The Market Analysis and the Company Analysis of the University of Chicago Medical Center - Essay Example

? Marketing Project 0 Executive Summary Cardiac Imaging Center is a service sector which will provide ranges of remedial ‘image scanning tests’ in the Chicago city, USA. The Cardiac Imaging Center will provide the services through one of the major hospitals in Chicago, i.e. ‘University of Chicago Medical Center’. In present day, the expenditure on health expenses has increased considerably. Advanced technology has made it much easier to test various health scans through imaging center. The imaging center service is a profitable business as people will become sick and thus there will be demand for the imaging scanning services. The report will describe the market analysis as well as the company analysis of University of Chicago Medical Center and its strengths and weaknesses in the health care industry of Chicago, its competitors and market environment. Further, the report will provide an insight about the marketing plan of the services of Cardiac Imaging Center. The marketing plan comprises of marketing mix and forecasted sales of the Cardiac Imaging Center. Table of Contents 1.0 Abstract/Executive Summary 2 Table of Contents 3 2.0 The Challenge 4 3.0 Situation Analysis 4 3.1 Company Analysis 4 3.2 Customer Analysis 5 3.3 Competitor Analysis 5 3.4 Environmental Analysis 9 3.5 Porter’s Five Forces Model 11 4.0 Market Segmentation 13 5.0 Alternative Marketing Strategy 13 6.0 Selected Marketing Strategy 13 6.1 Product 13 6.2 Price 14 6.3 Distribution/Place 14 6.4 Promotion 15 7.0 Short-Term and Long-Term Projections 15 8.0 Conclusion 17 9.0 References 18 Marketing Project 2.0 The Challenge The challenge of Cardiac Imaging Center of University of Chicago Medical Center is to provide imaging scanning services to the customer with superior quality while maintaining the cost and profitability. The Cardiac Imaging Center will offer solution to various diseases such as heart, lung among others by the experienced doctors and advanced machinery. The University of Chicago Medical Center is already famous for their specialization in Heart, Cancer, Gastroenterology, Diabetes and Neurosurgery. The clients of Cardiac Imaging Center will get advantage from the exceptional teamwork of medical experts. The Cardiac Imaging Center will perform by mutual association of both cardiologists and physicians which will make the cardiac center successful. The Cardiac Imaging Center will implement an incorporated approach for accomplishing the goal to offer accurate test for right person at right moment. Cardiac Imaging Center will provide full range of advanced imaging technologies such as CT scan which is a strong and quick imaging instrument that creates three dimensional pictures of the heart or Cardiac MRI scan which will provide detail picture about the beating of heart (The University of Chicago Medical Center, 2011). 3.0 Situation Analysis 3.1 Company Analysis The University of Chicago Medical Center is known as one of the top hospitals in Chicago city as well as in the USA. With regard to treating diseases such as cancer or diabetes the hospital is listed in the top 50 hospitals. The hospital’s operations are quite transparent and it provides every possible support to the customers regarding any enquiry. According to “The University HealthSystem Consortium” the University of Chicago Medical Center has effectively displayed performance compared to other medicinal services (The University of Chicago Medical Center, 2011). 3.2 Customer Analysis The facilities of ‘Cardiac Imaging Center’ will target the major insurance agents of insurance companies, famous doctors or physicians and various clinics of Chicago city as they can influence and motivate the patients or customers to use the ‘University of Chicago Medical Center’ for scanning and imaging purposes. The value driver of University of Chicago Medical Center will be to acquire customers through physicians, doctors and insurance agents. The patients will surely go to the imaging center according to their preference. 3.3 Competitor Analysis The healthcare industry is known as one of the largest developing industries in the USA. In the year 2008, the customer’s spending on health care was accounted as 2.3 trillion USD which was thee times more than that of 1990 which amounted to only 714 billion USD. The health care industry in the USA absorbs almost 16.2% according to the figure of 2008. The health care spending is increasing at an alarming rate i.e. 4.4 per annum according to 2008. The following figure shows the share of health care services by various sectors in 2008 (Kaiser, 2008). Source: (Kaiser, 2008). The above figure shows that majority of health care spending is on the clinical services and hospital services. Thus, there are huge prospects for Cardiac Imaging Center services (Kaiser, 2008). RWW Screen Market Position: Competition in the health care industry is based on cost, quality, convenience, technology and advantage. In the USA, the competitors involve in driving value rather than creating value. There are many competitors of University of Chicago Medical center, for example: Northwestern Memorial Hospital, University of Illinois Hospital, and Loyola University Medical Center. These are the closest competitors of University of Chicago Medical center with regard to providing cardiac imaginary services (Rivers & Glover, 2010) & (U.S. News & World Report, 2011). The following table shows the competitiveness of University of Chicago Medical Center with regard to other two major competitors. Northwestern Memorial Hospital University of Illinois Hospital The University of Chicago Medical Center MRI 29.5% 32.2% 35.1% Follow Up Mammogram 8.4% 4.1% 6.0% Outpatient CT Scan of Chest 0.001 0.048 0.001 Outpatient CT Scan of Abdomen 0.201 0.232 0.076 Source: (U.S. Department of Health & Human Services, n.d.). Strengths: The major strengths that had been identified in the University of Chicago Medical center are its quality related to services. It offers high quality and safe patient care. It has good experienced employees which grantees superior care for patients. It provides complete accompaniment services and the technology used in the Cardiac Imaging Center is highly advanced. The hospital has broad access to exceptional healthcare services (The University of Chicago Medical Center, 2011). Weaknesses: The weakness of the University of Chicago Medical Center is that there are not sufficient marketing activities such as branding or promotion. With regard to MRI services, it performs several unnecessary activities. There are inadequate fundraising actions and the expansion strategy is a bit inefficient. 3.4 Environmental Analysis PEST Analysis Source: (Indigo, 2006). Political: Political condition can impact upon the health care services. As the current government of the USA persists to look for strategies which can minimize the cost of health care, therefore it can affect on the expenditure of healthcare services. The probable passing of ‘Balanced Budget Act II’ can minimize the expenses of healthcare services even more. Thus, the University of Chicago Medical Center can face liability due to Cardiac Imaging Center services as it has high operational costs. Economic: In the Chicago region, the medical industry is one of the biggest suppliers of job for people. In the year 2008, hospital industry had provided almost 14.3 million jobs including 40% in hospitals. It is the vital source of economy in Chicago. As the number of people is increasing in Chicago city, it is expected that by 2020 there will be demand for additional 4500 beds, 22500 permanent employees and 3000 doctors. Thus, it is a great opportunity for companies such as University of Chicago Medical Center to provide Cardiac Imaging Services (U.S. Bureau of Labor Statistics, 2010 – 2011). Social: Social factors can impact on the spending of heath care services. In Chicago, majority of people are not guarded by their own parents and live separately. In the next 25 years, the population of Chicago region will increase considerably as many people from abroad are expected to migrate in the city. People’s spending in health care budget has increased significantly compared to spending on food, or cars and petrol. The following graph will describe the changes in budget of healthcare services: Source: (Humana, 2005). The change in behavior towards healthcare services will increase the need for imaging services in near future. Technological: As the technology advances, the utilization rate of the cardiac imaging services has amplified. New technology will increase the demand of these services more as people will spend on these services (Indigo, 2006). 3.5 Porter’s Five Forces Model Competitive Rivalry: The competitive rivalry in the cardiac imaging services especially in the highly concentrated metropolitan city such as Chicago is quite high. As cardiac imaging services are mainly cash services and hospitals providing this kind of services compete with regard to quality, speed delivery and low cost, the competitive rivalry for getting more customers is high in this sector. Companies spend huge money to provide unique services and advanced equipments. Thus, the cardiac imaging services of University of Chicago Medical Center will face intense competition from other cardiac service providers. Threat of Substitutes: The threat of substitutes in cardiac imaging services is low. In healthcare sector, the doctors or physicians face high competition regarding superiority, but there are no direct substitute of services such as CT Angiography or MRI (Magnetic Resonance Imaging) or Echocardiography and other services which are developed for specific purposes of patients. However, the cardiac service of University of Chicago Medical Center can face competition from same kind of services provided by other hospitals. Threat of New Entrants: The threat of new entrants in the cardiac imaging services are quite low as providing these services require huge initial investments and high risk of returns. Companies that are going to provide the cardiac imaging services need to develop string network with physicians, doctors and other insurance companies. The various regulations of the USA regarding health care services are barrier for other companies to enter in this market. Bargaining Power of Buyers: The bargaining power of buyers is quite low in this industry because people will become ill or sick and will need these services. People cannot control when to get diseases or become sick, thus University of Chicago Medical Center can enjoy lesser bargaining power for cardiac imaging services. Bargaining Power of Suppliers: The suppliers have high bargaining power in cardiac imaging services, because the patients choose hospitals and take these services according to recommendations provided by the physicians or doctors. But, in a large city such as Chicago there are many physicians and doctors which make their bargaining power slightly low. If one doctor leaves there are others because there are plenty experienced doctors in Chicago city. Thus, University of Chicago Medical center can experience moderate bargaining power from suppliers. 4.0 Market Segmentation According to the US Census Bureau, the number of physicians and doctors was around 661,000 in the year 2008 i.e. almost 0.6% of all employed persons. It is expected that this number will increase in future (Synergy Business Solutions, 2011). In the insurance market, Cardiac Imaging Center will target the major insurance brokers such as Marsh & McLennan Cos Inc, Wells Fargo Insurance Services Inc, BB&T Insurance Services Inc, and Wachovia insurance Services Inc. These are the leading companies which provide solution about insurance and risks, thus will be beneficial for Cardiac Imaging Center services. 5.0 Alternative Marketing Strategy The cardiac imaging center will accomplish the competitive advantage by most advanced technology. The advertisement will be shown on the yellow pages which will be cost effective and develop brand awareness. High networking with major insurance companies, hospitals, and doctors will be developed for expansion of imaging services. 6.0 Selected Marketing Strategy 6.1 Product The cardiac imaging center is in a service oriented industry. It will provide services such as CT (Computer Tomography) Angiography, Cardiac MRI, Echocardiography, Nuclear Cardiology, and Arterio Vision CIMT Test. The above five services will be provided at University of Chicago Medical Center. 6.2 Price The pricing will be set by keeping in mind about the affordability of customer as well as maintaining the profitability of University of Chicago Medical Center. The forecasted cost of the above services of cardiac imaging will be as follows: CT Angiography: Customer will pay probably 400 USD for CT Angiography service. Cardiac MRI: The cost of cardiac MRI will be 600 USD per one scan. Echocardiography: In case of echocardiography, the cost will be ranges from 250 USD to 1000 USD per scan according to the needs of patients. Nuclear Cardiology: The cost of Nuclear Cardiology will be in between 300 USD – 600 USD per scan. Arterio Vision CIMT Test: The Arterio Vision CIMT Test in cardiac imaging of University of Chicago medical Center will cost only 325 USD which is rational for every customer. 6.3 Distribution/Place The cardiac imaging services will be provided in Chicago near Midway Plaisance Park where there are no other hospitals which can provide these services. 6.4 Promotion For the promotion of the services, University of Chicago Medical Center will organize advertisement in newspaper as well as television. Business cards will be given to the doctors and major insurance companies to recommend the cardiac imaging to the patients. 7.0 Short-Term and Long-Term Projections As University of Chicago Medical Center is an old player of the health care market, the Cardiac Imaging Center will increase the forecasted sales moderately. The estimated long-term sales are as follows: Sales In USD Year 1 Year 2 Year 3 Cardiac Imaging Center 533000 559344 596850 Suppose, the estimated fixed cost of Cardiac Imaging is 106550 USD per annum and the variable cost is 98140 USD per annum and net profit is 20% of sales. Then, Contribution will be 106550 + (20% ? 533000) = 106550 + 106600 = 213150 USD P/V ratio = 213150/533000 ? 100 = 39.99%. Thus, Break Even Point (in USD) = 106550/39.99% = 42609.345 USD 8.0 Conclusion The criteria for success of Cardiac Imaging Center are to deliver quick and gracious services to the customer with accurate test results. In order to manage the operating cost there will be stringent measures in every step of expenses. It can help to control the cost related to capital and imaging machineries. The progress of the cardiac imaging services will be monitored to recognize any gap in services. It is estimated that proper sales strategy can help to increase the sales of imaging services and will make it a successful plan. 9.0 References Humana. (2005). Family Heath Budget. Retrieved from http://www.familyhealthbudget.com/fhbnet/global/need_budget.aspx Indigo. (2006, June 26). University of Illinois Medical Center at Chicago Strategic Plan. Retrieved from http://indigo.lib.uic.edu:8080/dspace/bitstream/10027/131/1/UIMCC%20Strategic%20Plan%20v1%5B1%5D.3.pdf Kaiser. (2008). U.S. Health Care Costs. Retrieved from http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx#How%20is%20the%20U.S.%20health%20care%20dollar%20spent? Rivers, P. A., & Glover, S. H. (2010, May 7). Health Care Competition, Strategic Mission, And Patient Satisfaction: Research Model and Propositions. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2865678/ Synergy Business Solutions. (2011, March 28). FORECAST - Professional Services Industry. Retrieved from http://www.synergybusiness.com/project-accounting/professional-services-industry-forecast.php The University of Chicago Medical Center. (2011). Quality. Retrieved from http://www.uchospitals.edu/pdf/uch_026634.pdf The University of Chicago Medical Center. (2011). Cardiac Imaging Center. Retrieved from http://www.uchospitals.edu/specialties/heart/services/imaging/index.html U.S. News & World Report. (2011). Best Hospitals in Chicago, IL. Retrieved from http://health.usnews.com/best-hospitals/area/chicago-il U.S. Department of Health & Human Services. (No Date). Survey of Patients' Hospital Experiences. Retrieved from http://www.hospitalcompare.hhs.gov/hospital-compare.aspx?hid=140281%2c140150%2c140088&lat=41.8781136&lng=-87.62979819999998&stype=GENERAL&&stateSearched=IL U.S. Bureau of Labor Statistics. (2010 – 2011). Career Guide to Industries. Retrieved from http://www.bls.gov/oco/cg/cgs035.htm#emply Read More