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Saint Petersburg’s Reality of Private Business in Primary Health Care Dr. Andrew Lobuznov, Family Physician, Director of “Family Medicine Department” NFPNGO.

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Presentation on theme: "Saint Petersburg’s Reality of Private Business in Primary Health Care Dr. Andrew Lobuznov, Family Physician, Director of “Family Medicine Department” NFPNGO."— Presentation transcript:

1 Saint Petersburg’s Reality of Private Business in Primary Health Care Dr. Andrew Lobuznov, Family Physician, Director of “Family Medicine Department” NFPNGO

2 BACKGROUND 1.What is private health care practice in Russia? Generally: The person (not a state) gives his/her money directly or indirectly to the provider. a.Directly – money goes out of own pocket (or bank account) to the provider. b.Indirectly - from the employer to the provider as a part of job compensation package or via voluntary health care insurance institute. c.Provider may belong to State or State controlled enterprise and at the same time take patient’s money or be independent: “really private”.

3 Why some doctors want to be in private practice? a.They are annoyed by old (Soviet) ineffective management in State clinics. Nothing has been change in the management within state run health care enterprises since Soviet time. b.They are not happy with the conditions and terms of their labor contract with the State Clinics (one of the most important thing is low compensation for the work they should do). They “feel” the market, and even pushed by it. Some patients insist on it.

4 Private practices in health care. How can we categorize them? SymbiosisSymbiosis is a close ecological relationship between the individuals of two (or more) different species. Sometimes a symbiotic relationship benefits both species, sometimes one species benefits at the other's expense, and in other cases neither species benefits. Ecologists use a different term for each type of symbiotic relationship:

5 Mutualism -- both species benefit Commensalism -- one species benefits, the other is unaffected Parasitism -- one species benefits, the other is harmed Competition -- neither species benefits Neutralism -- both species are unaffected

6 “PARASITIOSIS” Most of doctors continue to work in State Clinics, continue to use State assets without organizing some sort of legal firms – they care of patients who are clients of state clinics - just taking payments for:

7 “PARASITIOSIS” “ Extra” consultations and time. That compensates doctor’s State’s underpayment for the work. Easy getting some medical certificates and documents. Giving privileges in an access to limited state health care system’s recourses (CT, MRI, procedures). Some materials, medications and food those are not available in Clinics. Sometime doctors or other Clinic’s worker ask to bring this stuff with the patient admitted.

8 “PARASITIOSIS” 1. This way of the practice is widely spread within Russia. 2. One can say it is near to be illegal or is illegal. Another may state: It is only the way that allows System to stay in operation. 3. People who are our consumer commonly admit and consider this way almost “natural” in circumstances given in the country. Since no legal procedures, no material cost, no taxation incurred this kind of business – prices for the service they produce are relatively low. “Ever- brake” point is zero. This creates negative impact on whole Russian private health care business body.

9 “COMMENSALISM” Some doctors establish independently run private company, which occupies State’s premises and equipment. This form of business is legally cleared up. One may say: “It is a step from the wild to civilized heath care market”. This is way, which brings the business to “light gray” or “white” economy.

10 “COMMENSALISM” Patients sing a written contract This business requires quite low money to enter the market. No extra investments needed. Current expenses are not onerous. “Ever-brake” point low. Prices dictates average prices in the market. Spoiled by old type of management and traditions.

11 “MUTUALIISM”. Next type of health care business is the development of “Commensalism”: “daughter” firm attracts extra- investments and brings assets which are absent to the mother clinic.

12 “MUTUALIISM”.  Host clinic may use new opportunities brought by private clinic.  Percentage of two kinds of assets are different sometimes private clinic dominates. Consistency with old (soviet) way of management.

13 “COMPETITOR”. Real private enterprise. All original funds are brought from outside health care market, mostly funds grown by new “post-perestroika” economy. No state originated medical assets in established capital.

14 “COMPETITOR”. Limited by investors’ initiative. Pricing is strictly controlled by “COMMENSALS” which restricts purchase expensive sophisticated equipment. Mostly operate in primary care field. Populists’ values impact (cosmetic and beauty care, sexual functioning).

15 Tendencies “PARASITIOSIS”“COMMENSALS”“MUTUALISM”“COMPETITOR” 20% and lowering because pushed aside by “Symbiotics” and “Eubiotics”. Escape to “Competitors” 50% and tend to be EUBIOTIC. 20% and gain from “Symbiosis” but remain under state shelter. 10% and grow slowly. Mostly run by former “Parasites” and youths pertain to new economy oriented wave.

16 Planning ahead OBJECTIVES. If you can clearly outline what you want to get out of your business, then you have got something to measure up to. The most important point to remember is that the plan your prepare must work for you personally. CONSEQUENCES. Of course it is important to think clearly about each step, as it will impact on your overall success. KNOWING WHY. If you know what gets your results and why, you will be able to develop your business with confidence.

17 Planning ahead Think ahead; plan how your business is going to take shape in its first year and where you want it to be in three years’ time. Refer to your plan regularly and be prepared for change. Try to find and talk to experts who are experienced in this. Make your plan to suit you and your business. Feeling comfortable with it will make it easier for you to explain your objectives and your ambitions to others for the sake of your business progress.

18 Knowing your Market When you start business you are fully inspired with the idea. You probably have a good ‘feel’ for the work you do and the market in which you want to operate. But how accurate are your instincts? Can you back it up with any facts, numbers or figures?

19 Knowing your Market Knowing your customers Knowing your competitors Researching your market The comparison table.

20 Knowing your Market Ask yourself the question – why should anyone buy from me rather than my competitors? If you can give reasons, which are supported by facts, your business will stand a good chance of competing. Know your customers and what they want. Know your competitors and what they are doing. Take the time to research and understand your market – you may be missing out on opportunities, which will give you a head start.

21 Pricing A well thought out pricing plan will not only ensure that your business at a profit, which is essential for it’s survival, but also help you to make the most of your opportunities, as opposed to slaving away year after year and never really getting anywhere. The prices you set could bring you rich rewards – they could also be your ruin Pricing for profit YOUR COST –Fixed costs –Variable costs Competitors’ prices Hidden costs and sales taxes (VAT)

22 Pricing Take time to set your prices – they are a vital part of the equation which will make or break your business. Work out your break-even point and then look at your competitors’ prices and the market in general. Be prepared to review what you charge on a regular basis. Business in health care are best advised to think in terms of value rather than volume, that is, the quality of what you offer as opposed to how much you sell.

23 Promotion and selling Finding sufficient customers with whom to do business is obviously an essential part of getting your business off to the right start. There is a wide rage of advertising and promotional options available to you. Depending on the nature of your business some will be more appropriate than others.

24 Promotion and selling Creating the right impression. World of mouth. Atracting new customers.Some of the methods: Yellow pages local newspapers and magazines direct mail Leathlets Brochures trade fairs and exibitions

25 Promotion and selling a. Selling. People are more likely to do business with those they trust; people who are friendly, professional, knowledgeable and presentable. Treat people in the way you want to be treated. Following the four basic steps outlined below will help you to create the right impression in your sales efforts:

26 Promotion and selling Be prepared – Good preparation always pays off, so before you meet a potential customer, check the following points: 1. Do you know enough about their needs? 2. Are the benefits your service or product will give them clearly in your mind? 3. Can they afford you? Do not deal with the time wasters. Are you talking to the decision maker? 4. Who are they currently buying from – are you confident you can compete?

27 Promotion and selling Determine the needs. Ask open questions which will encourage a dialogue rather than just a ‘yes’ or ‘no’. Show confidence in what you are selling. Emphasize the benefits. Not the service (process) that may lead to that benefit. Negotiating. Try to create ‘Win-Win’ situation, that is a situation whereby you and your patient both feel satisfied that you have each gained a good result in your negotiations.

28 Promotion and selling Target your customers and think carefully about the way you present yourself to them in everything you do – be professional. Choose the promotional activity most appropriate to your business but don’t expect miracles overnight – take note of what works and why, and what is less effective to reduce the risk of wasted efforts. Once you’ve won new business and a new customer, work hard to keep them happy so that you secure repeat business.

29 Staying in control a. Profit and loss forecast. b. Cash flow forecast. c. Working capital. This consist of: i. Debtors ii. Creditors iii. Stock iv. Cash

30 Staying in control Overtrading. If your number of patients you attract to your clinic too high and you do not have enough recourse to serve them - -you may simply run out of cash. This can be disastrous for your business and means that a full order book is not only thing to strive for.

31 Staying in control How to collect money on time. For every day patients (clients) delay payment. i. Check your customers’ ability to pay before to serve them on credit. ii. Set out your terms of trading – be specific about when you expect payment iii. Set up a system – which enables you to issue invoices promptly and show you when invoices become overdue. iv. Keep clear and accurate records – inaccurate invoices or unclear records can be one of the main reasons for customers delay payment.

32 Staying in control Making a financial plan will help you to confirm the viability of your business. Maintaining it will give you the control you need to ensure that your business stays financially ‘healthy’. With regular reviews, it will show you if you are achieving your goals and enable you to take corrective action if necessary.

33 Bookkeeping i. A file for sales invoices to your patients ii. A file for purchase invoices from your suppliers iii. A file to keep track of the pity cash you spend and receive on daily activities iv. A file for bank statements

34 Bookkeeping Records you will need to keep: i. Cashbook – the most important book to maintain. ii. Dealing with sales – ‘sales unpaid’ and ‘sales paid’ files. iii. Dealing with purchases ‘purchases paid’ and ‘purchases unpaid’ files. iv. Dealing with taxes – chronologically organized tax dues to be prepared to pay taxes on time to avoid big penalty for delays

35 Bookkeeping In addition to the legal requirements of accurate records for submission to the tax inspection, up-to-date records will also help you to know where you stand, which means you will be in control.

36 Funding your business 1. how much you will be investing yourself? 2. the amount you need? 3. when you need it? 4. what the money is for? 5. how you will repay it? 6. what security (if any) you can offer?

37 Funding your business Before meeting your investor or lender you should be clear about questions aforementioned. Ensure that your plan covers all the key issues relevant to your business. Investments are business too and welcome new customers as much as any other business. It is in everyone’s interests for you to do well, so they will try to support you.

38 Conclusion Health care business is a special one – money is not only thing doctors want in return for their job. Sincere words of gratitude, flowers and chocolate boxes from recovered patients, happy face and eyes of mother whose baby gets better – are irreplaceable part of medical profession compensation.

39 By doing our job we make not money only. We make this World better, We make difference.

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