Jiamei Dental: Private Health Care in China Harvard Case Solution & Analysis

Hospitals in China:

As more and more private dental clinics entering into the market, but still the majority of the patients are having their treatment in a public hospital, as they have low prices because they don’t have any problem of short term profits. As the public sector organizations receives the government subsidiary on different occasions and they don’t need to charge high prices on dental services to overcome the losses in year, if incurred.

While private clinics are more established clinics in china as compared to the public sector dental health care units. Private dental health care units are having more educated and foreign qualified doctors in their paramedical staff. Foreign qualified dental staffs have more knowledge and competence as compared to public sector dental doctors. Liu haven't any trouble to grow with these well-established private sectors dental health care units because private health care dental units are serving to only 15% of the total Chinese population.

Private Clinics in China:

Liu has opened the private dental health care clinic nationwide in China. Competitors of the Jiamei had already well-established in many cities of China that is Beijing, Guangzhou, Shenzhen and some other places too. Competitor in Beijing has already established with 20 private dental clinics in Beijing. While Jiamei’s strongest competitor is Huamei, which is established in Shenzhen, which is also serving Honkong dental patient along with China at very cheap prices.

The Jiamei was at its growth stage in 2008, Liu tries to open the dental clinics as much as possible. Liu takes less than 50% time to open a dental clinic, than any other private dental health care unit as Liu is well aware of the process of open the nationwide health care dental clinics. This increasing number of clinics reduced the number of qualified and experience dental doctors in the market. Which in results, encourage quality doctors to commence their own dental clinics. Liu introduced different incentives and bonus plans in jiamei for its doctors and paramedical staff to increase the productivity and quality of the service to the patient.

Reputation of Clinics in China:

Liu next target is to establish Jiamei brand in the mind of the Chinese people through strong and deep market positioning. Only low costs, high quality equipment and services would establish the brand of Jiamei in the mind of Chinese people as compared to their competitors in dental health care clinics. Jiamei also offers corporate services to boost upper their dental patient in groups as corporate patients. They are connecting with different local and multinational organizations and insurance companies of China as a corporate client of Jiamei for dental services to their employees and clients at low cost and high quality services.

Most of the Liu dental health care private clinics are earning more cash flow as compare to other private health care dental units at its early stage. Liu is finding the cause of his unsuccessful private dental clinics he finds that the different place of people have different level of purchasing power an income level. Liu is evaluating the best remote areas to open the Jiamei private dental clinic to earn profits at an early stage. Liu keeps in mind the different economic issues as well, that’s its clinics have good location, easy public transport route available to its clinics, availability of utilities and also the purchasing power of the public of the city in which Liu is going to open the private dental Clinic. Liu is looking for acquiring existing well developed private dental clinics. On acquisition Liu is not considering its past performance, but Liu contempt to stagger this private clinic, a source of generating overwhelm revenues.

Proposed Action & Courses Of Action:

Financing Strategies:

As the number of clinics are increasing in the country, now Liu’s target is on the future financing options to finance the future investments. Liu is in search of private equity investor to Invest in the Jiamei. As he already got a commitment from different private equity investors to invest in Jiamei for establishing an international standard dental health care Industry in china.

Downsizing Clinics:

Jiamei some private clinics are continuously making a loss, but Liu thinks that these private clinics will get into positive cash flows by the years and will start making profits. While meeting with the investor, they suggested Liu to shut down the loss making private dental clinics of Jiamei. Investors also suggested investing in some new places where there is more purchasing power, better economic conditions and suitable place for the dental clinic. Before closing down loss making private clinics, Liu inspected all these clinics from different aspects, and then Liu decided to close its loss making private dental clinics of Jiamei.

Liu hired new financial analyst to make his private dental clinic ‘Jiamei’, cost efficient through different cost reduction techniques. Different cost reduction techniques of Jiamei private dental clinic such as; bulk quantity purchase, tax relief or some other strategies to reduce the cost. The cost reduction techniques used by Liu to make Jiamei more profitable and efficient...................................

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