Anda di halaman 1dari 117

EXECUTIVE SUMMARY

This is a strategic management paper of World Citi Medical Center (WCMC), a tertiary
hospital formerly known as Quezon City Medical Center, owned by the Guico family. Our goal
is to be able to analyze the current situation of World Citi Medical Center, evaluate its products
and services and develop strategies for the hospital to cope with the changing health care
environment .
WCMC has positioned itself as the first

medical hotel.

The experience of being

confined in a hospital with a hotel ambiance may be attractive to some patients but it has also
built a reputation of being an expensive hospital.

The attractiveness may be due to an

impression of being clean, devoid of hospital smell and with quality service. But the high cost of
their services seemed to have more impact to the customers than the experience of being in a
"hotel".

In the past 3 years, the growth of

WCMC was not encouraging. The hospital

occupancy rate showed a downward trend. Currently, hospital occupancy is merely 45%.
World Citi Medical Center's challenge is to reinvent itself to be able to improve image
and subsequently improve utilization of its products and services.

There has been drastic

changes in health care industry in the Philippine setting the past 15 years. WCMC must adapt
to these dynamic environmental changes without sacrificing the quality of health care. In the
private sector both Metro Manila and suburban areas, different health care organizations have
suddenly appeared

such as mall based clinics, satellite laboratory with multi-specialty clinics

and health maintenance organization owned clinics. New tertiary hospitals with more modern
facilities were established. Physicians are not only part of the medical staff

but they also

have business interests, being stockholders of these health care organizations. World Citi
Medical Center like any health care organization, especially hospitals, have unique culture and
the impact of

internal and external factors affect the strategies that will be developed and

implemented.
Compared to its competitors, World Citi Medical Center has consistently shown low
numbers in the sales growth. The high cost, lack of modern facilities and shortage of medical
staff could have contributed to this. WCMC should offer competitive prices that are acceptable
to the target market while allowing the hospital to survive.

Additional doctors should be

encouraged and invited to join the medical staff. Physicians are important customer base for
hospitals. Patients follow their doctors to other hospitals even if they don't like the hospital
1

just to avail of their services. The more doctors there are, the greater the chance of improving
bed occupancy census. Improving hospital facilities and equipments do not only attract patients
to be seen or confined at WCMC, but also attract doctors especially those with specialties to
be part

these hospitals. Doctors are getting more technologically inclined and are more

confident with the help of the recent technologies.


Aside from its known geographic competitors, threat of new hospitals being built in the
same target area can affect WCMC.

WCMC must meet the needs of its employees and

doctors to avoid an exodus of the WCMC staff to these hospitals.


The importance of effective Marketing strategies could not be overemphasized. In fact,
it could have made the difference for WCMC. Other tertiary hospitals are also known to be
expensive but it was the branding and aggressive marketing that

made them acceptable to

patients. They have effective marketing strategies which make patients patronize them. Now
that WCMC is lagging behind its competitors, it should invest in good and aggressive marketing
programs for the hospital.
Based on the External factor Evaluation (EFE) Matrix, WCMC has a total weighted
score of 2.4 . It is in a stable condition.
WCMC should take advantage of Opportunities such as
1. Increase in Health Consciousness
2. Increasing population of senior Citizens
3. Low inflation rate
4. Accessible internet
5. Enhanced partnership through Asean Integration 2015
6. Abundance of HMOs
WCMC should be able to respond and formulate strategies to reduce impact of these external
threats
1. New hospital in the periphery
2. Rapidly evolving technology
3. Conservative Gross Domestic Product
4. Augmented burden of taxation
5. Dynamic Government Regulations
2

6. Worsening traffic congestion


The Internal Factor Evaluation (IFE) of WCMC showed a total weighted score of 2.04
indicating the company's poor internal position.
WCMC has the following strengths and should capitalize on these:
1.accessible and strategic location
2. Well trained managerial staff, doctors and ancillary services
3. Residency training program for local and foreign doctors
4. Electronic Medical records in clinics
5. Management committed to improve quality of patient care through international standards
6. Healthcare courses offered at World Citi Colleges
The following are some of the Weaknesses that must be addressed:
1.High Hospital Rates
2. Lack of modern facilities
3. Shortage of doctors who can contribute to revenue
4. Marketing Department not fully utilized/effective
5. Hospital staff shared with other family businesses
6. Family owned corporation with different interests of family members
7. Lack of communication between management & staff /doctors
Space Matrix showed that WCMC enjoys a competitive advantage but the critical
factor is financial strength. The Internal - External Matrix score is 2.04 and falls in Cell V
which indicates that WCMC can be managed with hold and maintain strategies. Grand
strategy Matrix WCMC is in quadrant II which means it has rapid market growth but in a
weak competitive position.
Using the identified external and internal critical success factors, strategies that
would involve market penetration, product development, and market development are
formulated. These recommended strategies has an objective of increasing hospital
revenue by at least 5% every year from 2015.

CHAPTER 1. INTRODUCTION

World Citi Medical Center (WCMC) is a tertiary hospital located along 960 Aurora Blvd,
Cubao Quezon City. It is a 15 storey hospital building with a 276 bed capacity and
three accreditation by the Department of Health.

a level

In spite of being a 276 bed capacity, only 150

beds are functional and only 6 floors are dedicated for in-patient rooms.
WCMC has 187 accredited physicians but only 165 are active. Only 98 (62%) are
holding clinics and 22 are visiting physicians. Non medical staff includes 142 nursing service
and 142 administrative staff.
The hospital is situated right across the intersection of Aurora Blvd and Anonas Street.
About ten meters from the main gate is a ramp which leads to the elevated hospital building.
The sign "EMERGENCY" in color red is prominently placed at the right side of the building
facade at the level of the 2nd floor. The first floor is about 15 feet from the ground level. A 711 convenience store is underneath the elevated first floor.
There are two main doors found in front of the hospital building. Entry to the hospital
lobby is through the left main door. Patients, doctors and visitors enter the hospital through this
main door. The entrance to the emergency room is through the right main door. Employees
enter through the basement doors. Basement 1 has the Cafeteria, Dietary, Central supply room,
housekeeping, stock room, laundry and security office. Half of the basement area is occupied
by Parking area for the Executives. Basement 2 is the Morgue, Engineering, Maintenance
offices, Carpentry and storage area for unused hospital equipments and junks.
Before entering the left main door, a small coffee shop is seen at the left side. Upon
entry, a boutique/convenience store can be seen at the right side. The stairway leading to the
basement and upper floors is just beside the boutique. Opposite the boutique is the outpatient concierge which is

immediately seen at the left side of the main entrance.

receptionist/information counter is seen

4 meters

The

upon entering the main entrance. The

receptionist also functions as the telephone operator.


The lobby is simple yet elegant in style. It has marble flooring. The floor near the main
entrance has an intricate design. Lighting fixtures are contemporary chandeliers.

At the far

end of lobby, are the Philhealth, Billing and Cashier counters. Patients are provided seats near
these counters while waiting for their turns. Turning to your right immediately before these
4

counters will lead to a small hallway with the three elevators ( 2 elevators are opposite a 3rd
elevator). Another stairway covered by a swing door is

beside the 3rd elevator. Walking

straight through the elevator hallway will lead one to the radiology section. Turning right from
the radiology will lead to the pharmacy and the back door of the emergency room. While turning
left from the elevator hallway will lead to the corridor leading to the Rehabilitation Medicine
Department.
The Emergency room is approximately 120 square meters. There is an emergency exit
door approximately 10 meters away and straight from the emergency room entrance. The
Pharmacy is located immediately to the left of the emergency room exit door. The Laboratory
is opposite the Pharmacy. The Radiology Department is beside the Laboratory.
from the Pharmacy is the elevator hallway.

Turning left

Directional signage are prominently displayed on

the walls to guide patients. There are closed circuit television (CCTV) cameras inside elevators
and along stairways.
The doctors' out-patient clinics together with the Women's Center, Eye Center, Urology
Center, Hope (Hema, Onco, Pedia, Elderly ) Center, Cardiac Laboratory are found on the
second floor. There are television monitors strategically located along the corridors of the
second floor to keep the patients entertained while waiting. The third floor is occupied by
executive, managers and corporate offices. The 4th floor is assigned to the Intensive Care Unit,
Operating Room-Delivery Room complex, Dialysis, Neonatal Intensive Care Unit. This floor also
has a door connecting to the school, the World Citi Colleges passing through their basketball
gymnasium. The suite rooms, main conference room, prayer room and a mini garden can be
found on the fifth floor. The 6th, 7th, 8th, 9th ,10 floors are the in-patient rooms. Half of the
9th floor are occupied by service rooms. The different departments occupy these rooms for
charity patients required

for their training.

All the patient rooms are equipped with water

sprinklers. Emergency exit door is found at the back of each floor.


mini conference room

can be found

at the 11th floor.

The records section and

The office of the Citi Property

Management Inc, the company which handles the out patient clinics rentals and parking area is
also found on the 11th floor. The 12th to the 14th floor function like condotels. The wellness
center and gymnasium is at the 15th floor.

Figure 1. Quezon City Medical Center Circa 1970s

Figure 2. WCMC Logo

Figures 3 & 4 The World Citi Medical Center 15 storey building

CHAPTER 2. RESEARCH DESIGN AND METHODOLOGY


7

Significant information for this paper were primarily obtained through interviews with the
following informants:
1. Dr. Pepito Amores

- Vice President for Hospital Operations, WCMC

2. Ms. Imelda Bariso

- Corporate Accounting Manager, WCMC

3. Mr. Prince William So

- System Administrator, IT Department, WCMC

4. Mr Norbert Barretto

- Quality Management Officer, WCMC

5. Dr. Deborah Bernardo

- Training Committee, Department of Medicine, CMC

6. Dr. Victoria Dumlao

- Board Member, Marikina Valley Medical Center

Data were also culled from various business textbooks and publications, articles from
the internet and through telephone inquiry to gather consistent information especially on pricing
and service delivery. Financial Information were based on printed documents obtained from the
Securities and Exchange Commisssion.
In analyzing the current status of World Citi, the following evaluation tools were utilized:
1.
2.
3.
4.
5.

External Factor Evaluation Matrix


Porters Five Forces of Competitive Analysis
Competitive Profile Matrix
Internal Factor Evaluation Matrix
Mc Kinseys 7 Framework

In strategy formulation, the following strategic tools were used:


1.
2.
3.
4.
5.

SWOT Matrix
Strategic Position and Action Evaluation Matrix (SPACE)
Internal-External Matrix
Grand Strategy Matrix
Quantitative Strategic Planning Matrix (QSPM)

Limitations of the Study:

1. The study relied mostly on information provided by the informants.


2. Data and statistics obtained from public documents secured from the Security and
Exchange Commission were not verified.
3. Information gathered mainly covers years 2011-2013 with some selected data from
2014 to present.

CHAPTER 3. COMPANY ANALYSIS

3.1 History of World Citi Medical Center

World Citi Medical Center (WCMC), was formerly known as Quezon City Medical Center
and College (QCMCC).

QCMCC was incorporated in June 1971 and was previously named

Medical Center for Quezon City (MCQC). It started to operate a 50 bed hospital. MCQC later
changed its corporate name to Quezon City Medical Center and Colleges Inc.(QCMCC). The
School of Nursing was established as its first college which offered general nursing program. It
eventually offered other programs in the College of Arts and Sciences. The 50 bed hospital was
later expanded to a 100 bed capacity.
After 15 years of operation, QCMCC was on the brink of foreclosure.

In March 1986,

the Guico family from Pangasinan acquired ownership and management of the QCMCC. The
purchase was initially intended to be a real estate investment only. They would eventually
resell the property and make a profit out of it. Running a hospital and a nursing school was not
part of the plan. However,

the real estate market plummeted after the EDSA revolution.

Nobody was interested to buy the property. The Guicos thus had no alternative but to run the
business. When Mr. Guico was unexpectedly called to serve the government, Mrs. Arlyn Guico,
then 32 years old and with six children in tow, was left to manage the dilapidated institution.
Mrs. Guico introduced changes in the school and the hospital. The following years saw
the introduction of several additional health related course offerings in the school such as
Radiologic Technology, Rehabilitation, Pharmacy Medical Technology. Eventually in 1994, a 15
storey hospital building was constructed. The hospital was transformed to a 276 bed tertiary
medical center and equipped with hi- tech facilities.
In 2001,Quezon City Medical Center and Colleges Inc later changed its name to World
Citi Incorporated. Prior to the change in name, Quezon City Medical Center has always been
confused with another hospital the Quezon City General Hospital, a government hospital
located in Seminary Road Quezon City. World Citi Incorporated's twin institutions were also
renamed. The hospital division as World Citi Medical Center and the school was renamed as
World Citi Colleges.

World Citi Inc. acquired the ISO 9001:2000 Certification ( Quality Management System )
in 2001.

This International Standard promotes the adoption of a process approach when

developing, implementing and improving the effectiveness of a quality management system, to


enhance customer satisfaction by meeting customer requirements.

Subsequently, WCMC

obtained Environmental management systems (ISO 14001) and Occupational health and safety
10

management systems (OHSAS 18001:2007) certifications. ISO 14001 enables an organization


to develop and implement policies and objectives which take into account legal requirements
and information about significant environmental aspects. OHSAS 18001:2007 Occupational
and safety management system standard against which their management systems can be
assessed and certified.
World Citi Inc. eventually

expanded its education system to other areas such as

Antipolo, Caloocan, Nueva Ecija and Binalonan, Pangasinan. The Guico family has also
developed other businesses such as Aviation, Resorts, Medical Transcription, Real Estate and
Food Business.
WCMC was voted as the Most Outstanding Center for Wellness and Medical Hospitality
in the Philippines by the Philippine Marketing Excellence Award in July 2005. On December
2005. World Citi Medical Center was awarded as the Outstanding Medical Center in the 2005
Global Excellence Award at the Ambassador Hotel in Shenzhen, China.
Residency training programs were later established to improve its services. The first
department to have an accredited Residency training program was the Department of Internal
Medicine in 2002.

Department of OB- Gyne was accredited after 3 years, then Department of

Pediatrics followed. Department of Radiology started its residency training program 3 years
ago. Department of Surgery is preparing to be accredited 2 years from now.

3.2 Mission Statement

11

We are committed to provide optimum holistic healthcare and wellness services to our
client to nurture, empower and improve the quality of life of our stakeholders and foster a
mutual beneficial relationship with our partners in the industry.
Credo
We believe in a Higher Call for which we exist and to which we respond,
as an organization of integrity in the pursuit of our goals,
Committed to fulfill our tasks and responsibilities with excellence;
Competent in our areas of expertise;
Truthful and honest in our dealing with everyone;
Working effectively as one; and
Respecting each others opinions and differences.
But these can only be possible by the grace and guidance of the Divine Providence.

Table 1. Mission Statement

12

COMPONENTS

Yes/No

Statement

CUSTOMERS

Yes

Client, partners, stakeholders

PRODUCTS AND
SERVICES

Yes

Healthcare and wellness services

MARKET

Yes

Healthcare and wellness market

TECHNOLOGY

No

CONCERN FOR SURVIVAL


GROWTH AND
PROFITABILITY

Yes

Nurture , empower, improve


quality of life of stakeholders and
foster a mutual beneficial
relationship with our partners in
the industry

PHILOSOPHY

Yes

Credo statement

SELF-CONCEPT

Yes

Committed to provide optimum


holistic healthcare and wellness
services

CONCERN FOR PUBLIC


IMAGE

Yes

Organization of integrity in the


pursuit of goals

CONCERN FOR
EMPLOYEES

Yes

Nurture , empower, improve


quality of life of stakeholders and
mutual beneficial relationship with
our partners

10

NATION BUILDING

No

REVISION
delete clients

State of the art technology

Make a difference in the life of


stakeholders

Make a difference in the life of


stakeholders

The mission statement revealed the desire of WCMC to provide services to both the
sick and the healthy. Wellness services will be provided. There was no mention of technology
13

or means to attain their commitment to all the stakeholders. There was no mention of level of
competence that services will be delivered. The word holistic healthcare indicates that it takes
in consideration the person's total being which is body mind and spirit.By replacing holistic and
optimum with highest standard of healthcare, shows commitment to quality healthcare.
The Credo statement can be rephrased to make the message simple, easily
understandable yet still meaningful. The words Higher Call were replaced with Supreme Being.

3.3 REVISED RECOMMENDED MISSION STATEMENT:

We are committed to provide highest standard of healthcare and wellness through


state of the art technology, make a difference in the life of our stakeholders, foster a mutual
beneficial relationship with our partner and be part of nation building through a healthy world
citizen.
Credo
We believe and respond to a Supreme Being,
an organization committed to Integrity and Excellence;
Competent, Truthful and Honest;
Working harmoniously and peacefully in the pursuit of our goals.
All through the grace and guidance of the Divine Providence.
3.4 Vision Statement:

A hi-touch world-class healthcare and wellness provider

Table 2. Vision Statement

14

COMPONENTS

Yes/No

No

FOCUSED CONCEPT
Is it concise enough yet
inspirational?
Is it aspirational?

Yes

NOBLE PURPOSE
Does it clearly answer the
question: What do we want to
become?

No

PLAUSBLE CHANCE OF
SUCCESS
Does it give clear indication as to
when it should be attained?

part of statement

REVISION

Personalized
customer
service

World class healthcare and


wellness provider

By 2020

The word high touch was used by John Naisbitt in his book High Tech/High Touch:
Technology and Our Search for Meaning which says that "The More high tech the more high
touch we desire. The message is that even with a technology- driven world we still appreciate
the personal touch and we still need personal interaction with the people we deal with in
business. The term high touch is concise but not readily understandable by customers. The
vision statement can therefore be interpreted as the desire of World Citi Medical Center to
become a

world class health and wellness provider without losing the personal touch or

service with dedication and personal touch. The vision statement did not mention time frame to
attain their vision.

3.5 REVISED RECOMMENDED VISION STATEMENT:

To be recognized as the preferred quality healthcare and wellness provider with


International Standards through dedicated and personalized customer service by 2020.

15

CHAPTER 4. EXTERNAL ANALYSIS


4.1 The General Environment
4.1.1 Economic
4.1.1.1 Conservative Gross Domestic Product
Gross Domestic Product is defined as an aggregate measure of production equal to the
sum of the gross values added of all resident, institutional units engaged in production (plus any
taxes and minus any subsidies, on products not included in the value of their outputs. GDP
estimates are used to gauge the economic performance of a country or region. It is also a
measure of value added more than sales, hence GDP also increases when an enterprise
reduces its use of raw materials and other resources to produce the same output. Most
importantly, GDP estimates reflect the growth of the economy from annually or quarterly. The
pattern of GDP growth would indicate the success or failure of a nations economic policy. GDP
can be determined in three ways: production approach, income approach or the expenditure
approach. The most direct of the three is the production approach which sums up the outputs of
every class of enterprise to arrive at the total. GDP can be differentiated from Gross national
Product (GNP) or as it is now known Gross National Income (GNI). GDP defines its scope
based on location while GNP defines its scope according to ownership.

Table 3. Rank of Countries According to Gross Domestic Product


Country/Region
1
2
3
4
5
6
7
8
9
10
11
12
13

GDP (Millions of US$)


World
United States
China
Japan
Germany
France
United Kingdom
Brazil
Italy
Russia
India
Canada
Australia
Spain

72,689,734
16,768,100
9,181,204
4,898,532
3,730,261
2,806,432
2,678,455
2,243,854
2,149,485
2,096,774
1,937,797
1,838,964
1,531,282
1,358,263
16

Country/Region
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42

GDP (Millions of US$)


World
South Korea
Mexico
Indonesia
Netherlands
Turkey
Saudi Arabia
Switzerland
Argentina
Sweden
Poland
Belgium
Norway
Nigeria
Iran
Taiwan
Austria
Thailand
United Arab Emirates
Colombia
Venezuela
South Africa
Denmark
Malaysia
Singapore
Israel
Chile
Hong Kong
Philippines
Finland
Egypt

72,689,734
1,304,554
1,259,201
868,346
853,539
822,149
748,450
685,434
611,726
579,680
525,863
524,806
522,349
514,965
492,783
489,089
428,322
420,167
402,340
378,148
371,339
366,060
336,701
312,434
295,744
291,567
277,043
274,027
272,067
267,329
255,199

The economy of the Philippines is the 40 th largest in the world according to the 2014
World Bank statistics and is also one of the emerging markets in the world. The Philippines is
considered as a newly industrialized country which has been transitioning from being one
based on agriculture to one based more on services and manufacturing. Goldman Sachs
estimates that by the year 2050, the Philippines will be the 14 th largest economy in the world,
Goldman Sachs also included the Philippines in its list of the next eleven economies. According
17

to HSBC, the Philippine economy will become the 16th largest economy in the world, 5th largest
economy in Asia and the largest economy in the Southeast Asian region by 2050. Inflation rate
of 3.7% (November 2014)and unemployment rate of 7.5% (January 2014) could not be taken as
negative indicators of economic growth.

Although healthcare industry was not explicitly

mentioned as a major contributor to the GDP, the following data is encouraging considering that
the industry the World Citi is into involves services:

Table 4.

GDP Composition by Sector:

Services
Industry
Agriculture

54.4%
33.3%
12.3%

The healthcare industry plays an important

part in the economy of a country. It

determines export status, employment, capital investment, etc. Healthcare segment provides
employment openings to many individuals directly associated with the healthcare sector or other
associated sectors related to the healthcare industry in some way or the other. Businesses
dealing with healthcare adds to the already existing economy by buying utility programs, paying
taxes and the like.
A portion of GDP can be reflected specifically in terms of health services utilization. The
total health expenditure is the sum of public and private health expenditure covering the
provision of health services (preventive and curative), family planning activities, nutrition
activities, and emergency aid designated for health. According to the World Bank, the health
expenditure expressed in percentage total of the GDP in the Philippines are as follows:

Table 5. Health Expenditure in Relation to GDP


18

Philippines
Indonesia
Taiwan
Malaysia
Singapore
India

2010

2011

2012

4.2
2.9
3.8
4.0
4.1
3.7

4.4
2.9
4.1
3.8
4.2
3.9

4.6
3.0
3.9
3.9
4.7
4.0

In comparison with other Asian countries, the Philippines health expenditure is similar
showing an increasing trend every year. This data is a welcome development to the healthcare
industry since the populace in any given country within the region tend to spend more on health
maintenance annually.(source: World Bank Group IBRD IDA)

Figure 5. GDP Annual Growth Rate of the Philippines


The GDP growth rate of the Philippines has no definite pattern as it is
dependent on the economic situation, political climate and peace and order
in the country. On top of these, disasters also spell a downward trend as
shown in 2013 to 2014 (from 7.9 it plummeted to 7 then 6.3 and eventually
to a low 5.3. Expectedly, during the Bohol-Cebu earthquake and onslaught of
typhoon Yolanda, productivity was at its lowest while expenditures were at
highest.

4.1.1.2 Low Inflation Rate


19

The term inflation originally referred to increases in the amount of money in circulation.
Nowadays, most economists use the term inflation to refer to rise in price level. Inflation,
therefore, is sustained increase in the general price level of goods and services in an economy
over a period of time. When the general price level rises, each unit of currency buys fewer
goods and services. As a consequence, there will be a reduction in the purchasing power per
unit

of money. Inflation rate measures the annualized percentage change in a general price

index over time.

Table 6. Philippine Inflation Rate


Year-on-Year Inflation Rates in the Philippines, All Items
January 2010 December 2013
(2006=100)
Year

Month
2010

2011

2012

2013

January

3.9

4.0

4.0

3.1

February

3.9

4.7

2.7

3.4

March

3.9

4.9

2.6

3.2

April

4.0

4.7

3.0

2.6

May

3.9

4.9

3.0

2.6

June

3.6

5.2

2.9

2.7

July

3.7

4.9

3.2

2.5

August

4.1

4.6

3.8

2.1

September

3.8

4.7

3.7

2.7

October

3.3

5.2

3.2

2.9

November

3.7

4.7

2.8

3.3

December

3.6

4.2

3.0

4.1

Average

3.8

4.6

3.2

3.0

As of January 2015, inflation rate is only 2.4% as compared to average of 8.88%


(source: NSO Phils.) . This would be beneficial to World Citi Medical Center since services will
still be affordable. The cash saved by consumers and patrons at a certain point still would not
have devaluated much. People will tend to put premium on their health, and saving for future
health needs may be appreciated more.

20

Given this scenario, price of medical care can increase also since prices of basic
commodities started to escalate once more. Hopefully, medical services will still be affordable to
the public so that business sustainability in the healthcare industry will be attainable.

4.1.1.3 Rising Unemployment Rate


Unemployment rate is defined as the percentage of the total labor force that is
unemployed but actively seeking employment and willing to work. During periods of recession,
an economy usually experiences a relatively high unemployment rate. According to
International Labor Organization report, more than 197 million people globally or 6% of the
worlds workforce were without a job in 2012.
Unemployment rate in the Philippines rose to 7.5 percent in January from 7.1 percent a
year ago according to the Philippine Statistics Authority (PSA). The latest unemployment rate
means that 2.969 million Filipinos were unemployed with most of them (48.2 percent) were 1524 years old; followed by those 25-34 years old (29.9 percent), the January 2014 Labor Force
Survey (LFS) showed. About 64 percent of the unemployed were males.
Underemployment rate, meanwhile slightly declined in January to 19.5 percent from an
estimated 20.7 percent during the same period last year. Employed persons who express the
desire to have additional hours of work in their present job, or to have additional job, or to have
a new job with longer working hours are considered underemployed.
With rising unemployment rate, utilization of medical services, except probably in
emergency situations, will not be given top priority since there will be difficulty pinpointing who
among the family members of the patient would be responsible in the account settlement during
hospitalization or medical check up.

4.1.2 Sociocultural
4.1.2.1 Ageing Population
On the socio-cultural aspect, health consciousness seemed to have been enhanced.
Awareness of problems and complications arising from certain diseases and illnesses can lead
21

one to be more cautious with regard to health preservation. Theres likewise an increasing
patronage of senior citizens. The Philippine law classify a person as senior citizen based on age
(60 years old and above). They are entitled to discounts in medicines, basic commodities,
health services and socio-recreational activities. Although discount privileges may mean a slash
on the gross income of the medical center, still, senior citizens are major clients and patrons of
health services obviously due to the propensity of this group to develop illnesses as part of the
aging process.
The succeeding chart will provide the total number of the population and actual number
of senior citizen based on actual NSO survey. This is one scenario where the fertility rate is
going down while the elderly population is constantly increasing.

Table 7. Percentage of Senior Citizen Population


Year

1995
2000
2005
2007
2010
2015

Total

Number

of

Total

Number

Population

Senior Citizen

(Per Million)
68.62
76.5
84.21
88.57
90.46
99.01

(Per Million)
3.7
4.6
5.68
5.8
7.06
8.72

of

5.4
6.0
6.7
6.5
7.8
8.8

Source: NSO www.census.gov.ph

4.1.2.2 Increasing Health Awareness


Health consists of a complete state of physical, social and mental well being. Health
permits people to lead an individually, socially and economically productive life. Health
awareness is the basic concept of living a healthy life that makes sure that you do not get sick
and are able to live an optimal lifestyle. In has been observed that there is an increasing
consciousness regarding health as evidenced by establishment of wellness centers in hospitals,
gyms and spas, vegetarian restaurants and more people engaging in sports activities. This is a
22

much welcome development in the hospital industry as more people will be expected to utilize
the services being offered in the medical centers.

4.1.2.3 Health Issues in the Philippines


The Philippines has been struggling with some healthcare issues, one of the most
noticeable is malnutrition. Unsurprisingly, the poorer citizens are the ones who suffer from this
condition. The Philippine government through the Department of Social Welfare and
Development and in conjunction with

the Department of Health, has initiated projects to help

the poorer citizens who suffer from starvation.


Another serious health issue is illegal drug use. There are a number of Filipinos who are
said to be addicted

to prohibited drugs. The Philippine government has concentrated on this

issue and although there are still some recorded incidents of drug abuse, the number of drug
dependents has gradually decreased.
Cases of Dengue Fever, cardiovascular diseases, tuberculosis have constantly been on
the rise. However, most of these cases are properly attended to by the Philippine government.
(source: Alliance Worldwide Care). It is important to know these morbidities and mortalities so
that remedies can be instituted in a timely manner and allocation of budget to certain diseases
will be justified. On the side of the hospital, strategies can also be formulated based on data
available. Additionally, studies may be pursued especially in research oriented medical centers
on how to lower the incidence of certain illnesses.

Top 10 Causes of Death in the Philippines in 2009


Throughout the year, the government, through the Department of Health, has actively
promoted the practice of living a healthy lifestyle among Filipinos. Of the top ten causes of death
in the country, nine are diseases that could have been prevented with a healthy lifestyle.
1. Heart Diseases
The term heart diseases collectively refers to diseases of the heart and the blood
vessels surrounding it. There are more than 50 different types of heart diseases but the most
common is coronary artery disease. Congenital heart diseases, on the other hand, are inborn or
can be developed as a child grows older. The risk of developing heart diseases can be lowered
by controlling the blood pressure, lowering bad cholesterol levels, avoiding smoking, and getting
enough exercise.
23

2. Vascular Systems Diseases


The most common of vascular system diseases is stroke, which occurs when the brain
lacks blood flow or suffers internal bleeding. Blood vessels inside the brain are damaged due to
fat deposits or blood clots and brain functions are impaired. Normally, the preventive measures
done to avoid having heart diseases can be applied in lowering the risk of having a stroke. In
addition to those, it is recommended that Filipinos follow a low-fat diet and avoid excessive
intake of alcohol.
3. Cancer
Leading causes of cancer-related deaths in the Philippines are lung cancer, breast cancer,
cancer of the cervix, liver cancer, colon and rectum cancer, prostate cancer, stomach cancer,
'cancer of the oral cavity, cancer of the ovaries, and leukemia. Six out of the Top 10 Most
Prominent Deaths of 2009 are cancer-related deaths.
4. Road Accidents
Defensive driving is a major lesson taught to students in driving schools around the
country. Nevertheless, the majority of Filipino drivers have been taught to drive in an informal
setting. Defensive driving, which entails taking safety precautions and practicing accident
prevention while driving, is often ignored. It is not a surprise, therefore, that road accidents have
become the fourth leading cause of death in the country today.
5. Pneumonia
Pneumonia collectively refers to over 50 respiratory diseases that affect the function of
the lungs alveoli. The most common form is viral pneumonia which develops after a patient has
contracted an upper respiratory disease. Pneumonia is a highly treatable disease but it can be
deadly when left untreated. This is what commonly happens in the barrios when impoverished
patients fail to seek medical help and instead rely solely on common herbal medications.
6. Tuberculosis
The Philippines ranks 9th among the 22 countries in the world that are still battling
tuberculosis (TB) today. This means that around 250,000 Filipinos become infected with the
24

disease and 75 patients die of TB every year. It is already an improvement as the country
ranked 7th in the past years, yet the statistics are still alarming. In fact, the country still ranks 8th
among the countries with incidences of Multi-Drug Resistant Tuberculosis.
7. Dengue Fever
As of 9 May 2009, a total of 62 deaths have been caused by dengue nationwide.
Bacolod City appeared to be the most affected area in the whole country, with eight deaths as of
September. This prompted the city council to pass a resolution declaring the city in calamity due
to dengue fever.
8. Chronic Lower Respiratory Diseases
Chronic Lower Respiratory Diseases include emphysema and chronic bronchitis.
Emphysema is characterized by damaged air sacs in the lungs making it hard for the patient to
breath. On the other hand, the lungs cells and linings become red and swollen when affected
with chronic bronchitis. These two diseases are all smoking-related and can mainly be
prevented by avoiding smoking or inhaling second-hand smoke.
9. Diabetes Mellitus
Diabetes Mellitus affects around 3 million Filipinos but only half of this population
actually know about it. Diabetes is a manageable disease but it still is the 9th cause of death in
the country since most diabetics discover it too late. Early identification is the key to preventing
deaths linked to the condition. A good exercise program and a balanced diet limits the risk of
death caused by diabetes.

10. Perinatal Conditions


According to the Department of Health, the Philippines is among the 42 countries that
contribute to 90 percent of all deaths of children under five years of age worldwide. Fifty percent
of the infant deaths occur during the first two days of life and is caused by birth asphyxia,
complications due to prematurity, or severe infection. Birth asphyxia happens when a baby
doesnt receive enough oxygen before, during, or after birth.
25

Reference:
Mortality: Ten Leading (10) Causes Number and rate/100,000 Population Philippines 5-Year
Average (2000-2004) & 2005. Department of Health Republic of the Philippines. From
Wikipilipinas: The Hip 'n Free Philippine Encyclopedia

4.1.3 Technological
4.1.3.1 Accessible Internet
The internet is one of the greatest wonders that made a significant impact in a persons
life. Alongside the popularity of the WiFi is the rise of the social media like Facebook and
Twitter that can be used as portals for mileage. Technologically, the hospital and healthcare
industry became at par with other businesses and industries. Access to internet has become
vital to medical personnel for research and other studies and helps in alleviating boredom on the
part of the patients. The internet has become a powerful tool in marketing and promoting a
business enterprise because advertising is easier and faster, and web utilization provides wider
reach. Communication among stakeholders, suppliers, business partners and clients will not be
difficult. Visual appreciation of products and services can be readily accessible. Inquiries can
likewise be addressed quickly which could be a delight to clients.
4.1.3.2 Constantly Evolving Technology
Technological advances can be considered threat. Healthcare is one of those industries
that have become technologically dependent. Year after year, new and advanced medical
technologies are introduced and used, and old ones become obsolete and are thrown away.
Healthcare professionals including nurses and paramedical personnel are under the pressure to
learn how to utilize these technologies. Computer-based tools are becoming ubiquitous in many
healthcare activities and procedures as well as in the field of instruction and education of
healthcare professionals and workers. Learning how to manipulate these interactive
technologies is critical for everyone involved in healthcare delivery. This has a bearing in
managing a hospital. It is observed that well patronized tertiary hospitals are more financially
capable of adapting readily to changes in equipment upgrades like imaging modalities. Investing
on upgrades or even replacements can be a financial challenge to the organization.
26

4.1.4 Legal/Political
4.1.4.1 Expanded Senior Citizens Act
In early 2010, an Expanded Senior Citizens Act was passed to provide the elderly
additional benefits and privileges not included in the Senior Citizens Act of 1992. With this new
law, some 5 million senior citizens will receive a 20% discount and exemption from VAT on the
sale of goods and services (medicines, medical and dental fees, transport fares, services in
hotels and restaurants, admission fees in theaters and other places of leisure). The elderly will
be provided with free medical and dental service, diagnostic and laboratory fees in all
government facilities covered under a mandatory PhilHealth coverage (equivalent of the NHIF in
Kenya). A monthly stipend of P500 (US$ 12) will be availed and P1,500 (US$ 35) stipend for
indigents with additional free vaccination against the influenza virus and pneumococcal disease.
Included in the new benefits are a 5% discount on water bills (if consumption is less than
30 cubic meters a month) and electric bills (if consumption is less than 100 kilowatt-hours).
Educational assistance will be be equally extended to those who shall meet school admission
requirements. The law also orders the Department of Health, local government units and other
concerned organizations to institute a national health program for the elderly. It also establishes
an Office for Senior Citizens Affairs in all cities and municipalities, and a senior citizens ward in
every government hospital. Other enjoyments for the seniors include the Express Lane Privilege
in all private, commercial and government establishments; where in the absence thereof, priority
is given to them.
All one needs to enjoy these privileges at old age is an identification card - issued by the
city or municipal mayor / Office of Senior Citizens Affairs (OSCA) or of the village (Barangay)
captain of the place where the senior citizen resides; Passport and or other documents that
establish the senior citizen as a citizen of the Republic and who is at least 60 years old is
equally accepted. Other provisions in the original Act include the Establishment of Various InterAgency Monitoring and Coordinating Mechanism - at the national and regional level to
undertake the various functions for the interest of senior citizens. First-time violators of the law
face imprisonment of six months to two years and a fine ranging from P50,000 to P100,000
(US$1,170 to US$ 2,400 equivalent). For subsequent violations, the fine can go up to P200,000
(US$4,600 equivalent)and a prison term reaching six years.
27

4.1.4.2 Increased PhilHealth Utilization


The Philippine Health Insurance Corporation (PhilHealth) was created in 1995 to create
a universal health coverage for the Philippines. It is a tax-exempt, government-owned and
government-controlled corporation (GOCC) of the Philippines, and is attached to the
Department of Health. It states its goal as insuring a sustainable national health insurance
program for all. In 2010, it claimed to have achieved "universal" coverage with 86% of the
population, although the 2008 National Demographic Health Survey showed that only 38
percent of respondents were aware of at least one household member being enrolled in
PhilHealth. Nevertheless, this social insurance program provides a means for the healthy to pay
for the care of the sick and for those who can afford medical care to subsidize those who
cannot. Both local and national government allocate funds to subsidize the indigent.

4.1.4.3 Augmented Burden of Taxation


Taxation in the Philippines is governed by the Bureau of Internal Revenue. Taxes in the
Philippines range from 5% to 35%. No tax is collected for income up to 5000 Php month and ten
percent above that figure. The following are exceptions: employed individuals: single, head of
the family, and married individuals, 25,000 for every qualified dependent child; number of
children not to exceed four, exceptions for Small and Medium Enterprises with income of less
than 100,000 pesos.

4.1.4.4 Dynamic Government Regulations


Another threat to the business is dynamic government regulations. Republic Act 9439
(Hospital Detention Law) could have an impact on hospital owners since patients may evade
settlement of bills prior to discharge. This will definitely be detrimental to the sustainability of
operations. Implementing guidelines and city ordinances can limit operations also based on
adherence to these directives. Physical plant defects like fire exits and lay-out requirements
may affect operations during structural revisions. Compliance however is a must.
4.1.4.5 Strict Building Laws

28

There are existing guidelines in the planning and design of a hospital or health facility.
Owners are required to observe appropriate architectural practices, to meet prescribed
functional programs, and to conform to applicable codes as part of normal professional practice.
References shall be made to the following:
1. P. D. 1096 National Building Code of the Philippines and Its Implementing
Rules and Regulations
2. P. D. 1185 Fire Code of the Philippines and Its Implementing Rules and
Regulations
3. P. D. 856 Code on Sanitation of the Philippines and Its Implementing Rules and
Regulations
4. B. P. 344 Accessibility Law and Its Implementing Rules and Regulations
5. R. A. 1378 National Plumbing Code of the Philippines and Its Implementing
Rules and Regulations
6. R. A. 184 Philippine Electrical Code
7. Manual on Technical Guidelines for Hospitals and Health Facilities Planning and
Design. Department of Health, Manila. 1994
8. Signage Systems Manual for Hospitals and Offices. Department of Health,
Manila. 1994
9. Health Facilities Maintenance Manual. Department of Health, Manila. 1995
10. Manual on Hospital Waste Management. Department of Health, Manila. 1997
11. District Hospitals: Guidelines for Development. World Health Organization
Regional Publications, Western Pacific Series. 1992
12. Guidelines for Construction and Equipment of Hospital and Medical Facilities.
American Institute of Architects, Committee on Architecture for Health. 1992
13. De Chiara, Joseph. Time-Saver Standards for Building Types. McGraw-Hill Book
Company. 1980
29

4.1.4.6 Abundance of HMOs


HMO means "Health Maintenance Organization." HMO plans offer a wide range of
healthcare services through a network of providers who agree to supply services to members.
With an HMO you'll likely have coverage for a broader range of preventive healthcare services
than you would through another type of plan. Though there are many variations, HMO plans
typically enable members to have lower out-of-pocket healthcare expenses.
4.1.4.7 Compulsory Implementation of Generics Act
Republic Act No. 6675, also known as the Generics Act of 1988, is an act to promote,
require and ensure the production of an adequate supply, distribution, use and acceptance of
drugs and medicines identified by their generic name. R.A. 6675, which was signed into law on
13 September 1988, is a consolidation of Senate Bill No. 453 and House Bill No. 10900, which
was finally passed by the Senate and the House of Representatives on 25 August 1988 and 31
August 1988, respectively. As stipulated:

All government health agencies and their personnel as well as other government
agencies shall use generic terminology or generic names in all transactions related to
purchasing, prescribing, dispensing and administering of drugs and medicines.

All medical, dental and veterinary practitioners, including private practitioners, shall write
prescriptions using the generic name. The brand name may be included if so desired.

Any organization or company involved in the manufacture, importation, repacking,


marketing and/or distribution of drugs and medicines shall indicate prominently the
generic name of the product. In the case of brand name products, the generic name
shall appear prominently and immediately above the brand name in all product labels as
well as in advertising and other promotional materials

4.1.5 Global
4.1.5.1 Asean Integration
In the pipeline, ASEAN integration this 2015 is thought of as probable feature that could
propel World Citi to greater heights since services & products will be made known
30

internationally. Hence, partnership with labor organizations can be developed. Medical tourism
with the hospital as accredited provider will furthermore make the healthcare business grow.

4.1.6 Environmental
4.1.6.1 Worsening Traffic Situation
Though beyond our control, a major concern of the city populace is traffic congestion.
Slow mobility can cause loss of clients especially in emergency situations as it will be
reasonable for a client to go instead to a nearer and more accessible medical center.
Consultations with MMDA must be done in order to clear thoroughfares leading to hospitals with
U-turns and crossings closer to the main entrance of the facility.
4.1.6.2 New Medical Center and Hospitals in the Area
Establishment of other businesses of similar category is a continuing threat.

For

example, soon to be opened is the Marikina Doctors Hospital, touted as another potential major
player in healthcare within the perimeter. With possible aggressive marketing of this hospital
once operational, market share of World Citi could be diminished.
4.1.6.3 Typhoon / Flooding
The Philippines is the most exposed country in the world to tropical cyclones. On an
annual time scale, activity is at minimum in May and increase steadily through June and spiking
from July to September, with August being the most active month for tropical cyclones in the
Philippines. Activity falls off in October.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA) releases tropical cyclone warnings in the form of Public Storm Warning Signals. An
area having a storm signal may be under:

PSWS #1 - Tropical cyclone winds of 30 km/h (19 mph) to 60 km/h (37 mph) are
expected within the next 36 hours. (Note: If a tropical cyclone forms very close to the
area, then a shorter lead time is seen on the warning bulletin.)

PSWS #2 - Tropical cyclone winds of 60 km/h (37 mph) to 100 km/h (62 mph) are
expected within the next 24 hours.

31

PSWS #3 - Tropical cyclone winds of 100 km/h (62 mph) to 185 km/h (115 mph) are
expected within the next 18 hours.

PSWS #4 - Tropical cyclone winds of greater than 185 km/h (115 mph) are expected
within 12 hours.
Classes for Preschool are canceled when Signal No. 1 is in effect. Elementary and High
School classes and below are cancelled under Signal No. 2 and classes for Colleges
and Universities and below are cancelled under Signal No. 3 and Signal No. 4.
In the hospital industry, this phenomenon has a bearing since certain diseases are more

prevalent during rainy season. During higher signal typhoons, flooding is a common occurrence
hence staff absenteeism may be observed. This is counterproductive to the hospitals operation.
4.2

THE TASK ENVIRONMENT

(Figure 6)

Suppliers

Distributor
s

Organizati
on

Competitors

Customer
s

4.2.1 CUSTOMERS
1. Patient , relatives and friends of patients
2. Physicians
3. Health Care organizations
4. Third party payors-insurance companies and employers
32

5. Employees
Patients whose physician does not have privileges at the hospital of the patient 's choice
may change physician. For instance, a patient may choose WCMC

even if his previous

physician is from another hospital because WCMC is nearer his residence or place of work .
This would allow him to have his regular check up.

Patients with HMO and third party payors

choose hospitals accredited by their HMO and payors.


Physicians prescribe drugs and recommend hospitalization, diagnostics, surgical and
other procedures to their patients. Physicians can refer patients to other centers if they are not
happy with the services offered by the hospital. Hence , physicians as customers must also be
satisfied with the hospital they are affiliated with.
Third party payors and health care organizations can dictate where their patients go for
healthcare services. WCMC have accredited 46 health care organizations and 27 private
companies . It is important that

WCMC meet

services and facilities needed by these

customers.
Employees are also customers because they will also need healthcare services. Just
like other patients, they can recommend the hospital to their relatives and friends.

4.2.2 COMPETITORS
WCMC has several geographic competitors .

Table 8. Competitor Hospitals

Distance
COMPETITOR HOSPITALS

from

1. Villarosa Hospital
2. V. Luna Hospital

WCMC
1.4 km
1.7 km

Location
Project 4, Quezon City
V. Luna Ave. Quezon City
33

3. Quirino Memorial Medical Center


4. Camp Panopio PNP General Hospital
Annex
5. Sta. Monica Hospital
6. Delgado Hospital
7. Veterans Hospital
8. Victoria Hospital
9. Marikina Valley Medical Center
10. Capitol Medical Center
11. Salve Regina General Hospital
12. St. Luke's Medical Center

2.2 km
2.2 km

Katipunan, Quezon City


Camp Panopio, P. Tuazon Blvd

3.3 km
3.6 km
5.0 km
5.1 km
5.3 km
5.3 km
5.6 km
6.0 km

Quezon City
Tanong , Marikina
Kamuning , Quezon City
North Ave, Quezon City
JP Rizal, Marikina, Quezon City
Sumulong Highway , Marikina
Quezon Boulevard, Quezon City
Marcos Highway, Marikina
E. Rodriguez, Quezon city

Table 9. Competitor Clinics/Laboratories


1. People's Choice
2. Ed Med Clinic and Laboratory
3. Sim's Laboratory
4. Friendly Care Clinic, P. Tuazon branch
5. Patient First Clinic, Kamias branch
5. Hope Medical and Diagnostic Clinics
6. Clinica Caritas
7. Medical City Satellite Clinic and

Anonas
Anonas
Anonas
P. Tuazon, Cubao 1.km,
Kamias Branch 2 km
Araneta complex , Cubao
Farmers Market Cubao
Gateway Mall, Araneta Cubao Quezon City

Laboratory

Table 10. Suppliers/Distributors


1.
2.
3.
4.
5.
6.
7.
8.

Pharmacy
Medical Supplies
Office supplies
Maintenance Supplies
Housekeeping supplies
Equipment/ Tools/ Furniture/Fixtures
Biomedical
Outsource supplier

- 60 suppliers
- 73 suppliers
- 17 suppliers
- 8 suppliers
- 6 suppliers
- 30 suppliers
- 7 suppliers
- 5 suppliers

34

CHAPTER 5. INDUSTRY AND COMPETITOR ANALYSIS


5.1 Overview of the Hospital Industry in the Philippines

The healthcare system in the Philippines can be considered to be at par with other
medical centers in the region. This is despite the fact that the medical facilities in the country
may not be as impressive as those found in high-end US or European hospitals. According to
reviews, the top Philippine hospitals include St. Lukes Medical Center in Quezon City and
Global City, Makati Medical Center, The Medical City in Ortigas and Asian Hospital because of
exponential patronage of patients and clients due to the excellent care accorded to them and
the modern modalities available in these hospitals. Doctors are not at all inferior to counterparts
overseas as medical practitioners in the Philippines are graduates from the top universities in
the country and some of them even had further studies and training abroad, mainly in the Unites
35

States. Additionally, there are doctors that have practiced medicine in the US before sharing
their expertise in the Philippines. Unfortunately, majority of these centers of excellence are
located in Metro Manila. In the provinces, regional hospitals readily cater to the medical needs
of the locals. The more affluent prefer to go to private hospitals.

5.1.1 Hospitals

Finding the right hospital in the Philippines is not too difficult as there are a number of
great options to choose from. The Philippines has both public and private healthcare institutions
that can cater to different segments on the society. Most of the government hospitals provide
quality healthcare in similar way private hospitals do. Although some people may have
misconceptions, most of them are unfounded. The main difference between public and private
hospitals are the facilities and technologies offered. Most of the public hospitals would not be
equipped to the same standard as the private ones. However, some of the best physicians are
serving in the government hospitals. Also, most Filipinos would seek advice from these
government hospitals because fees are not charged. Private hospitals are located in key cities
throughout the nation and quite a number are tertiary hospitals that have the latest in medical
technology. However, as one expects, private hospitals are more expensive.

5.1.2 Cost of Medicines and Hospitalizations


On the average, hospitals in the Philippines are not that expensive in comparison to
foreign medical centers. Medicines are also affordable, both locals and expatriates can attest to
this fact. In the Philippines, almost ninety percent of the population can speak and understand
English, hence, communication is never a problem when a foreign visitor is in the country. The
people are very hospitable and accommodating. The doctors, nurses and other medical
practitioners are friendly and compassionate. Not to be forgotten, the place is very inviting.
These factors are therefore strengths for medical tourism.

Table 11. Comparative Table for World Citi Medical Center, Marikina Valley Medical Center
and Capitol Medical Center.
36

WCMC
Classification
PhilHealth Accreditation
Bed Capacity
Services Offered
1.Breast Care Center
2.Catherization Laboratory
3.Delivery Room
4.Department ofPathology
5.Dialysis Center
6.Ear,Nose andThroat
7.Electroencephalogram
8.Emergency Rm.
9.Endoscopy Unit
10.Eye Center
11.Gamma Camera
12.Heart Station
13.Intensive CareCenter
14.Laboratory
15.Lunar Bone Densitometry
16.Neonatal Intensive Care Unit
17.Nursery
18.OB-GynecologyUltrasound
Section
19.Operating Rm.
20.Out-PatientDepartment
21.Orthopedic Surgery
22.Pediatric Intensive Care Unit
23.Plastic and Cosmetic Surgery
Center
24.PulmonarySection
25.Radiology
Xray
Ultrasound
CT Scan
MRI
26.RehabilitationMedicine
27. Skin Center
28.Sleep Center
30.Breastfeeding Stations.

Private Rm.
Occupancy Rate

Private, Tertiary
Yes
276

MVMC
Private,
Tertiary
Yes
100

CMC
Private,
Tertiary
Yes
300

None
None
Yes
Yes
None
Yes
Yes
Yes
Yes
Yes
None
Yes
Yes
Yes
None
None
Yes
Yes

None
None
Yes
Yes
Yes
Yes
None
Yes
Yes
Yes
None
Yes
Yes
Yes
None
None
Yes
Yes

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes
Yes
None
Yes

Yes
Yes
Yes
None
Yes

Yes
Yes
Yes
Yes
Yes

Yes

Yes

Yes

Yes
Yes
Yes
None
Yes
Yes
None
None

Yes
Yes
Yes
None
Yes
Yes
None
None

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

1554/day

1600/day

2000/day

40-55%

85-89%

95-99%

37

5.2 The Industry and Market Segments

The healthcare industry is one of the few in the world right now with expansion seeming
likely to continue unabated. In 2013, after nine years, the Department of Health (DOH) lifted
Administrative order 2004-004, which restricted the establishment of new hospitals, in order to
address the maldistribution of hospital beds resulting in inaccessibility and inadequacy of the
hospital delivery. It was, however, observed that there was no significant increase of hospital
beds in rural areas. Private individuals and corporations were hesitant to establish hospitals in
most regions where market forces could not guarantee a reasonable return of investment.

With this revision, the private individuals and corporations who will establish new
hospitals will no longer be required anymore to secure a Certificate of Need (CONA). This led
to more new hospitals being built. World Citi Medical Center is a tertiary hospital with a level
four accreditation by the Department of Health, acquired by the Guico family in 1986. It is a 15storey facility with a 276 bed capacity. Located in a thickly populated area in Quezon City, it is
accessible to most types of public transportation, which makes it very convenient for patients. It
boosts of having modern medical technology with competent medical professionals. It also
offers wide array diagnostic procedures like pulmonary, cardiovascular, laboratory, ultrasound,
CT scan, mammography, and radiology tests. In addition, packages for executive check-up and
medical procedures are also available. The hospital, however, still lacks MRI and Nuclear
Medicine facilities.

The inclusion of a school, World Citi Colleges, the courses of which are mostly in the
paramedical field, is a welcome addition to the hospital. It has assured the hospital of acquiring
well trained personnel. Because of World Citis strategic location, a number of smaller diagnostic
centers have sprouted just a few kilometers away, some of which are even just a walking
distance. These facilities though limited to the basic diagnostic studies, have lower prices,
which has greatly reduced World Citis revenues. Surrounding population is generally from the
middle class because of the hospitals high prices.

Most of the patients are medical card

holders, a few are cash paying.


38

Capitol Medical Center was built and inaugurated on March 19, 1970, founded by Dr.
Thelma N. Clemente, Mr. Luis C. Clemente and a handful of her contemporaries in the medical
profession. From an initial 100 patient bed capacity in 1970, it has expanded to 300 beds after
almost 45 years of operation. It has continuously sustained programs for the upgrading of its
facilities to keep abreast with the latest developments in medical and health technology. Capitol
Medical Center is located in the heart of Quezon City, and is accessible via public
transportation. The location is less congested with more affluent families in the surrounding
area. Like World Citi Medical Center, Capitol Medical Center has a school, though with a lesser
number of courses. The hospital is equipped with advanced and modern technology including
digital mammography, MRI and nuclear medicine facilities all of which are not available at
World Citi Medical Center.
Marikina Valley Medical Center, is a 7-storey twin-structure edifice designed along
Sumulong Highway corner Aguinaldo St., Barangay Sto. Nino, Marikina. It is smaller than World
Citi Medical Center and Capitol Medical Center with only a 100 bed capacity. Like, World Citi
Medical Center, the location is thickly populated, but with lower cost of living. More cash paying
patients are catered in Marikina Valley Medical Center when compared with both World Citi and
Capitol Medical Centers.

Hospital professionals and staff are equally competent. Though

competitive with other hospitals and facilities in the area, facilities are less modern and complete
when compared with World Citi and Capitol Medical Centers.

5.3 Porters Five Forces of Competition (Figure 7)

STRON
G

39

HIGH

STRON
MODERAT
E

WEA
K

5.3.1 Competitive Rivalry : Strong


The rivalry within the healthcare industry has become intense. This is due to the fact
that there are now many healthcare facilities available within a given area. When the
Department of Health (DOH) lifted Administrative order 2004-004 last year which restricted the
establishment of new hospitals, many privately owned hospitals have sprouted near World Citi
Medical Center.
Level of competition among hospitals generally involves offering the best medical care at
the most affordable price. Rivalry among competitive firms is made stronger by the
presence/absence of modern technology. Consumers tend to measure the success of hospitals
by the availability of new and state of the art medical facilities since these are more readily
noticeable. The size of the hospital is another factor. In addition, medical advances and
specialty services are also considered.

Two of the most likely competitors are Marikina Valley Medical Center and Capitol
Medical Center. Facilities of both WCC and Marikina Valley Medical Center are almost the
same, whereas, Capitol Medical Center is more advanced with the presence of modern
technology and facilities. Capitol Medical Center, like WCC, also has a school for paramedical
studies.
Aside from hospitals, there are likewise many small multi specialty clinics and diagnostic
centers in the vicinity. The smaller medical facilities offer low prices with regards to the basic
40

ancillary procedures such as basic laboratory tests, x-rays, etc. The diagnostic clinics low
overhead rates make this possible. WCC loses a substantial amount particularly in cash paying
patients who prefer to go to the less expensive centers.

5.3.2 Threat of New Entrants: Strong


As mentioned earlier, many new hospitals are being built due to the less difficult
government policies and regulations. The initial barrier in building a hospital is the initial cash
investment. However, there is a new practice of opening stocks to doctors as well as non
medical personnel, with promise of attractive benefits as stockholders. This enables the major
stockholders to raise enough money to build and staff the hospital.
Though other barriers exist in the setting up of a medical facility such as a hospital, they
are not unsurmountable. As long as the facility adheres to standards and guidelines that the
government has mandated necessary in order to put up a hospital, permit is readily given by the
government (DOH).
Equipments are likewise not very difficult to acquire. Many medical equipment suppliers
have attractive payment schemes to suit the budget of the hospital owners. Another new
technique is renting out spaceor profit sharing with investors who are willing to provide the
machines/equipment needed. The number of suppliers of hospital machines and equipment
also makes it possible to buy them at low prices.

5.3.3 Pressure from Substitutes : Strong


WCC is a private hospital and one of the substitutes to be taken into consideration is the
presence of low-priced government hospitals, free-standing clinics, diagnostic centers, lying-in
maternity facilities, and the emergence of facilities offering alternative health services/alternative
medicine. This is true because the patients are able to get diagnostic procedures at a much
lower price and sometimes get results faster, too. Hence, the number of out patients availing of
the hospitals ancillary services is decreased. Alternative medicine practitioners have provided
more affordable rates for their consultation and medicine.

5.3.4 Bargaining power of Customers: Moderate

Healthcare is not greatly affected by buyer power. This is true because people will get
sick whether the economy is doing well or not, whether the cost of medicine and consultation
fees are high or low. Most people will consume healthcare if there is a need to do so. Patients,
particularly with healthcards usually seek prompt medical attention at the most accessible
facility. Cash paying patients usually wait till money is available. Even families with low income
41

are now able to seek medical attention with Philhealth cards and with the charity or social
services provided by the hospitals.
Buyer power is, however, evident in the fact that due to the presence of many healthcare
facilities, people now have the power to choose the hospital. Hence World Citi Medical Center
has to try its best to make the patients want to go back to the hospital because they are happy
with the services extended to them and contented with the medical attention afforded to them by
their attending physicians. These contented patients will further increase the revenue of the
hospital by referring other patients.

5.3.5 Bargaining power of suppliers : Weak

Hospital suppliers may either be in the form of medical equipments or in the form of
hospital personnel. There is a large number of suppliers for most hospital commodities. These
suppliers offer attractive packages and payment schemes.
With regard to the hospital personnel, World Citi Medical Centers strategic location is
reason enough to make physicians want to join their medical team. The initial capital needed to
be a part of the hospital is small when compared with the stocks that are being sold in the newer
hospitals.
If the hospital will acquire new and state of the art medical equipments, more quality and
trained physicians and medical personnel will want to work with them.
Training programs for residency, nursing, etc are present, also a possible source of
medical professionals. World Citi Medical Center has a school for many paramedical courses,
which may provide as a pool for their medical manpower needs.

5.3.6 Threat of Substitute Products: High


The presence of many small multi-specialty and diagnostic clinics pose as a threat to the
hospital as far as income from out patient services is concerned. These smaller facilities have
lower overhead expenses and are, therefore, able to charge much lower for services rendered
especially those concerning ancillary procedures. Hence, World Citi Medical Center has to offer
services not available in these facilities and packaging then with common services so the
patients will think that they have a better deal when these procedures are done in the hospital.

5.3.7 Attractiveness of the Industry


The healthcare industry remains attractive as the demand continues to grow in spite of
the presence of multiple healthcare facilities. Improvement in services, procurement of modern
42

equipments and presence of medical professionals will greatly increase hospital revenue.
Aggressive marketing strategies and attractive healthcare packages should also be considered.

5.4 External Factor Evaluation Matrix (EFE)

(Table 12)

Key External Factors


Opportunities
SC 1
Increase In Health
Consciousness
D1
Increasing Population of
Senior Citizens
E1
Low Inflation Rate

Weight

Rating

Weighted
Score

0.20

0.60

0.15

0.45

0.10

0.20

T1

Accessible Internet

0.10

0.20

P1

Enhanced Partnership thru


Asean Integration 2015
Abundance of HMOs

0.05

0.10

0.05

0.10

L2
Threats

43

Env1

New Hospital in the


Periphery
Rapidly Evolving
Technology
Conservative Gross
Domestic Product
Augmented Burden of
Taxation
Dynamic Government
Regulations
Worsening Traffic
Congestion

T1
E1
L1
L2
Env2
TOTAL

0.15

0.45

0.05

0.10

0.05

0.05

0.05

0.10

0.03

0.03

0.02

0.02

1.0

2.4

E= Economic, SCD= Sociocultural Demographic, T= Technological, etc


The average total weighted score is 2.5. A score of 4.0 indicates that the organization is
responding well to existing opportunities and threats. A score of 1.0 indicates that the firm is not
capitalizing on opportunities or avoiding external threats.

5.4.1 Opportunities
1. Increase in Health Consciousness
Awareness of problems and complications arising from certain diseases and
illnesses can lead one to be more cautious with regard to health preservation. This item
is given a weight of 0.20 and a rating of 3 since the health industry is dependent on the
receptiveness of the population in embracing available options to maintain excellent
health.
2. Increasing population of senior citizen
This segment of the society is a major market in the hospital industry because
the retirees and elderly require more diagnostic tests and prolonged treatment when
illness strikes. In terms of utilization of various investigative and treatment modalities,
they are the prime beneficiaries of such offerings. Given this, a weight of 0.15 and a
rating of 3 are assigned.
3. Low Inflation Rate

44

Inflation rate is a good indicator of dynamics in price index. The inflation rate has
constantly improved from 3.7% in November 2014, its lately been at 2.4% as of January
2015. This is a lot better compared to the average of 8.88%. Since this is being seen as
a a great opportunity to earn more, a weight of 0.10 and a rating of 2 have been
assigned.
4. Accessible Internet
The internet has become an indispensable collaborator in any business
enterprise because of the unquestionable benefits it can provide for the growth of an
industry. People nowadays tend to gravitate to a place with good internet capability
because of the convenience it can give when a busy person has to multitask doing
business on the side while not actually in the workplace. An example of this is Starbucks.
In the health industry, this value added service is likewise a great help to an executive
who has to watch over a project or monitor his staff while seeking medical attention for
his illness or merely having a health check up. Cognizant of this opportunity, a weight of
0.10 and rating of 2 are allotted.
5. Enhanced Partnership through Asean Integration
In any business venture, it is always refreshing and inspiring to aim for
regionalization and better yet, globalization. Expanding beyond the confines of the usual
and ordinary will definitely add more revenues because of the advantage of linking and
networking. Through the right channels, referrals can be exponential translating to
skyrocketing sales. Even though this is an exciting project, the logistics may be
prohibitive hence a weight of 0.05 was given with a rating of 2.
6. Abundance of HMOs

Without a doubt, a hospital needs constant influx of clients through the HMOs.
Since the trend of our society is to secure any form of health insurance for their health
security, the management has capitalized on this opportunity by accepting all the
insurance companies (HMO) who want to be affiliated. So far, all the insurance
companies have never failed to pay their dues to the hospital. This is an existing
arrangement already but partnership needs to be enhanced, thus the management
needs to maintain this. In this aspect, a weight of 0.05 and rating of 2 were given.

45

5.4.2 Threats
1. New Hospital in the Periphery
As in other industries, competition or rivalry becomes a part of the game. The
more superior or stronger ones and those who can respond or adapt well with the
changing environment are expected to emerge as winners. The Marikina Doctors
Hospital is being seen as a formidable competitor since similar services will be offered in
close proximity to World Citi. With this unpreventable scenario, this threat is given a
weight of 0.15 with a rating of 3.
2. Rapidly Evolving Technology
As they say, innovate or evaporate. Technological advancements should always
be embraced otherwise others will take over. Efforts to withstand competition through
modernization can be costly requiring huge capital expenses. But without a doubt, World
Citi needs to catch up with the race. With the anticipation that reasonable investment on
upgrades should be undertaken, a weight of 0.05 with a rating of 2 is just apt.
3. Conservative Gross Domestic Product (GDP)
The GDP started to decline mid of 2013 to early 2014 (7.9 to 7.0 to 6.3 and
down to 5.6). Despite low production and with lower income of the average Filipino
family, still, emphasizing the need for health maintenance can help further reduce cost of
hospitalization when afflicted with full blown illness. But then priorities in budget can be a
hindrance to this advocacy. In this item, a weight of 0.05 and a rating of 1 is given.
4. Augmented Burden of Taxation

Every earning family or business has an obligation to contribute to the coffers of


the government by paying the right and lawful taxes. The current leadership of the BIR
has a flagship of increasing revenues in order to comfortably finance the various projects
of different agencies of the government. The commissioner is regarded to be very strict,
hence, we are expected to turnover reasonable taxes. If the hospital earns more, it goes
without saying that heavier duties shall be imposed. Keeping this in mind, a weight of
0.05 and rating of 2 is allotted.
46

5. Dynamic Government Regulations

With every change in leadership, laws, rules and regulations are expected to
conform with the directions set forth by the government. Building requirements need to
be complied upon. Also, some laws are appreciated to be pro-poor like that of the illegal
hospital detention. This is regarded as not favorable to hospital owners, but again, we
have to abide. Therefore, a weight of 0.03 and a rating of 1 is given.

6. Worsening Traffic Congestion

Although World Citi has very good location considering that is accessible through
both private and public transportation systems, a factor that could hinder preferential
patronage especially in emergency situations is traffic condition. Theres very little that
can be done but first and foremost is dialogue with MMDA so that convenient
passageways can be created to serve patients. This concern is given a weight of 0.02
and a rating of 1.

5.4.3 Summary and Conclusion of EFE Matrix


The total weighted score obtained by World Citi Medical Center using the EFE matrix is
2.4. This indicates that the organization got an average score and is in stable condition. It also
gives an impression that the hospital has enough strategies to ward off or minimize the effects
of the external threats.

5.5 Strategic Issues Based on External Factors


1. The need to pay attention to the intense rivalry in the industry not only with existing
competitors but with upcoming facilities as well.

47

With the increasing pace of changing external environment, the competitors who are
more strategic, who can readily respond and adopt well usually emerge as the winners.
World Cit Medical Center can minimize the weaknesses and threats by following the
newest trends in the business and by acquiring the latest technological changes.

2. The need to explore measures of reducing taxes legally.


It is usually expected that taxpayers submit increasing trend in tax declarations.
Engaging in charitable projects to drum up corporate social responsibility might be an
avenue that could potentially reduce duties and obligations.
3. The need to balance the pros and cons of having Internet access in the workplace.
It is acknowledged that the Internet has eased operations and likewise attracts clientele
to stay on. The downside of having web access however is that it can be
counterproductive if erroneously used by employees, for example: opening social sites
while at work. It might be difficult to monitor staff behavior and work ethic along the way.
Blogs may also be accesses which can promote the hospital on one end or destroy the
image of the World Citi on the other hand.

5.6 COMPETITIVE PROFILE MATRIX

The three hospitals chosen for comparison are Capitol Medical Center, Marikina Valley
Medical Center and World Citi Medical Center because they have similar clientele covering
those mainly from the middle class to upper middle class social strata. All have hotel ambience.
World Citi and Capitol Medical Center have paramedical schools and residency training
programs. Marikina Valley and Capitol Medical Center are in close proximity to World Citi within
5.3km. They offer almost same health and wellness services. They are all situated in an
accessible location.
5.6.1 Capitol Medical Center
Capitol Medical Center has endeavored to make itself synonymous with excellence in
total quality healthcare delivery. Competent doctors and dedicated staff have put their heart and
soul in caring for the patients. CMC came into the Philippine health community at the dawn of
48

revolutionary seventies the martial law years. It was founded by Dr Thelma N. Clemente, Mr.
Luis C. Clemente and a handful of contemporaries in the medical profession. From an initial 100
patient bed capacity in 1970, it has expanded to 300 beds after years of operation. An
outstanding feature of the institutions operation is the continuing sustained program for the
upgrading of its facilities to keep abreast with the latest developments in medical and health
technology, hence, allowing the highest degree of sophistication and modernity in its services.
In 2004, the Capitol Medical Center Colleges was established offering one
baccalaureate degree, Bachelor of Science in

Nursing. It is affiliated with the Philippine

Orthopedic Center, the San Lazaro Hospital and the National Center for Mental Health.

5.6.2 Marikina Valley Medical Center


Marikina Valley Medical Center is an impressive 7 storey twin-structure edifice designed
elegantly with features and ambience of a luxury hotel along Sumulong Highway, Barangay Sto.
Nino. The left wing houses the fully air conditioned OPD while the right wing houses the inpatients with about 100 beds, also fully air conditioned. It has complete laboratory and
diagnostic facilities, 6 operating rooms, 2 delivery rooms, NICU, ICU, rehabilitation unit and
dialysis section. The building boasts of a conference room and library in line with the medical
centers vision to be a teaching hospital in the near future.
5.7. Critical Success Factors
5.7.1 Service Quality and Performance
Pleasant customer service is vital in all kinds of service establishment. This is a critical
success factor because this is usually the basis of the organizations achievements in terms of
revenue and market share. It greatly influences the patients decision to come back for repeat
consultations or admission in the hospital.
This is important in the hospital industry because good patient experience translates to
more patronage coming from free endorsement through word of mouth of satisfied clients.
Capitol Medical Center tops in this aspect since it has an image of catering to the more affluent
patrons being located strategically along Quezon Avenue in proximity to exclusive villages. In
fact, it is considered as a competitor of St. Lukes Medical Center Quezon City because it offers
almost similar world class services to patients. It is near big TV networks and a partner hospital
49

of ABSCBN in the reality show Pinoy Big Brother a very good advertisement indeed for the
medical center, boosting its position in the healthcare industry.
World Citi may be trailing second with its hotel like concept then followed by Marikina
Valley Medical Center. From the tradition of an excellent healthcare provider with distinctive
hospitality, World Citi Medical Center dedicates itself in providing optimum, holistic healthcare
and wellness services to its patients and clients. Rated as a tertiary hospital with 276 bed
capacity, World Citi Medical Center is one of the leading healthcare providers in the country. It
encompasses the preventive, curative and rehabilitative facets of maintaining ones physical
and psychological welfare. The hospital has the following clinical departments, all of which have
modern and cutting-edge facilities:
Internal Medicine
Surgery
Obstetrics and Gynecology
Pediatrics
Ophthalmology
Otolaryngology
Radiology
Anesthesia
Rehabilitation Medicine and Physical Therapy
Pathology and Clinical Laboratory
Dentistry and Oral Surgery
ER and OPD

5.7.2 Price Competitiveness


Price is an important factor of probable patronage in business since people tend to
gravitate to a place of lesser expense. Price competitiveness refers to the availability of
affordable, quality health services at reasonable price. This critical success factor is scrutinized
by price sensitive individuals and patients who choose to be admitted in a private setting at
minimum cost.
With regard to pricing, Capitol Medical Center surprisingly has lower rates even though
it is located right in the heart of Quezon City and closer to the office of the city government.
Marikina Valley Medical Center has average rates that are deemed affordable to patients and
clients coming from an area farther to the metropolis. As a revelation, World Citi Medical Center
has higher rates for diagnostic tests but cheaper room and board for single occupancy.

50

Table 13. Price Comparison of Basic Tests


World Citi
Capitol Med
Room Rate (Single)
1,554
2,000
CBC
650
320
Chest XRay
697
330
ECG
550
500
FBS
400
99
BUN
420
190
Creatinine
441
190
Uric Acid
441
190
Lipid Profile
1,929
850
*Data gathered through telephone inquiry on February 25, 2015

Marikina Valley
1,600
420
425
367.60
304.50
304.50
304.50
262
1,207.50

5.7.3.3 Management Depth


The composition of the organizational structure and management depth are important
aspects of operational success because they can be indicators of dynamism, openness and
accountability in running a corporation. In this aspect, it is observed to how the organization
does the planning, leadership, organizing, controlling, motivating, and staffing of its personnel.
This is necessary for the success of the organization as it reflects the working condition and
organizational culture. This also shows how the managers withstand the stress of handling the
health care facility.
Management depth could be a weakness for World Citi as it is a family owned
enterprise. Being so, decisions are usually made by the owners even after deliberating on
various ideas put forth by the officers within the organization. The best interest of the major
stockholders who are family members are always prioritized. In the corporate world, it is always
an advantage having diverse personalities composing the organizational leadership because
objectivity is not compromised and views and opinions are taken into consideration squarely
and fairly. Discussions during board meetings can be free-flowing if officers are regarded as coequal with similar interests.

51

5.7.3.4 Customer Loyalty


Customer loyalty connotes captive clientele and patronage with utmost certainty. These
customers silently become the marketing arms of the organization once they are satisfied with
the services. This is considered a critical success factor because customer loyalty would mean
more power patients and increase revenue.
Marikina Valley has very loyal clients and patients due to its prominent presence in the
vicinity. It has set an image that it is very affordable facility for middle class families in the
outskirts of Manila. Capitol Medical Center has also regular clients and patients due to its
prominent location near business establishments and residential places. World Citi may have
fleeting clients since it is surrounded by good hospitals.

5.7.3.5 Market Share


Market share is important because it dictates superiority in the playing field that
translates into outstanding sales or patronage. By taking up a bigger piece of the pie, market
leadership will be convincingly conveyed to customers and even to competitors. Being in the
lead is an advantage as other players may consider benchmarking with the top performer.
Based on market share, Capitol Medical Center is leading as reflected by higher sales of
P892,330,515 in 2013. Marikina Valley comes second with sales of P 441,029,432 while World
Citi had sales of

P313,727,357 in the same year (source: Securities and Exchange

Commission). As to occupancy rate, Capitol Medical Center has 95-99%, Marikina Valley has
85-89%, World Citi trails behind with only 40-45%. It was shared to the authors by insiders that
Capitol Medical Center gives 2% incentive to top performing physicians aside from dividends
due for stockholders. Marikina Valley provides incentives in the form of annual trips. There are
sentiments relayed by doctors of World Citi that only the department chairmen, training officers
and executives together with top 10 contributing physicians are the only ones given incentives.
These strategies are seen to be effective in enticing medical staff members to patronize the
medical centers that they are connected with. An impression that doctors are valuable partners
and allies in the industry is indeed well conveyed through these programs. Again, location,
services and image are factors in market share. Because of this advantage, Capitol Medical
Center has more capitalization funds, hence, more capable in delving into major projects like
expansion and product development. It is rather difficult for World Citi to catch up at present
because of this downside. In fact, acquisition of MRI is quite not easy for World Citi.
52

5.7.3.6 Advertising and Promotions


Capitol Medical Center has better marketing strategies because it has gained the
confidence of big companies as a partner healthcare provider. This contributes significantly to
brand power. World Citi need to work harder on advertising and promotions as it is lagging
behind in this aspect. World Citi can venture into creating a full blast campaign on primary
prevention of medical conditions and draft comprehensive wellness programs. In order to realize
this doable plan, an attractive Wellness Center must be established. With well trained and
friendly staff, it will be a plus for the organization, making the center highly marketable for
corporate tie-ups.

5.7.3.7 Innovativeness
Being abreast with constant change is critical in strategic management as resistance to
adapt and adjust to circumstances would spell failure in any business venture. The existence of
a paramedical college in World Citi is an advantage as this can be interpreted that there is a
thrust for education, research and training. World Citi Medical Center also offers wide array of
diagnostic procedures like pulmonary, cardiovascular, laboratory, ultrasound, CT scan,
mammography and other radiologic tests. In addition, packages for executive check up and
medical procedures are also available. It is also unique and outstanding because it is the first
and only Medical Hotel in the Philippines. This pioneering and revolutionary concept combines
hygienic aesthetics of hospital interiors with the luxurious and relaxing ambience of first class
hotels, complete with the top-of-the-line amenities at price-friendly rates. Showcasing 24 deluxe
furnished suites with panoramic views of the 14th floor, World Citi Medical Center Hotel caters to
guests and family members of the patient coming from abroad and far provinces. This makes
World Citi Medical Center a hub for wellness and medical hospitality rolled into one.
In the aspect of education, Capitol Medical Center shares the vision of World Citi as it
has also a college offering Nursing and Radiologic Technology courses. An academic medical
center is always regarded as more updated in know-how, skills and technology since it has to
keep up with the requirements of governing bodies concerning accreditation as an educational
institute and likewise as a medical facility primarily. The downside, however, is the perception
that patients are regarded as educational materials for professional growth of trainees.
53

Marikina Valley has similar concept as that of World Citi adopting a medical hotel
ambience in a suburban setting. This concept distinctively differentiates the Marikina Valley
Medical Center from other hospitals in the area.

5.7.3.8 Brand Power


There is a need to be conscious about image and branding. This refers to the picture
that is retained into the mind of the patients, clients, physicians, suppliers and other
stakeholders about the organization. It is a critical success factor because it gives the
impression of the stability and objective competitive advantage of the organization over the
competitors.
Expectedly, this entails a lot of marketing and branding efforts. Part of brand
management is the effective use of internet and social media. Using the number of facebook
likes as a yardstick, this can be interpreted as stamp of approval from the patients, clients,
relatives and business partners, hence, a mileage which will be beneficial to the business.

5.7.3.9 Strategic Location


Strategic location refers to the vantage of the place where the health facility is located
that can attract wide market share. This is a critical success factor for the hospital as it is
explicitly included in the 4 Ps of marketing product, price, place, promotional campaigns. The
advantage of strategic location of the Hospital is most appreciated during emergency cases
since patients tend to consult at the Hospital with accessible or strategic location.
World Citi has the best location as it is exposed to a continuous influx of commuters,
near business establishments and residential areas. It is at the midpoint of intersecting avenues
connecting Marikina, Quezon City and Manila. It is the only one among the three hospitals
compared accessible by an elevated railway transport system.

5.8 Competitive Profile Matrix


(Table 14)

54

Critical Success
Factors
Service Quality and
Performance

Weight

Marikina Valley
Rating
Score

Capitol Med
Rating
Score

World Citi
Rating
Score

0.2

0.3

0.6

0.4

Market Share

0.15

0.3

0.45

0.15

Financial Position

0.15

0.6

0.45

0.30

Innovativeness

0.12

0.24

0.36

0.24

Management Depth

0.1

0.3

0.3

0.2

Strategic Location

0.08

0.24

0.16

0.24

Advertising and
Promotions

0.07

0.14

0.21

0.14

Customer
Loyalty/Service

0.06

0.18

0.12

0.06

Price
Competitiveness

0.04

0.08

0.12

0.04

Brand Power

0.03

0.06

0.09

0.06

TOTAL

1.0

2.44

2.86

1.83

Note: Weight: 0.0 (not important) to 1.0 (very important)


Rating Score: 4= Major Strength, 3= Minor Strength, 2= Minor Weakness, 1= Major Weakness

6.0 INTERNAL ASSESSMENT


55

6.1 Mc Kinseys Framework

6.1.1 Strategy
The main strategy of World Citi Medical Center is positioning itself as a first

and only

medical hotel in the Philippines. Because of this concept, the hospital provided luxurious and
relaxing ambiance like that of a first class hotel combined with hygienic aesthetics of hospital
interiors with top of the line amenities at competitive price.

World Citi Medical Center is a

center for wellness and medical hospitality rolled into one.


From the grand-standing hospital lobby to various comfortable hospital suites and
private rooms, World Citi Medical Center guarantees all its patients and customers a medical
and wellness experience unparalleled by any medical centers in the country. It boasts of a
holistic complex equipped with state of the art medical facilities and staffed by top notch and
friendly professionals who provide comprehensive and personalized services.

6.1.2 Shared Values


World Citi Medical Center aspires to be an organization of integrity committed to
fulfilling medical responsibilities with excellence. Both medical and non medical personnel strive
to work effectively, respecting each others opinions and differences.

6.1.3 World Citi l Incorporated Organizational Structure


The Organizational structure of World Citi Medical Center was revised early this year.
The President is the Chief Executive Officer. This is occupied by the owner of the corporation.
Directly under her are the Executive Committee, Integrated Management System, Vice
President for Hospital Operations and Corporate Services. There was no Vice President for
Hospital Operations in the old structure.
The Vice President for Hospital Operations is the highest executive for the hospital.
(Figure 8).

Under him are the Management Committee, Office of International Standards,


56

Medical Director and Medical Affairs. Assistant Vice President for Hospital Operations

and

Corporate affairs of the hospital. The Office of International Standards and Corporate Affairs for
hospital are additions to the new organizational structure. These 2 new offices are still in the
formative phase.

The Office of International Standards is responsible for formulating,

implementing guidelines and policies for the planned international accreditation in the next 5
years.
The Medical Director has two Assistant Medical Directors, the Assistant Medical Director
for professional staff services and the other is for patient and clinical services.
Assistant Vice President for Hospital Operations is directly responsible for nursing
services, ancillary services and facilities and management services.
Corporate Affairs Services handle both the school and hospital affairs as well as other
business ventures of the family. There was no Corporate Affairs for Hospital Office in the
previous organizational structure.

57

World Citi l Incorporated Organizational Structure


Figure 8
EXECOM

Vice President for Hospital Operations

MANCOM

Medical Director and


Medical Affairs
Office

INTEGRATED MANAGEMENT SYTEM

PRESIDENT

CORPORATE
SERVICES

Assistant Vice President for Hospital Operations

Clinical

Finance

Patient Support
Services

Services

Office of International Standards for Hospital

Corporate Affairs Office Hospital

Nursing
Services

Facilities
Management

HRD

Sales and
marketing

Assistant
Director for
Professional
Staff
Services

Assistant
Director for
Clinical
Services and
Patient Care

ITSD
Medical
Staff

Clinical
Department
s

PSMD

Research
and
Developme
nt

Ethics/Pe
er
Committe

Medical
Consultants

Medical
Committees

Special
Services

Men's
Wellness
Center
Women's
Wellness
Center

HOPE
Center

Affiliations
Training
Residents

Dialysis
Center

Therapeuti
c Services

Dietary

Pharma
cy

Social
Servic
e

Diagnostics
Services

Laborato
ry

Medic
al
record

Radiolog
y
Securi
ty

CSR/CS
SR
CSS

Cardiovasc
ular
Laboratory

Rehab
Medicin
e

Pulmo
Services

Busine
ss
Office

Bldg
mainte
nance

General
engineerin
g

House
keeping

Clinical
Engine
e
ring
devices

Biome
dical

Patient
Care
Servic
es

Training
and
Research

Clinical
Ward

Man
power
Develop
ment

OR/DR/
LR

ICU
Nursing
Research

NICU
Industrial
Medicine

Admitting
Section

ER

58

6.1.4 Systems

6.1.4.1 Integrated Management System


WCMC has an integrated management system (IMS) . IMS covers the totality of the
organizations processes and systems and embraces health, safety, environment, security,
human resource, finance, marketing, public relations, as relevant to the organizations values,
operations and objectives. There is an IMS Director who sees to it that the processes are
applied in the hospital. Quality (QMS- ISO 9001:2000 ), Environmental (EMS -ISO 14001 ),
and Safety (OHSAS 18001:2007) management systems are often combined and managed as
an IMS. IMS components common to all the systems include the resources (people, facilities &
equipment, etc.) and processes (documented in the QMS/EMS/OHS and applied throughout the
organization). This leads to a more efficient management process. The Integrated Management
System includes internal auditing scheme, employees training, and other reference documents
and standards pertaining to quality, environmental and health and safety of the organization. It
is communicated to all levels through memorandum, intranet, posters, bulletins.

6.1.4.2 Information System


The information system at WCMC

includes the Biz Box Hospital information system,

Financial Management system, Philhealth Infomation System, Electronic Medical Records .


Hospital Information System collates the data of patients services which includes patient
information, laboratory results etc.

Financial Management system integrates billing, payroll

and accounting processes. Materials Management System is for

inventories, purchases,

supplies while Philhealth Information System simplifies Philhealth related data. Electronic
Medical Records are used in the out patient doctors offices.
Managers can have access to the data concerning their respective units only. They
can request for access through a password. There is a regular update of data in all the all the
information system.

59

All data are backed up. Corporate IT director is the head of the Information Technology
department .

The unit provides support services for all IT concerns. It also provides training

for doctors and staff upon request.

6.1.5 Style

The management style should depend upon the situation that an organization is facing.
The medical environment is fast changing, hence, it is neither practical nor economical to stick
to only one style of management. Transactional leadership is practiced by the CEO/ President of
the organization. Due to its compact nature, the transactional style is the preferred style in
WCMC, giving more power and authority to the President. Because of the track record of its
leader, personnel are more inclined to follow the orders of the CEO.
The transactional style of leadership is, however, viewed as insufficient in developing the
maximum leadership potential. With the changes planned by the hospital administration, it is
now more geared towards the practice of transformational leadership. Aside from assuring a
smooth flow of operations, the owners of the hospital are now focusing on motivation and
collaboration with employees at different levels of the organization to accomplish change for the
better.

6.1.6 Staffing

World Citi Medical Center utilizes the newspaper ads as well as web based job listing
sites such as job street and posts in its web site for recruitment of needed personnel. A big bulk
of their staff, however, come from their schools, particularly their graduates from Nursing and
Radiologic Technology.
Staffing for nursing is tedious and the applicant has to undergo a series of tests and
trainings in order to be hired. They start as trainees for about 7 weeks, paying the hospital a
small fee inclusive of 2 sets of uniforms and medical supplies that they will need. After the
training period, they are ranked and evaluated. If there is an opening, they are hired on a
60

contractual basis for 3 months. If none, they become part of the manpower pool. Nurses are
then re-evaluated after 5 months. Because of the barriers presented to nursing applicants, the
hospital has a need for more nurses.
Other hospital staff like those in the administrative staff, laboratory, pharmacy etc., are
given the usual pre-employment test after which they work for a probationary period of 5
months. If evaluation is favorable, they are advanced to a permanent status.

Interview with

some administrative personnel likewise show that they are understaffed. Many are forced to
multi task and unable to deliver quality work output due to many other duties related to other
business corporations of the owners. Benefits are few. Aside from the mandatory SSS and
Pag-Ibig contributions, the staff of World Citi Medical Center only get a 25% discount on the
gross total hospital bill when availed of. The immediate relatives get 20%. No other benefits
such as health insurance are given. Salary increase is likewise limited though yearly evaluations
are done. Increase is on the first, third and fifth year of employment.
Prior to being accepted into the hospital, the physicians are required to submit their
resume with copies of their certificates of specialization which are reviewed by the credentialing
committee upon recommendation of their department heads.
The rest of the hospital staff such as the orderlies, janitors, security personnel and
respiratory technicians are outsourced.

6.1.7 Skills
When hired, the employee is required to attend the orientation program. They are
likewise encouraged to join other training programs that will help improve their skills and
competencies as required by their jobs. The nursing training program includes the following:
basic intravenous therapy, intravenous therapy update, basic competency program for nurses,
basic life support (in house),and staff development program. The medical staff are active in their
respective specialty societies. Continuing update in their basic and advance cardiac life support
certification is required every two years.

61

6.1.8 Financial Position


This is the ultimate deciding factor in evaluating whether a business enterprise is worth
continuing and keeping. The operating profit margin of World Citi is better than Marikina Valley,
but Capitol Medical Center has the highest ratio. Also, Capitol Medical Center has the highest
net profit margin. The return on total assets is not encouraging for World Citi indicating low profit
generated from total assets.
FINANCIAL RATIOS
2011
Gross profit
margin
Operating profit
margin
Net profit margin

0.14

WCMC
CMC
2012 2013
2011
2012
PROFITABILITY
0.14 00.15 0.31
0.30

2013

2011

MVMC
2012

2013

0.29

0.21

0.22

0.27

0.04

0.04

0.05

0.10

0.10

0.09

0.03

0.04

0.04

0.03

0.03

0.03

0.06

0.06

0.06

0.02

0.03

0.03

1.03

1.09

1.24

1.21

Current Ratio

1.36

1.07

LIQUIDITY
1.21
0.91
0.90

Quick Ratio

1.06

0.70

0.66

0.73

0.87

1.02

1.16

1.12

Inventory
turnover
Fixed assets
turnover
Total assets
turnover
Ave. collection
period

18.18

14.24

ACTIVITY
14.84 22.24 16.68

21.86

31.80

54.93

39.09

0.69

0.73

0.79

1.21

1.16

1.01

1.93

2.18

2.34

0.59

0.63

0.64

0.87

0.84

0.78

1.23

1.33

1.29

19.97

23.65

23.50

50.94

49.26

46.09

36.89

32.60

32.59

31%

47%

46%

49%

0.79

Debt-to-total
assets ratio
Debt-to-equity
ratio

35%

20%

LEVERAGE
18%
37%
37%

53%

25%

22%

59%

45%

90%

85%

97%

Sales

1%

1%

GROWTH RATE
2%
4%
4%

2%

47%

13%

12%

Net income

26%

17%

8%

-5 %

90%

44%

39%

59%

14%

11%

62

Table15. Financial Ratios showing the three-year trends of World Citi Medical Center
(WCMC), Capitol Medical Center (CMC) and Marikina Valley Medical Center (MVMC).
FINANCIAL RATIOS
Gross profit
margin
Operating profit
margin
Net profit margin

WC

2011
CMC

MV

WC

2013
CMC

MV

0.31

2012
MV
WC
CMC
PROFITABILITY
0.21
0.14
0.30

0.14

0.22

00.15

0.29

0.27

0.04

0.10

0.03

0.04

0.10

0.04

0.05

0.09

0.04

0.03

0.06

0.02

0.03

0.06

0.03

0.03

0.06

0.03

1.24

1.21

1.03

1.21

Current Ratio

1.36

0.91

LIQUIDITY
1.09
1.07
0.90

Quick Ratio

1.06

0.79

1.02

0.73

1.16

0.66

0.87

1.12

Inventory
turnover
Fixed assets
turnover
Total assets
turnover
Average
collection period

18.18

22.24

ACTIVITY
31.80 14.24 16.68

54.93

14.84

21.86

39.09

0.69

1.21

1.93

0.73

1.16

2.18

0.79

1.01

2.34

0.59

0.87

1.23

0.63

0.84

1.33

0.64

0.78

1.29

19.97

50.94

36.89

23.65

49.26

32.60

23.50

46.09

32.59

Debt-to-totalassets ratio
Debt-to-equity
ratio

35%

37%

LEVERAGE
47%
20%
37%

46%

18%

31%

49%

53%

59%

90%

59%

85%

22%

45%

97%

Sales

1%

4%

GROWTH RATE
47%
1%
4%

13%

2%

2%

12%

Net income

26%

14%

90%

44%

8%

- 5%

39%

0.70

25%

17%

11%

Table 16. Financial Ratios comparing World Citi Medical Center (WCMC), Capitol
Medical Center (CMC) and Marikina Valley Medical Center (MVMC) for each year 2011
2013.

63

Financial Ratios are the mathematical expressions of the financial health of an organization.
Several formulas were applied to quantitatively assess the financial status of World Citi Medical
Center in comparison with its perceived competitors namely Capitol Medical Center and
Marikina Valley Medical Center. The data used were based on the financial statements from
2011 to 2013 submitted by the three hospitals to the Securities and Exchange Commission.
6.1.8.1 PROFITABILITY (Table 17)
PROFITABILITY
RATIOS
Gross profit
margin
Operating profit
margin
Net profit margin

PROFITABILITY
RATIOS
Gross profit
margin
Operating profit
margin
Net profit margin

WCMC
2011 2012 2013
0.14
0.14 00.15

2011
0.31

CMC
2012
0.30

2011
0.21

MVMC
2012
0.22

2013
0.29

2013
0.27

0.04

0.04

0.05

0.10

0.10

0.09

0.03

0.04

0.04

0.03

0.03

0.03

0.06

0.06

0.06

0.02

0.03

0.03

WC
0.14

2011
CMC
0.31

MV
0.21

WC
0.14

2012
CMC
0.30

MV
0.22

WC
00.15

2013
CMC
0.29

MV
0.27

0.04

0.10

0.03

0.04

0.10

0.04

0.05

0.09

0.04

0.03

0.06

0.02

0.03

0.06

0.03

0.03

0.06

0.03

Profitability ratios are used to assess a business's ability to generate earnings as


compared to its expenses and other relevant costs incurred during a specific period of time. 1
World Citi Medical Center has low gross profit margin ratio of 0.14 indicating that it has low profit
with high overhead cost.

lthough in three years, the trend showed a slight upward movement.

In 2011, the gross profit margin is 0.14, which remained the same in 2012, and a very minimal
increase (0.14 to 0.15) in 2013. This may indicate poor purchasing efforts, meaning not getting
good prices for materials. This may also be due to poor inventory control or poor product mix.

64

This indicates the high costs of expenses for its services, or low prices of its services and goods
but still with low sales, for which it may need to increase prices of its services and goods while
maintaining competitiveness, coupled with good marketing strategy. While World Citi Medical
Center showed a slight increase in the three-year trend, Capitol Medical Center had a high
gross profit margin ratio of 0.31 in 2011 (more than double that of World Citi Medical Center) but
showed a gradual decrease in the gross profit margin trend to 0.29 by the year 2013. Marikina
Valley Medical Center has a higher gross profit margin of 0.21 in 2011 compared to World Citi
Medical Center with a remarkable increase in 2013 to 0.27.

For the three-year period, World

Citi Medical Center performed poorly in terms of gross profit margin as compared to Capitol
Medical Center and Marikina Valley Medical Center.

World Citi Medical Centers operating profit margin is also low indicating poor operating
efficiency. The ratio remained low for three years, being stable at 0.04 from 2011 to 2012 with a
slight increase in 2013 to 0.05 (same trend observed with gross profit margin).

This means

that the fixed costs is high in relation to its sales. This indicates that World Citi Medical Center
has difficulty reducing its fixed expenses in the production of services and sales, which may
include high cost of marketing with low efficiency.

Capitol Medical Center has a higher

operating profit margin of 0.10 in 2011 (twice that of World Citi Medical Center) with slight
decrease to 0.90 after two years. Capitol Medical Centers operating profit margin in relation to
its gross profit margin shows it has higher fixed costs or operating expenses. Marikina Valley
Medical Center has a lower operating profit margin of 0.03 in 2011, which increased slightly to
0.04 in the next two years. For the three-year period, World Citi Medical Center performed
almost the same way as Marikina Valley Medical Center.

The net profit margin of World Citi Medical Center is very low and remained the same in
three years at 0.03. This may indicate poor pricing policies and product efficiency. This means
that the prices of services and goods may be low without good marketing, improvement in sales
and delivery of services. This margin is low compared to Capitol Medical Center with 0.06, but
the same with Marikina Valley Medical Center. The trend for the three hospitals is the same,
remaining stable for the three-year period.

65

World Citi Medical Center performed poorly in the profitability metrics.


6.1.8.2 LIQUIDITY (Table 18)
LIQUIDITY
RATIOS
Current Ratio

WCMC
2011 2012 2013
1.36
1.07
1.21

2011
0.91

CMC
2012
0.90

Quick Ratio

1.06

0.70

LIQUIDITY
RATIOS
Current Ratio

WC
1.36

Quick Ratio

1.06

2011
1.09

MVMC
2012
1.24

2013
1.03

2013
1.21

0.66

0.79

0.73

0.87

1.02

1.16

1.12

2011
CMC
0.91

MV
1.09

WC
1.07

2012
CMC
0.90

MV
1.24

WC
1.21

2013
CMC
1.03

MV
1.21

0.79

1.02

0.70

0.73

1.16

0.66

0.87

1.12

Liquidity refers to the companys ability to pay off its short-terms debts obligations. 2 In
2011, the current ratio of World Citi Medical Center is 1.36, meaning for every Php1.00 the
company owes, it has Php1.36 of current assets with which to pay it off. This value dipped
down to 1.07 in 2012 and then recovered to 1.21 in 2013. These indicate the good position of
the Center to cover its short-term debts or obligations. The values were higher than that of
Capitol Medical Center with a current ratio of 0.91 in 2011, which slightly increased to 1.03 by
the year 2013. On the other hand, Marikina Valley Medical Cent current ratio of 1.09 in 2011
when compared to World Citi Medical Center. This increased to 1.24 in 2012 and later went
down to 1.21 in 2013 (same value as World Citi Medical Center). Although World Citi Medical
Centers current ratio in 2011 is highest among the three medical centers, it showed a
downward trend as compared to Capitol Medical Center and Marikina Valley Medical Center
which both showed improvement in 2013. The current ratios of World Citi Medical Center in
three years showed fairly good values in that it has maintained the values above 1.0.

22 Liquidity Ratios. www.investopedia.com


66

The quick ratio helps us determine whether the company can pay off all its debts using its most
liquid (cash or near cash) assets. For World Citi Medical Center, this is low with a downward
trend in three years. In 2011, the quick ratio was 1.06, but went down in 2012 to
0.70, with a further decline in 2013 to 0.66. This indicates the low level of extremely liquid
assets thus reflecting the poor capability of World Citi Medical Center to satisfy its immediate
short-term obligations. The quick ratios of Capitol Medical Center and Marikina Valley Medical
Center were both lower in 2011. Both centers showed increase in ratios by the year 2013. Even
though World Citi Medical Center has the highest quick ratio in 2011 among the three centers, it
has the lowest ratio by the year 2013.

World Citi Medical Center faired poorly in the liquidity metrics.

6.1.8.3 ACTIVITY (Table 19)


ACTIVITY
RATIOS
Fixed assets
turnover
Total assets
turnover
Ave. collection
period

ACTIVITY
RATIOS
Fixed assets
turnover
Total assets
turnover
Average
collection period

2011
0.69

WCMC
2012 2013
0.73
0.79

2011
1.21

CMC
2012
1.16

2013
1.01

2011
1.93

MVMC
2012
2.18

2013
2.34

0.59

0.63

0.64

0.87

0.84

0.78

1.23

1.33

1.29

19.97

23.65

23.50

50.94

49.26

46.09

36.89

32.60

32.59

WC
0.69

2011
CMC
1.21

MV
1.93

WC
0.73

2012
CMC
1.16

MV
2.18

WC
0.79

2013
CMC
1.01

MV
2.34

0.59

0.87

1.23

0.63

0.84

1.33

0.64

0.78

1.29

19.97

50.94

36.89

23.65

49.26

32.60

23.50

46.09

32.59

67

Activity ratios assess how effectively a company is able to generate revenue in the form
of cash and sales based on its asset, liability and capital share accounts.3 The fixed asset
turnover ratio measures the amount of sales the hospital generates from every peso of its fixed
assets. This is very low in 2011 (0.69) for World Citi Medical Center with an increasing trend in
the next two years (went up to 0.73 in 2012, and 0.79 in 2013). Capitol Medical Center has a
higher fixed assets turnover ratio of 1.21 in 2011, with a decreasing trend in 2012 and 2013
(1.16 and 1.01 respectively).

Marikina Valley Medical Center has the highest fixed assets

turnover ratio (1.93) in 2011 with increasing trend to 2.34 in 2013. Although World Citi Medical
Center has the lowest fixed assets ratio among the three hospitals from 2011 to 2013, it showed
improvement in the three-year duration, like Marikina Valley Medical Center.

The total assets turnover ratio of World Citi Medical Center is low at 0.59 in 2011 and increased
slightly to 0.64 in 2013. This is the same pattern noted in the fixed assets turnover ratio for
three years. This indicates the hospitals low productivity or low efficiency in the utilization of its
assets to generate sales. Although the total assets turnover ratios of Capitol Medical Center
showed a decreasing trend from 2011 to 2013, it remained slightly higher than World Citi
Medical Center throughout the three-year period. The total assets turnover ratio of Marikina
Valley Medical Center is the highest among the three hospitals in 2011 (1.23) with an increase
to 1.33 in 2012, then a slight decrease the following year. The total assets turnover ratios of
World Citi Medical Center from 2011 to 2013 remained inferior to that of the two competitors.

The short average collection period of World Citi Medical Center reflects the good
efficiency in collecting its accounts receivables. Although the average collection period in 2011
is around 20 days, this became longer to 24 days in 2012 and 2013 and is not a good indicator
of the companys activity. Capitol Medical Center has the longest average collection period of
51 days in 2011, but this was shortened to 46 days by 2013 indicating improved efficiency in its
collection system. Marikina Valley Medical Center has an average collection period of 37 days
in 2011. This was shortened by 3 days in 2012 and 2013 reflecting its improved collection
system.

Comparing with the two competitors average collection periods for the three-year

33 Activity Ratio. www.investinganswers.com


68

period, World Citi Medical Center has maintained to have the shortest collection period despite
the noted increasing trend.
The overall activity performance metrics is poor for World Citi Medical Center.

6.1.8.4 SOLVENCY (Table 20)


LEVERAGE RATIOS

WCMC
2012
20%
2011
CMC
25%
37%

2011
2013
Debt-to-total
35%
18%
LEVERAGE
assets ratio
WC
MV
RATIOS
Debt-to-equity
53%
22%
Debt-to-total35%
47%
ratio
assets ratio
Debt-to-equity
53%
59%
90%
ratio
Leverage or solvency reflects the level

WC
59%
20%

CMC
2012
37%
2012
CMC
59%
37%

25%

59%

2011
37%

2013
31%

2011
47%

MV
45%
46%

WC
90%
18%

MVMC
2012
46%
2013
CMC
85%
31%

85%

22%

45%

2013
49%
MV
97%
49%
97%

of debt of the company and how much of its assets is

financed by either debts or equity. World Citi Medical Center has low debt-to-total assets ratios.
In 2011 the debt-to-total assets ratio is 0.35. This went down to 0.20 in 2012 and went down
further to 0.18 in 2013.

This means that by 2013, only 18 per cent of its total assets is

financed through debt. This is good for creditors showing World Citi Medical Center has
improving financial risk profile. Capitol Medical Center has a debt-to-total assets ratio of 0.37 in
2011 and 2012, which decreased slightly to 0.31 in 2013. Of the three hospitals, Marikina Valley
Medical Center has the highest ratio of 0.47 in 2011, which did not change much in three years.
From 2011, World Citi Medical Center was able to reduce dramatically the debt-to-total assets
ratio in three years thus having the lowest ratios among the three hospitals.

With regards to debt-to-equity ratio, World Citi Medical Center also has a downward
trend. The debt-to-equity ratio followed the same pattern of debt-to-total assets ratio, that is,
being 0.53 in 2011, which dropped to 0.25 in 2012 and 0.22 in 2013. This means that the
company is not relying too much on debts but on equity for financing its assets. Capitol Medical
Center has a slightly higher debt-to-equity ratio in 2011, which slightly went down after two
years. Marikina Valley Medical Center has the highest debt-to-equity ratio (0.90) among the
three hospitals, which went up in 2013. World Citi Medical Center maintained to have the

69

lowest debt-to-equity ratios compared to Capitol Medical Center and Marikina Valley Medical
Center from 2011 to 2013.

World Citi Medical Center performed well in the leverage metrics.

6.1.8.5 SALES GROWTH (Table 21)


GROWTH
RATIOS
Sales
GROWTH
RATIOS
Net income
Sales
Net income

WC
26%
1%

WCMC
2012
1%
2011
CMC
17%
4%

26%

14%

2011
1%

2013
2%

2011
4%

8MV
%
47%

WC
14%
1%

CMC
2012
4%
2012
CMC
11%
4%

90%

17%

11%

2013
2%

2011
47%

MV
-5
%
13%

WC
90%
2%

MVMC
2012
13%
2013
CMC
44%
2%

44%

8%

-5 %

2013
12%
MV
39%
12%
39%

World Citi Medical Centers growth rate in sales is very low at 1% from 2011 to 2012 with a
slight improvement to 2% in 2013. Capitol Medical Center has a low growth rate in sales of 4%
in 2011, which went down to 2% in 2013. Marikina Valley Medical Center has a very high sales
growth rate of 47% in 2011 but dramatically dropped to 13% in 2012, and remained low in 2013.
The growth sales rate of World Citi Medical Center was the lowest for the three-year period.

The growth rate in net income of World Citi Medical Center showed a decreasing trend
from 26% in 2011 to 17% in 2012, and further drop to a single-digit 8% in 2013. The growth rate
of Capitol Medical Center was low at 14% in 2011 with a downward trend resulting in a (-5)%
after two years. This downward trend was also seen in Marikina Valley Medical Center having a
net income growth rate of 90% in 2011 with a drop to half after one year at 44%. World Citi
Medical Center has a net income growth rate which is intermediate between Capitol Medical
Center and Marikina Valley Medical Center during the period of 2011 to 2013. The decreasing
trend observed among the three hospitals may be due to the effect of the economic crisis
resulting in lower sales and high cost of operational and production expenses.

70

World Citi Medical Center performed poorly with its growth rates.

6.2.Internal Factor Evaluation Matrix (IFE)

(Table 22)
Key Internal Factors

Weight

Rating

Weighted
Score

0.09

0.36

Strengths
1

Accessible, strategic location near jeepney

71

stop, MRT

2
3

Well trained managerial staff, doctor, ancillary


Residency training program for local and
foreign doctors

Electronic Medical Records in Doctors Clinics

0.08

0.24

0.07

0.21

0.06

0.18

Management committed to improve quality of


patient care through international standards

0.05

0.15

Healthcare courses in the school division

0.04

0.12

0.12

0.12

0.11

0.11

Weaknesses
1

High Hospital Rates

Lack of modern facilities

Shortage of doctors who can contribute to


revenue

0.10

0.10

Marketing Department not fully


utilized/effective

0.09

0.09

Hospital staff shared with other family


businesses

0.08

0.16

Family owned corporation with different


interests of family members

0.06

0.12

Lack of communication between


management & staff /doctors

0.05

0.10

TOTAL
Rating:

1.0

2.04

4 major strength

2 minor weakness

3 minor strength

1 major weakness

6.2.1 Strengths
1. Accessible and strategic location near jeepney stop, MRT
72

World Citi Medical Center is situated in a busy intersection ( Aurora Blvd and Anonas
intersection).

The jeepney stops in front the hospital. It is

surrounded by several

establishments. St Joseph Church and School is 20 meters away and MRT station with a mini
mall beside it is just a 5 minute walk from the hospital. Banco de Oro is 10 meters away and
United Coconut Planters Bank is 30 meters from the hospital. Hi-Top Grocery is about 15
meters.
Strategic location is a major strength of WCMC. In any business a good location is a
key factor in the success of the business. The highest weighted score of 0.36 was given to this
major strength.

2. Well trained managerial staff, doctors, ancillary services.

Although a minor strength, it has the second highest weight and weighted score of 0.08
and 0.24 respectively. Even if the location of WCMC is good but the management staff,
doctors and ancillary services are not trained and experienced the hospital services will suffer
eventually.
The President of World Citi Medical Center is a Pharmacy graduate of UST. She
obtained her Masters in Hospital Administration from the same university. Vice President for
Hospital Operations is a Pulmonologist and obtained his Masters in Hospital Administration from
Ateneo Graduate School of Business. The Medical Director is an OB-Gyn specialist and had
her Masters in Hospital Administration at the University of the Philippines. The two Assistant
Medical Directors are currently finishing their Masters in Hospital Administration. The Nursing
Director

obtained her Masters in Nursing from MCU. The Chief Finance Officer is Certified

Public Accountant with Masters in Management from Asian Institute in Management.

Save for a handful non diplomates who were with the old Quezon City Medical center, all
new doctors are required to be diplomate and fellows of their respective specialties before they
are accepted as staff.

3. Residency training program for local and foreign doctors


73

WCMC has an accredited training program in Medicine, OB-Gyne, Pedia and


Radiology. Doctors from Indonesia and Nepal have also graduated from training programs in
Internal Medicine and OB- Gyne. The Residency training program was given a weight of 0.07
and the 3rd highest weighted score of 0.21. The accreditation of residency training programs
by specialty societies shows that it has passed the standards set by the accrediting specialty
societies.

4. Electronic Medical Records in Doctors Clinics


Computers with Electronic Medical Records are provided in all the doctors rooms. This will
make doctors view patient data easily.

It can help provide higher quality and safer care for

patients. The presence of EMR is becoming more attractive for doctors because of its space
saving benefit. A weight of 0.06 and a weighted score of 0.18 was given to this factor.
5. Management committed to improve quality of patient care through international standards.
Orientation and Meetings are being held regularly to formulate policies on quality patient
care according to the JCI standards with the ultimate goal of being JCI accredited in the next 5
to 6 years. The management fully supports this endeavor, however other concerns geared
towards improving quality patient care deserve attention of the management.

A weight

0.05

with a weighted score of 0 .15 was given.


6. Healthcare courses offered at World Citi Colleges.
The twin institution of World Citi which is the World Citi Colleges situated just beside the
hospital offers several healthcare courses such as Nursing, Pharmacy, Biology, Chemistry,
Physical Therapy, Medical Technology, Radiologic Technology, Nutrition and Dietetics,
Psychology, Midwifery, Respiratory Therapy, Health Aide, Medical Transcription. This is an
advantage because the school can be a source of manpower for the hospital. However, not all
graduates are willing to work in WCMC. They want be employed in other which offer better
opportunities or better pay for them. This is a minor strength with a weight of 0.04 and a
weighted score of 0.12

74

6.2.2 WEAKNESSES
1. High Hospital Rates
This is one of the major weaknesses of WCMC. Patients compare high hospital rates
of WCMC to nearby laboratories and hospitals offering the same services. Feedback forms
from confined patients always mention this factor as the reason why they do not want to be
confined again in the hospital. This factor has the highest weight and weighted score of 0.12.

2. Lack of modern facilities

WCMC still lacks state of the art equipments which can make them competitive with
other tertiary hospitals. There are times when confined patients have to go to other centers or
hospitals just to undergo special procedures. The hospital can increase its market share and be
a preferred facility if it can upgrade and invest in state of the art facilities.

This is a major

weakness and given a weight of 0.11


3. Shortage of doctors who can contribute to revenue
There is a need to add more doctors especially those with subspecialties. Competitor
hospitals have medical staff comprising 3 or more times than the bed capacity. The presence
of various specialists can attract more patients. There will be increase in revenue through their
patronage of laboratory, pharmacy, admission of patients, inter-referral among specialties.
WCMC should attract doctors

to join as staff.

This is a major weakness

and must be

addressed seriously. A weight and weighted score 0.10 was given.

4. Marketing Department not fully utilized/effective

The management should invest in a well trained and experienced marketing specialist.
75

The hospital has a marketing department but it seems that there is no one leading the
department in formulating and implementing strategies. WCMC should hire a marketing expert,
who understands the best way to market services of WCMC and eventually make money for
the company. A weighted score of 0.9 was given to this major weakness

5.

Hospital Staff shared with other family business.


The corporate services is responsible for all corporate concerns of

the family owned

businesses. Apparently, this is for economical purposes. Although, each one have assigned
tasks for a specific business there might be incidences when workload can be shared with
other personnel in case of absences, too much work,

inadequate staff available, sudden

emergency or urgent data needed. Confusion and lack of focus may happen in this set up.
There should be a separate corporate group for the hospital This is a minor weakness with a
weight of 0.08 and weighted score of 0.16. It has the highest weighted score among the
weaknesses.

6. Family owned corporation

Being a family corporation can be considered a weakness for several reasons. The
needs of the business may not align

with the needs of the family hence may cause

misunderstanding and may even affect the business as a whole. For example, one family
member may want to expand the business, but other family members may not share this
interest. Family businesses frequently have a confusing organization, and may have no clear
division of tasks. Authority and responsibility lines are unclear and jobs may overlap. The
decision-making hierarchy may be completely ignored to favor the decision or interest of a
family member. This is a minor weakness with a weight of 0.06 and a weighted score of 0.12
which is the second highest weighted score. High hospital rates also got a weighted score of
0.12.

76

7. Lack of communication between management & staff


Doctors complain about changing hospital policies without proper communication before
implementation. Examples are rental schemes, computer installations and parking issues. The
doctors were informed that rental schemes will change and to be handled by another family
owned company.

Computers were installed but doctors were not informed about payments

and usage. Parking rules were suddenly changed without informing doctors. These

issues

caused agitation and anxiety among doctors. Some doctors opted to leave the hospital.
This minor weaknesses was given a weight of 0.5 and weighted score of 0.10

77

CHAPTER 7 STRATEGY FORMULATION

7.1 SWOT MATRIX World Citi Medical Center (Table 23)


Strengths

Weaknesses

1. accessible location near jeepney stop, MRT

1. High Hospital Rates

2. Well trained managerial staff and doctors

2. Lack of modern facilities

3. Residency training program

3. Shortage of doctors who

for local and foreign doctors

contribute to revenue

4. Electronic Medical Records in

4 . Marketing Department not

Doctors Clinics

utilized

5. Management committed to improve quality

5. Hospital staff shared

with
of patient care through

other family businesses


international standards

6.

Family owned corporation with


6. Healthcare Courses in the

different interests of family

School Division

members
7. Lack of communication between
management &

staff/doctors

Opportunities

1. Increase In Health Consciousness

SO Strategies

1. Develop program and healthcare/ wellness

2. Increasing Population of Senior Citizens


3.

Low Inflation Rate

4. Accessible Internet

WO Strategies

packages for Asean patients ( S2,S5, O5)


2. Massive marketing campaign
(S5,O1,O4, O5)
3. Invite doctors with
different specialties
(S5, O1,O2,O5)

1. New Hospital in the Periphery

citizens ( W4, O2)


2. Add staff exclusive for hospital
(W5,O1,O5)
3. Repair old facilities
(W2,O1,O5)
4. Increase Medical Staff
(W3 , O1, O5)
5. Add state of the art
equipments (W2,O1,O5 )

5. Enhanced Partnership thru


Asean Integration 2015

Threats
WT Strategies

1. Promote packages for senior

ST Strategies

1. Stock Purchase plan for doctors/ employees

1. Adjust hospital rates or offer

78

2. Rapidly Evolving Technology

(S2 ,T1)

discounted rates (W1,T1)

3. Conservative Gross Domestic Product 2. Provide convenient access to hospital entrance


4. Augmented Burden of Taxation

especially emergency room (S1,T6)

3. Improve parking facilities (S1, T1,T6)

Dynamic Government Regulations

2. develop healthcare packages


competitive price ( W1,T1,T2)
3 . Purchase modern equipments
(W2, T1,T2)

6. Worsening Traffic Congestion

7.2 Strategic Position and Action Evaluation (SPACE)

Factors Determining Environmental Stability

Technological changes
Few

Many 0

Inflation Rate
Low

High 0

Large

Competitor Price Range


6 Narrow

Wide 0

Barrier to entry
6 Many

Few

Competitive pressure

High 0

Demand variability
6 Small

2
1

Average minus 6

3
3

2
2

-3.5

6 Low

Factors Determining Service Category Strength

Growth potential
Profit potential
High

Low

6 High

Low

79

Financial stability

Low

6 High

Inefficient 0 1

Technological know-how Simple


Complex
Resource utilization
Efficient
Capital intensity

High 0

6 Low

Adaptability

Low

6 High

Average

4.1

Factors Determining Competitive Advantage

Market share

Small 0

6 Large

Inferior

6 Early

Patient loyalty
High

Low

Competitors utilization
High

Low

Technological know-how Low

6 High

-2.2

Product Quality
6 Superior
Product life cycle

Late

Average minus 6

Factors Determining Financial Strength

Return on investment
6 High

Low

80

Leverage
Balanced

Imbalanced

Cash flow
2
High

Low
3

0
5

1
6

Risk
Much 0
5

involved
1
2
6 Little

Average

Liquidity
6 Balanced
Capital available
Low

Imbalanced
High

SPACE Matrix
(Figure 10)

Financial Strength

Conservative

Competitive
Service Category Strength

Aggressive

Advantage

81

Defensive Competitive

Environmental Stability

Interpretation:
This posture means that World Citi Medical Center is in an attractive service category
business.

The organization enjoys a competitive advantage in a relatively unstable

environment. Critical Factor however is Financial Strength.


Strategies (Action Plan):
There are various strategies under a competitive standpoint. These include market
penetration, market development and product development. Being in this quadrant, the aim of
the organization is to increase financial stability to withstand an unstable external environment.

7.3 World Citi Medical Center Internal- External Matrix


(Figure 11)
The IFE total Weighted Scores
3.0-4.0

High
3.0 to 4.00

The
EFE
Weigh
Scores

Strong
2.0-2.99

Average
1.0 to 1.99

Weak

II

III
Medium
2.0 to 2.99

IV

VII

VIII

VI

Low
1.0 to 1.99

82

The IE Matrix falls in the cell V which indicates that WCMC can be managed with hold
and maintain strategies. Strategies commonly employed are market penetration and product
development.
New products can include :
1. invest in state of the art facilities
2. develop an extensive advertising campaign
3. install a sophisticated information system including bedside terminals to further differentiate
itself
from its competition
4. positioning strategies must be selected on the basis of resources competencies and
capabilities as
well as environmental risks

7.4 Grand Strategy Matrix


(Figure 12)
Rapid Market growth
Quadrant II
1
2.
3.
4.
5.
6.
Weak Competitive
position

Market development
Market penetration
Product development
Horizontal integration
Divestiture
Liquidation

Quadrant I

Strong Competitive

83

Quadrant III

Quadrant IV

Slow Market Growth

The WCMC is in quadrant II which means it has a rapid market growth but a weak
competitive position..The most attainable strategy that can be applied by the hospital are market
penetration, product development, market development. In order to fulfill these strategies the
hospital must tap its resources and ask the support of the medical consultants, marketing
department, various department and other prospective investors to invest in the project. Hence,
the strategies identified in this quadrant must be used and implemented in order to be highly
competitive in the market.

7.5 Matrix and Tows Summary


(Table 24)

ALTERNATIVE STRATEGIES
INTEGRATIVE STRATEGIES
Forward Integration
Backward Integration
Horizontal Integration
INTENSIVE STRATEGIES
Market Penetration
Market Development
Product Development
DIVERSIFICATION STRATEGIES
Concentric Diversification
Conglomerate Diversification
Horizontal Diversification

SPACE

1
1
1

IE

1
1

GS

TOTAL

1
1
1

1
1
1

1
1
1

3
2
3

1
84

DEFENSIVE STRATEGIES
Joint Venture
Retrenchment
Divestiture
Liquidation

Summary:
After gathering all the matrices including SPACE, IE and GS. We came up the lowest
score of 1 in the Integrative strategies (forward, backward and horizontal integration) and
Diversification strategies (horizontal diversification). It signifies that WCMC will not prioritize
to use aforementioned strategies. WCMC identified Intensive strategies with the highest score of
3 such as

market penetration and product development while a score of 2 for market

development that would focus in using strategic planning and management.


7.6 Quantitative Strategic Planning Matrix (Table 25 )
Key External Factor

Weight market penetration

Opportunity

product development market development

AS

TAS

AS

TAS

AS

TAS

0.20

0.6

0.4

0.20

0.15

0.45

0.3

0.15

Low inflation rate

0.10

0.3

0.2

0.10

Accessible internet

0.10

0.3

0.2

0.10

Enhanced partnership
thru Asean integration
2015

0.05

0.1

0.15

0.05

Abundance of HMOs

0.05

0.1

0.05

0.15

AS

TAS

0.3

0.15

0.05

Increase in health
consciousness
Increasing population of
senior citizen

AS

Threats
New hospital in the
periphery
Rapidly evolving
technology
Low gross domestic
product

TAS

0.15

0.45

0.05

0.1

0.05

0.1

AS

TAS

0.15

0.05

0.15

85

Augmented burden of
taxation
Dynamic government
regulations
Worsening traffic
congestion

0.05

0.1

0.03

0.06

0.02

0.06

AS

Strengths
Accessible strategic
location near jeepney
stop, MRT
Well trained managerial
staff, doctors
Residency training
program from local and
foreign doctors
Electronic Medical
Records in Doctors
clinic
Management committed
to improve quality of
patient care through
international standards
Healthcare courses in the
school division
Weakness

TAS

0.05

0.03

0.02

AS

TAS

0.15

0.09

0.04

AS

TAS

0.09

0.27

0.18

0.09

0.08

0.16

0.24

0.08

0.07

0.14

0.21

0.07

0.06

0.12

0.18

0.06

0.05

0.15

0.1

0.05

0.04

0.12

0.08

0.04

AS

TAS

AS

TAS

AS

TAS

es
High hospital rates

0.12

0.24

0.12

0.36

Lack of modern facilities

0.11

0.22

0.33

0.11

Shortage of doctors who


can contribute to revenue

0.10

0.2

0.3

0.10

Marketing department
not fully
utilized/effective

0.09

0.18

0.09

0.27

Hospital staff shared


with other family
businesses

0.08

0.08

0.16

0.24

Family owned
corporation with
different interests of the
family members

0.06

0.06

0.12

0.18

86

Lack of communication
between management &
staff/doctors
TOTAL

0.05

0.05

4.69

0.1

4.1

0.15

3.15

The hospital considers three alternatives based on the relative attractiveness of feasible
alternative actions using the previous identified external and internal critical success factors;

1
2
3

Market Penetration (Massive marketing campaign advertisement)


Product Development(acquiring MRI ,enhance integration of Asean partnership, add
local and foreign residency program)
Market Development (Attract corporate linkages and more HMOs invitation)

The weights in each category are already given in the EFE and IFE Matrix
Comparing the score of market penetration (4.69) to product development (4.1) and to
market development (3.15), it is very clear that the hospital can have a very big advantages to
use the intensive strategies including establishment or build up a massive marketing campaign
advertisement such as online ads, print ads, tv ads, etc. (market penetration),acquiring a
Magnetic Resonance Imaging, enhance integration of Asean partnership ,add local and foreign
residency program

(product development) and attract

corporate linkages more HMOs

invitation(market development) . To pursue this goal, the hospital must tapped its reserved
resources and request the medical consultants and other potential investors to join in this
worthy endeavor.

87

CHAPTER 8. STRATEGIC OBJECTIVES


AND RECOMMENDED STRATEGIES
A. Strategic objective
To increase the hospital market share by at least 5 percent (5%) every year from year
2015 to 2018
B. Recommended strategies
1. To establish and build up aggressive marketing campaign including online
advertisement, print advertisement, etc.
a) Offer discounted packages for patients (diabetic, geriatrics, wellness, pregnancy ,
pediatric, packages,etc.)
b) Giving incentives to the referred clients.
c) Invite other consultants or clients to practice in our institution thru various
advertisement.
d) Update monthly the social media advertisement by creating a new gimmick
advantageous to our institution
88

e) Advertise the state of the art equipments and facilities of the hospital.
Establishing online advertisement connectivity, TV ads, print ads, etc. may acquire more
patients influx that can increase our revenue income.
f) Provision of project larger scale on marketing advertisement promotion including TV
commercial, Billboard ads,newspaper ads, online ads, magazine ads, print ads, Telehealth ads,
etc.
2. To add state of the art equipment such as
a) Magnetic Resonance Imaging (MRI)
Provision of MRI will attract more patients as well as consultants to bring patients in
our institution that can help in increase our revenue..
For the medical clinics within the vicinity, the hospital can offer rebates for any referral
from them laboratory examinations, x-ray examinations, use of ambulance and patients for
confinement.
3. To enhance integration of Asean partnership, add local and foreign residency
program
By enhancement of Asean partnership, the WCMC will open the opportunity for global
market through medical tourism that will result to increase in its market share and revenue.
a) Exchange residency program with students from other countries.
b) Additional accredited residency program from local to foreign.
c) Encourage and open for medical tourism the WCMC health facilities, equipment and
healthcare services.
4. To improve utilization of outpatient and ancillary services
a) Additional accredited residency programs aside from OB Gyne, Pediatrics, Internal
Medicine and Radiology is highly recommended.
b) Invite more doctors both general practitioner , specialists and subspecialist to hold
their clinics and practice in the hospital.
c)

Inform other practitioners along the area about the availability of the ancillary

procedures.
d) Network with other clinics to increase utilization of available ancillary procedures.
89

e) Conduct more free screening services for hypertension, cardiovascular diseases,


osteoporosis, diabetes and other diseases in cooperation with drug companies and
suppliers.
f) Encourage support of doctors by ordering necessary procedures, routine laboratory
work- ups for their in and out patients
g) Aggressive marketing strategies
Through the maximization of utilization of present offices, equipments and other ancillary
services the objectives of the hospital will be attained in the soonest possible time.
5. To improve poor hospital facilities and equipment
a) Allocate budget from the hospital income to purchase the needed equipment and to
improve facilities and infrastructure.
b) Infuse additional capital from the potential investors to buy the needed equipment like
Magnetic Resonance Imaging .
c) Hire skilled person or agency to maintain the existing equipment and facilities and to
keep them always in good working condition.
One of the critical success factors that the patients as well as the other stakeholders
consider in the choice of the hospital is the presence of good and complete facilities and
equipment. Most patients would prefer to go to the hospital that could provide complete
diagnostic procedures, laboratories, physicians and the good equipment all in one sitting rather
than experiencing the hassles of transferring to different hospital due to inadequacy or lack of
equipment or diagnostics.
One of the good strategies then would be to invite interested investors to join the
organization and infuse the money to purchase the new equipment. This will also help in the
continuity of improving the delivery of hospital services. The doctors residing or practicing within
the area would be the first priority followed by capable and willing non doctors who believe in
the capability of the hospital to become more competitive in the field of health management..
6. To enhance improvement of finance department
a) Provide a good collection system.
90

b) Establish a strong internal control especially on collections and inventory.


c) Provide a good inventory system and this could be attained thru the following;
1. Repairing or replacing leaking or busted water pipes and faucets
2. Maximizing working hours by being productive and avoiding waste of time.
3. Avoiding overstocking of office supplies and materials
4. Implementing strictly preventive maintenance schedules by maintenance crew.
5. Encouraging recycling of used materials such as papers, plastic bottles, vials
and others
6. Switching off lights air-conditioning units, electric fans and other electric
appliances and equipments when not in use
7. Repairing electrical connections and outlets and replacing busted bulbs and
tubes.
8. Avoiding wastage of supplies and materials- date of manufacturing and date of
expiration must be recorded

Reviewing collection procedures and instituting the appropriate changes may improve
the finance department, consequently, augment the hospital net income.
Collection of outstanding debts, likewise, is a very important aspect in the financials. It
includes mainly those patients who were not able to pay their bills in time and have lost to follow
up.
Work on a budget is also a very important point. This may include an efficient inventory
of medicines and supplies and cost cutting especially on unnecessary hospital-operating
expenses.
Infusion of additional capital by inviting investors to increase the cash flow that will be
used to improve the hospital infrastructure or buy additional equipment is also highly
recommended. Invite doctors to invest although most of them are already affiliated with other
hospital, they are still given priority to join the corporation and encouraged to practice in the
hospital because of the culture of the population to consult first their own family physician.
7. To empower and improve Marketing Department Operation
91

a) Conduct regular monthly meetings with Marketing Department in order to update


and improve the marketing strategy and to review sales
b)

Conduct a monthly survey of the prices of the different drug store, hospital room
rates of the competitors around the area to compare with the hospital pharmacy
and hospital room rates price in order to be competitive.

c)

Provide marketing department staff training funds to make them efficient in carrying
out feasible programs.

d)

Oblige all Resident Physician to prescribe only medicines that are available in the
Hospital Pharmacy except those that are out of stock.

e)

Enhance the image, brand and position of the hospital by good public relations and
other promotions.

f)

Affiliate or make a MOA of more credit lines not only with existing affiliation but also
more HMOs and corporate linkages.

g)

Establish and maintain a satisfactory system of records and bookkeeping of


purchases and sales.

The empowerment and improvement of marketing department operation has a huge role
in capturing the potential clients that will lead to increased income.

8. To improve Pharmacy operation


a) Conduct a regular monthly inventory of drugs and hospital supplies by the auditor
b)

Establish and maintain a satisfactory system of records and bookkeeping of


purchases and sales.

c)

Conduct a monthly survey of the prices of the different Drug Store around the area
and compare with the Hospital Pharmacy price to be competitive.

d)

Provide and complete the necessary drugs and supplies that are commonly being
prescribed by the physician including some branded drugs.

e)

Oblige all Resident Physicians to prescribe only medicines that are available in the
Hospital Pharmacy except those that are out of stock.

f)

Lead and convince all the outpatients to buy medicines directly from the Hospital
Pharmacy after being checked up and let them be accompanied by the secretary
92

g.) Affiliate or make a MOA of credit line not only with Mercury Drug but also with other
nearby drug stores .
Internal control of the Hospital Pharmacy is deemed necessary to improve the efficiency
of operation. This would include the proper and regular monthly inventory of drugs and supplies
as well as limiting the purchases for the drugs and supplies to those that are not commonly
prescribed and used in the Hospital. A systematic tool for recording and bookkeeping is also
important for monitoring. Encouraging all the in house physicians especially the Resident
Physician and those consultants who conduct their clinic to prescribe only drugs available in the
Pharmacy will definitely help in moving the medicines and supplies in the Hospital Pharmacy.

93

CHAPTER 9. DEPARTMENTAL PROGRAMS

9.1 STRATEGIC ACTION PLAN


(Table 26)

Objectiv
es

Strategies

Actions

Person
Respo
nsible

Tim
e
Fra
me

Bud
get

Key
Performanc
e Indicator

1.Increas
e market
share

1.To build
strategic
massive
marketing
campaign
including
online
ads,tvads,pri
ntads,etc.

a)

Marketi
ng
Depart
ment

2016
2018

10
milli
on

Increase
patients
patronage
at least 510%
Increase
number of
stockholder
s
Increase
number of
investors

Offer discounted packages for

patients(diabetic,geriatrics,wellness,
pregnancy , pediatric, packages,etc.
b) Giving incentives to the referred
clients.
c) Invite other consultants or clients
to practice in our institution thru
various advertisement.
d) Update monthly the social media
advertisement by creating a new
gimmick

in

advantage

in

our

institution to other competitors.


e) Advertise the state of the art
equipments

and

facilities

of

the

hospital.
f) Provision
on

of project larger scale

marketing

advertisement

promotion including TV commercial,


Billboard ads, newspaper ads, online
ads, magazine ads, Telehealth ads,
etc.

94

2.To empower
and improve
marketing
department
operation

a)Conduct regular monthly meetings


of Marketing Department in order to
update and improve the marketing

Marketi
ng
depart
ment

2016
2018

sales.
b)Conduct a monthly survey of the
prices of the different drug store,
hospital

room

competitors

rates

around

of

the

area

the
to

compare with the hospital pharmacy


and hospital room rates price in order
to be competitive.
c)Provide marketing department staff
training funds to make them efficient
and feasible.
d) Oblige all Resident Physician to
prescribe only medicines that are
available in the Hospital Pharmacy
except those that are out of stock.
e) Enhance the image, brand and
position of the hospital by public
relation and other promotions.
f)Affiliate or make a MOA of more
credit line not only with existing
affiliation,

also

more

HMOs

and

attract corporate linkages.


g)Establish

and

maintain

satisfactory system of records and


bookkeeping of purchases and sales.

2.Increas
e revenue
net
income

1.To add state


of the art
equipments

Buy an MRI

Purcha
sing
Depart
ment

2016
2018

2.To enhance

a) Exchange residency program

Medical

2016

50
milli
on/
15
milli
on

Increase
admissions,
increase
opd
consults,
increase
referral
system.
Increase

95

integration of
Asean
partnership
,add local and
foreign
residency
program .

students from other countries.

3. To enhance
improvement
finance
department

a) Provide a good collection system.

b) Additional accredited residency


program from local to foreign.
c) Encourage and open for medical
tourism the WCMC health facilities,
equipments and healthcare services.

b) Establish a strong internal control


especially on collections and
inventory.
c) Provide a good inventory system
and this could be attained thru the
following;1. Repairing or replacing
leaking or busted water pipes and

depart
ment,Fi
nance
depart
ment,H
uman
Resour
ces
depart
ment,M
arketin
g
depart
ment
Finance
Depart
ment,
Human
Resour
ces
Depart
ment

2018

2016
2018

1
milli
on

residency
affiliation
from local
and foreign
Increase
patients
admissions
and
consults

Decrease
usage of
electricity
and water
Increase
number of
employees
efficiency
Increase
electric and
water usage
savings

faucets 2. Maximizing working hours


by being productive and avoiding
waste of time.3.Avoiding
overstocking of office supplies and
materials 4.Implementing strictly
preventive maintenance schedules by
maintenance crew.
5. Encouraging recycling the use of
materials such as papers, plastic
bottles, vials and others
6.Switching off lights air-conditioning
units, electric fans and other electric
appliances and equipments when
not in use
7. Repairing electrical connections
and outlets and replacing busted
bulbs and tubes.
8. Avoiding wastage of supplies and
materials- date of manufacturing and
date of expiration must be recorded

96

4.To improve
Pharmacy
operation

a)Conduct a regular monthly inventory


of drugs and hospital supplies by the
auditor
b)Establish and maintain a
satisfactory system of records and
bookkeeping of purchases and sales.
c)Conduct a monthly survey of the
prices of the different Drug Store

Finance
Depart
ment,
Pharma
cy
Depart
ment,
Marketi
ng
Depart
ment

2016
2018

Increase
sales on
pharmacy
department
Decrease
number of
drugs
expiration

around the area to compare with the


Hospital Pharmacy price and be
competitive.
d)Provide and complete the necessary
drugs and supplies that are commonly
being prescribed by the physician
including some branded drugs.
e) Oblige all Resident Physician to
prescribe only medicines that are
available in the Hospital Pharmacy
except those that are out of stock.
f)Lead and convince all the
outpatients to buy medicines directly
from the Hospital Pharmacy after
being checked up and let them be
accompanied by the secretary
g.) Affiliate or make a MOA of credit
line not only with Mercury Drug store
but also other nearby Drug store .

97

10. STRATEGY EVALUATION AND CONTROL

10.1 BALANCED SCORECARD


(Table 27)
The balanced scorecard is a strategic planning and management system that is used to
align business activities to the vision and strategy of the organization, improve internal and
external communications, and monitor organization performance against strategic goals. 19 This
serves as a quick reference to outline the goals for World Citi Medical Center, and rationalize
strategies to deliver expected results.

10.1.1 LEARNING AND GROWTH PERSPECTIVE


This perspective views the people as the main fuel that drives the organization, thus focuses on
employee training and corporate self-improvement.
GOALS
Staff skill
improvement

Staff loyalty index

Staff satisfaction

STRATEGIES
Conduct Skill
Training and
Competency
Seminars
Loyalty Award and
Recognition;
Promotion
Personality
improvement
seminars; Conduct
regular interviews
with employees

MEASURES
Training
Certification and
Recertification as a
requirement
Employee turnover
(26% in WCMC)

TARGETS
Certification
compliance of 80%
by 2017

Absenteeism
(42.2% in a US
article20)

Lessen
Absenteeism by
20% yearly starting
2016

Reduction by 30%
by 2017

1919 Balanced Scorecard. Balanced Scorecard Institute. March 2015.

2020 Rates of Sickness Absenteeism Among Employees of a Modern Hospital: the Role of Demographic
and Occupational Factors. Pines A et al. Brit J Ind Med, May 1985.

98

Investing in people is the core mechanism in the attainment of the companys goals, thus
there is a need for empowerment of the staff. This may be achieved by improving and updating
their knowledge and skills through special trainings and regular recertification. Examples are
Basic Life Support certification, IV insertion skill training and enhancement, Pharmacology
lectures, Patient care and bedside care refreshment courses, etc. It is also important to focus on
attitude modification of employees, by inculcating a sense of loyalty to the company. Due
recognition should be given to those who have devoted time in service of the institution.
Appropriate promotions should be given to deserving employees. In this way they grow love for
the institution and they become proud to be part of the institution. Staff satisfaction is a major
concern.

This can also be achieved by personality development and solving work-related

problems thus improving job satisfaction. Personality improvement sessions may have a big
impact on employees, like beauty lessons to improve their appearance and self-esteem,
cooking lessons that they can use during day offs, seminars on hygiene, healthy eating and
sickness prevention at home, etc. It is also important to hear from the employees through
interviews the reasons for their absences and try to seek solutions.

10.1.2 INTERNAL BUSINESS PROCESS


This perspective looks into the companys performance in meeting quality standards to
improve its performance in delivering quality health care to its clients.

GOALS
Quality outcomes

Patient safety

STRATEGIES
Information and
Implementation of
Clinical Practice
Guidelines;
Regular case
conferences;
Review of hospital
cases/census
Pharmacology

MEASURES
Readmission rates
within 30 days
(20% in US
hospitals21)

TARGETS
Reduction by 10%
of readmissions
starting 2017

Medication error

Reduction by 20%

2121 0 A Best Way to Manage a CMS Hospital Readmission Reduction Program. Brown B.
Readmissions, Regulatory Measures, December 2013.

99

Improvement in
Standards of care

Lectures; Seminars
on Medication
Errors; Reporting,
investigation of
causes and
Correction of
Behavior;
Recognition
Review of
Credentials of
Medical Staff; Recredentialing;
Promotion

rate (5.07% in US
hospitals22)

quarterly starting
2016

Core competency
compliance

Compliance of at
least 80% by 2017

The internal business environment needs periodic evaluation and process modification to
improve the companys performance delivering good quality service. This can be attained by
looking into strategies geared towards compliance to globally accepted standards in medical
care by doctors, and reduction in medication errors by the nursing staff through strict monitoring
and prevention. Equally important is assuring the patients that they are receiving the best of
care because the healthcare providers have met the expected competency levels.

10.1.3 CUSTOMER PERSPECTIVE


This perspective focuses on the kinds of customers and processes to satisfy these
customer groups.

GOALS
In-Patient
satisfaction

STRATEGIES
Conduction, review
and investigation of
customer
complaints/comments
; Recognition

MEASURES
+/- comments and
feedbacks,
satisfaction
ratings; likelihood
to recommend

TARGETS
Increase in (+)
over (-) comments
to 80% starting
2016 with
quarterly
evaluation

2222 1 Medication Errors in the United States Hospitals. C A Bond et al. Pharmacotherapy, 2001.

100

Emergency
Department
satisfaction

Census Review;
Recognition

ED consultations
left without being
seen

Physician
satisfaction

Regular meetings with


medical staff;
surveys/comments
from doctors;
Recognition

Admission or
Occupancy rates
(45% occupancy
rate)

5% or less
starting 2016 with
monthly
evaluation
Increase in
Occupancy rate
by 50% by end of
2016

The satisfaction of customers, being the end users of the service provided by the
hospital, is essential in maintaining focus to the achievement of the companys vision. Patient
satisfaction can be measured through increase in positive feebacks and adequate delivery of
their needs. The function of the Emergency Department is crucial in the overall function of the
hospital because it gives initial medical or surgical care to patients, thus it should be able to
attend to all patients who walk into its door. Physician satisfaction is very important in that their
concerns should also be given proper attention. This may be reflected by increased admission
rates and occupancy rates.

10.1.4 FINANCIAL PERSPECTIVE


This perspective addresses the stakeholders view of the companys goals and
performance.

GOALS
Financial growth

Expense control

Liabilities reduction

STRATEGIES
Improve
performance and
delivery of care;
Recognition
Review of
processes; Supply
inventory audits;
Recognition
Debt payments;
Financial review

MEASURES
Gross revenue
(Php 313M in
2013)
Operating profit
margin (5% in
2013)
Total liabilities
(87M in 2013)

TARGETS
Gross revenue
increase by at least
5% yearly starting
2016
Operating profit
margin increase by
5% yearly starting
2017
Reduction by 5%
yearly starting
101

and planning

2017

Financial growth is a major factor in any business. This goal can be measured in terms
of gross revenue, which is currently 313 million pesos for World Citi Medical Center. A target
increase of at least 5% annually seems reasonable to attain a steady growth. Reducing the
operating expenses without compromising quality of health care delivery can improve the
financial standing of the company. This may be achieved through review of operating costs and
profiles of suppliers, identification of problems, with formulation and implementation of solutions.
Also, reduction in short term and long term debts should be specifically addressed, especially
bad debts.

102

STRATEGY MAP
FINANCIAL
PERSPECTIVE

CUSTOMER
PERSPECTIVE

INTERNAL
PROCESSES
PERSPECTIVE

LEARNING AND
GROWTH PERSPECTIVE

Revenue
growth

Increase in
net income

Customer
Satisfaction

Gain market
share

Manage
Customers

Added value
services

Increase of
Seat load factor

Manage
operations

Manage
innovations

Marketing

103

11.0 FINANCIAL PROJECTIONS

INCOME STATEMENTS : WORLD CITI MEDICAL CENTER


Fiscal Year
2011
% of
2012
% of
2013
Ended
Rev.
Rev.
Total
304,514,369 100 307,788,103 100 313,727,357
Revenue
%
%
Direct
260,684,802 86% 265,335,647 86% 265,682,195
Costs
Gross
43,829,566 14%
42,452,455 14%
48,045,162
Income
General &
32,252,238 11%
28,852,515
9%
33,389,731
Admin.
Expenses
Net Income
11,577,327
4%
13,599,940
4%
14,655,430
Provision
for Income
Tax
Net Income
After Tax
Interest
Income
Total
Income

% of
Rev.
100
%
85%

2014

2015

363,370,254

276,415,756

% of
Rev.
100
%
86%

318,433,267

323,209,766

270,995,839

15%

2016

385,172,470

292,835,717

% of
Rev.
100
%
81%

47,437,428

46,794,010

11%

34,558,372

5%

412,134,542

296,591,254

% of
Rev.
100
%
77%

308,207,350

% of
Rev.
100
%
75%

14%

70,534,537

19%

88,581,216

18%

103,927,192

25%

35,767,914

11%

52,019,791

14%

53,315,484

14%

61,656,526

15%

12,879,056

11,026,096

3.4
%

18,514,746

5.1
%

35,265,732

9.2
%

42,270,666

10%

1%

4,079,982

1%

4,396,629

1%

3,863,717

3,307,829

8,104,129

3%

9,519,958

3%

10,258,801

3%

9,015,339

7,718,267

2.4
%

12,960,322

3.6
%

24,686,012

6.4
%

29,589,466

7.2
%

811,867

0.3
%
3%

311,521

0.1
%
3%

9,015,339

7,718,267

2.4
%

12,960,322

3.6
%

24,686,012

6.4
%

29,589,466

7.2
%

3%

10,331,826

10,570,323

10,579,720

2018

3,473,198

8,104,129

5,554,424

2017

12,681,200

Table 28. Financial Projection, Income Statements, World Citi Medical Center

104

Table 29. Financial Projection, Balance Sheet Assets, World Citi Medical Center

BALANCE SHEETS : WORLD CITI MEDICAL CENTER


Fiscal Year
2011
% of
2012
% of
2013
Ended
Rev.
Rev.
ASSETS
Current Assets
Cash
43,002,379 14%
20,189,470
7%
46,365,936
Accounts
16,656,969
5%
19,942,266
6%
20,202,661
Receivable
Inventories
16,745,917
5%
21,620,461
7%
21,145,637
Other
16,607
current
Asset
Total
76,421,874
Current
Assets
Non Current Assets
Property
392,882,184
and
Equipment
Other Non50,553,398
Current
Assets
Total Non
443,435,583
Current
Assets

% of
Rev.

2014

2015

% of
Rev.

2016

% of
Rev.

2017

% of
Rev.

2018

% of
Rev.

15%
6%

47,764,990
20,465,295

48,481,465
20,731,344

15%

43,613,892
21,000,851

12%

49,587,009
21,273,862

13%

53,631,320
21,550,423

13%

7%

21,653,462

22,301,474

6.9
%

25,435,918

7%

27,347,245

7.1
%

29,673,687

7.2
%

0%

17,900

0%

25%

61,770,097

20%

87,714,234

28%

89,883,747

91,514,283

28%

90,050,661

25%

98,208,116

26%

104,855,430

25%

129
%

373,246,971

121
%

356,113,642

114
%

338,307,960

321,392,562

99%

359,762,890

99%

341,774,745

89%

332,686,008

81%

17%

50,553,398

16%

43,553,398

14%

43,553,398

43,553,398

146
%

423,800,369

138
%

399,667,041

127
%

381,861,358

364,945,960

43,553,398

113
%

403,316,288

43,553,398

111
%

385,328,143

43,553,398

100
%

376,239,406

105

91%

Table 30. Financial Projection, Balance Sheet Liabilities, World Citi Medical Center

BALANCE SHEETS : WORLD CITI MEDICAL CENTER


Fiscal Year
2011
% of
2012
% of
2013
Ended
Rev.
Rev.
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Accounts
38,166,904 13%
39,925,800 13%
38,432,865
Payable
Income Tax
107,362
0%
135,785
0%
252,703
Payable
Other
17,782,842
6%
17,439,222
6%
18,363,136
Current
Liabilities
TotalCurrent
56,057,109 18%
57,500,809 19%
57,048,704
Liabilities
Long Term Liabilities
AcctPayable
72,000,000 24%
0
0
Others
Loans
51,972,374 17%
39,958,393 13%
30,018,076
Payable
Total Long
123,972,374 41%
39,958,393 13%
30,018,076
Term Liabs
Total
180,029,483 59%
97,459,202 32%
87,066,781
Liabilities
Shareholder 339,827,974
112 388,111,265 126 400,314,495
s Equity
%
%
Total Liabs
519,857,457 171 485,570,467 158 487,381,277
and
%
%
Shareholder
s Equity

% of
Rev.

2014

2015

% of
Rev.

2016

% of
Rev.

2017

% of
Rev.

2018

% of
Rev.

12%

39,804,158

40,401,221

12.5
%

45,421,282

12.5

48,146,559

12.5
%

51,516,818

12.5
%

0%

154,549

132,913

6%

18,363,136

18,363,136

6%

18,363,136

5%

18,363,136

5%

18,363,136

4%

18%

58,321,843

58,897,270

18%

64,006,595

18%

66,932,884

17%

70,387,202

17%

10%

22,813,738

17,338,441

10%

22,813,738

17,338,441

28%

61,135,581

76,235,711

128
%
155
%

412,323,930

424,693,648

473,459,511

500,929,359

222,177

423,189

0
5.4
%
5.4
%
24%

56,743,797

16%

53,392,405

14%

42,800,020

10%

56,743,797

16%

53,392,405

14%

42,800,020

10%

120,750,392

33%

120,325,289

31%

113,187,222

27%

424,693,648
155
%

507,248

542,312,040

424,693,648
149
%

541,699,490

424,693,648
141
%

537,880,870

106

131
%

107

Based on the data collected from 2011 to 2013 :


1. The Total Revenues were calculated to have an average increasing trend of 1.5%
annually.
2. The Direct Costs were calculated to have an average increasing trend of 1% annually.
3. The Gross Income went down by 3.1% from 2011 to 2012, then increased by 13.2% in
2013.
4. The General and Administrative Expenses were calculated to have an average
increasing trend of 3.5% annually.
5. The Net Income increased from 2011 by 17.5% in 2012, then by 7.7% in 2013.
6. The Total Income increased from 2011 by 27.5% in 2012, then by 2.3% in 2013.
7. The Cash Current Asset dropped from 2011 by 53% in 2012, then went up by 130% in
2013 (8% increase from 2011).
8. The Accounts Receivables increased from 2011 by 19.7% in 2012, then by 1.3% in
2013.
9. The Inventories increased from 2011 by 29% in 2012, then went down by 2.2% in 2013.
10. The Total Current Assets from 2011 decreased by 19% in 2012, then went up by 42% in
2013.
11. The values of Properties and Equipments were noted to depreciate at an average rate of
5% each year.
12. Likewise, the values of the Total Non-Current Assets depreciated at an average rate of
5% yearly.
13. The values of Accounts Payable were steady at an average of 12.5% of the Total
Revenue.
14. The Income Tax Payable in the Liabilities Balance Sheet ranged from 0.9% to 1.72% of
Net Income.
15. In terms of Loans Payable, World Citi Medical Center is noted to pay off 24% of its loan
annually.

ASSUMPTIONS In 2014 :
1. The estimated total revenue of Php 318,433,267 was calculated from an increase of
1.5% from 2013.
2. The estimated Direct Costs of Php 268,339,017 was calculated from an increase of 2%
from 2013.
108

3. The Gross Income went down by 1.3% from 2013.


4. The estimated General and Administrative Expenses were calculated from an increase
5.
6.
7.
8.

of 3.5% from 2013.


The Net Income went down by 12% from 2013.
The Total Income went down by 15% from 2013.
The Current Assets as Cash was calculated to be 15% of the Total Revenue.
Based on the trend from 2011 to 2013, the extrapolated value for the Accounts

Receivables was estimated to increase by 1.3% annually.


9. Based on the decreasing trend in Inventories from 2012 to 2013 (7% and 6.8% of Total
Revenues respectively), the extrapolated value for the Inventories for 2014 was
estimated to 6.8% of the Total Revenue.
10. The value for Properties and Equipments was calculated with a depreciation rate of 5%
from 2013.
11. The Accounts Payable was calculated at 12.5% of Total Revenue (based on the 2011 to
2013 trend).
12. The Income Tax Payable was assumed to be 1.2% of the Net Income.
13. The Other Current Liabilities was pegged at the same value as in 2013 (and for the next
4 years).
14. The Loans Payable was calculated to decrease by 24% from 2013.
15. The Shareholders Equity was estimated to increase by 3% from 2013 (this value was
maintained for the next 4 years in the table).

ASSUMPTIONS In 2015 :
1. The estimated total revenue of Php 323,209,766 in 2015 was calculated from an
increasing trend of 1.5% annually from the estimated value in 2014.
2. The Direct Costs were estimated to increase by 2% annually from the estimated value in
2014.
3. The Gross Income went down by 1.4% from 2014.
4. The General and Administrative Expenses were estimated to increase by 3.5% annually
from 2013.
5. The Net Income went down by 14% from 2014.
6. The Total Income went down by 14% from 2014.
7. The Current Asset as Cash was estimated at 15% of total revenue.
109

8. The value for the Accounts Receivables was estimated to increase by 1.3% from 2014.
9. The extrapolated value for the Inventories was estimated to be 6.9% of the Total
Revenue.
10. The extrapolated values for the Properties and Equipments had a 5% depreciation
annually.
11. The Accounts Payable was calculated to be 12.5% of the Total Revenue.
12. The Income Tax Payable was assumed to be 1.2% of the Net Income.
13. The Loans Payable was calculated to decrease by 24% from 2014.
14. World Citi Medical Center has a plan to purchase a new generator set in response to the
energy crisis in the country (worth USD 99,999 or Php 4,439,955.60, plus Php 18,271.97
for shipping ).
15. World Citi Medical Center has a plan to purchase a new Magnetic Resonance Imaging
equipment by 2016 (worth Php 50 million inclusive of bank loan interest, to be financed
as Php 26 million share of WCMC and Php 24 million from investors/doctors at Php
250,000 per share)
16. The plan for a 5-storey multi-level steel parking, with the ground floor to be rented out to
concessioners, is underway (worth Php 8 million).
17. World Citi Medical Center plans to beef up its Marketing Department with an additional
Php 5 million budget annually.

ASSUMPTIONS FOR 2016 :


1. The projected increase in Total Revenue is 5% from 2015, plus additional Php 24 million
as shares/investments for purchase of Magnetic Resonance Imaging Equipment.
2. The Direct Costs were estimated to increase by 2% from 2015.
3. The additional increase in Direct Costs was due to the purchase of a 50Hz 400v Diesel
Generator 1mw 1000Kw soundproof Generator Set which costs USD 99,999 plus
additional cost of shipping (total of Php 4,458,227.57) with payment terms of 20% initial
down payment (Php 891,645.51) then Php 3,566,582.06 payable in the next 3 years,
(amounting to Php 1,188,860.69 yearly).
4. Increase in Direct Costs was also due to purchase of a Magnetic Resonance Imaging
equipment with total cost of Php 50 million with payment terms of initial down payment of
Php 10 million, then the remaining Php 40 million as loan payable in the next 8 years
(amounting to Php 5,000,000 annually).
5. General and Administrative Expenses were estimated to increase by 3.5 % annually
from 2015.

110

6. Additional Php 5 million in Administrative Expenses for a more aggressive marketing


arm.
7. General and Administrative Expenses include an additional Php 10 million allotted for
renovation of room for MRI, and general repairs of rooms.
8. The Net Income went up by 68% from 2015.
9. The Current Asset as Cash was estimated at 15% of total revenue.
10. The Current Asset as Cash is lower than expected due to the initial payments for the
Generator Set and Magnetic Resonance Imaging Equipment.
11. The value for the Accounts Receivables was estimated to increase by 1.3% from 2015.
12. The extrapolated value for the Inventories was estimated to be 7% of the Total Revenue.
13. The extrapolated values for the Properties and Equipments had a 5% depreciation from
2015.
14. The acquisition of the two equipments is reflected in the increase in Property and
Equipment value, and subsequently Non-Current Assets. This also resulted in increase
in Current Liabilities and Loans.
15. The Accounts Payable was calculated to be 12.5% of the Total Revenue.
16. The Income Tax Payable was assumed to be 1.2% of the Net Income.
17. The Loans Payable was calculated to decrease by 24% from 2015.
18. The increase in Loans Payable is due to the additional loans for the Generator Set
(remaining balance of Php 3,566,582.06) and Magnetic Resonance Imaging Equipment
(remaining balance of Php 40 million).

ASSUMPTIONS FOR 2017 :


1. The projected increase in Total Revenue is 6% from 2016.
2. The Direct Costs were estimated to increase by 3% from 2016.
3. The high Direct Costs include the 1 st installment payments for the Generator set (Php
1,188,860.69) and MRI machine (Php 5,000,000 ).
4. The value for the General and Administrative Expenses was estimated to increase by
3.5 % from 2016.
5. Additional Php 5 million in Administrative Expenses as budget to fund the aggressive
marketing strategies.
6. An additional Php 10 million allotted for renovations of rooms for conversion to clinics is
included in General and Administrative Expenses.
7. The construction of a 5-storey multi-level steel parking is projected to start. This will cost
Php 8 million payable in 4 years (Php 2 million yearly, 2017 to 2020). This is reflected in
the increase in General and Administrative Expenses.
8. There is an increase in Net Income of 90% from 2016.
9. The Current Asset as Cash was estimated at 15% of total revenue.
111

10. The payments for the 1st installment dues for the Generator Set and MRI, and the 1 st
payment for the construction of the multi-level parking were subtracted from the Cash
Current Asset.
11. The value for the Accounts Receivables was estimated to increase by 1.3% from 2016.
12. The extrapolated value for the Inventories was estimated to be 7.1% of the Total
Revenue.
13. The extrapolated value for the Properties and Equipments had a 5% depreciation
annually.
14. There is an increase in the Properties and Equipments of Non-Current Assets due to the
acquisition of the Generator Set and the Magnetic Resonance Imaging Equipment.
15. The Accounts Payable was calculated to be 12.5% of the Total Revenue.
16. The Income Tax Payable was assumed to be 1.2% of the Net Income.
17. The Loans Payable was calculated to decrease by 24% from 2016.
18. Included in Loans Payable are the remaining balances for the Generator Set (Php
2,377,721.37) and Magnetic Resonance Imaging Equipment (Php 35 million).
19. Also included in the Loans Payable is the remaining balance for the 5-storey multi-level
parking (Php 6 million).

ASSUMPTIONS FOR 2018 :


1. The projected increase in Total Revenue is 7% from 2017.
2. Direct Costs were estimated to increase by 4% from 2017.
3. The Direct Costs included the second installment payments for the Generator set and
MRI machine (Php 1,188,860.69 and Php 5,000,000, respectively).
4. General and Administrative Expenses were estimated to increase by 3.5 % from 2017.
5. Additional Php 7 million in Administrative Expenses for the good performance of the
Marketing department.
6. An additional Php 15 million allotted for renovations of rooms and clinics is included in
General and Administrative Expenses.
7. The second payment of Php 2 million for the construction of the 5-storey multi-level
parking is reflected in the General and Administrative Expenses.
8. The Net Income increased by 20% from 2017.
9. The Current Asset as Cash was estimated at 15% of total revenue.
10. The payments for the 2nd installment dues for the Generator Set and MRI, and the 2 nd
payment for the construction of the multi-level parking were subtracted from the Cash
Current Asset.
11. The value for the Accounts Receivables was estimated to increase by 1.3% from 2017.
12. The extrapolated value for the Inventories was estimated to be 7.2% of the Total
Revenue.
13. The extrapolated value for the Properties and Equipments had a 5% depreciation
annually.
112

14. There is an increase in the Properties and Equipments of Non-Current Assets due to the
completion of the 5-storey steel parking building.
15. The Accounts Payable was calculated to be 12.5% of the Total Revenue.
16. The Income Tax Payable was assumed to be 1.2% of the Net Income.
17. The Loans Payable was calculated to decrease by 24% from 2017.
18. Included in Loans Payable are the remaining balances for the Generator Set (Php
1,188,860.68), Magnetic Resonance Imaging Equipment (Php 30 million), and 5-storey
multi-level parking (Php 4 million).

The three-year projection plan for World Citi Medical Center shows an increasing
revenue of at least 5% annually starting 2016. This increase in revenues allows the hospital
to acquire modern diagnostic and operational equipments, and pay off corresponding
expenses and loans. It also allows the hospital to offer more Value-Added Services, such as
improved parking and commodity availability through concessioners. With the projected
increase in revenue, Cash Asset is projected to go up in 2018 even with payments for the
acquired equipments and properties. The projected increase in revenue also puts World Citi
Medical Center in a better position to pay off loans and other liabilities, reapply for new
loans, and utilize its cash for further acquisition of equipments and expansion. Through
aggressive marketing strategies and better management processes, our financial
projections are optimistic.

113

Conclusion

World Citi Medical Center is currently in the hold and maintain position. The hospital is in
a stable competitive state. It is recommended that management must not be complacent for
what it has attained because sooner or later a new entrant may enter the arena or if not, its
nearest competitor may re invent itself and compromise World Citis market share. Capitalizing
on the critical success factors will further strengthen its hold in the healthcare playing field. The
hospital must choose wisely which strategies to pursue to increase its market share and
revenue.

114

REFERENCES

Books

1. Strategic Management, 13th Edition, Fred R. David, Prentice Hall, 2011


2. Strategic Management of Health Care Organizations, 6th Edition, Linda E Swayne, W Jack
Duncan, Peter
M. Ginter, A Wiley Imprint, 2008
3. Understanding Healthcare Financial Management, 6th Edition, Louis C. Gapenski, George H.
Pink, Health Administration Press, 2011
4. Healthcare Management, 9th Edition, Rose T. Dunn, AUPHA, Health Administration Press,
2010

Publications/Articles

Mortality Ten Leading Causes Number and rate/100,000 Population Philippines 5-Year Average
(2000-2004) & 2005. Department of Health Republic of the Philippines. From Wikipilipinas: The
Hip 'n Free Philippine Encyclopedia
Health Expenditure in Relation to GDP, World Bank Group IBRD IDA
GDP Annual Growth Rate of the Philippines
The Filipino Senior Citizen at a Glance, Nicamil K. Sanchez, Winter Newsletter 2008
Total Health Expenditure for Filipino Family, National Statistical CoordinationBoard
Typhoons in the Philippines, Wikipedia
Generics Act of 1988. The LawPhil Project, Philippine Laws and Jurisprudence Databank

115

Health Maintenance Organization, Wikipedia

Websites
neda.gov.ph
nso.gov.ph
census.gov.ph
sec.gov.ph
dti.gov.ph
worldcitimedicalcenter.com
marikinamedical.com
www.capitolmedical.org
www.investopedia
www.investinganswers.com

116

117