Syntax Literate: Jurnal Ilmiah Indonesia p–ISSN:
2541-0849 e-ISSN: 2548-1398
Vol. 7, No. 9, September 2022
IMPLEMENTING
BUSINESS MODEL IN HOSPITAL: A SCOPING REVIEW
Lastri
Swastanita1, Amal Chalik Sjaaf2
1Hospital
Administration Studies Program, Faculty of Public Health Universitas Indonesia,
Depok
2Health
Administration and Policy Department, Faculty of Public Health Universitas
Indonesia, Depok
Email:
[email protected], [email protected]
Abstract
Increased
competition between hospitals, population growth, advances in medical
technology, increased life expectancy, and digital transformation urges
hospitals to adapt. Health care providers are stuck in situations that require
cutting health costs while still maintaining the quality of care to patients.
Many believe that the business model will be a major contributor to the
sustainability of competitive advantage for hospitals. This research aimed to
look at the role and application of hospital business models that can maintain
quality, effective financing services, and sustainability. Searches for
articles were conducted on four databases using PRISMA-ScR
protocol. We included studies containing the business models in a hospital
setting, using relevant search terms related to the hospital business model. Systematic
search yielded five articles that lay out some of the business models. Sixty
percent of articles were published in Asian countries. Study designs were descriptive and observational studies. Each business
model has its uniqueness that can give an idea of how to run a business model
tailored to the characteristics of the hospital itself.
Keywords:
hospital, business model, business strategy
Introduction
Since the beginning of the 20th
century, the performance of health services has become increasingly important
and consists of several dimensions, namely quality, finance, experience, and
security. As the population grows, increases longevity, digitalization, and
many inventions of medical technology quickly push hospitals to be more
adaptable (Ilin et al., 2018).
Shifting from hospital centered to patient-centered that focuses on patient
satisfaction as a core value of service is more likely to achieve greater
quality and profitability (LaPointe, 2018; Lee, 2017). In the midst of this intense business
competition, for almost 3 years hospitals were faced with the problem of
Coronavirus Disease-19 (COVID-19). World Health Organization (WHO) said that
until April 2021, COVID-19 still caused disruptions to hospital performance in
90% of countries. Although this disruption has decreased, the results of the
WHO survey show that hospitals still need to increase efforts and take
strategic steps to reduce the gap and strengthen the quality of services (WHO, 2021). Hospitals are required to prepare the right business strategy to
maintain their existence amid the global market competition in the hospital
industry (Lee, 2017).
Market pressures in emerging
economies and global economic recessions are forcing hospitals to innovate
their business models (Casadesus-Masanell & Ricart, 2011).
A business model is a simple picture of the actions that lead to value-added
products and services. It can be interpreted as the process of creating value
as a blueprint of a company's activities aimed at sustainable company growth (Osterwalder & Yves, 2010).
Business model helps an organization to create, capture, and deliver its value
to the customer. In this era, a business can survive if it can generate and retain
customers and make adjustments to market changes by carrying out
market-oriented strategic planning (Armstrong et al., 2014).
Implementation of a business model in a
hospital is believed can increase patients’ loyalty and maintain a sustainable
business environment. Every hospital has its own characteristics and runs the
specific activities based on the organizational culture, surrounding
conditions, etc. Innovation must be in
line with the need of the customer and every community has its own uniqueness (Ilin, 2018). There are many types of business models. This scoping review tried to
find any business model implemented in hospitals in order to
help every stakeholder to understand and choose the appropriate business models
for their hospital. The specific objectives were: (1) to gather and describe
the business models or business strategies which could be applied in hospital,
(2) To evaluate any impact of the business models on hospital performance.
Methods
This review was carried out with the
Preferred Reporting Item for Systematic Reviews and Meta-Analyses Extension for
Scoping Review (PRISMA-ScR) protocol to create a brief summary about hospital business model. The selected
articles were a full-text English article published over the past 5 years
without any exclusions of country. In addition, a search of the list of
references in articles that entered the inclusion criteria was also carried out
to find whether other studies were related to this research.
This review used term “hospital”,
“business model”, and “business strategy” on several databases (Pubmed, ScinceDirect, EMBASE, and
EBSCOhost). Boolean operators were used to help the search. Then the studies
were imported and any duplications were removed by
using Mendeley application (Version 1.19.8). Each study was screened based on
the title and abstract according to the criteria
aforementioned. All of the studies that met the
inclusion criteria were downloaded for the full text articles. The full text
articles must contain information about business model in hospital and give
some information about its impact on hospitals.
Result and Discussion
Five out of 270 studies identified in
literature search were eligible to include in the review. Five articles
included explain business models which has been applied in hospital or could be
applied in hospital. Publication countries vary mostly from Asia (Iran,
Singapore, and India), the rest was from USA and Canada. Most of them are located in developing countries. Study design of the
articles were descriptive and observational studies. Figure 1 shows the process
of data synthesis and Table 1 gives summary of the obtained articles.
Over fifty years the term of business
model has been used in academic text. Entering the 20th century,
business model is used to make innovative strategic decision. A business model
is a framework for how a company creates the "value" that it wants to
convey to customers, to maintain the sustainability of the business itself.
Health experts are passionate about creating value for patients, simultaneously
improving quality and cutting service costs. Many
believe that the business model will be a major contributor to the
sustainability of competitive advantage for hospitals (Casadesus-Masanell & Ricart, 2011).
The development of the hospital
business today requires innovations that must be constantly updated to maintain
the continuity of the hospital's business activities. Some of the articles
found in this scoping review show how a business model can determine the
sustainability of a hospital business.
Figure 1. PRISMA Flow Diagram of Selection of
Scoping Review
Table 1. Description of Business Model
|
Author (Year) |
Country |
Business Model |
Descriptions |
Result |
|
(Gupta et al., 2018) |
India |
Cross-subsidization
business model |
Business
model of Arvind Eye hospitals, a non-profit hospital in India. It carries out
a marketing strategy i.e., eye screening out-reach camp (for cataract)
targeted rural poor patient to attract paying patient. Those who qualified
for surgery, were brought to the hospital and treated for free. The spill
over benefit from paying walk-in patient subsidized "free section"
walk-in patient at hospital. |
Camps gives
significant positive effect on the number of paying walk-in patient and
subsidized patient. Price for "paying section" cataract surgery
range from US$100 - US$700. Subsidized patients are not charge any
consultation fee and admit for cataract surgery pay approximately US$12. The
incremental revenue to Arvind from a camp exceeds the incremental cost of
organizing a camp. |
|
(Southerland et al., 2020) |
USA |
Business
model of Geriatric Emergency Department |
Midwestern
academic hospital runs GED program that put geriatric staff and equipment in
ED. This study compares 2 parameters of operational and patient safety rate before
and after the GED. Operational metrics include patients’ length of stay >8
hours and patients placed in observation. |
Comparing 2
years before and after, operational metric proportion did not change. Patient
safety metrics show rate of falls decreased from 0.60/1,000 patient visits to
0.42/1,000 in ED observation unit and 0.42/1,000 to 0.36/1,000 in the ED.
Cost saving from the improvement of fall rate was US$80,328. |
|
(Miremadi & Goudarzi, 2019) |
Iran |
Moheb's business model |
Moheb's business
model adapts public-private partnerships (PPP) to address the
problem of high-cost healthcare. Leading factor of their value proposition is
patient centricity. Moheb as nonprofit hospital
establish partnership with Shahid Hasheminejad
public hospital to create synergy, increase efficiency, and minimize
shortcomings and errors. |
Moheb PPP business model has been implemented in Iran
and can be applied in developing country. PPP causes not only less financial
burden on patient but also cost reduction and increase patient satisfaction. |
|
(Wirtz & Zeithaml, 2018) |
Singa-pore |
Cost-effective
service excellence (CESE) |
CESE
strategies pursued by: |
1. Shouldice
hospital has 50-75% lower cost than general hospital, failure rate equal to
1/6th to 1/12th of industry average, and is one of the top 10 global hospital
by healthcareglobal.com |
|
(Sibalija et al., 2021) |
Canada |
Business
Model Canvas (BMC) |
The
study was conducted in a large hospital in southwestern Ontario on how BMC is
applied in drug prescribing services by doctors based on pharmacogenomics to
avoid unexpected side effects. BMC stimulates thinking about how a
value is created and held back in the future. |
BMC
is a tool that can be used in the field of health services and is very worthy
of consideration to be used as a business model. |
Social Business Model
Two studies discuss about social
business model in developing countries, India and
Iran. The former study (Aravind Eye Hospital) tried to reach out rural poor
patient by out-reach camp, giving them free service for cataract surgery. The
benefit from paying patient who came to the hospital was subsidized to “free
section” walk-in patient. Aravind Eye Hospital implements a business model of
collecting operating costs and a charitable model to help underprivileged
patients.
Because of this policy, Aravind Eye
Hospital experienced an increase in visits so that it generated profits which
were then used for business expansion (Gupta et al., 2018). Study from Moheb hospitals in Iran
collaborate public and private hospital. This public-private partnership (PPI) makes
public sector patient using the facilities of private hospital at the same
price of public sector service (Miremadi & Goudarzi, 2019). Both of the study shows a good outcome in cost reduction, patient
satisfaction, and incremental revenue (Gupta et al., 2018; Miremadi &
Goudarzi, 2019).
Cost-effective Service Excellence
(CESE)
One study integrate literature to make
a concept of service excellence at low unit costs. Two hospitals i.e., Narayana
Health in India and Shouldice Hospital in Canada achieve CESE by focusing on
only one surgical service, cardiac and simple external hernia surgery
respectively (Wirtz & Zeithaml, 2018). Narayana Health Hospital has high bargaining power due to its high
market share. Narayana Health Hospital performs 12% of the total open-heart
surgery in India. The achievement is in low-cost heart surgery and lower
mortality than in the United States.
Shouldice Hospital provides operate
services without general anesthetic for simple external hernia cases. Their
target market is "healthy" patients who do not require medical
attention outside of hernia surgery and those who can serve themselves in
hospitals (self-serve). Before the surgery is performed, the patient is asked
to meet patients who have been in previous surgery to foster confidence and
reduce counseling time with doctors and nurses. Shouldice Hospital can lower
medical costs by 50-75% compared to general hospitals (Wirtz & Zeithaml, 2018).
Business Model of Geriatric Emergency
Department
Midwestern
academic hospital with annual volume of more than 80,000 ED visit and twenty percent
by adult over 65 years, runs GED program that put extra staffs and geriatric
equipment in ED. This innovation brings cost saving from the improvement of
fall rate (Southerland et al., 2020). This kind of business model can be applied in hospital which dominated
by geriatric patient.
Business Model Canvas
One article
provides a detailed description of how BMC is used and adapted to understand
physician responsibilities and challenges related to prescriptions and drug
doses, and how health facilities can meet physician needs and create value by
mapping services to physician needs and desires. The broader use of the
BMC framework can clarify customer needs, make offers that have added value,
and create and capture the selling points that exist in the healthcare and
patient care systems (Sibalija et al.,
2021).
One of the innovations in developing
business strategies that can be an example is elderly services. Vietnam's study
of 33 healthcare services explains how they tried to map out business
strategies using four elements within BMC to deliver added value to older
customers.
The study analyzed and summarized the
differences in healthcare providers in proposing their value-added strategies
based on distinguishing these four model categories: (i)
residential and co-residence care models, (ii) Home care and living in place
models, (iii) community e-business experience models and (iv) virtual and
physical portable device models. The goal is none other than to meet the daily
needs of the elderly population in maintaining its health (Yang et al., 2020).
More broadly, research on two of the
best healthcare system providers in Germany and America shows how a social
business can create social value that leads to high-quality health care. BMC is
used as a framework for comparing the two organizations. The results show that
BMC offers the right conceptual framework for generating and analyzing complex
systems for interactive healthcare systems (Sabine et al., 2020).
Business model is made based on
organization’s need. Because business model eventually will be translated into
strategic business planning, so every hospital has to analyze
“where the current position of the hospital is”. The analysis of this situation
is a very important stage because it will generate a lot of data and
information. For this reason, a good management of data and information is
needed by categorizing the internal factors of the organization as weaknesses
and strengths and external factors of the organization as opportunities and
challenges. When we already know our position, we can decide what kind of
strategy will be developed (David & David, 2017; Dumilah, 2020).
We choose the best business model based
on the vision of our organization. We can combine BMC with social-oriented
business to accommodate triple bottom line business model: the Social
Enterprise Model Canvas. Additional two building blocks to serve the outcome:
(1) social and environment cost of business model and (2) social and
environment benefit of business model (Sparviero, 2019).
Conclusion
With the development of the hospital
business and the increasing competition in the hospital industry, it is a
challenge for the hospital to develop its business strategy. Business model is
a framework to make innovative strategic decision. To maintain its business
continuity, hospitals need to update their business models following
developments in the external environment. The selection of a business model must consider the
internal and external conditions of the hospital.
This scoping
review obtained several studies about business model implemented in hospital. Those
business models were social cross subsidization business model, Moheb's public-private partnerships (PPP), business model
canvas, Cost-Effective Service Excellence, and business model ofe geriatric emergency department. Every business model in
this scoping review, is developed with some consideration about the hospital
location, its core business, and most importantly its customer.
