Context: A Kenyan eye hospital offers out-patient and in-patient specialist services and sells glasses.
Challenge: The hospital needed support in crafting its growth and expansion strategy for new services, new geographies, and price optimisation
- How should the hospital optimize its existing prices?
- What adjacent services should the hospital offer?
- What geographies should the hospital expand into and in what sequence?
- What are the financial implications for geographical and service expansion?
Approach and outcomes:
a) Pricing (existing products):
- Created a tiered pricing structure for products based on the cost of goods
- Trained salespersons on the new standardised prices and re-labelled all the products for customers’ convenience
- Modelled the new prices and volumes to ensure margin optimisation i.e. the cost base was covered in all scenarios
- Analysed counties in Kenya according to GDP per capita, population density, prevalence of diseases, insurance penetration etc.
- Sequenced the geographic expansion based on proximity to existing hospital, availability of resources etc.
- Expanded services in existing hospital after benchmarking against Kenyan competitors and international eye hospitals
- Designed a hub and spoke model where the new peripheral locations would act as spokes offering basic services and referring patients to the hub (existing facility) for specialised services
d) Financial implications
- Modelled the income statement and balance sheet for new hospitals
- Determined the capital investment required for the strategy