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Yield Management

Vivek Shukla

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This month, let me talk about yield management. This is a concept which is widely used by the airlines industry. In a way, we can copy it in the healthcare scenario as well. The airline calculates the revenue a particular flight will generate if all the seats are taken at the maximum price that the airline offers. Then they calculate the actual revenue earned from the same flight. The difference will determine the actual and possible yield. Less the difference, better it is for the airline. Let us see how this works for the hospitals or doctors.

A 100 bed hospital can calculate the revenue it will generate per bed if the beds are taken by the most profitable procedure seeking patients. For example all 100 beds in an Orthopaedic set up are taken by joint replacement patients, what is the total revenue to the hospital? That can be compared to the actual revenue per bed being generated. In a way yield management can be compared to opportunity cost.

In an OPD setting, if a surgeon consults with 20 patients a day, yield management can again be calculated. Surgery candidates versus the general patients who could also have gone to a physician can be determined. The concept can help us realize how far we are from the maximum profit scenario.

A word of caution – Under no circumstances should we misuse this concept. In other words, we must not refuse or give casual treatment to the customers who are not contributing much to the maximum yield gap. This would be a foolish thing to do. Not only will the purpose of the medical profession be defeated, your brand would suffer a big damage if this is done. The formula is only to see as to how far you are from the maximum profit. It is just like a reality check which can be used in a useful way.

ATTENTION ALL ASPIRING MARKETING GURUS -

For people who do not want to invest in my Marketing Lessons in healthcare, I am coming out with another option. I would provide the same lessons over e-mail and telephonic classrooms. This will be ideal executives, students and doctors. It will far cheaper too. The 6 month training will be conducted in small batches and the successful graduates will be given a certificate. Write in to me if you are interested to be in the first batch.

Vivek Shukla
Healthcare Marketing Consultant
Sai Mahima Hospital, Ram Nagar,
Dharamshala H.P. 176215
India
Phone +91-9816086868



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