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Strategic Planning for Medical Practices in Singapore


									Strategic Planning for Medical Practices in Singapore
Dr Prem Kumar Nair

State of Health Care
“Healthcare is undergoing a revolution today, a revolution of attitudes and expectations that is as inevitable as the industrial revolution…….. …this revolution, like that one, has its opponents, who would much prefer to keep things as they were. But reversing a genuine revolution is as unlikely today as it was then”
- President, AAHP

State of Health Care: The Forces for Change
Five key areas where transformation is taking place:
1. The new consumerism
  Traditional payors shifting burden to patients Patients taking on increased responsibility and control of their own health care Recognition that the breadth and quality of care required cannot be delivered by fragmented systems

2. Integration of delivery networks

State of Health Care: The Forces for Change
3. Cost management by payors
 Managed care, defined care, capitation, spending caps IOM report on safety Quality report cards IT to re-invent care management and delivery processes Any time, any place health care
- Anderson Consulting

4. Quality awareness and improvement
   

5. The information infusion

Industrial Age Medicine



Professional Care

Secondary Primary



Information Age Health Care



Individual self-care
Friends & family Self-help networks


Professionals as facilitators

Professional Care
Discouraged $

Professionals as partners Professionals as authorities

What does this mean for medical organisations and practices?
• Develop winning strategies
 Create unprecedented value for customers

• Develop key competencies
 Create competitive advantage

• Change management and execution
 Execute the changes required to create the competencies

Strategic Analysis Process
Resource Analysis Prospects for Profitability Industry Analysis Segmentation Analysis Competitor Analysis

Cost Differentiation

Formulation & Implementation

The Business Environment

The national/ international economy

• Suppliers

The natural environment Demographic structure


• Competitors

• Customers


Social structure

Prospects for Profitability
• Determinants
 Demand – the creation of value
• In absolute terms • Not in terms of inducing demand

 Competition
• Intensity between players in marketplace • Relative bargaining power (shifting from physician to patient)

• Techniques – SWOT/ Five Forces Analysis

Identifying Key Success Factors
•Supplying a service where customers are willing to pay a price which exceeds the cost of “production” •Supplying a service which some customers prefer to that of competitors

The ability to survive competition

ANALYSIS OF CUSTOMERS/ DEMAND Who are the customers? What do they want? How do customers choose between competing practices?

ANALYSIS OF COMPETITION •What are the main structural factors driving competition? •What are the principal dimensions of competition? How intense is competition? •How can a practice obtain a superior competitive position?


Identifying Key Success Factors Example of GP Clinic
• What do customers want?
 Convenient location  Convenient opening hours  Reasonable pricing  Good service quality  Excellent care

• Analysis of competition

• Key Success Factors
 Combine efficient low-cost operations with convenient locations and time  Differentiation through quality of service, staff and ambience  Upgrade and upscale through CME and staff training

 Moderate entry barriers  Moderate exit barriers  Intense competition in city, town and neighbourhood centres  Economies of scale in integration  Price competition not vigorous – imperfect knowledge

Market Segmentation
• By:
     Specialty of doctor Interest area (GP) Payor – private or corporate (incl. insurance) Patient age group Nature of services – curative, preventive, ancilliary, surgical

Market Segmentation
• Identify key success factors in each segment
 Corporate
• Billing and reports, advisories, occupational health expertise, medical board

 Preventive
• Lab/X-ray services

 Children
• Friendly staff • Clinic design – play area

Analysis of Competition
• Ambulatory sector
 Fragmented, relatively “undifferentiated” service  Industry behaviour predictable and generally representative of sector

• Hospital sector
 Few key players  Competitor strategy, behaviour and initiatives can be fluid

• Tangible: over time, these become less important
 Financial resources
• Savings, loan, investors

 Physical resources
• Space, equipment

• Intangible: if managed well, value increases over time
 Human resources  Skill  Reputation
Resources themselves are of no value if they cannoy be translated to value or “distinctive capabilities” Make resources durable (skill, reputation) Ideally, replicable within the group but not outside

Resource Capabilities
• Example: Human capital
 Need for stronger staff retention policies  Formalise reward system  Training
• Soft skills – customer service, phone skills, grooming, service recovery • Healthcare specific skills – clinic assistant, dispensing

 There is a cost to high staff turnover – often ignored!

Competitive Advantage
• Cost advantage
 Identify cost drivers
• • • • Manpower (including doctor) Space Drugs/supplies Utilities

 Economies of scale/scope/learning  Rationalise capacity utilisation and operational efficiency
• eg. opening hours in city clinics

Competitive Advantage
• Differentiation Advantage
 Potential to differentiate service is limited only by the boundaries of human imagination (and ethics)  Create loyalty and image
Q: Is it enough to create a premium?

Practical Pointers
• Scenarios:
 Starting a practice  Running a corporate practice  Winding down a practice

Starting a Practice
• Opportunity cost • Location - benchmarks • Watch start-up cost
 Rental, renovations, technology, staffing, computers, stocks

• Communicate
 To existing patients  One time advertisement  Directories

• Clear information to customers
 Opening times, off-days, holidays, emergencies

Starting a Practice
• Pricing strategy
 Cost-oriented  Competition-oriented

• Be aware of the plethora of laws and regulations and ethical code • Corporate practice – specialised requirements to meet • Sole proprietorship or private limited company

Running a Corporate Practice
• Getting business – usually by proximity, access or reputation • Adhere to company benefit plans
 Exclusions, restrictions, caps

• • • •

Advisory role esp. occupational health Billing and reports capability Be aware of trends eg. prevention Clinic ambience – “corporate group”

Winding Down a Practice
• Difficult to sell a solo practice due to personal nature of business • Goodwill exists only if doctor stays with acquiring practice • Good compromise is to “earn out” over a few years; can reduce sessions over time • Corporate practices have a certain value if contracts “transferable”

• Strategise, develop competencies, execute • Be customer focused • Be market oriented • Change management • Again, strategise, develop competencies, execute………….


Thank You

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