any company ed under the companies Act

1956. IRDA, which licenses and regulates these TPAs, has specified stiff entry norms some of which include a minimum capital requirement of 1 Crore, capping the foreign equity at 26% etc. License is usually granted for a period of 3 years. Service offered by TPA for policyholder & Health care providers.

1 Cashless Hospitalization: Each policyholders is provided with a list of emled Hospitals where in he/she can avail cashless hospitalization. 2. ID card: TPA provides ID cards to their entire policy holder in order to validate their Identity at the time of ission. 3. Claims Management: On behalf of insurance companies TPA isters & settles claims for hospitals & policyholders. 4. 24hours customers services: TPA provides assistance through its 24 hrs callcenter information regarding policyholder’s data, provider network, claim status, benefits available with existing cardholder, etc is furnished on request. TPA ission process 73

•

DIRECT ISSION:

 The patient first goes to the OPD  The patient then consults the doctor concerned.  The doctor suggests a procedure/ission  Then the patient decides if he wants to go for the procedure in the hospital

 If yes then the patient comes to the corporate desk and if not then the patient

makes an exit.  Then the patient shows TPA card if he does not have it then it would be a cash payment  After the TPA card is verified by the counselors the Pre-authorization form is given to the patient to get it filled by their concerned doctor.  If ission is required or necessary as per the doctor he fills up the preauthorization form.  After the pre auth form is filled it is handed over to the corporate desk with the photocopy of the TPA I card.  The corporate counselor then checks for the availability of bed with the bed manager .  If the patient party does not agree to the particular category then the next category is checked  After the bed category is confirmed then the confirmation for OT is taken for the

respective date as per the requirement  Then the pre auth form and the copy of the patients I card is faxed to the TPA 74

 Once the approval is received the patient Party and the treating doctor are informed  If there are some queries to be answered to the TPA then the following is done but if the queries are not answered then the patient decides whether he wants to go for a cash payment or not.

 The patient’s ission process starts in which he is first made to sign all the consent & claim forms, sent to the IPD front desk and from there he is escorted to his respective ward or treatment area.

EMERGENCY ISSION •

Patient gets itted directly through emergency

•

Then he comes to the Corporate desk

Enhancement Process  After the patient has been itted he undergoes his treatment procedure/surgery  While the patient is itted here the job of the corporate desk is that they keep checking the Payables whether any up gradation in the bill amount is required or not.  If bill amount exceeds approval then a mail is sent with the details of the patient to the medical auditor. The details contain patient’s name,UHID, ward number, approximate bill amount and the approval amount.  The medical auditor forwards the mail with the necessary changes to the medical coordinators of the concerned ward 75

 The medical coordinator will then send the case summaries to the medical auditor  Medical auditor will cross check the case summaries with the pre-auth form  If there are any changes are to made then the following are done and a printout of the updated case summaries are given to the corporate desk

 These updated case summaries along with the adhoc bills, with remarks of further hospitalization,and extension of the bill amount is checked  TPA ID number and CCN number to be mentioned in the adhoc bill (first page)

 The above documents are faxed to the TPA  Then the counselor call and confirm with the TPA for the fax sent  Here the TPA might have some queries if the queries are solved then approval is received for the exceeding amount.  The TPA might deny the case if there are some discrepancies found  In that case the doctor and the patient is informed  The doctor may reconsider the case and make the necessary changes if the case is justifiable and certify the patient for approval  The corporate desk will again fax to the TPA the above documents with the necessary changes  Approval received then cashless  If the approval is not received or in case of any denial the payment is to be done by the patient

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Customer Relation Management-



Relation with Patients- During my training, while performing all those activities which I mentioned above, I interact mostly with patients and since they are the only source of revenue generation therefore they are most important for hospitals like FEHJ and moreover nowdays customer relationship is the vital part of any organization to maintain existing customers and attract new customers therefore I enhance this managerial quality in me which will be very useful for me and the organization in which I will work.



Relation with Doctors- Hospital industry is very sensitive industry as it deals with an individual’s life and health, therefore maintain good relations with doctors is very important for the big brand hospitals like fortis escorts hospitals because they are the only one who are the main service providers. O.P.Ds. camp, C.M.Es. Etc. are the means to maintain good relations with doctors.



Corporate Relations- As mentioned above, during my training I assist corporate cell executive of FEHJ, in which our main task is to maintain and develop good relations with other corporates. 77

LearningsWith the help of above mentioned activities I learn following things•

Importance of C.S.R.

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Customer relationship management

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Convience and satisfy the customer

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Develop s and networks in society.

Suggestions•

Reposition the image of FEHJ in market

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Search new market opportunities

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Strategic alliances with competitors and distributors

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Improve security measures

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Utilize the work force of trainees efficiently and effectively

BIBILOGRAPHY 78

BOOKS REFFERED•

Kotler P., Marketing Management, ‘13th edition’.

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‘Walker M; Larreche Boyd, Marketing Strategy.

INTERNET SITES•

www.google.com

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www.fehj.com

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