Fertility Clinic Research Paper

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Healthcare management (Strategic operations plan)

The financial section of this strategic operations plan will take into consideration both projected revenues and expenses and will try to anticipate these based on the existing business model. For that, it will look at pricing strategies, essential in the impact these can have on business demand and projected revenue. It will also look at best practices required to maintain profitability and the general financial health of the fertility clinic.

Basic Budget

In its very basic form, the basic budget will include the revenue and the expenses. The revenue will be primarily formed from the fees that customers pay for the clinic's services. Other forms of revenue could result from cooperating with different scientists in order to try new procedures at the clinic. With all the components of an infertility treatment, the average cost for such a treatment is likely to be around $7,500. To this, the fertility clinic will add a 10% premium, based on the pricing strategy described below. The average revenue per customer will thus reach $8,250.

One can evaluate that the clinic will be able to have around 600 customers in the first years, considering an average of 50 patients in a month (one can also consider that the numbers in the first couple of months will be smaller, as the clinic builds a presence in the market). The total expected revenue in the first year of operation will be $4,950,000.

In terms of expenses, the most important component will be the wages that the employees receive. There are several issues to be considered here. First of all, some of the employees are highly specialized, with many years of practice and, most often, with PhDs in medical science. Their wages are likely upwards of $200,000, although, as previously showed in the report, they can also share some of the profit, meaning that they can be offered lower wages for a share of the profits.

Another important category of expenses are marketing expenses, particularly in the first months to a year of operation. The clinic will be relatively unknown in the beginning, so a targeted marketing strategy, focusing on the segment of consumers and in specific locations (hospitals, other clinics, magazines such as "Parents" etc.), will be preferred. Travel expenses and other administrative expenses (rent, utilities) will have to be added.

It is important to note that the initial investment is also likely to be quite consistent. If one considers that the clinic will simply start with an empty building, everything, from high-tech instruments to furniture needs to be purchased. Such an investment, particularly in all the high-tech tools previously mentioned, will probably cost as much as $1,000,000.

In order to maintain profitability, the focus should be on the revenue side, namely on ways to maximize revenues. There are at least two different areas to be explored here: customer retention and new customers. Customer retention refers to those clients who have already used the clinic's services, but unsuccessfully, namely pregnancy has not occurred. It is more difficult to have them return, but the solution in this case is the quality of services. The idea is to have them believe that everything possible was done in order to improve their fertility and the quality of service is essential in this case. The main competitive advantage that the company can have on the market is the quality of services and the entire focus of the business should be directed towards maximizing this.

Pricing strategies

In terms of pricing strategies, theoreticians such as Gregson (2008) agree that identifying and selecting the right pricing strategy is one of the key elements in having a successful business. Determining the appropriate pricing strategy is a complex undertaking that needs to take into consideration a series of factors, including the consumer profile, the nature of the business, the overall economic conditions etc.

Nagle and Holden (2002) propose nine factors that psychologically influence the consumer in his purchasing decision and that determine price-sensitivity. One of these factors or laws is referred to as the "price-quality" effect. The price-quality effect proposes the idea that buyers become less sensitive to price when higher prices signify higher quality. What this means is that the consumers are likely to ignore higher priced services (or products) if they perceive the high quality these services have,

The fertility clinic should have a pricing strategy that is based exactly on this…

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