Strategies that Private Hospitals Adapt to Become Competitive in the Healthcare Industry

The chapter aims at reviewing existing literature associated with business strategies that private hospitals adapt to become competitive in the healthcare industry and techniques that can be used in the alignment of the internal change with the strategic context. The information will be obtained from peer-reviewed scholarly journal articles relating to the research articles. In the last few years, the healthcare industry has undergone significant growth and experienced changes in financing, quality standards and patient demand (Ram, 2014). These issues contribute to increased health expenses, public concern and the need for restructuring. As a result, the changes compel re-evaluation and rethinking of different strategies by the management to adapt to improve efficiency, effectiveness and competitiveness in the market. The discussion will be based on branding strategies that private hospitals may adopt to be viewed as market leaders while at the same time, ensure that there is alignment with the internal changes.

The healthcare industry in Saudi Arabia has changed drastically and hospital marketing has focused on patient education and brand management. Mohammad Ahmad (2016) conducted a study where they concluded that on a consistent basis, hospital marketers are adapting and adjusting their market plans to meet the needs and expectations of today’s tech-conscious patients. The study is relevant because it provides a rationale for marketing plans that are adopted which comprise elements such as search engine optimization, maximization of the website experience, increased patient education, social media engagement and online interaction. Since there are many options available to the patients who may prefer online services rather visiting the hospital or practice that may be near their location, Mohammad and Ahmad (2016) provides effective strategies that will enhance brand management. However, the level of awareness among clients on their right to select their institution of choice is high and results from use of online search methods when undertaking the process (Walston, Al-Harbi & Al-Omar, 2008).

Therefore, there is need for proper positioning to ensure the hospital’s success since the practice serves various purposes such as instituting an internal and unified understanding of the services and distinguishes the organization from competitors (Bishwajit, 2016). Bishwajit (2016) has given deeper insights on how market positioning can enable an institution to get a direction for product and service development and further establish direction for product and service development. In the current error, market positioning strategy significantly depends on customer’s motivational variables as well as competitor’s actions. Additionally, market positioning depends on research that allows the analysis of the sector intricacies and potential (Sharma, 2013). The trends in the healthcare market indicate that extensive research is an excellent approach to assessing rivals who pose the greatest threat to the survival and developing impactful strategies that drive meaningful results. Both studies indicate that, due to the fundamental changes which are currently undergoing in the healthcare sector such as increased acquisitions and merger activities, adopting effective marketing strategies will play an essential role in enhancing success.

The government of Saudi Arabia has given high priority to the sector which has led to seemingly improved service quality (Yusuf, 2014). Yusuf (2014) provides necessary information on how Saudi Arabia has had the largest health care system regarding geographical coverage being ranked at 26 out of 190. As a result, deeper insights regarding increased competition in the health sector, and the need to offer quality services is inevitable can be deduced from the study. Additionally, Biygautane (2016) provides additional data on how the government continues to dominate the country’s health sector, and only 25% of the total health sector expenditure is from the private sector. Hence, both Yusuf (2014) and Biygautane (2016) try to explain how the survival of both private hospitals substantially depends on their capability to employ outstanding marketing and promotional strategies that contribute to increased profitability.

 In these times of industry uncertainty, it is essential for healthcare institutions to capitalize on four major approaches to be well positioned in the future including; growth, relevance, effectiveness, and capabilities (Arsanam, 2014). Whilst the growth and effectiveness strategies have been stable in strategic plan employed in Saudi Arabian healthcare systems, Arsanam (2014)  explains how the increasing industry upheaval have brought about the need for according an equal priority to capability and relevance. In relation to brand positioning as a market leader, growth strategies should focus on the efforts to expand services which eventually contribute to a significant increase in revenue and profitability as well. On the contrary, since the industry future direction and level of competition is very clear, growth enables hospitals to survive and further generate profit (Basturescu and Kechagias, 2014). Until today, growth constitutes one of the primary methods applied in the healthcare industry to enhance success. The two studies show that that, with growth, an institution may concentrate on specific issues such as reputation, new markets, a span of services, size and scale, specific population, and additional geographies.  However, Tyagi and Nauriyal (2017) argued that growth is an aggressive approach, perceived as a sign of strength and success due to its capability of increasing revenues. The sources are credible and relevant because the data was collected from Saudi Arabian healthcare organizations with a focus on how the health sector consistently experience myriad opportunities for improving their revenues. Moreover, some of the measures recommended include enhancing service lines within existing programs and expanding channels and avenues to offer retail and urgent care.

On the other hand, effectiveness methods allow the organization to focus on gaining higher value while delivering the services (Bichescu, Bradley, Smith and Wei, 2018). The study provides some of the methods employed in relation to effectiveness include creating standardized processes and supplies, using technology in completing tasks, reinforcing goals by addressing organizational goals, and improving the coordination across departments. For capability strategies, healthcare organizations pursue initiatives such as developing data analysis and population segmentation that are used in predicting health needs (Bichescu et al., 2018). Through the approach, institutions usually create care teams that effectively communicate chronic diseases and measures put forth by an organization to assist clients to combat the use.

Studies also suggest that marketing mix play an instrumental role in enhancing success among private hospitals who charge patients relatively high prices (Bhalerao and Deshmukh, 2017). Notably, patients’ satisfaction is very important since the concept leads to an elevated number of customers to the healthcare facility. Bhalerao and Deshmukh (2017) provides detailed information on how pricing strategy adopted by a particular private hospital can attract a large number of customers hence culminating in increased revenue and profit. Similarly, since the hospitals have costs that they incur in their daily operations, patients are required to meet all the costs in exchange for excellent medical services (Abo_Dalbouh, 2017).  The  study by Abo_Dalbouh, (2017) provides current trends on how the prices for the services normally cater for costs and estimated profit as well to enhance continuity and competitiveness. Nevertheless, pricing strategy is dependent on government regulations and the variable costs that are incurred on a daily basis. Thus, it can be deduced that the pricing policy is drawn according to completion in the market and price discrimination of market segment. Consequently, the market competition compels healthcare organization, particularly offering private services to base on multiple factors when determining prices of their services.

 Health service strategy revolves around the interactions between the patients and the hospital. Shivakumar and Sarala (2018) proposed that the health care services offered are required to meet established level of quality standards which are mostly determined by the level of customer satisfaction. Shivakumar and Sarala (2018) have structured the arguments by focusing on strategies to increase competitiveness whereby, the organizations should ensure they accurately meet these expectations and execute supplementary measures such as aggressive marketing and publicity to build a strong brand image. However, the health sector is facing competition as strong brands are coming up every day with customers’ demands changing dynamically (Shivakumar and Sarala, 2018). Additionally, a study conducted by (Smith, 2018) evaluated how the modern technology has played a pivotal role in enhancing the delivery of outstanding services due to increasing operational and administrative efficiency. Despite the fact that a wide range of medical services are currently offered in hospitals which ensure the diverse needs of the target clients are met, most facilities are developing and introducing new health care services, which have indeed increased the level of competition in the industry (Smith, 2018). Whilst, Smith (2018) concludes that the integration of technology in hospitals operations ensures they appropriately meet the ever-changing client’s needs, growing demands, and hostile external business environment, Shivakumar and Sarala (2018) provides current trends and patterns associated with inventions and innovation that can help the facility to penetrate new markets since delivery of outstanding services attracts a large number of clients irrespective of the price charged. Therefore, due to the fact that customers in the industry are more concerned with the quality of services offered, continuous innovation has allowed hospitals to proactively respond to patients wants and effectively implement marketing and operational strategies.

In regards to access strategy, most of the healthcare institutions are normally located in strategic areas which can be easily reached by the target market (Al-Hanawi, 2017). The study Al-Hanawi (2017) structured the arguments basing on how these organizations usually establish a special team which provides education to the public about the services offered in the facility. Accessibility depends on physical location, the time taken to receive medical services, and communication approaches between the physicians and clients. For instance, time accessibility regards the working hours of a station, the waiting time before receiving service and the period customers take before being allowed to meet doctors. In Saudi Arabia, some health care facility work twenty-four hours, for seven days which indicates that they are always in operation (Yusuf, 2014). Yusuf (2014) focused on how a facility can adopt a schedule that allows for emergency and accident cases and the study provides information private hospitals are very reliable in terms of accessibility to services. Consequently, accessing may not be an exceptional strategy for the new healthcare, but can offer the opportunity to tap additional customers hence increasing the overall revenue.

Furthermore, the promotional strategy is mostly applied using integrated marketing communication. According to Ahmad et al. (2013), promotion is a critical marketing strategy, whereby hospitals communicate to their customers concerning the services they offer. The study gives clear details on how an organization gets into a particular industry by identifying market gaps that provide insights on key approaches to embrace in order to attract a large market share. However, these strategies are dependent on the resources allocated by the hospital and the objectives the facility seeks to achieve (Bhalerao and Deshmukh, 2017). Therefore, different promotional tools are used because no one tool can achieve the strategy; the concept is referred to as a promotional mix. As a result, organizations that effectively and successfully employ selling and promotion are more competitive since they get more revenue which contributes to improved profit.

Private Healthcare Market Opportunities in Saudi Arabia

Both private and public hospitals in Saudi Arabia are struggling to provide to the citizens quality healthcare services which are cost-effective. As a way of addressing this issue, leaders of private organizations have considered restructuring their branding techniques through introduction of insurance coverage for both citizens and foreign workers (Mohammad & Ahmad, 2016). These changes aim at bringing insightful and interesting solutions to the challenges being experienced in the country’s healthcare system. Nevertheless, an institution should introduce unique ways of delivering quality services to the clients to address the deteriorating quality and rapidly escalating healthcare costs (Walston, Al-Harbi & Al-Omar, 2008). However, the private sector still encounters drawbacks which result from strict regulation from the government. On the contrary, Katz, du Preez and Louw (2016) findings indicate that through the use of interest-free loans given by the Saudi Arabian government, private hospitals can construct new facilities with technologically advanced equipment and infrastructures which will be used in delivering quality services to clients across the country.

Privatization of hospitals in Saudi Arabia

The recent move for privatizing healthcare services in the Kingdom of Saudi Arabia by the Ministry of Health is expected to result in an increment in healthcare demand and investment opportunities (Al-Salem, 2018). As a result, global healthcare companies will be attracted into the industry and henceforth, stiff competition among private hospitals. This initiative will boost healthcare services as institutions will now focus on achieving decentralization, expediting the decision making process, raising productivity and boosting quality (Khaliq, 2012). The competition for a significant market share will increase and hence, marketing departments should build strategies to position themselves as leaders in the industry through the provision of improved quality services and being customer-centric (Alhowaish, 2018). The studies show that comprehensive and preventive care will require integrated marketing communications that center focus on establishing a reputable brand image. However, it is necessary to note that private hospitals are believed to provide enhanced performance through close supervision and good governance by the owners who look for profitability as well as ensure continuity amid razor sharp competition (Informa Exhibitions, 2013). With an increment in the number of private hospitals, patients and their families will have a variety of options to select from and hence, switching costs will be low as explained in the Porters’ Five Forces (Al-Salem, 2018). Thus, the authors seek to provide information that, to position the brand effectively in the targeted market segments, private hospitals should focus on improving their services along with making sure that the staff is committed towards highest international standards. However, the Saudi Arabian government believe that the move to privatization will result in increased availability of state-of-the-art technology and most modern medical equipment (Khaliq, 2012). These findings indicate that the rivalry will result from competing for best consultants, technicians, specialists and nurses in the healthcare labor market. 

Aligning internal change with a marketing strategy in private hospitals

An organization should gain deeper insights regarding both the internal and external market dynamics as it prepares for change.  A study by Sadeghi (2011) show that the key market driver should be the basis of value-based care delivery model which should be leveraged into scenarios that take a market-wide and population-centric view. The author based arguments on significant demographic shifts in the patient population have either positive or negative impact on the provider networks. Nevertheless, the private markets influence health plans that companies offer and how small groups and individuals purchase health insurance (Dobni, 2010). The sources are credible as they entirely focus on the external market forces and internal capabilities that should be examined through analysis of the internal system of compensation, care management infrastructure and data analytics capabilities. The authors in this context have based their arguments on a re-evaluation of the current structure and focuses on the management of the targeted audience.

Nevertheless, the change management initiatives should be used in the adjustment of a marketing strategy to attain the continuously changing performance goals. Effective leadership is a necessary component during the implementation of a new strategy (Reeves & Deimler, 2011). This step ensures alignment of the change with overall business strategy to secure a significant competitive edge in the industry. The working environment should be conducive and encouraging to allow the staff to focus on higher productivity and quality services through appropriate communication, collaboration and innovation (Dobni, 2010). To guide operational decision-making clearly defined responsibilities by marketing managers to ensure the new strategic advance does not interfere with operations in other departments or does not encounter resistance from the staff (Acur, Kandemir and Boer, 2012).  Both Reeves & Deimler (2011) and Dobni, (2010) recommend that the main problems experienced in the private hospital should be diagnosed followed by identification of existing performance gaps before developing a new strategy. As a result, to devise new alternatives, managers can use a sequential design process based on changing market conditions, new technology advances and competitive pressures (Sophia, Volk and Ansgar, 2018). The sources are authoritative and demand organizational strategic alignment to include traditional competitive advantages including delivery models and market position which are referred to as the static competencies. The primary focus for the arguments is on how change can be used in supporting successful implementation of a marketing strategy and requires optimization of current activities along with radical and disruptive innovation.

Adequate employee training and support is necessary to build trusting relationships with the managers lead the whole process of change which needs to be flexible (Acur, Kandemir and Boer, 2012). Leaders should create a supportive culture accompanied by securing appropriate resources to meet the needs and expectations of the patients and other stakeholders that are directly affected by the operations in the private hospitals (Lear, 2012). The modifying factors that influence internal alignment with change include decision-making techniques, quality of planning, transparency, trust and communication. From Kettinger & Grover business process change model, aligning internal change with a marketing strategy require inclusion of a wide range of elements including performance measurement, culture, information technology, governance, management, leadership, communication and people (Sophia, Volk and Ansgar, 2018). As a result, internal change strategic alignment aid in the removal of common barriers to transformation and innovative solutions in private hospitals. Successful change management will lead to achievement of the highest customer benefit and requires concentration on tactics to achieve improved communication, build partnerships, grow skills, and establish governance (Sadeghi, 2011).

Aligning Market Leader Strategies with Internal Changes

Competition in a normal market leads to relentless quality and cost improvements. Patients always have a variety of public health facilities to visit and seek medication which may be absolutely free or subsidized (Yusuf, 2014). Hence, private hospitals should adopt competitive strategies to position themselves well and become attractive to the clients. Before the discovery of oil within its borders, Saudi Arabia was a poor and isolated country. The healthcare sector in Saudi has been recording significant progress in recent decades whereby, local hospitals have received internal recognition (Katz, du Preez and Louw, 2016). To manage healthcare needs, Saudi Arabians still rely on private healthcare organizations which have increased competition among the major players in the industry (Wei, 2014). The essentials that drive market changes include high demand by patients’ need for treatment, higher population growth and increased life expectancy. As a result, from commercial and social perspectives, the private sector is attractive and threat of new entrants is high. The existing hospitals need to position themselves properly as the market leaders through either offensive and defensive mechanisms while at the same ensure alignment of the internal changes with the strategic context (Chang, Fernando and Tripathy, 2015). 

From Michael Porter’s Generic strategies, cost leadership is the main type of competitive approach that leads to taking of either defensive or offensive actions that eventually creates a defensible position in the industry (Tanwar, 2013).  A private hospital can position itself as a leader by emphasizing on efficiency and provision of high-quality standardized services (Yusuf, 2014). Therefore, the studies explain how the initiative allows the healthcare institution to take advantage of experience curve effects as well as economies of scale. Similarly, the healthcare market in Saudi Arabia is overcrowded and fragmented and achievement of competitive superiority requires possession of difficult-to-imitate and distinct position in the mind of consumers and carrying intangible value (Tanwar, 2013). On the contrary, an institution can consider adopting the cost leadership strategy by providing the services at low costs and ensuring that the services can be accessed by different types of the population including the disadvantaged or less fortunate groups in the community across the nation (Chang, Chiao and Tsai, 2017). As a result, maintaining this strategy force organizations to focus on cost reductions in all the business aspects and increment to easy accessibility of essential inputs.

In today’s dynamically changing and uncertain environment, the traditional competitive advantages including delivery models, scale production capabilities and market competencies have become static competencies (Katz, du Preez and Louw, 2016). The data is relevant to the topic as it relates to how institutions should expand smartly and implement good marketing plans that will enhance brand positioning the market which has a significant influence in the minds of consumers. The competitors should be the point of reference when formulating appropriate strategies to become leaders and gain significant market share (Chang, Chiao & Tsai, 2017). To determine the mindset of clients in healthcare sector, it is necessary to analyze their behavior and elements that impact satisfaction of anticipated needs and expectations (Almalki, Fitzgerald and Clark, 2011). By become customer-centric, the level of patient satisfaction increases and strategic leadership should focus on improving quality and adhering the universally and locally accepted standards of handling clients in the hospital setting (Arshad, Shamila, Jabeenand and Fazli, 2012). Authors in this section are authoritative and base arguments on the private medical services market where the patient choices depend on availability of experienced doctors, time spent in waiting for services and technology applied and hence, should be handled effectively to enhance the competitive advantage of the institution.

Market Leadership in the Healthcare Sector

Every business organization works to attain market leadership in the industry (Reeves and Deimler, 2011). The leadership is only attained through an adoption of a suitable strategy that helps it attract and retain more customers in their operation (Mosadeghrad, 2012). Usually, the center of the main activities is placed upon the cost reduction and increase in returns for effectiveness in the operation (Wei, 2014). In healthcare, some of the key factors of consideration for growth to market leadership include the consideration of the ability to identify and meet the market needs. There is need to conduct market research on the health status of people to determine the market gaps that the healthcare. Basturescu and Kechagias (2014) argued that healthcare organizations that offers healthcare services that meets the market needs stand the chances of industry leadership. Besides, Arshad et al (2012) sated that the success in offering the services to the patient’s demands for the clear understanding of the needs of the patients with the target and delivering services that suits them.

            The second aspect for consideration to achieve market leadership is the quality in the healthcare (Tanwar, 2013). There must be efforts to ensure that the medical services are delivered with the highest possible quality for better results. Usually, quality attracts more clients to seek the services. The trends and patterns in research indicate that there is need to establish the key aspects of the business such as the convenience, and incorporate them into the medical services of the company for increased customer satisfaction. However, Smith (2018) argued that the service quality in medics is determined by the kind of healthcare problem being solved. The aspect is true because different healthcare services are delivered to the customer in accordance to their type (Basturescu and Kechagias, 2014). Therefore, the incorporation of quality is connected to the specific value aspects of the given service in the hospital.

            Besides, creativity and innovation is essential in the helping a hospital attain market leadership (Smith, 2018). The approach provides the capability of solving problems in a cost-effective way, and the coming up of solutions to overcome the challenges. The private hospitals gain competitive power over healthcare institutions through the incorporation of the creativity and innovation aspects in their operation (Mosadeghrad, 2012). Therefore, the private healthcare need to integrate the culture of creativity and innovation into their operations for better results. Generally, the use of the corporate culture towards the attaining of goals is important and has significant impacts to organizational internal alignment to embrace a strategy towards achieving the goals. Thus, the practice is essential in attaining of the market leadership in the healthcare industry (Bhalerao and Deshmukh, 2017).

            Typically, the strategic efforts to gain market leadership in the healthcare sector focuses upon the capabilities of attracting customers and retaining more for effectiveness (Kawczynski and Taisch, 2009). The aspect helps the hospital to build a bigger customer base that translates into increased competitive power over other players in the sector. There exists a relationship between the customer population size and their satisfaction. Usually, contented customers have the capabilities of influencing other customers to seek the services, hence, helping the business to grow (Chang, Fernando and Tripathy, 2015). Besides, satisfied clients are likely to come back to seek the services in the hospital. Therefore, the two studies indicate that there is a direct relation between the competitive capabilities of the business. The customer satisfaction is the key driver for the competitive power and market leadership in the private sector.

The Relationship of Internal Harmony and the Profitability of the Private Hospitals

The link between different sections of every organization has a direct impact on its general profitability (Hardyman, Daunt and Kitchener, 2015). According to Porter’s value chain analysis, the sum performance of an organization is composed of a series of activities performed by different sections of the company that makes up the value delivered to the company (Porter and Heppelmann, 2014). The model advocates for the fact that the competitive advantage of a company is realized through effective coordination of different departments. Usually, increased competitiveness has a direct impact on the profitability of the business. The delivery of value to the customers and the general profitability of the private hospitals can be achieved through increased enhancing internal departmental harmony for effectiveness.

The study by Mosadeghrad (2012) states that the basic element for the high performance of a private healthcare organization is through a focus on the quality of the services offered to the customers. After the utilization of the exploratory in-depth interviews to both the individual and the focus groups, the study concluded that quality within healthcare can be attained through the coordination of different sections. The work perceived that performance in medical care can be attained through a focus on key aspects that include the effectiveness, environment, efficacy, efficiency and empathy (Mosadeghrad, 2012). These factors form a conceptual framework that works together to deliver the best quality in the institution. On the other hand, the factors defined in the model can only be attained through coordination of different sections of the organization to yield better results (Hardyman, Daunt, and Kitchener, 2015). High quality in the organization translates to a high patient value that has a direct positive impact to its performance. The fact is true because humans tend to seek high quality in medical services. Therefore, an increase in quality within private healthcare is attained through effective coordination of different departments that in turn translates into increased profitability of the institution (Mosadeghrad, 2012).

A similar study conducted by Kawczynski and Taisch (2009) emphasizes that a healthcare organization can gain competitiveness in the sector through an improvement in the quality of the services offered to customers. The research utilized methodology of surveys and the interviews of the experts in the field. The study found that medical organizations can improve the quality of their services by an establishment of an organized value chain in their operation. The aspect is attained through a focus on each value chain item delivered by every department as a contribution to the delivery of the service to the client (Kawczynski and Taisch, 2009). There exists a link between service and customer satisfaction that in turn impacts the profitability of the institution. In all cases, the patient value is achieved through efficient coordination of different sections of the business that handles various aspects on the value chain. However, the study has shortcomings of the potential bias that emanates from the survey and interview methodology employed (Kawczynski and Taisch, 2009).

Buttigieg, Schuetz and Bezzina (2016) argued that private medical organizations can overcome financial problems through the creation of value by maximization of resource usage and the cutting down of the costs. The best usage of the available resources translates into the creation of value to the business. The study was conducted qualitatively, whereby different aspects of the value creation process were reviewed to establish the best practices (Buttigieg, Schuetz and Bezzina, 2016). The research found that a link between various departments of the institution that are involved the service delivery must work together for the best outcome. The principle must be applied to all the sections of the business, ensuring that value is created within the sub-processes of the business. Besides, the process of value creation must focus upon the understanding of the strength, weakness, the opportunities and the weaknesses (Buttigieg,