The Menace of Cut Practice

Cut practice, incentives, commissions are a few words that are the bane of the growing healthcare industry.

At the onset, let me clarify that it is illegal and unethical for a doctor to solicit patients by offering any kind of incentives.

The 2002 amendments to the Indian Medical Council Act 1956 clearly states in section 6.4.1.- A physician shall not give, solicit, or receive nor shall he offer to give solicit or receive, any gift, gratuity, commission or bonus in consideration of or return for the referring, recommending or procuring of any patient for medical, surgical or other treatment. In spite of the law, the epidemic of cut practice still is still unabated. Let us look at why this is happening.

First and foremost, the doctors who run hospitals and nursing homes are not qualified marketing professionals. Unfortunately, they do not have the access to the brand building and ethical marketing techniques. Business management is not taught in medical colleges. Then there is the hunger for instant rewards. Some people are oblivious of the virtues of patience. They want results and they want it yesterday.

In the rush for creating a successful institution/practice, they forget that they are inward bound to a no entry zone. Another reason for this widespread practice is that everyone seems to be doing it. It seems they have reached a point of no return. Doing what everyone else is doing sometimes sounds a valid excuse for indulging in sinful activities. ‘What can I do?’ Remark some doctors. ‘Everyone else is getting away with it and also making money in the process. Why should I lose out?’

The multi crore rupee hospitals are being held to ransom by a handful of ‘referring’ doctors. They demand, they bargain and they blackmail. ‘It is not a nice feeling’ says a gynaecologist who had been recently approached by a village quack who was convincing her to perform a caesarean section on a pregnant woman who may have delivered normally if give a fair trial. He had the nerve to tell me that the patient party has decided by themselves that they want a caesarean only’ laments the doctor who has been in practice for almost three decades now. ‘And when I said that I will decide after examining the patient whether there is an indication for surgery, the quack left the OPD and walked across to the nursing home across the road.

The horror stories do not end here. A hale and hearty doctor in Punjab was pronounced long dead by an auto driver. The reason was that the orthopedic patient who had just alighted from a bus had hired him to go to that doctor. ‘You don’t know? He passed away a few months ago’ said the auto driver non-challantly. ‘But don’t worry, I will take you to another good doctor. You will get a discount too’ he hastily added. Needless to say the auto drivers are also enjoying the ‘cuts.’ Another popular way of ‘diverting’ a patient is by announcing that the doctor preferred by the patient has gone abroad for a long training or a conference.

I don’t think there is an end to it. As things keep going in this direction, there will be more lies and more ‘hitting below the belt.’ The percentages of commissions will keep increasing to an extent that the quality of care will go down as there will not be sufficient margins left for the hospitals. What is the way out? How does one get out of this vicious circle? I get mails and calls almost daily from people asking this question. Most of them are doctors running their own hospitals.

And my answer to them is this- ‘Direct to customer approach through brand building is the answer.’ Almost everyone who hears this answer exclaims- ‘What? What did you say?’ Can you explain what it means? Can you tell me how it works?’ The response is not surprising. Given that doctors are not familiar with the territories related to branding.

Not only you enjoy higher profit margins, you also reduce your dependency on others for business. Business strategy wise, it is always better to have strategy which is not easy to replicate. Giving commissions, needless to say, is a no brainer as far as strategy is concerned. Building a brand is something that not everyone can do successfully. Another thing to be considered is that a hospital’s credibility is lost without a chance of gaining it back, if someone blows the horn on its unethical practices.

Imagine if someone comes out with a sting operation [something that we are all witnessing every other day on TV at prime time], about a hospital striking a deal with the GP. Let’s face it, people are increasingly becoming aware and educated about their surroundings these days. With the rise in the awareness levels, it is just a matter of time before someone blows the horn on this mode of doing business. A well branded hospital finds it easier to convert its OPD patients to indoor patients than a referral dependent hospital.

By the sheer power of the brand, people feel it is safer to get admitted in a hospital than a lesser known one. This term is known as conversion rate [the percentage of patients who actually get admitted to a hospital]. Also consider the word of mouth for branded hospitals. Research shows that good and strong brands are spoken about more than others. If you had an ultrasound done at Apollo hospital, you are more likely to tell it to your friends than if you had it done at an unknown hospital. In hospital marketing, there is no stronger tool than word of mouth marketing. It would be a big loss if deliberate efforts are not made towards reaching the customers directly with a strong value proposition.

Research also points out that strong brands enjoy stronger customer loyalty. Not only your patients come back for their repeat appointments, they also suggest your name to other hospitals. Marketing professionals have always been raving about how it is far cheaper to retain a customer than to create a new one. A retained customer is also easier to serve than a new customer as the latter is more likely to complain about the services than the former. Another point I wish to make here is the impact of a strong brand on staff loyalty. Attrition is a big challenge for the healthcare industry today. If your nurses, technicians and doctors are leaving you frequently, consider building a strong brand.

I have talked about how to build a brand in my previous article. You need to start by creating a value proposition which only you can provide and which differentiates you from the rest of the pack. Once the value proposition is in place, you need to work diligently on ensuring a consistent delivery of the proposition. For example, if you create a proposition called- the hospital with minimum waiting time, you need to ensure that you actually deliver on the brand promise. You will need to create systems and structures which ensure that.

Once you have gained mastery in consistent delivery of the proposition, you then need to tell the world about it through various innovative methods. Once this is achieved, a successful brand is created. The transition from referrals to brand building is not an overnight phenomenon. Nor does it take donkey’s years to build a brand. It takes perseverance and out of the box thinking to get the job done. First and foremost it takes the willingness to embark on the journey. I would want to end by strongly recommending that if you have been indulging in kickbacks; it’s time to re-create your business plans.
 

This article has been published in Modern Medicare - www.infomediaindia.com