Transcript Document

The Emerging Hospital Business Model
for a New Value Proposition;
a projection for the
Saudi Market
Prof. Dr. Dr. h.c. Fried Oelschlegel
Healthcare Development Holding Co.
Definition
A customer value proposition is a business or marketing
statement that describes WHY a customer should buy a
product or use a service. It is specifically targeted
towards potential customers rather than other
constituent groups such as employees, partners or
suppliers. It is a clearly defined statement that is
designed to convince customers that one particular
product or service will add more value or better solve a
problem than others in its’ competitive set.
The easy for customers understandable value proposition of a
specific healthcare service is essential for patients but is also as
“differentiator” able to change the healthcare market in a longer
range. It’s a key for new customer driven business models.
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Core fields of business modeling
Business
Operations
and Process
Business
Strategy
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Vision
Leadership
Communication
Transformation and
Innovation Drive

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Information
Metrics
Communications
Hardware, Software,
Networking
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Business
Infrastructure

Organizational
Structure
Workflow and Business
Process
Supply Chain
and IT
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What is a business model, and
how is it built?
PROCESSES:
PROFIT FORMULA:
Ways of working together to address
recurrent tasks in a consistent way:
training, development,
manufacturing, budgeting, planning,
etc.
Assets & fixed cost structure, and the
margins & velocity required to cover
them
RESOURCES:
THE VALUE PROPOSITION:
People, technology, products,
facilities, equipment, brands, and
cash that are required to deliver this
value proposition to the targeted
customers
A product that helps customers do
more effectively, conveniently &
affordably a job they’ve been trying to
do
Copyright Clayton M. Christensen and Jason Hwang
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The dimensions of Business Models
Each of these business fields are structured in similar dimensions:
 Customer Value
(Proposition, Assumptions, Validation, and Achievements)
 Financial Formula
 Key Resource Inventory
 Key Processes
Business Modeling is precursor to change.
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Business Modeling:
Customer Value Proposition – How ?
1. Market segmentation - Targeting the customer group – Who is
your customer group? Who could be your customer?
2. Developing “ tailored “ products and services for specific market
segments based on Core Competencies – What are your core
competencies? Do you believe in these or are you sure about it?
3. Marketing based on the consumer’s subjective desire & objective
needs. Bearing in mind that allies, partners and payers are also
your customers, what do they believe in regards of needs? How
do they define value?
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Business Modeling (1):
Customer Value Proposition
1.
2.
3.
4.
5.
6.
7.
8.
Our target customer group is/should be/will be…
The problems we assume we are solving for them is…
Our service offering to the targeted customer includes…
We validate our assumptions by…
Our sources for additional R&D include…
Our competition includes…
Our market position is best described as…
Our “differentiators” include…
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Business Modeling (2):
Financial Formula
1. Revenue model shows revenue coming from what sources?
What is “bread & butter”; what are new sources, what could
become the business of future
2. What are our fixed costs? Variable costs?
3. What is our profit margin model?
4. What is our ROI model?
5. What is our “sales cycle” time? The time between courting a new
referral source and the admission of a new client as a result.
6. Can it be improved?
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Business Modeling (3):
Key Resource Inventory
1.
2.
3.
4.
5.
6.
7.
Who are our key people?
What are our key technology and system supports?
What are our strongest tools?
What is our most valuable information?
What are our strongest marketing and promotion channels?
What are our best prospects for partnerships and alliances?
How do we handle our branding?
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Business Modeling (4):
Key Processes
1.
2.
3.
4.
5.
6.
What are the core business processes that exist and those you
will need to modify? Develop? Extend ? Can you?
What are the “unique business processes” (“ this what makes
you different – your special face “ ) you enjoy now and those you
would need to innovate?
Business rules affecting your business model and those vs.
affected by it?
Existing and required Key Performance Indicators?
Existing and required Standards (credentials, accreditation, best
practices etc.)?
By the way – Germany hasn’t implemented JCI-Accreditation
standards and has not the worst healthcare system
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Be aware of “your” market segments
& services

A Market Segment is a specific “cluster” of prospective
clients who share common characteristics.

You have to answers the questions:
● What of our strengths should we leverage?
● What market segments make the most sense for us – now and
●
●
●
●
in the future?
What are our core competencies? What could be or hidden
competencies we are not aware off
Where will we be most successful? Inshaallah !
What makes us different to our competitors ?
What is our identical , typical face we are associated by our
stakeholders – patients, payers, competitors, media……
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…by proofing the opportunities – e.g.
Matrix Orthopedics
Market
Segments/
Services
Segment 1
(people age >
50)
Segment 2
Segment 3
(Young men
with strong
sportive
activities)
(Children with
congenital
musculoskeletal
deformities)
Identify where you are strongest in terms
of:
1.
Revenue share (%)
2.
Share of profits
3.
Greatest subject matter expertise
and capacity to grow
4.
Consistency with vision and mission
5.
Brand equity or reputation
6.
References
7.
Political/legislative opportunities
Service 1
(Out-patient)
Service 2
(In-Patients)
Where is the strongest
competition ?
Service 3
( Rehabilitation)
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Building business models – means also to
identify & overcome resistances & hurdles
1.
2.
3.
4.
Identify it
Prioritize it
Build alliances of spirit & intentions
Resolve it by conviction – avoid fights but
promote spirit of partnership
But beware - an overcome resistance will develop
new problems in the future – nothing is of eternity
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Hit list of resistors in MENA (1)
■ Tremendous lack of trusting and well structured healthcare
data
■ Being “ prestigious & a VIP “ – a stamping culture of wealthy
but underdeveloped countries
■ Lack of “management experience “ of doing business from the
scratch” & level of being “ military “ organized
■ Lack of business transparency and committing love to details
■ Too many “ business bubbles & big dreams “ ; announcements
with no putting in place; no execution
■ Insufficient revenue cycle / cost management in healthcare
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Hit list of resistors in MENA (2)
■ Overly cautious management culture; to less change & turn
around management experience
■ Lacking courage and open mind sets for new, fresh ideas and
thinking outside the box
■ Traditional Autocratic Leadership models with no participation/
involvement of employees as “most valuable assets”
company
of a
■ Lack of professional project management , timelines, milestones
and accountability (chaos)
■ Competing priorities – new “shiny objects” that derail initiatives
■
…..and much more
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Three Types of Business Models
Solution Shops
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Value-adding process
businesses
Consulting firms
High-end law firms
R&D organizations
Diagnostic activities of
hospitals
Fee for service
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Manufacturing
Food services
Retailing
Medical procedures
Fee for outcome
Facilitated User
Networks
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Telecommunications
Insurance
Facebook
D-Life (for diabetes
patients & families)
Varies
Copyright Jason Hwang and Clayton M. Christensen
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Hospitals become focused
solution shops, practicing intuitive
medicine
Today’s hospitals,
specialist physician
offices are agglomerations of solution
shop, value-adding
process, and (a few)
facilitated network
activities
Hypothesis
Treatment
Focused value-adding process
hospitals & clinics provide
procedures after definitive
diagnosis
Facilitated networks take
dominant role in the care of many
chronic diseases
Copyright Jason Hwang and Clayton M. Christensen
7/17/2015
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The difference
Specialty Hospital
General Hospital
Profit formula
Value Proposition:
Don’t know what’s
wrong? We can address
any problem you bring
Processes
Profit formula
Processes
Resources
Value Proposition:
When you know what
you need, we provide it
efficiently, effectively
Resources
Copyright Clayton M. Christensen and Jason Hwang
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A WORD OF THOUGHT…
It is not the strongest of the species
that survives,
not the most intelligent, but the one
most responsive to change
Charles Darwin
( 1809 – 1882 )
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