Medipartner

Strategic Management Term Project

20031018 Yeong-gyu Kim

20041006 Kyung-min Kim

20041021 Sooyoung Kim

20041030 Ji-ae Kim

Content1. Introduction to Medipartner

1-1. Company Profile1-2. CEO Profile1-3. Vision1-4. History & Current Status

2. Business Analysis2-1. Market features2-2. Business Area2-3. Key Success Factor2-4. Strategic Options2-5. SWOT Analysis

3. Competitive Structure3-1. Five Force Analysis3-2. Competitive Advantage

4. Value Chain Analysis4-1. Value Chain4-2. MSO

5. Future Direction & Recommendation 5-1. Business expansion

5-2. Future direction

5-3. Our recommendation

Introduction to Medipartner

1-1. Company profile

Korea’s first network supporting / consulting companyTraining, marketing, purchasing, info sharing, general

mgt, etc.‘Ye Dental Clinic’-based

Chief dentist of Ye established the firm, noticing the needs for professional management

Recognized as a successful model in the industry

2000 2001 2002 2003 2004

580

Sales Revenue(Million Won)

700

930

860

950

< 출처 : 2005.1.3. 주간조선 >

1-2. CEO ProfileIn-chool, Park ( 박인출 ) – a dentist with mgt instinct

Seoul National University, Dental collegeDentist(Ye dental clinic), President(Mediparter and Medisoft)

• Impressed by U.S practical medical practices (co-opened hospitals for synergies / services for patients’ satisfaction) Co-opened “Ye Dental Clinic” with 3 doctors in Gang-Nam

• Established & has managed “Ye network”, ”Mediparter”, ”Ye medical investment holdings” with his visions • Honored as an innovative, successful doctor who brought management concept to Korean medical industry.

• In his book on hospital management: “The standard for good hospitals is service level.” “The best doctors in this era is the ones who respect patients.”

1-3. Vision

VisionCreating and sharing new business model in the era of for-profit hospitals

Service for customer.

Mgt for customer

satisfaction.

Happy hospital.

Customer-oriented World-class

World-classmedical technology,

service,and management

- Human-oriented treatment- Contribution to development of clinical studies & education- Contribution to society- Future-oriented mgt.

1-4. History & Current StatusCurrent Status

• Managing 150 doctors (58 clinics in Korea, 9 clinics abroad)• China 8, Vietnam 1• Exclusive contract with BriteSmile

(US)• Major revenue source: franchising

fees

Goal (BHAG)

• Value creation through evolution• Success of doctors and hospitals • 10,000 doctors & 1,000 clinics in

network until 2010

1992 Accumulates Knowledge•Ye dental clinic in Gangnam(1992)•Ye academy(1993)

1999 The formation of Ye Network•Medipartner(1999)•Educated Japan HPI

2002~2005

Expands to outside•Dentismile(2003. 6)•Ye clinic institute(2004. 12)•First Ye dental clinic abroad: Beijing(2004.4)•Contracts the financial support MOU with WooriBank(2005. 11)

2006 The formation of MSO holding company•Ye dental clinic in Vietnam(2006. 5)•Ye dental clinic 53, Ye oriental clinic 4, Ye plastic surgery 1(2006. 4)

History

Business Analysis

2-1. Main Features of the Market

– Increasing # of Dentists (1990: 9,619 2003: 20,446)– Customers’ preference to well-known brands– Change of customer needs: health beauty Brand & network reputation management (better customer services and

control on clinics’ quality), Focus on beauty

– Increasing # of Dentists (1990: 9,619 2003: 20,446)– Customers’ preference to well-known brands– Change of customer needs: health beauty Brand & network reputation management (better customer services and

control on clinics’ quality), Focus on beauty

Changes of policies and regulationsChanges of policies and regulations

Intensive competition among (dental) clinicsIntensive competition among (dental) clinics

– toward doctors’ additional job, hospital as a for-profit org, and tax-favor (05.5)

– Market opening (FTAs, external capital to be allowed, etc)

Seeking more profitable value chain and revenue stream (ex. MSO)

Changes in ParadigmChanges in Paradigm– Increasing # of doctors / needs of medical service / opening

market– Increasing # of failed hospital in the competition needs on

special mgt

Providing professional management, Specialization

2-2. Business Area

Abroad Franchising: sharing Ye brand and providing individual consulting

services Clinics under direct ownership and management

Dental care products Ye dental care: offering various specialty dental care products Denti Smile: exclusive contract with BrightSmile – differentiated teeth-

whitening products

Education services staff seminar, workshop for practitioners, senior seminar, Ye coordinators,

Ye way education

• Domestic Networks– Ye Network Supporting System:

Sharing know-how and supporting mgt– Yes Medical: Sharing & managing

buildings for various clinics / Joint purchasing and advertising

2-3. Key Success Factors

– Thorough verification for joining:2~3-week communication and value verification with CEO

– Monitoring and management on service level: customer evaluation, mystery shopper technique, etc

– Manage the adhesiveness in the value of clinics

– Thorough verification for joining:2~3-week communication and value verification with CEO

– Monitoring and management on service level: customer evaluation, mystery shopper technique, etc

– Manage the adhesiveness in the value of clinics

Sharing knowledge through networkSharing knowledge through network

Rigid standards for the network strong reputation and brand powerRigid standards for the network strong reputation and brand power

First & specialized clinic modelFirst & specialized clinic model

– Strong professionalism: each doctor treats his specialized part– Specialization on clinic for beauty– Pioneering ‘Management’ concept in medical industry: providing

professional management for hospital operationex) marketing, CRM, purchasing, doctor’s life cycle

- information of treatment, service, management, education Synergy & network effects

DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE

2-4. Strategic OptionsCustomer

- patient-oriented treatment

- doctor-oriented management

Differentiation

- High quality service

- Additional services

- Interior

Growth

- Dental care products

- Expansion to foreign market

Alliance

- Inter-network

- Financial support from Woori-bank

Offensive

- frontier spirit aggressive expansion

Provide

- Direct product manufacturing

- Proprietary mgt knowledge

TARGET

CUSTOMER COMPETITORSUPPLIER

THRUST

MODE

DIRECTION

OFFENSIVE

DEFENSIVE

USE PROVIDE

EXECUTION

2-5. SWOT Analysis

Strength- Famous CEO with managerial mind in medical industry broad human network- High ”Ye” brand recognition- The 1st dental network in Korea (first mover advantage)- High loyalty of customers (doctors) for the network- Stable & high profitability

Weakness- Limited fields of medical service (dentistry, oriental medical science)- High service price- Blurring focus in the process of biz expansion- Gaps benchmarking target- Harmful effect of unexpected medical accidents in the network - Communication issue in foreign market

Opportunity

- Fierce competition Increasing demand for professional mgt. for hospitals- Increasing opportunities in foreign market ex) Cooperation with SK in Beijing - Revision of medical law Freer market condition for biz- Increasing preference to better quality of life- Best practices existing abroad

Threat- Conservative/settled medical industry- Entry of entities with deep pocket ex) large corporations, advanced , foreign MSOs- Low price of Chinese oriental medicine clinic- Strategy imitation, knowledge dissemination- Aggressive entry expected because of its rosy prospect on growth potential and high profitability

Competitive Structure

Suppliers: LEquipment, materials, financing, marketing.. large, continuing transactions/ move to vertical integration of Ye

Buyers• Doctors of small clinics: L Fierce competition in their business/ less mgt skills/ expecting benefits from MSO (++) increasing # of options (- -)Potential entrants

• MSO by large companies: H• MSO from abroad: M MGT know-how/ high experience on this industry/ strong reputation/ large investment (---) Regulation issues/ less friendliness/ less focused (large companies) (++)

Substitutes• Medical centers: M• Networked hospital based on Human network (no or less fee): M Synergy expected (--) MGT, profit distribution?? (++)

Rivalry• MSOs: H• Hospital networks: H• High #/ potential entries expected/ similar concepts/ imitation/ high margin & prospect on healthcare industry (- - -)

3-1. Five Force Analyses(1) - Doctors

H: HighM: MediumL: Low

Buyers: M• Patients Increased info/ choice (strong purchasing power) (- - -) Desire to receive specialized, diff. service (++)

Substitutes: M• Regional clinics• Large general hospitals• Medical centers High quality vs. convenience (+/-) Specialization trend (-)

Potential entrants• Hospitals combined with esthetic/spa centers: H fits trend/niche/synergy (- - -)• Foreign medical centers with low price: L less trustable different segment• Excellent quality of service: H know-how/ reputation (+++) regulatory issue

Rivalry: H increasing # of choices fierce competition in price & quality imitation (- - -)

H: HighM: MediumL: Low

Suppliers: LEquipment, materials, financing, marketing.. large, continuing transactions/ move to vertical integration of Ye

3-1. Five Force Analyses(2) - Patient

Main CompetitorGowoonSesang 고운세상 networks• From a dermatological clinic (~‘98)

nation-wide beauty care networks

• Established a medical consulting firm (‘00)- Knowledge/know-how sharing: consulting, franchising,

research institute (beauty trend), education, procurement, marketing..

- Segmented, diversified biz areas: derm., plastic surg., hair, esthetics, cosmetics, ..

- IT solution: customer DB, diagnosis & treatment

• Globalization: China, Chicago (US)

• Active media play with its research institute, strong move to IT, creative new biz model (new clinic in a hotel)

3-2. Competitive Advantage

3-2. Competitive Advantage “Differentiation Focus Strategy”

Patient-oriented More communication with patients Less patients a day increasing the quality of each service Minimum waiting time Good ambience in the clinic & additional health and beauty related

services Focus on high-end customers

top quality service & equipment VIP customer service & marketing (Spa service/ Exquisite interior

design/ Valet parking/ Aroma, massage service) For better quality of medical services and it mgt

Professional management team: Medical MBA Expert Course at ‘Ye Academy’

Advanced know-how & information sharing network

: Cooperation among professionals from dentistry, plastic surgery, and oriental medical science

Value Chain Analysis

ProcurementLaw & taxes

Employees

IT systemAsset mgt

IndividualClinics

(Doctors/Staff)

NetworkSolution/

Consultingcompany

SolutionKnow-howSupportNetwork

Clinics (Doctors/

Staff)

Law & taxissues

EmployeesProcurement

IT system

Asset mgtMarketing

Fees, Knowledge sharable, Agent of network

Better service for patients

Failed in increased competition

Diluted focus (medical care + management)

Training

Marketing

4-1. Value ChainTraditionally, clinics were run by the owner doctor.

Things to consider increased failure increased

Currently, Medipartener works as a solution provider/ consulting firm who support doctors’ mgt.

4-2. MSO (Management Service Organization)Future business model of Medipartner

Role• Offers overall professional management except medical treatment (marketing, joint purchasing, CRM, vision sharing, training, etc.)

Advantage

• Scale of economy: enhanced purchasing power cost reduction, stronger mktg• Professional mgt with more responsibility improved efficiency better service for patients• Creates synergies within N/W through closer interactions (new, creative biz model, co-diagnosis & co-treatment, etc.)• Easier, broader financing more power for the medical industry to advance• Reduced operating costs (up to 12%)

Investment MSOBetter service for patients

Know-howSupportManagementNetwork

Clinics (Doctors/

Staff)

Doctorsas

stockholders

Profit sharing(fees, incentives, ..)

Profit sharing(Dividends)

MSO- Ye’s BenchmarkOCA (Orthodontic Centers of America) (’85 ~)

More than 365 clinics worldwide Comprehensive mgt service to orthodontists, pediatric dentists

and general dental practitioners (separation of doctor and manager)Financial services to both patients and practitionersJoint purchasing (up to 81% discount)Joint marketing (radio advertisement, events)HRM (training, recruiting, deployment, etc.)Practical IT solution (financial system, CRM, etc.)

For-profit hospital: active to make substantial money, IPO Expanded medical service’s reach to the masses by low cost

structure More direct management and ownership of the head office

Future Direction & Recommendation

Business Expansion Franchising

Source of Revenue: Registration/ monthly/ brand loyalty fee ‘Ye’ brand enhancementCash cow

Diversification (dental care, teeth whitening products) & affiliationSource of Revenue: Commission fee, profit sharing with affiliated

businessesValue creation by taking advantage of huge buying power

International investmentSource of Revenue: Profit sharingExpansion to the global market (China, Vietnam, Russia, etc.)

Seeking new business modelsMedical center: opened in April, 2007 Integrated for-beauty center with clinics, spa, esthetic care, café,

etc.

Future Direction Globalization

Launched YMG (Ye Medical Group) initiativeGlobal market share extension through FDI (Foreign Direct

Invest.) Evolution towards MSO

Franchising Direct management Holding company* Vision for a holding companyVertical integration: manufacturing, consulting, practicing,

financing, marketing, …Expansion for the purpose of successful doctorsA company that concerns about overall management of clinics

and even the doctors’ post-retirement life IPO

More capital to evolve and expand furtherFor a real ‘business firm’ that aims to make money

6. Recommendable Strategy Localization

Communication with local doctors Study Abroad Program for Korean doctors (i.e. have doctors study & work in China) Building close relationship ("Quan-si") with Chinese public officers to weaken

strict regulations

Lower cost lower price Share expensive medical equipment among clinics in the network to save the

operating cost Provide discounts/special offers to offset high price Joint insurance to prepare for unexpected accidents at lower cost

Minimize the number of accidents Maintain optimal service quality in every clinic Prepare contingency manual to counteract to unexpected accidents

Business expansion Expand the fields of medical service, maintaining quality & specialization Joint marketing: medical tour (i.e. travel packages for plastic surgery)

Strengthen organizational unity Develop strong incentive system to raise doctors/staffs' motivation Open national workshops/seminars to exchange ideas and build its own culture

Thank You