Well Being health care

The following framework/structure provides an overview of the case:

A good answer would include:

Degree of rivalry (High)

The dominant player (NHC) or other private hospital groups lead to low profit margins.

Possibilities to differentiate from competitors:

• Brand
• Quality of service
• Price
• Location
• Waiting times (reduce)
• Expanding its target demographics, new services, new locations, etc.

Supplier power (Medium/High)

• Top quality doctors are key scarce source.
• WB should try to attract and retain them.

Buyer power (High)

• Patients can easily choose one of WB’s competitors.
• WB should differentiate itself from the competitors.

Threat of substitutes (Low)

No real substitutes for health care.

Entry barriers (Medium)

Entering the market takes a lot of time, investment and expertise. Not difficult for international health care systems.

WB could try to raise entry barriers:

• Build hospitals in attractive locations
• Charge a very low, competitive price for its services

A good answer would include:

+ Advantages

• Accepting the contract will increase business volume.
• As NHC provides bulk contracts it will be easier to plan for the increase (scheduling resources, etc.)
• NHC patients, who get to know the superior facilities of WB, may be tempted to take out private insurance themselves (increasing the market for WB).

- Disadvantages

• Additional NHC contracts will increase the waiting time at WB. This will reduce the ability to differentiate from competitors via short waiting time.
• Private patients might not like being treated together with public patients. This could harm the appeal of private healthcare to current customers.
• WB might not have enough resources/capacities to treat the increased amount of patients. NHC will also not pay as much as private patients, due to the fact that they sign bulk contracts.
• It is not certain that WB will turn a profit from these contracts.

Information that should be shared with the interviewee:

• WB decided to enter the NHC contracts.
• Each hospital has 2 different, major areas:
  1. “Inpatient” area for surgeries and overnight stays
  2. “Outpatient” area for consultations, operations without overnight stays, physiotherapy and tests (X-ray, blood test, etc.)

A good answer would include:

• Key capacity constraints are personnel and equipment.
• Every sector of a patients journey through the hospital should be analysed:
  Appointment booking, car park, reception, consultations, physiotherapy, X-ray, leaving hospital … (here the interviewee should not only mention doctors and nurses, but also for instance admin staff)
• The utilisation of nearly all resources in the outpatients’ area is variable and therefore vulnerable to peak demand that exceeds the supply. This would result in queues and a lower quality of service.
• Capacity could be added via:
  1. Increasing staff
     - General staff (reception) is easy and cheap to acquire.
     - Clinical staffs (doctors) are expensive and difficult to find.
  2. Acquire equipment
     - Equipment is easy, but expensive to acquire.
     - Extra space could be rented, depending on the location.
• Bottlenecks are
  1. Clinical staff (doctors, nurses, etc.)
     No substitutes, difficult and expensive to acquire
  2. Physical space (waiting areas, etc.)
     Required, but can become over utilised
  3. Admin staff
     Required, but can become over utilised (will lead to increased process times)

Does it seem that consultations lead to X-ray or vice versa?

The interviewee should find out:

• Both areas exceed their capacity sometimes (lead to delays)
• The demand for both areas seem to have inversely proportional patient demand (busy days in consultation are quiet days in X-ray and vice versa)
• There may be a relationship between X-rays and consultations
  1. X-rays lag consultations by one day
  2. X-rays lead consultations by one/two days#

The interviewee should find out:

• X-rays consistently lag consultations by one day, but do not lead consistently.
• There are more consultations than X-rays. X-rays should not cause more than one consultation the next day, but a consultation could cause more than one consultation the following day.

Information that should be shared: For each operation about 1 inpatient and 6 outpatient visits are needed.

Main conclusion

The number of outpatient visits occuring will be 10.5m. The number of operations exceeds the current maximum capacity of the client. It is obvious that on the long-run the capacity will be too small.

Main conclusion

• The additional business would exceed the capacity rather quickly.
• As demand fluctuates it will exceed 100% of capacity on a regular basis. This will lead to many problems, as delays, lower service quality, higher costs and brand damage.
• Capacity levels should be monitored in detail.
• Don’t take on all the contracts of NHC (e.g. half of them).
• Add more capacity (takes time and may be costly).
• Get more details about the revenue/costs related to the NHC contracts to determine if it would be economical to agree on them.