Antecedents of cocreation and their impact on operational and financial performance of private sector tertiary care hospitals in and around major urban areas in India An empirical study

Abstract

newline One of the biggest challenges that healthcare service sector has been facing worldwide, is cost containment, rather managing cost, without compromising the extent/level of services offered and the sense of value ingrained in it. Healthcare costs are continuously spiraling up but the inherent criticality and patient safety aspects prevent hospitals from drastic cost-reduction approaches, which are usually followed across various other sectors for cost containment. Thus the hospitals have been facing steep competition to provide increased access to high quality services at affordable cost. Porter (2010) indicated that value is outcome relative to cost, encompassing a sense of efficiency and also warned about the dangerous consequences of reduction in cost without regards to outcome, which he said to be linked to false sense of savings and actually resulting in limiting effective outcome (in this context limiting effective care). Supply-related cost accounts for around 25% of total hospital-cost. Thus control of supply related costs has become a priority. However the input costs and their fluctuations are mostly out of control of the hospitals and also to some extent uncontrolled from the supplier-side as they always try to position themselves as per the sector norms and pricing strategies. However what remains viable is effective management of transaction relationships between the buying partners (hospitals) and the supplying partners (the hospital suppliers) and trying to streamline the transaction relationship, so as to maximize the outcome and also the sense of value. The healthcare industry is an aggregation of sectors of which the hospital activities constitute the lion s share. Supply chain relationships, value creation, and healthcare: all three are buzzwords, often found making rounds in the academia as well as in the corporate community.