Student Dissertation

Agency : Cost Analysis, Comprehensive Package, Pricing Strategies

Objective : Objective of the study was to design a comprehensive Total Knee Replacement package for unilateral as well as bilateral procedures with respect to the categories of room by performing cost breakup analysis & calculating the unit cost and using this package cost for appropriate pricing.

Background : The increasing burden of non-communicable diseases has made the healthcare experts and organizations shift their lens of focus on these emerging trends, in which degenerative diseases have been evident in making a substantial contribution of which the major chunk consisted of osteoarthritis. These cases many a times go untreated by medications and have to ultimately select joint replacement surgeries as a last and the most suitable resort. Joint replacement surgeries are generally planned and can be timed as per the patient’s schedule. These reasons have made the joint replacement surgeries as one of the core specialties of the orthopedic department, to be offered by an emerging multispecialty hospital in a city like Jaipur to its local population. And status of Jaipur as an international tourist destination presents good opportunities for the medical tourism industry. Also before functioning a new specialty, it is now-a-days a requirement from the patients as well as the hospital’s end to view the offerings in a form of a comprehensive package owing to its benefits to the former as well as the latter.

Methodology : This was an exploratory study done for a study period of 3months where type of analysis done was quantitative. Discussion with experts of hospital, review of records of central stores, pharmacy & laboratory and collection of package data of competitive hospitals was done for primary data collection while secondary data was collected from various journals, books & websites pertaining to cost analysis & package designing.

Findings : The data collected was analyzed to derive the package cost by which, the total package cost for per U/L TKR in the general ward amounted to be Rs 53,500. This was the base cost for performing a U/ L TKR in the general ward of EHCC hospital. Considering Cost based pricing & Competitive pricing as the major pricing strategies to be followed, a profit margin at 10% mark up point was finalized. According to this profit margin, the total package prices derived for U/L & B/L TKR procedures for general ward patient was Rs. 58850 & Rs. 66550 respectively. This price achieved from the cost analysis & after markup pricing was in between its two competitor hospitals but reducing it further will enhance the offering and will be advantageous for patient acquisition as well as increasing the profit margins.

Recommendations : In order to reduce the final package price distinguishing factors that can be controlled or curbed to reduce unnecessary expenditures from those which cannot be controlled or kept under a check is required. Focusing on such factors & their entire process flow will help in reducing wastage and optimize utilization of resources with an added return in the profits. This will also enhance the quality of service delivered and thereby affect the patient satisfaction while giving a fair idea about the hospital’s profit margins.