Health Goods and Services: Business Plan

Introduction

The basis of the present business plan is based on the thesis of Kenneth Arrow regarding the impossibility of the market (health industry) to efficiently cover the demand for health services in general, due, especially, to the uncertainty in the incidence of the diseases as to the efficacy in the treatments. Arrow is based on the competitive, optimization model on the flows of services offered and purchased, and the prices assigned to them by the market. According to Arrow (1963) and as cited by Kotler (2014), the demand for medical services is based on irregular and unpredictable events, such as diseases. The service, which is medical care, belongs to the category in which the product and the production activity are identical. In this balance, an additional element in the health offer is the trust generated by medical care products.

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On the other hand, Philip Musgrove (2007), as cited by Dixon-Fyle, Gandhi, Pellathy, and Spatharou (2012) establishes that health activities are located within three natural domains: public goods, low-cost private interventions, and catastrophically costly private goods. However, the appropriate limit between private and state action is not defined. Because the demand for health goods and services does not acquire the entire market offer nor feel the only beneficiaries of what they "pay", the private market will produce a supply of health goods and services lower than optimal to meet the total demand. Although a large part of the health market constitutes a private (almost) pure asset, Musgrove identifies market failures in the Health sector, which justify public intervention: Ignorance, externalities and principal-agent problem. In this sense, the present business plan develops a profitable investment opportunity that bases its differentiation on the quality and management of the health service it offers; day surgery or ambulatory. The day surgery center will provide high quality services lacking in most public heath institutions. It will be a win-win situation since the center will be a profitable investment and at the same time be highly beneficial to people seeking high quality surgical interventions.

Chapter I. Business Idea

In Mexico, the health sector generates, on average, $ 9,000 million annually, with a 19% annual growth (Healthcare in Mexico: Expenditure, and financing 2018, p.1). Of this amount, a large part comes from the private sector; for which it is proposed to promote greater competition, expand the offer and improve services (Health Statistics Mexico 2018). On the other hand, the public budget for the Health sector is equivalent to approximately $ 1,122 per capita, well below the regional average, equivalent to 9% of the national budget per year (Healthcare in Mexico: Expenditure, and financing 2018, p.1). The business plan for the implementation of a day surgery center is based on four main aspects or reasons of interest:

First, take advantage of the investment opportunity shown by the Health sector. Only in 2014, around $ 400 million in private health was invested in Mexico (OECD Health Statistics 2015, p. 1). There is an opportunity to expand access to quality health for all Mexicans, through more infrastructure and more health offer, make more efficient the addendums so that a patient can go to different health institutions and their history can be seen by all and promote high-quality generic medicines but low cost. Likewise, although it is observed that the private health market slows down, there is a lot of interest from national entrepreneurs, as foreigners, to open complexity centers and outpatient surgery.

Secondly, take advantage of outpatient surgery opportunities not included in the public health service protocols, especially outpatient plastic surgery. Also, reduce the gaps in health care, including ambulatory or day surgery, through cooperation agreements between public and private sectors. This constitutes an opportunity. Thirdly, take advantage of the justified and necessary space to provide a safe and quality service that meets the expectations of the population and reduces their uncertainty regarding the service offered, with a focus on the customer and fair price-service. With this, the Business Plan Strategy seeks to contribute with the population in the process of improving health, in the moments that most require personalized, safe, quality, timely and transparent support and attention (a competitive strategy based on differentiation). Fourth, capture the demand, and expense, of health that is not served through private insurance, or other health providers. According to the Ministry of Health, during 2012, 88.5% of health financing of households in Mexico (estimated at $10,590.4 million) is direct; that is, it corresponds to the out-of-pocket expense. That is, only 11.5% of health spending is channeled through private insurance; the population having the ability to decide their health care. It should be noted that out-of-pocket or direct out-of-pocket expenses could be made without the intermediation of a consultation or a sickness care report.

This business plan seeks to capture the unmet demand of the public health service, with a safe and quality service, paying special attention to provide an opportune service for ambulatory operations, regarding the waiting times shown by the Health Establishments, both from the Ministry of Health and from other sectors. Likewise, it seeks to provide a transparent and fair service regarding the service fees, according to the services received and expected. It should be noted that the health indicators in the country are good as those registered in countries of the region, standards of the World Health Organization (WHO) and the Pan American Health Organization (PAHO); both at the level of investment, quality, morbidity, attendance rates, among others (Health Statistics M...