- Asante Teaching Hospital is the top ranked hospital in its region of South Africa, serving over 22,000 patients annually with 274 beds and 1652 staff. However, it receives no government funding and relies on patient payments and insurance.
- Courtney Young, an intern, was tasked with analyzing Asante's cost data and billing processes to make recommendations to simplify pricing and billing for patients, insurance companies, and the hospital's competitiveness.
- Asante's current billing system leads to high prices that vary for each patient, overwhelming discharge processes, and long insurance scrutiny times. Competitors offer simpler bundled pricing that is cheaper and easier to understand.
1. Case Study
On
Asante Teaching
Hospital
Presented By:
Aniket Mandavkar (2207004)
Armaan Gupta (2207007)
Dhananjay Patwari (2207011)
Malyaj Kaushal (2207017)
Nilesh Nikhade (2207019)
Puneet goyal (2207023)
2. Courtney Young was
undergoing an internship at
Asante Teaching Hospital
She had to organize the cost
data she had gathered from
staff interviews into clear
recommendations for the CEO
CEO, a professional CA with
specialization in Cost Control,
recruited in 2013 from a For-
Profit Hospital
Introduction
3. Served
community
for 40 years
Official visiting
facility for
visiting
President &
Prime Minister
Top ranked hospital in
region for surgery,
trauma, neonatal care
& teaching
274 Beds
1652 Staff
Served over
22,000
patient each
year
Annual Budget of
over R378 Million
Johannesburg
4.4 Million
Including
Metropolitan Area
7.8 Million
Including Outer Suburbs &
Townships
10.3 Million
Salient Features Asante
Teaching Hospital
Information about Asante
Teaching Hospital
Population
Demographics Growth in the middle class had been strong in the decade
City & Townships were economically varied with average
GDP of R249,900
The city’s middle class had grown rapidly
100% funding from
private foundation
A not-for-profit
body with
charitable mission
As no government
support, patient paid
bills through a
combination of
insurance coverage &
out-of-pocket payments.
If patients were unable
to afford services, they
could apply for
coverage under
Asante’s Patient
Welfare Program
5. ASANTE 1. Non-Profit
2. Needed to survive
independently
3. Any surplus from one
department was used to offset
care in another department
4. Asante was the only hospital
that offered single rooms to
patients for an additional fee
5. Privacy was a core driver of
perceived luxury
6. Asante’s higher prices could be
justified by its premium level of
care
7. Insurance providers often
scrutinized and debated its long
bills before mothers could be
discharged
COMPETITOR
1. For-profit
2. Raise capital from investors to
expand
3. Earn profits from operations to
pay dividends
4. All competitors except St.
Luke’s: Operating efficiently, with
four patients per room
5. Less appealing (except St.
Luke's) to the growing demand
for privacy among maternity ward
patients.
6. Cheaper services with fewer
variations in price. Lower quality
of care and fewer perks in terms
of comfort, such as enhanced
privacy for mothers
7. All but Johannesburg Hospital
offered bundled pricing for labour
with no complications
6. Existing Billing System
• Prices at Asante ranged from R13,912 to R19,917 for a
natural birth
• Much of the cost was covered by insurance
• Expectant parents at Asante had no certainty regarding the cost of a
birth
• Costs were broken down in final discharge > overwhelming for patients
• Wait for hours at discharge for insurance clearance
• Overwhelming billing procedure at discharge for new parents
• Significant financial strain on patients
• While Asante’s higher prices could be justified by its
premium level of care
• insurance providers often scrutinized and debated its
long bills before mothers could be discharged.
Cost
Patient’s
Concerns
Insurance
Company
7. 1. Asante- best hospital in S. Africa
•2. Loan-free Operations
•3. Single room service
•4. Experienced team
1. Negligible support from the Government
•2. Difficulty in raising funds
•3. Difficulties & Problems in Billing Process
•1. Simplify the pricing model & to be more
competitive to other hospitals
•2. Tapping the high potential
Johannesburg middle class people
•3. Growing Demands
•1. Competitors are cheaper & fewer
variations
•2. Other players can raise higher funds to
expand due to profit-making the
organization
•3. Better parts of the city have better
hospitals with advanced & latest equipment
SWOT
STRENGTH WEAKNESS
THREATS
OPPORTUNITY
8. Pricing
Strategy
Recommendations
• Single bundled
price for all natural
birth deliveries
• Three bundled
prices
• The status quo
Steps
• Identify the cost
drivers
• Determination of
total Overhead Cost
• Applying Cost
Drivers to the total
cost
• Length of Stay
• Registration time
11. Competition
Most of the competitors were offering bundled prices for the
maternity ward.
Customer Concerns related to
the billing process
The stress and disappointment that their birth cost more than
expected was often upsetting to parents, even when much of
the cost was covered by insurance.
Costs were broken down in dizzying detail upon final discharge
and this meticulous compilation led to patients waiting during
delivery.
Insurance Providers
Insurance providers scrutinized its long bills and took longer
time for it.
Insurance providers naturally appreciated low costs but also
preferred bundled pricing because of its simplicity.
Challenges in
Asante Hospital
12. Comparative Study
S.No. Challenges Status Quo Triple-bundle Single-Bundle
1 Competition
1.2 Bundled Prices Not Offering Offering Offering
2 Customer Concerns related to billing process
2.1 Bill amount clarity in advance
Not very
Clear
Clear Clear
2.2 Customers Waiting Time High Low Low
2.3 Bill Complexity High Low Low
3 Insurance Providers
3.1 Bill Scrutiny time High Low Low
3.2 Insurance Payment clearing time High Low Low
14. Price Recommendations
for Level 1
S. N. Challenges Triple-bundle Single-Bundle
1 Price Difference w.r.t. Status Quo -5% +2%
2 Price hike justification Not Applicable Not Available
3 Customer Preference
Comfortable to pay
quoted price
Apprehensive to
pay higher price
4 Price Low High
5
Price Difference w.r.t. Competitor
(St. Luke’s)
5.58% to 0.55% 5.58% to 8.11%
15. Price Recommendations for Level 2
Note: Patient base is only 5%
Price Drop
Status Quo to Triple Bundle 10%
Status Quo to Single Bundle 16%
16. Price Recommendations for Level 3
1.Number of such
cases is only 8% of
total admissions
1.Involves most
complications (Such as
Fetal Distress etc.)
1.Can’t be predicted
prior to admission to
the hospital.
1.Such urgent
scenarios require more
resources and fast
action.
1.Priority during such
scenarios is safe
childbirth, irrespective
of expenditure.
17. Triple bundle model is proposed.
Triple bundle price will simplify and fasten
the billing & checkout process
Triple bundle price option allows patients
to get an upfront idea on expected cost
Ease of insurance claim scrutiny and faster
settlement of insurance claims
Bundle pricing will ultimately boost customer
satisfaction.
