HCG Business Model

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. How would you assess the business model of HCG? Compare HCG’s cancer care model with other international cancer-care models using case information and your secondary research. Where do you think lies HCG’s strength and weaknesses relative to these international cancer care models? Highlight the differences and similarities between the HCG business model and that of Aravind, Narayana Hrudalaya, Fortis & Apollo? Structure your response in no more than 2000 words using no more than 2-3 exhibits.
HCG has successfully developed a vertically integrated one stop shop providing services, treatments and laboratories covering every speciality and sub-speciality areas in cancer care.
It operates using a “hub and spoke” model, wherein the HCG Centre
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Exhibit 1 is a 5 force analysis of the industry. Cancer care is a high barrier, high bargaining power, no substitute and medium competition industry. The business models of some international cancer care establishments are summarised as below:
1. Cancer Treatment Centre of America (CTCA): Operates standalone for profit units. This increases the cost of treatment and limits expansion. They work on a fixed price model and cater largely to the affluent class.
2. Dana-Farber Cancer Institute: It’s a non-profit organisation which forms JVs with multi-speciality hospitals. It provides outpatient care and the partners provide inpatient care, with 30-35% of patients coming for second opinion. It’s also a premier institute for cancer research which increases its cost of operation. Due to its non-profit nature, the capital costs are shared by the JV partners which reduces the financial burden on the chain.
3. Salick Health Care: It started operation as a focused factory and worked in JV with hospitals. It concentrated on providing outpatient care. It also diversified its revenue base with centralized procurement. It was taken over by AstraZenece Plc in
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The advantages that HCG commands over other international cancer care establishments are:
1. Hub and Spoke model – This is a unique structure which gives HCG tremendous advantage in cost, revenue, quality and ease of access as compared to other centres which are either full scale standalone centres or work as a JV embedded in a hospital as a department. This restricts their expansion and the control and quality of treatments.
2. Centralised Hub rationalizes talent requirement – With a shortage of skilled specialists and nurses across the world, the requirement for a large number of personnel is reduced due to the hub. Since most international centres work as standalone entities, their requirement for skilled personal increases, increasing the cost of operation.
3. Diversified revenue base – HCG has successfully diversified its revenue base by having centralised purchase, hotel for international patients, sale of excess raw material etc. This gives additional income and better control of treatment. Most international centres focus on outpatient care as their core
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