LIFENET hospitals (India): developing new services' case study

Indian healthcare is in the process of offering a plethora of services to customers hailing largely from India and from neighboring countries. The Indian hospital sector consists of private "nursing homes" and government and charitable missionary hospitals. Government and missionary hospitals determine their charges according to patients' income levels and treat poor patients freely. Nursing homes charged higher, market-determined rates. They offer services in just a few medical specialties, owned and operated by physicians who worked with them. Nursing homes cannot afford the latest medical technology, but they provide more intimate settings than government hospitals. This case study aims to demonstrate the various strategic options available to a for-profit hospital, in an emerging economy with a burgeoning middle-class population and how it can choose which services that it can best offer to its target population.

Diagnosing and treating complex ailments in nursing homes could be a time-consuming and expensive proposition as visits to several nursing homes with different specialties may be necessary. This paper demonstrates how an hospital can develop new customer-oriented services and eliminate the hassle for patients needing to run around different healthcare outlets even for minor ailments.

The paper finds that large government hospitals generally have better facilities than nursing homes, but they were widely believed to provide poor-quality care. They failed to keep up with advanced equipment, train their technicians adequately and did not publicize their capabilities to doctors who might refer patients. Many missionary and charitable hospitals were undercapitalized and did not offer all services. These conditions left an unsatisfied demand for high-quality medical care. In 1983, LIFENET opened in Madras, becoming the first comprehensive, for-profit hospital in India. LIFENET, invested in a cardiology laboratory and clinics with capacity to diagnose heart and lung ailments, which grew through referrals it received from other doctors.

Out of promoters' shared vision and the persistence to overcome financial and regulatory hurdles, LIFENET turned into a super specialty hospital. In early 2004, LIFENET promoters considered several options for expansion. In addition to building more hospitals, they considered licensing the brand name and establishing India's first health maintenance organization.