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Competition, Marketing Mix and Pricing

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The success of any company directly depends on the clearance of the objectives that have been set, the appropriate formation of the company’s mission, and perseverance in achieving them. According to the Hospital Corporation of America (HCA) annual report (2005) the mission of the company is to “deliver high quality cost-effective health-care in the communities” where the medical entities of the HCA operate. HCA puts all its efforts to make the lives of their patients better. This paper investigates the milestones of the market segmentation, strengths and weaknesses of the marketing mix tools, pricing strategy of HCA, and proposes strategic direction for the maintaining high level of the competitive advantage for the HCA.

Key Characteristics of the HCA’s Patients

It should be emphasized that any patient, who applies for the qualified help from the Hospital Corporation of America professionals, is searching for the following values that the company provides:

  • affirmation of person’s unique individuality, and intrinsic worth of each patient;
  • kindness and compassion are the milestones of the company’s professional activity;
  • trust and honesty, fairness and integrity drive HCA daily small and big professional deeds;
  • each patient knows that medical personnel are highly satisfied with the attitude that the company demonstrates, based on the loyalty, respect and dignity.

It is proved that satisfied employees, especially in the medical realm where the compassion and kindness play a decisive role, provide better service quality and improve the effectiveness of a daily operating activity (Rees, 2003).

According to the HCA annual report (2005), the Hospital Corporation of America marketing team conducted in-depth segmentation of the market including indicators of demographics (age, gender, race, and ethnicity), incomes level, lifestyles, usage rates. It was determined that men and women represented X-Generation, N-Gen, or Generation Y cohorts,  had average and high level of income. They are ready to pay extra money to obtain qualified help and spend as little time as possible for the hospital visit. They also expect to be serviced in the hospital with the highest respect and total confidentiality.

Competitive Environment of the HCA’s Operations

Analyzing the forces that form the competitive environment and its regulation, it must be pointed that Hospital Corporation of America operates in 20 states and is represented by 109 freestanding surgery centers and 163 hospitals. It should be stated that HCA is the largest for-profit medical services provider with 4.2 percent of a market share. It has two main competitors Community Health Systems Inc. (CHS) and Tenet, both possessing more than 1 percent of the market share. Health care area is difficult for a market entering in particular, due to the huge capital expenditures. The level of patient’s satisfaction and loyalty indicator determines the profitability of the company. Healthcare sector is multilevel. Federal and state regulating agencies, primary providers such as hospitals, voluntary, governmental and investor-owned entities, ambulatory care facilities, hospices and secondary providers are the main players. Therefore, the challenging task for the company is to adapt to the changes in government regulation, reimbursement policies, and private sector strategies quickly. All the above mentioned sector’s players determine the direction of its development and growth (HCA annual report, 2005).

According to Naidu (2009), to differentiate itself from the main competitors HCA has to provide such a value for its patients’ money that will suit their expectations. With regard to price-service quality ratio, HCA marketing specialists should put an emphasis on the easy access to the medical centers both in suitable scheduling and physical availability terms. Moreover, the patient should understand that he pays money for the best professionals in their fields, for the up-to-date facilities and technologies.

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The Hospital Corporation of America aims to enlarge its network to provide high quality service to the communities. Miguel (2009) states the main company’s strategies should include achieving status of the industry-leading performer. Leading positions will be achieved in the level of ambulatory services and patients’ loyalty indicator. Increased recognition of the Company’s services significance will be achieved not even by satisfaction of the patients but by measuring of the increasing patients’ loyalty. Satisfied patient could shift to another health care provider every minute. Loyal patient is ready even to forgive small mistakes. Moreover, it is much cheaper to satisfy loyal patient, than attract the new one. It is crucial to build long term medical representative-patient relationships, because it is the guarantee of repeat visits and, thus, a stable flow of income.

Moreover, to meet the growing competition in health care industry, it is crucial for the Hospital Corporation of America to ensure a stable process of recruiting that will assure attracting of the best medical professionals to the Company’s hospitals and surgery centers. It is impossible to be the leader at the market without highly committed and engaged personnel, knowing that their skills and knowledge are adequately paid for, and that the company values their efforts.

Marketing Mix Tools

Regarding the analysis of the marketing mix tools, such as 7 P’s elements, major strengths of the Hospital Corporation of America has to be pointed. HCA is famous for its unrivaled quality of service and modern equipment. The company actively advertises its services, demonstrating its advantages of receiving medical care at its hospitals and surgery centers for the wide range of customers. Company’s competitive advantage is characterized by the diverse service portfolio. Moreover, the Hospital Corporation of America operates in the urban areas with the high level of citizen’s income that provides growing inpatient incomes. High indebtedness and low inpatient rooms utilization are the main weaknesses of the Company (HCA Annual Report, 2005).

Growth plans of the Hospital Corporation of America include three P’s: place, process and physical evidence. Concerning easier access to the surgery centers and hospitals, HCA will further conduct aggressive acquisition policy. It means that the company will acquire the best hospitals to enter new local and foreign markets and to expand its network. Moreover, the emphasis will be put on the opening new imaging and outpatient centers with an increase in funding for capital expenditures. Increase in the number of access points in particular new surgery and oncology centers will improve performance of place and physical evidence indicators by attracting more patients to the medical centers. Possibility to improve the process of health care provision exists always. The challenging task for the HCA management is to arrange such daily operating activity that the patient will obtain the best medical service for the shortest time being in the clinic (Rees, 2003).

Pricing Strategy

The Hospital Corporation of America positions itself as a reliable health care provider with the high quality of service and the highest professional level of its medical staff.  Therefore, the company proposes its medical services at average high prices, comparing to its major competitors like Community Health Systems Inc. (CHS) and Tenet. Taking into consideration surgery services, proposed in the 109 freestanding surgery centers, such top segment pricing strategy is easily explained. With the aim to meet high expectations of the patients, surgery centers are equipped with the latest facilities, diagnostic equipment and provided with the latest medications. The company applies competitive-at-the-market pricing strategy, whereas the existing market of medical services is growing; competitors propose the similar services, the costs are easy to determine when setting a price.

Hospital Corporation of America builds a wise marketing strategy with the aim not only to satisfy its target audience with the best quality of medical services, but also to provide cost-effective medical care that assures meeting interests of the stockholders and guarantees increase in profitability.

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