The risks involved for a hospital, in expansion, from one speciality to many, may sometimes outweigh the benefits, observes Vivek Shukla
There comes a point in a single speciality hospital?s life when it finds itself on crossroads. This is more likely to happen if the hospital is doing well. The promoters of the hospital are in a dilemma, whether or not they should be adding new specialities. They want the label of multi-speciality set up. Marketers know of this phenomenon as ?line extension?.
There is a school of thought among the marketing strategy gurus that line extension is a trap which tempts many organisations successfully. What is behind the thought of extending the line? The answer to this question requires a bit of common sense.
Firstly, the hospital owners think that one speciality has done well and therefore if they extend the services, the existing goodwill will act as a lever and the new service will take off instantly.
Secondly, the extra funds created by the success of the one speciality, give the extra courage to the promoters to experiment and thirdly, in wake of existing or future competition, the hospital decides not to put all its eggs in one basket.
A classic example is one orthopaedic hospital called Dr Chandan?s Ortho Centre (not the real name). Dr Chandan did his MS in orthopedics from a leading medical college and then went to UK to do his (M Ch). On his return, he got a break with a big multi speciality hospital in his city.
Fortunately, he made a good name for himself and soon he was the most sought after doctor in orthopedics. In due course of time, he was tempted to open up his own nursing home, which he did. Fortune favoured the brave doctor as his practice went roaring within a year. There was no other orthopedic centre in the city which could boast of gadgets like image-intensifiers and top of the line X-ray machines.
After a few years, he decided to be brave again. He thought that it would be great if his wife, who was a gynaecologist, left her present job and joined him. He even invited his childhood friend, Dr Harish (not his real name), who was a good laparoscopic surgeon in the neighbouring town to join him. Dr Harish also had a medico wife who had specialised in pathology and was keen on jumping on to the bandwagon.
The whole idea made perfect sense. The hospital was already well known. So, the word would spread around easily. The doctors had already earned enough and the funding of new equipment was not a problem. Moreover, since they shared a strong bond of being friends, the idea sounded exciting. They were ready to rule the town to the extent that the big hospital that Dr Chandan had initially worked with, could also face competition from them. Alas! It was not to be.
The start was too slow. Dr Chandan?s work did not get affected much, but the other specialities just did not pick up. So, the promoters decided to pump in some money to boost the new specialities. They even changed the name of the hospital to Dr Chandan?s Multi-Speciality Centre.
Dr Chandan also lost focus and his practice started to go down for the first time in his life. A pro-active competitor took opportunity. He hired a strategy consultant and started to improve upon his single speciality orthopaedics hospital.
He bought a top of the line image intensifier, employed a part time neuro surgeon and a part time plastic and reconstructive surgeon. Soon, he came to be known as the number one trauma and orthopaedic centre in the city. Till date, he does at least 30 per cent extra surgeries than his counterpart, who is still struggling to get his new specialities to take off.
I am sure many of you would ask,?How come??. Some of you may even go the extent of saying that this story can not be true. So let me explain what went wrong.
Marketing in a competitive environment is like waging a war. As in war, there are objectives (customers) to be achieved before the opponent reaches them. Also, you need to defend your territory aggressively by improving yourself ongoingly.
In this case, the hospital in question already had captured a major chunk of the territory. But when they decided to employ new forces and capture a new region, it made them weak in defence. All of a sudden, they realised that capturing this new market, with the new service, will mean fighting a new set of competitors. These competitors were, in addition to the existing ones.
Moreover, they were already established in their respective fields. Not only those, the existing resources of Dr Chandan?s Ortho Centre were divided along with his focus. This made it easy for the existing competitors to make inroads into his defences.
A very important factor that led to the failure of this ?exciting? venture was, the displacement of the place that Dr Chandan?s Ortho Centre held in the minds of the prospects. All of a sudden, the prospects had to create a new place for the hospital, which did not gel with the existing reputation.
It was as if Maruti had suddenly decided to manufacture scooters and in addition to that, it was trying to push this idea down the throat of its prospects, based on its impeccable reputation as a car manufacturer.
Marketing is a game of perceptions. People do not buy your product or service. They buy the perception or image that is associated with it. It will be very useful to add that, in some instances ,the extension of services into a new area can be successful. Especially, if the area in which the extension is being done is devoid of competition and there is a demand for the new service.
Also, it may help to offer the new services under a new name, so that the existing ?positioning? is not meddled with. All in all, my phrase of advice to the people in this dilemma is-?be careful.?
(The writer is a healthcare and marketing consultant. Email: email@example.com