Asian Case Research Journal

A STUDY ON COMPETITIVENESS AND ATTRACTIVENESS OF PRIVATE

HOSPITALS IN GUWAHATI CITY
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Full Title: A STUDY ON COMPETITIVENESS AND ATTRACTIVENESS OF PRIVATE

HOSPITALS IN GUWAHATI CITY

Article Type: Research Paper

Keywords: Porter's five force model, hospitals, competitive analysis

Corresponding Author: Joyjit Sanyal, Ph.D

Assam University
Diphu, Assam INDIA

Corresponding Author Secondary

Information:

Corresponding Author's Institution: Assam University

Corresponding Author's Secondary

Institution:

First Author: Joyjit Sanyal, Ph.D

First Author Secondary Information:

Order of Authors: Joyjit Sanyal, Ph.D

Durlav Barman, M.com, M.Phil

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Abstract: Good health is a medium for handling stress and living a long and active life. Recently,
in India, the health care industry is growing at an increasing rate, and it is one of India's
largest sectors in terms of revenue and employment. The health care industry consists
of two type’s i.e., public and private hospitals. Due to rising income levels, aging
population, growing health awareness among peoples, and changing attitudes towards
preventive healthcare and support, the government contributes to India's increased
health care services. There is a high demand for healthcare services globally that have
generated immense opportunities for private players in the sector. As a result, it turned
out to be a potential investment for large corporate.  In India, the private health care
sector emerged fast due to both national and international reputation. With the growing
importance of health care services and the significant development of private health
care services and the substantial development in private healthcare units, it has
increased the customers' demand. So competition in this sector has gained momentum
in the recent years. Porter’s Five Forces analysis is a framework that attempts to
analyze the level of competition within an industry and business strategy for growth
and development, and firms can identify its strengths and weaknesses for its better
position in the competitive market. Thus, Porter’s five forces model has been applied to
study the competitive analysis of private Hospitals in Guwahati city. The numbers of
the private hospitals for the study are 24 based on the Census survey. In the study, the
census survey method has been adopted as the population's size is limited and to
collect accurate date for the study. Therefore, this study is an important area of
research that helps them to analyze their strengths and weaknesses of their strategies
and allocate resources towards improving their performances to capture the market
share and remain competitive in the market.

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A STUDY ON COMPETITIVENESS AND ATTRACTIVENESS OF PRIVATE

HOSPITALS IN GUWAHATI CITY

Dr. Joyjit Sanyal1

Mr. Durlav Barman2

Abstract of the study:

Good health is a medium for handling stress and living a long and active life. Recently, in
India, the health care industry is growing at an increasing rate, and it is one of India's largest
sectors in terms of revenue and employment. The health care industry consists of two type’s
i.e., public and private hospitals. Due to rising income levels, aging population, growing
health awareness among peoples, and changing attitudes towards preventive healthcare and
support, the government contributes to India's increased health care services. There is a high
demand for healthcare services globally that have generated immense opportunities for
private players in the sector. As a result, it turned out to be a potential investment for large
corporate. In India, the private health care sector emerged fast due to both national and
international reputation. With the growing importance of health care services and the
significant development of private health care services and the substantial development in
private healthcare units, it has increased the customers' demand. So competition in this sector
has gained momentum in the recent years. Porter’s Five Forces analysis is a framework that
attempts to analyze the level of competition within an industry and business strategy for
growth and development, and firms can identify its strengths and weaknesses for its better
position in the competitive market. Thus, Porter’s five forces model has been applied to study
the competitive analysis of private Hospitals in Guwahati city. The numbers of the private
hospitals for the study are 24 based on the Census survey. In the study, the census survey
method has been adopted as the population's size is limited and to collect accurate date for
the study. Therefore, this study is an important area of research that helps them to analyze

1
Assistant Professor (Senior), Assam University Diphu Campus, Diphu, Karbi Anglong, Assam-782462
2
Assistant Professor, Arya Vidyapeeth College, Guwahati, Assam-781016
 their strengths and weaknesses of their strategies and allocate resources towards improving
their performances to capture the market share and remain competitive in the market.
Keywords: Porter’s five force model, hospitals, competitive analysis.

1. Introduction

Health is defined as a state of complete mental and physical well being. 'Health is Wealth' is a
common proverb that reveals a straightforward meaning by comparing health value with wealth.
Good health is a medium for handling stress and living a long and active life. Finlay (2007)
explained that 'health did play a role in economic development and showed that health influences
economic growth through education incentive effects. He further added that individuals who are
healthy live longer and are encouraged to invest more in education and, in turn, improves the
propensity to generate more income both individually and macro-level'. Therefore, a healthy
nation can turn into a wealthy country. Recently, in India, the health care industry is growing at
an increasing rate, and it is one of India's largest sectors in terms of revenue and employment.
The health care industry consists of two type’s i.e., public and private hospitals. Due to rising
income levels, aging population, growing health awareness among peoples, and changing
attitudes towards preventive healthcare and support, the government contributes to India's
increased health care services. Nowadays, the health care sector comprises hospitals, diagnostics,
pharmaceuticals, telemedicine, health insurance, medical devices and equipment, and other
goods and services related to medical care. There is a high demand for healthcare services
globally that have generated immense opportunities for private players in the sector. As a result,
it turned out to be a potential investment for large corporate.

In India, the private health care sector emerged fast due to both national and international
reputation. According to the IBEF report 2017, private sector plays have a large investment to
contribute significantly to the development of India's healthcare sector, which comprises around
80 percent of the total market. In India, private healthcare captures the market for almost 74
percent of its total healthcare expenditure. The report also stated that the private sector's share in
hospitals and beds is estimated at 74 percent and 40 percent, respectively. With the growing
importance of health care services and the significant development of private health care services
and the substantial development in private healthcare units, it has increased the customers'
demand. So competition in this sector has gained momentum in the recent years.

2. Objectives of the Study:

The study is undertaken on the backdrop of the following objectives:

 To analyze the competitiveness of private hospitals in Guwahati city.

 To analyze the attractiveness of private hospitals in Guwahati city.

3. Overview of Competition among Private hospitals:

Competition arises when two or more parties act independently to secure their own resources
from a limited pool of sources. In a market, competition drives relentless improvements in
quality and cost (Porter, 2006). There is a unique feature in healthcare market that have made
hospital competition different from other market competition. There are various factors which
leds to competition among hospitals. Some of the important factors that force to competition
among the providers of health care services are discussed below:-
 The first convolute factor is quality. Consumers usually choose the competing products,
which will provide them true value and examine the product's quality. Similarly health
care consumers choose those health care services which they find that price and quality
are balanced. Though in most cases, the consumers are willing to pay even more to
maximize the quality, as the cure of health as quickly as possible with less pain as
possible is highly admired.
 The second complicating factor is the presence of health insurance in the healthcare
industry. The patients, as consumer who are covered under health insurance have been
insured the cost arising from the health care services availed by them. So, the decision to
select a particular health care provider is not only based on services, amenities and
quality of the provider but also on health insurance provided by them. (Morrisey, 2001).
 The third factor is the location. Since patients often consider convenience, ease of access,
community and virility connections while availing the health care services. So location is
 very important factor for the providers of health care services. It is also usually found that
hospital services are provided and consumed at the same place in a time sensitive
manner. Management of hospitals requires to deal with uncertain factors which are not in
the hands of management. Also, there are very few methods in the hands of hospitals that
they can adopt to alleviate such external impact, including operation scheduling, demand
forecasting, revenue cycle optimization etc ( Mc laughling and Hays, 2008). Thus
location is very important factor for remain competitive in the health care market.
 The fourth vital factor is product differentiation in the hospital market. Competition in
this market will lead to too little, too much, or just the right amount of quality a variety of
services (Wu, 2014). As the services provided by the hospitals are different due to their
location, doctors and other staffs. There should be good arrangement between travel time
and quality. Consumers sought this medical care on an emergent basis, so this
arrangement provides hospitals more power in the competitive market. Thus, hospital
services in the competitive market should involve various types of services by using
latest technologies and equipments.
In order to compete in the health care market hospitals should adopt various strategies. When
two or more firms compete within the same market, one firm possesses a competitive advantage
over its rivals when it earns (or has the potential to earn) a persistently higher rate of profit.

4. Conceptual Framework:

Attractiveness and Competitiveness in this context refers to the overall industry profitability in
the competitive market. Attractiveness and Competitiveness of an industry can be analyzed by
using various models or frameworks develop by various experts. In this study the attractiveness
and Competitiveness of Private Hospitals has been measures by Porter’s five forces model.

4.1. Porter’s five forces model

It is a framework that helps us to determine the competitiveness and attractiveness of an
Industry. This model was developed by Michael E. Porter of Harvard University in 1979. A
model has been proposed consisting of five competitive forces that are explained below:-
  Threat of New Entrants: It determines the threat from the new entrants in an industry.
The lower the threat, the higher is the attractiveness of the industry. It analyzes the
capital requirement, entry barriers, etc.
 Bargaining Power of Buyers: This factor analyzes the power of the customers in setting
the prices.
 Bargaining Power of Suppliers: This force determines the power of suppliers by
analyzing the number of suppliers, cost of switching to other suppliers, etc.
 Threat of substitutes: This factor analyzes the impact of substitutes on the demand of
the products and services.
 Rivalry among existing competitors: This force measures the intensity of competition
among the existing competitors by analyzing number of competitors, differentiation in
products, strategies adopted to attract customers, etc.

5. Research Methodology
The methodology adopted in this study has been outlined as below:
5.1 Nature of the study:

The study is both descriptive and analytical in nature. The study is descriptive because the study
is based on the responses of the respondents to draw conclusion and recommendation. The study
is analytical as the already available facts or information will be evaluated.

5.2 Universe of the study: In Guwahati city there are 24 Private hospitals as on 31st March 2019
as per records of Office of the Joint Director of Health Services Kamrup Metropolitan District.
This constitutes the universe of the study.

5.3 Sample Size: In Census survey the whole population is selected for the study. The numbers
of the private hospitals for the study are 24 based on the Census survey. In the study, the census
survey method has been adopted as the population's size is limited and to collect accurate date
for the study.

6. Discussions and Findings:

6.1: The competitiveness of private hospitals in Guwahati city have been explained in the
following point:-

 There are many private hospitals, i.e., 24 in Guwahati city, which results in high
competition among them to survive in the market. These hospitals compete with
each other by adopting various strategies like by installing high tech-equipment
for medical procedures, recruiting expertise doctors, tying up with expert doctors
from others cities of India or even other countries (like Pratiksha Hospital,
International Hospital have tied up with some top doctors in the country from
whom patients can consult for different types of diseases. These doctors specially
visit the hospital on a monthly basis), combining with the top hospitals (like
Apollo Hospitals acquired International Hospital, Guwahati), providing discounts
in health care services, providing different types of health care services under one
roof, etc. This makes it competitive among them in order to capture the market
share.
 The competition is high among hospitals having a large number of beds like; the
top three hospitals in terms of the number of beds are Down Town Hospital with
300 beds, Ayursundra Superspecialty Hospital with 272 beds, and GNRC
Hospital with 215 beds. Moreover, the hospitals having low number of beds faces
tough competition from the hospitals having a large number of beds as they
cannot accommodate more patients as compared to Down Town Hospital,
Ayursundra Superspecialty Hospital, and GNRC Hospital.
 Hospital like Ayursundra Superspecialty Hospital has opened its clinic in Lachit
Nagar, Guwahati, located in the hub of Guwahati city which attracts patients for
the outdoor visit by providing all types of health care services for outdoor patients
under one roof.
 The existing private hospitals have opened different specialized branches under
one roof in order to attract more patients to their hospitals. But there are also some
hospitals which are specialized in a single department like GNRC hospital is
known for neurological treatment, Hayat hospital is known for cardiology
treatment, Nightingale Hospital is specialized in the field of E.N.T. This shows
 competition among existing private hospitals, and they compete with each other
by providing specialized services.
 The private hospitals recruit a sufficient number of doctors to provide various
services types of under different specializations to a large number of patients. So
private hospitals have a large number of doctors under different specialization
who can compete in the industry and attract patients towards their hospitals.
Among the 24 private hospitals in Guwahati city, the top three hospitals in terms
of the number of doctors are GNRC hospital has 40 doctors, Ayursundra
Superspecialty Hospital has 42 doctors; and Down Town Hospital has 56 doctors.
Thus competition among them is high.

6.2: The following are the reasons which attracted the existing entrepreneurs to establish
private hospitals in Guwahati city:-

According to the existing entrepreneurs of the private hospitals, the main factors which attracted
them towards the health care industry in Guwahati city are:-

 Guwahati is the hub of economic activities with sufficient transport facilities that
connect all the northeastern states of India. The people from all over the northeastern
region come to Guwahati for availing good health care services in other northeastern
states.
 In government hospitals, the procedure of obtaining health care services is lengthy,
and there is a lack of proper infrastructure. This results in switching the patients to
private hospitals that can afford it. Therefore, the entrepreneur got attracted to
establish their hospitals to provide quality and better healthcare services.
 Some entrepreneurs of private hospitals have also opined that the demand for health
care services has grown in Guwahati.
 Most of the entrepreneurs of the existing private hospitals are doctors by profession.
They have expertise knowledge in medical science and also want to work for the
welfare of society.
 On questioning regarding the factors that attracted them towards establishing private
hospital is their passion to do something of their own and earn authority and power.
 Although most of the existing entrepreneurs are doctors, they wanted to achieve
greater financial security by establishing their hospitals.

7. Conclusion:

Good health is a medium for handling stress and living a long and active life. In this regard,
private health care units play a vital role in capturing the market by providing excellent
services to society. Due to this competition arise in this sector. The study's primary objective
is to analyze the competitiveness and attractiveness of the private hospitals in Guwahati city
with reference to Porter's Five Forces model. From the study, it was concluded that There
are many private hospitals, i.e., 24 in Guwahati city, which results in high competition
among them to survive in the market. These hospitals compete with each other by adopting
various strategies like by installing high tech-equipment for medical procedures, recruiting
expertise doctors, tying up with expert doctors from others cities of India or even other
countries (like Pratiksha Hospital, International Hospital have tied up with some top doctors
in the country from whom patients can consult for different types of diseases and as the
Guwahati is the hub of economic activities with sufficient transport facilities that connect all
the northeastern states of India. The people from all over the northeastern region come to
Guwahati for availing good health care services in other northeastern states which give
attractiveness in this industry. Therefore, this study is an important area of research that helps
them to analyze their strengths and weaknesses of their strategies and allocate resources
towards improving their performances to capture the market share and remain competitive in
the market.

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