Business Model

Current Standing

Pantai Hospital is a general hospital that was established in 1974 as a 68 bedded hospital to serve the Malaysian community. The hospital generally operates on with hospitality Business Models which is to provide beds to the sick people that come to the hospital to see Doctors that are also not employed by the hospital but rent offices to perform their services. Because of the way the hospital is run, it has been noted that business is really not doing to will and hence the introduction of Giving Inc. to come up with a new business model for the hospital.

New Business Model

According to S. Wunker and A. Waldeck (2009), they say, rather than being everything to everyone, hospitals should distinguish themselves by focusing on one or two business model only. They go on to say that, while the finances of a hospital are relatively easy to describe, it's harder to outline the underlying model that are interconnection in the enterprise. For this reason Giving Inc. feels that the best way forward for Pantai hospital would be to have two business model and Specialize in that model.
As hospitals face extreme pressure due to falling refunds, tough competition, defecting physicians, tight credit markets and other factors, it is becoming more vital than ever to nail down the principle business models of a hospital's and determining what is important to protect and grow. A look at the history of the hospital model one can see that in the past, transportation for example was expensive and difficult to get, while physicians were relatively cheap. This is one of the reasons it made sense to centralize the provision of care in settings that could accommodate the different needs of a community. But due to the changes the world as seen it is safe to say that it is about time that new models were adopted by hospitals. For this reason, Giving Inc. recommends that the best solutions for Pantai Hospital is to become an International Specialist Hospital that will provide Eye care, and Neonatal services, but to succeed in the midst of the economic pressure the world is going through, Pantia hospitals will need to be seen as a flexible, repeatable and reliable Specialist Hospital.
According to Clayton M. Christensen, Jason Hwang, M.D., and Jerome H. Grossman, M.D (2008), Customers of healthcare delivery generally find themselves needing one of two jobs done. The first be summarized as, “I need to know what the problem is, what is causing it, and what I can do to correct it.” And the second job would be, “Now that I know what needs to be done to fix my problem, I need it to be done effectively, affordably, and conveniently.” This is the reason Giving Inc. feels the two mentioned models would work best for Pantia Hospital.
These conditions will enable less skilled physicians (e.g., nurse anesthetists, general surgeons) to treat many patients in settings equipped to handle only routine types of cases like in clinics and other health care centers that are growing in numbers worldwide. Patients with more complex conditions will be the focus of institutions dedicated to a more complex type of care. Different types of conditions can be handled by hospitals with different kinds of business models like the one Pantai will have. According to Evelyn R. Singson (2008),the problems with the old business model of hospitals was that, hospital became confused over their strategy, as the profitability of various departments became the focus of attention, rather than the opportunity to maximizing how the institution delivers care within a single business model. On the other hand, On top of the Specialist Hospital business model, Pantia can also take up a value-added model that will look at the Hospitality services of the hospitals Patients.

New Business Vision and Mission

Vision
To be the national and regional Centre of excellence for both comprehensive and subspecialty in all ophthalmology Services and Research
Mission
  • To enhance the quality of life by improving sight and preventing blindness through kind patient care
  • To advance and disseminate ophthalmic knowledge through meaningful health education and innovative vision research
  • Attract the best qualified medical, scientific, and support staff
  • Excel in specialized ophthalmology care supported by comprehensive research and education
  • Providing affordable world class ophthalmic care with integrity and compassion to all our patients.
  • Provide efficient access to affordable medical care and Excel in the services we provide
  • Maintaining the highest standard of ophthalmic practice through continuous professional development and medical education.
  • Creating a healthy work environment by fostering teamwork, personal responsibility, integrity, innovation, trust and communication.
  • Develop, apply, evaluate and share new technology
  • Excel in specialized Baby and mother care for newly born babes and kids.

Business Objectives for the New Model

  • Attract the best qualified medical, scientific, and support staff
  • Excel in specialized ophthalmology care supported by comprehensive research and education
  • Providing affordable world class ophthalmic care with integrity and compassion to all our patients.
  • Provide efficient access to affordable medical care and Excel in the services we provide
  • Maintaining the highest standard of ophthalmic practice through continuous professional development and medical education.
  • Creating a healthy work environment by fostering teamwork, personal responsibility, integrity, innovation, trust and communication.
  • Develop, apply, evaluate and share new technology
  • Excel in specialized Baby and mother care for newly born babes and kids.

Business Strategy

According to Maarten den Braber (2009) business strategy bring about the issues of what value must be delivered which mostly focuses on customer preferences: how does the business provide what the customer wants? And, who are its customers? While on the other hand there are questions like what type of resources are available to the business, how can the business compete and collaborate with others and how would the business generate revenues from its activities in order to provide a sustainable course of action?

Chesbrough & Rosenbloom (2002) derive their definition of business strategy from different available definitions, focusing on detailing and operationalizing the definition. They also note that “many of the definitions of the current day business strategies and model are actually variations on Andrew’s 1971 classic definition of the strategy of a business unit (p. 533). Chesbrough and Rosenbloom’s business startegys and models are listed below.

1. Articulate the value proposition, i.e. the value created for users by the offering based on the technology.
2. Identify a market segment, i.e. the users to whom the technology is useful and for what purpose, and specify the revenue generation mechanism(s) for the firm.
3. Describe the strategic position of the firm within the value network linking suppliers and customers, including identification of potential competitors.
4. Define the structure of the value chain within the firm required to create and distribute the offering, and determine the complementary assets needed to support the firm’s position in this chain.
5. Formulate the competitive strategy by which the firm will gain and hold advantage over rivals.
6. Estimate the cost structure and revenue potential of producing the offering, given the value proposition and value chain structure chain chosen

After a look at the above strategies, the Authors feel that the best business strategies to using for Pantia Hospital would be the Strategic Position model, Market segmentation Strategy and last but not the least, Competitive strategy. In order to address the three strategies, we propose a structure that will identify the three main subjects the hospital will hope to answer and undertake which are: value creation, realization and value appropriation. We also include the basic notion of the business model approach that starts with customer preferences and ends with value delivered in our business strategy as shown in the figure 1.0 below.

value_model_2.jpg
Figure 1.0

The above attributes together with the selected business model and their application will form a comprehensive and logical model what will address the question of where the hospital is heading and also look at to what extent the sequence and combination of the models element/attributes and their combination will deliver value for the hospital.

The selected business models we have picked to be used by the hospital are generally focused on value-creation which will help the hospitals escape the zero-sum competition, which is one of the major problems in the current healthcare systems worldwide. According to Porter & Teisberg (2006), “Health care competition is not focused on delivering value for patients. Instead, it has become zero sum: the system participants struggle to divide value when they could be increasing Zero-sum competition in health care is manifested in a number of ways, none of which creates value for patients: competition to shift costs, competition to increase bargaining power, competition to capture patients and restrict choice, competition to reduce costs by restricting services.”

It is important in today’s economy for the hospital to create Value from a client’s point of view because the services provided in hospitals today are more on a market-oriented base. When it comes to value added services, the best part to look at is how interactions between clients and the healthcare system are often incident-based, instead of being focused on the complete process of healthcare. Eventually it always depends on what the complete process is described as, weather it is keeping clients healthy for example, or having incident- based interactions which do not deliver value.

In conclusion, the above business model will enables decision-makers in the hospital like the executives to make or building their own strategies through an inclusive model, rather than following senior exclusives advice on what paths the hospital should take. The selected models approach to strategy building provides a structure that makes it easy and possible for hospital executives to answer complex problems in healthcare. It balances an inside-out and outside-view on strategy. Starting from the value preferences it uses the six steps to reach the final stage of value creating. The three stages of the business model are value creation (value proposition, market segment), value realization (strategic position, value chain, competitive strategy) and value appropriation (cost structure and revenue potential).





References

  1. Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies. Industrial and Corporate Change,11(3), 529-555
  2. Clayton M. Christensen, Jason Hwang, M.D., and Jerome H. Grossman, M.D (2008), Strategy Innovation, Disrupting the Hospital Business Model. White paper The Innovator’s Prescription published in January 2009 by McGraw-Hill. http://www.innosight.com/documents/protected/SI/Strategy%26Innovation%20-%20Dec102008.pdf (Accessed online on 12.07.2011)
  3. Evelyn R. Singson (2008), Mapping the Future” Column in the INQUIRER, New business models for a more profitable hospital operations, (white paper, mapping - esingson - 8December2008.doc)
  4. Porter, M. E., & Teisberg, E. O. (2006) Redefining Health Care: Creating Value-basedCompetition on Results. Harvard Business School Press, white paper.
  5. S. Wunker and A. Waldeck (2009), Hospitals & Health Networks Magazine online, Resuscitating the Hospital Business Model, http://www.hhnmag.com/hhnmag_app/jsp/articledisplay.jsp?dcrpath=HHNMAG/Article/data/05MAY2009/090526HHN_Online_Wunker&domain=HHNMAG (Accessed online on 14.07.2011)