Hospitals expanding abroad must focus on the right marketing mix, not on influencing external environment: Experts

New Delhi: Spurred by the booming Indian economy, many Indian hospital entrepreneurs are wanting to spread their wings to other countries. They intend to leverage their strengths in global markets, especially in nations that have high per capita income but lack good healthcare infrastructure. To succeed, they must focus on getting the marketing mix right, rather than trying to control the environmental variables in the foreign land, India’s prominent hospital management experts have said.

Said Raj Sehgal, Associate Director with Delhi-based TR Life Sciences, a leading hospital management consulting firm: “Done right, cross-border expansion can offer phenomenal rewards for hospitals, as countries around the world welcome foreign investment and expertise in healthcare, opening the door to their markets and pool of patients. Global presence can enhance the value of an Indian hospital brand and earn the trust of overseas patients. It can give access to an advanced knowledge base and technology and help offer medicines and services to patients at competitive prices in the host country. However, taking a hospital business to uncharted territories does have its own perils, and one must tread the waters carefully.”

He added, “Hospitals need to keep patients at the center and structure all services around their needs. This might require new modeling of marketing mix and technology to develop the service offerings. In a foreign country, the marketing team is best advised to focus all efforts on creating an effective marketing mix, rather than trying to influence the environmental variables. It might be easier to manage the usual marketing mix of 4Ps (Product, Place, Price, Promotion) rather than persisting in managing the uncontrollable variables or the external environment.”

“The new entrant must consider all components of the external marketing environment, such as social, demographic, political, legal, and competitive landscape, before establishing a presence in a new land. A very important variable is the payer system (insurers) analysis. This profoundly impacts the way hospitals can operate in a country,” Raj Sehgal said.

According to him, several essential questions need to be asked and steps are taken when a hospital operator decides to establish a global footprint. “The first and foremost question is the choice of the country. This is vital for the business and its management team. Each country has its own distinct makeup of social, demographic, economic, financial, regulatory, and political environment as well as variant culture, resources, and global outlook,” Raj Sehgal said. “One must undertake due diligence of the host country. This entails evaluation of the market size and the growth opportunity it offers for a hospital business, the existence of supply chain, local competition, availability of technology and IT infrastructure, quality of physical infrastructure, regulatory policies and laws, and availability of human resources like doctors, nurses, paramedics, and IT professionals.”

According to Dr. Gopal Sharan, Managing Director, TR Life Sciences, setting up a hospital abroad requires an understanding of the business entities available locally, the availability of US dollars and currency valuation, the mechanism to repatriate profits, finance and audit requirements, taxation, bilateral trade agreements, and healthcare compliances. Anyone stepping into a foreign business environment must take care of the laws, rules, and healthcare regulations in the target locale and adhere to all compliances to ensure a hassle-free and impactful entry.

Said Dr. Gopal Sharan: “Hospital expansion abroad can come in many forms, as several market-entry routes are available. These include expansion through mergers and acquisitions (M&A), joint ventures, export of services, licensing the brand to local entrepreneurs (franchising), taking management control of existing hospitals, managing one or more departments (such as oncology or cardiology) of local hospitals (outsourcing), and 100% ownership projects. The entrepreneur needs to choose the one that best suits the business objectives and capital availability.”

“In my experience, overseas ventures of Indian hospitals become successful when they offer the quality of care and patient-centricity, develop capacities locally, all marketing variables are taken care of, and there is a balance between the local entity and the parent company in managing the hospital,” said Raj Sehgal.

According to him, global marketers need to avoid indiscriminate standardization of offerings, services, and pricing, and not use the same communication messages and strategies taken from the home country. Adopting and executing marketing actions specific to each geography should be flexible. Hospitals should encourage locally hired managers in other countries to develop and innovate ideas for use in that specific geography, with guidance from the corporate headquarters, in accordance with the concept of “think global, act local,” he added.