From the same author, who coauthored "Hardball: Five Killer Strategies for Trouncing the Competition", comes this article called "Curveball: Strategies to Fool the Competition". He lists four methods
1. Draw your rival out of the profit zone
2. Employ unfamiliar techniques
3. Disguise your success (looks like a Siemens versus GE story)
4. Let rivals misinterpret your success
The last one illustrates Southwest's success, which in part was due to increased asset utilization (keeping the airplanes in the sky for a longer period of time with faster turnaround times).
In medicine as well, especially in radiology, where the capital costs are high, the asset utilization should be maximised. Dr. K G Srinivasan in Madurai, has learnt this the best - keep the machines occupied at whatever price the patient is willing to pay. To maximise asset utilization (in this case the scanners), it is necessary to reduce the price - this way you can have a low margin, high volume business, which actually is a good model, especially in India, where the patient base is huge, but the paying capacity isn't.
Most hospitals follow the low volume, high margin route, which also works, especially if cutting costs is a problem. It makes no sense charging rich patients less and so poor patients are not catered to. Which is fine, if they break even.
One MRI centre in Ahmedabad, using a refurbished 0.5T MRI has also followed this principle of high volume, low margin, by pricing aggressively all MRI scans at Rs. 2500 and then doing close to 40 scans a day.
The only other problem with this strategy is the load that it places on quality. Unlike the airlines business, there is a limit to how many scans you can actually do without cutting corners and without the radiologists getting fatigued while reporting and making mistakes - so there has to be some trade-off. But if you can run the centre for 24 hours, not cut corners and generate enough revenues to have enough radiologists reporting, the system can work well.
Doesn't this also mean leaving "money on the table" ?
Posted by: Aniruddha Malpani | September 13, 2006 at 06:00 PM