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Jeevan Nursing Home: Fighting Low-Priced
Competitors During an Economic Downturn
Case
Author: Jaydeep Mukherjee
Online Pub Date: January 03, 2022 | Original Pub. Date: 2022
Subject: Marketing, Marketing Management, Pricing
Level: | Type: Experience case | Length: 2774
Copyright: © Jaydeep Mukherjee 2022
Organization: fictional/disguised | Organization size: Small
Region: Southern Asia | State:
Industry: Human health activities| Human health and social work activities| Other professional, scientific
and technical activities| Professional, scientific and technical activities
Publisher: SAGE Publications: SAGE Business Cases Originals
DOI: https://dx.doi.org/10.4135/9781529796056 | Online ISBN: 9781529796056
SAGE
© Jaydeep Mukherjee 2022
Business Cases
© Jaydeep Mukherjee 2022
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https://dx.doi.org/10.4135/9781529796056
Page 2 of 9
Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
Abstract
Dr. Jeevan Dhar owns Jeevan Nursing Home (JNH), located in a small town called Rampurhat,
in Birbhum district, in the state of West Bengal, India. JNH has a reputation for excellent patient
care, the latest technology, and affordable pricing. The COVID-19 pandemic reduced the income
of people, forcing them to delay and reduce non-urgent healthcare expenditure and seek lower
prices. Additionally, aggressive advertising and lower prices of two newly opened radiology
centres in Rampurhat adversely affected JNH’s business in 2020. Jeevan ponders his options
for improving the viability of the business of JNH in 2021 and in terms of long-term growth. He
must choose between the following options: (1) matching the lower prices of the competition; (2)
advertising to educate patients about the superior value offered by JNH; (3) devising a plan to
provide basic services at lower prices than the competition; or (4) offering value-added packages
at higher prices. Students will be asked to provide advice to Jeevan on which option to choose.
Case
Learning Outcomes
By the end of this case study, students should be able to:
• conduct an opportunity and threat analysis using the quantitative and qualitative information
available;
• describe various marketing strategies that can be applied to issues of economic uncertainty and
downturns;
• evaluate various competitive strategies; and
• assess how consumers evaluate prices to make appropriate pricing decisions.
Introduction
Radiologist Jeevan Dhar, in 1995, became a Fellow at the prestigious Nil Ratan Sarkar Medical College in
Kolkata, India. His vision was to follow in his parents’ footsteps by serving the rural patients in his hometown
by providing them with high-quality imaging and diagnostics facilities. He left a well-paying city hospitalbased job to join his parents at the Jeevan Nursing Home (hereafter JNH) 1 , located in a small town called
Rampurhat, in Birbhum district, state of West Bengal, India. After joining JNH, Dr. Jeevan reinvested most
of the surplus funds from business operations by investing in the latest technology and augmenting the
hospital’s patient care facilities. These initiatives helped JNH to become one of the largest imaging centres
in the entire Birbhum district by the year 2000. JNH built a reputation for providing excellent patient care, the
latest technology, and affordable pricing. Some competitors came into play over time, but they did not affect
the patient base and growth of JNH.
The COVID-19 pandemic-driven lockdowns, restrictions on the movement of people, social distancing norms,
and fear of infection reduced the Indian radiology throughput by almost 50% in 2020 compared with the
previous year; JNH also experienced a similar decline in radiology activity. The pandemic also reduced the
income of the people living in the catchment area of JNH, which forced most of the patients to delay and
reduce non-urgent healthcare expenditure as they became very price-conscious. Two newly opened radiology
centres in Rampurhat in 2020 compounded the problems by advertising their imaging services at significantly
lower prices than JNH. Consequently, JNH lost many patients, jeopardizing its undisputed market leadership
and a longstanding image of quality diagnostics at affordable prices. Dr. Jeevan knew that 2021 would be
another challenging year for JNH and needed to adjust his marketing strategy proactively. The decision
choices were: (1) matching the lower prices of the competition, (2) advertising to educate patients about the
Page 3 of 9
Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
superior value offered by JNH relative to competition, (3) devising a plan to provide basic services at lower
prices than the competition, or (4) offering value-added packages at higher prices. The solution should sustain
the large scale of operations of JNH, support regular investments in infrastructure, and continue to serve large
numbers of rural patients.
The Patient Base in Rampurhat
Rampurhat town, located in the agricultural belt of Birhum district in West Bengal, was an educational and
cultural hub, with a population of 100,000 in 2020. It had many stone-crushing units, a few government offices,
and schools and colleges. A famous temple located within 10 km of the town attracted a steady stream
of tourists and religious pilgrims from throughout the state. Thus, the transport infrastructure, hotels, and
restaurants were well developed.
The people of Rampurhat and its vicinity were mainly middle class and poor, having an average annual
household income of INR 0.3 million or less for a family of 5 persons (USD 1 = INR 75 in May 2021). A
100-bed government hospital in Rampurhat served the medical needs of the almost 1.4 million people from
nearby towns and villages. The hospital had good outpatient facilities, but critical patients were commonly
referred to specialty hospitals in cities like Burdwan and Kolkata.
The government hospital had capable doctors and provided free treatment, but the diagnostic facilities were
limited. Bringing patients who live in remote villages to the hospital in Rampurhat was a time-consuming and
expensive proposition. Therefore, usually only patients with moderate or severe problems visited the hospital.
Still, the hospital was crowded most of the time, and many of its patients needed diagnostic tests of various
kinds. For this, the patient had to visit private diagnostic service providers. Many pharmacies and diagnostic
labs mushroomed in Rampurhat due to the regular flow of patients in the government hospital. Most patients
preferred to continue with their existing service providers, but during the COVID-19 pandemic, almost 30% of
regular patients shifted to service providers offering lower prices. New patients traditionally depended on the
recommendation of doctors, a nearby pharmacist, other patients, and friends. However, due to the COVID-19
pandemic, lower prices, social media posts and videos, and outdoor media advertisements influenced the
choice of about one-half of new patients in 2020.
Background of the Jeevan Nursing Home
The Jeevan Clinic was established in 1978 by Jeevan’s parents in their home in Rampurhat, where both of
them treated patients. Over time, the clinic grew in its reputation and attracted patients from nearby areas.
However, with the government setting up a new hospital in 1990, demand for diagnostic facilities and nursing
home services increased in Rampurhat. Jeevan was a medical student at that time and visualized Rampurhat
growing to become an essential medical hub in the district. Hence, he persuaded his parents to buy a large
piece of land near the government hospital and set up a modern 20-bed nursing home that could benefit from
the large footfall in the hospital.
JNH became operational in 1992, offering a one-stop solution that included specialist doctor services,
diagnostic services, hospitalization, and minor surgical procedures. It offered a clean and hygienic
environment, and speedy and professional service at affordable prices, which helped develop a good
reputation in the area. Since it was the first such facility located near the government hospital, JNH became
popular among patients from more distant parts of the Birbhum district. This was accomplished without
spending financial resources on marketing initiatives. As a result, JNH increased its capacities to match the
steadily increasing demand.
Dr. Jeevan, a radiologist by training, kept abreast of new technologies and practices in diagnosis. He
was keen to make JNH a world-class model nursing home, which could provide the necessary medical
infrastructure and care for patients who do not require hospitalization, but cannot be safely returned to home
care. He regularly invested in upgrading the nursing home infrastructure and facilities, training, and skill
development of the technicians and staff. The best of the doctors from nearby areas were on the panel of
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Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
JNH. An analysis completed by Jeevan in 2019 had revealed that JNH patients, on average, visited JNH
multiple times, spent a total of INR 4,000 per visit, and referred four people they knew to use JNH. On
average, three of four of the referrals became new patients of JNH services in the next five years.
The financial performance of JNH was quite good in 2019, which encouraged Dr. Jeevan to invest heavily
in the latest equipment, adding beds and medical staff in 2020, which expanded capacity. However, due
to COVID-19, the number of patients decreased significantly after March 2020. This drop in the number of
patients resulted in a considerable strain on the finances of JNH in 2020. See Table 1 for the business growth
and Table 2 for financial indicators of JNH.
Table 1. Business Growth of RNH
Total healthcare market in Rampurhat
Jeevan Nursing Home
Year Approximate number of patients Value in INR million Number of patients in ‘000 Value in INR million
2000 120,000
48
15,000
12
2005 120,000
54
16,000
12.5
2010 130,000
62
17,000
14
2015 140,000
70
19,000
15
2018 150,000
79
17,000
16.5
2019 150,000
82
16,500
17
2020 90,000
52
11,900
11.5
Source: Company
Table 2. Financial Indicators of RNH (INR million)
Year
Heading
Details
Total revenue
Expenses
Page 5 of 9
2019 2020a
17.0 11.5
Employee and doctors
9.6 9.9
Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
Rent and property tax
0.2 0.2
Utility bills (cable, cell, electricity, water, etc.) 0.4 0.4
Insurance
0.2 0.25
EMI and bank payments for infrastructure
0.8 1.6
Consumable cost
0.35 0.25
Miscellaneous expenses
0.1 0.1
Equipment
2.1 3.2
Investments made Premises
People skills etc.
3
4
0.5 0.8
a projected
Source: Company
Competitive Landscape of JNH
The government hospital was JNH’s main competitor. The hospital provides some of the diagnostic services
that JNH provides, but at lower prices because these services are partly subsidized by the government.
However, at the hospital the services had a long waiting time and were not reliable due to poor maintenance
and frequent technical problems. Thus, most patients relied on JNH for such services.
In May and June 2020, two new well-equipped diagnostics centers opened their doors for business in
the vicinity of JNH. The first to open was Rampurhat Diagnostic Centre (RDC), set up by two young
entrepreneurs, one a radiologist and the other a marketing management graduate. Both are natives of
Rampurhat and had just completed their professional education. Jeevan knew that RDC enjoyed low bank
interest rates and tax benefits available for young entrepreneurs setting up medical facilities in rural India.
However, Jeevan was fairly certain that RDC was unlikely to provide all the services that JNH provided. He
was not therefore perturbed by their aggressive advertising and pricing strategies. The second new diagnostic
center was Tara Maa Diagnosis (TMD), which was opened by an experienced radiologist who had lost his
job at a reputable hospital in Kolkata during the pandemic. Tara Maa Diagnosis focused on ultrasound and
laboratory tests, which were the most important businesses for JNH, and offered lower prices than did JNH.
Although TMD did not advertise aggressively, it was also quite effective in leveraging lower prices and the
doctor’s credibility to attract patients. By the end of 2020, Jeevan estimated that at least 15 to 20% of regular
JNH customers had shifted to one of the competitors. See Table 3 for a comparison of the services offered
and prices at JNH, RDC, and TMC.
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Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
Table 3. Comparison of Product and Prices Offered in Rampurhat Market
Common
services
diagnostics % of patients
services
availing
the
Average prices offered in December 2020
(INR)
JNH
RDC
TMD
Ultrasound
50
1,000
800
950
X-ray
5
300
250
n/a
Color doppler
5
2,500
2,000
n/a
DEXA scan
1
2,500
n/a
n/a
MRI scan
5
3,500
3,500
n/a
Laboratory tests
50
500
400
300
20
1,200
n/a
n/a
ECHO
testing)
screen
(hearing
Source: Company
Choices Available and Their Assessment
Jeevan considered TMD a more significant challenge for 2021, whereas RDC would present a challenge
within a few years. The advertising and pricing of the competitors had hurt his business significantly in 2020,
which he needed to counter in 2021. Jeevan had decided that retaining patients and acquiring new patients
would be the priorities for JNH in 2021, and he pondered his options before making a final decision.
Match the Lower Prices of the Competition
Matching the prices – that is, fees charged for medical services – was the easiest option, which could be
executed immediately. JNH was well known in the community and enjoyed a good reputation in the market,
which the competitors could not match even after spending heavily on advertisements or other forms of
outreach. Hence, if JNH’s prices were the same as those of the competitors, the patients would prefer JNH.
JNH had added advantages of a more extensive set of services and efficient support staff, which helped it
offer a one-stop solution to all patients. However, the competition had smaller establishments and leaner cost
structures, and they could reduce prices further.
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Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
Advertising to Educate Patients About the Superior Value that JNH Offered
Although JNH had never advertised, it still was the biggest brand in diagnostic services in Rampurhat. If a
patient did not use the services of JNH, it was most likely not because they did not know about JNH or had
not considered JNH. JNH had a much larger patient base than the new centers, which, because it could
be accompanied by longer waiting time for services, was a disadvantage for patients during the COVID-19
pandemic. The patient experience offered by the new competition was comparable if not superior to that at
JNH. Furthermore, aggressive advertising, lower prices, or even the less crowded facilities reduced the fear
of infection and attracted patients to the new centers.
To stem the flow of potential patients to the competition, JNH could aggressively highlight the safety measures
undertaken to prevent infection for the patients, the experienced staff, assurance of the JNH brand, and
better services to demonstrate that JNH provided superior value. The problem with this choice was that the
competitor could respond by increasing their efforts at advertising or by using other means to project their
advantages over JNH in advertisements. Comparative advertising could further confuse the patients, which
could lead many to decide solely on prices.
Devise a Basic Services Plan Offered at Lower Prices Than the Competition
JNH was committed to maximizing patient experience by providing the best possible quality services using
the latest equipment and best-trained staff. They could do it because it was a capital-intensive business, and
JNH enjoyed an early mover advantage. Furthermore, patients appreciated the extra value they received
for the premium prices they paid. Thus, there was a possibility of confronting the competition head-on by
developing a few introductory, no-frills offers in popular categories such as ultrasound imaging, and offering
them at prices even lower than the competition. The problem would be a diminishment of the premium
products and delivering lesser value to patients, thereby losing the competitive advantage of the superior
patient experience.
Offer Value-Added Packages at Higher Prices
During the COVID-19 pandemic, many patients feared catching an infection in a hospital or diagnostics
center, both of which have large footfall. There was a chance that this concern adversely affected JNH
in 2020. However, the pandemic also presented an opportunity to create premium services that provided
much greater assurance of patient safety against infection. The advantage of this option was that it was
consistent with the JNH brand and would augment the brand further. In contrast, competitors, who depended
on the attraction of low prices, were unlikely to respond by emulating value-added packages. However, these
premium services were unlikely to retain consumers who preferred lower prices offered by competitors.
The Decision
At the end of 2020, there was no clarity about when the COVID-19 pandemic would end. The lives and
livelihoods of people had been severely affected, and it was prudent to assume that the situation was unlikely
to improve in 2021. A couple of vaccines had just been granted emergency approval in India and were
scheduled for roll-out; however, their effectiveness against mutations in the virus was unknown. Patients were
likely to continue delaying and even avoiding visits to doctor offices and nursing homes for non-emergency
medical conditions. Online medical consultation and medicine delivery had almost become the norm, and
hence high-touch medical diagnostic business was likely to experience a further decline in 2021. Jeevan had
resisted giving any discounts or engaging in promotional activities in 2020 to ensure financial viability, but this
approach had failed. However, the 2021 financial performance had to improve significantly or the viability of
JNH would be in danger. Jeevan could not wait any longer and had to make the best use of the available
information to choose among the available options.
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Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn
SAGE
© Jaydeep Mukherjee 2022
Business Cases
Discussion Questions
1. Evaluate the performance of the Jeevan Nursing Home from 2000 to 2020. From your review of
these data, what do you believe are its main challenges in 2021?
2. Do you agree with Jeevan’s assessment that TMD is a more significant challenge for 2021, whereas
RDC could potentially become a serious competitor within several years? Justify your answer.
3. Critically evaluate the different options being explored by Jeevan for 2021.
4. Which option should JNH choose for 2021? Explain your answer.
Note
1. While this case is based on a real-world situation, all names and details have been disguised.
Further Reading
Hinterhuber, A. , & Liozu, S. (2012). Is it time to rethink your pricing strategy? MIT Sloan Management
Review, 53(4), 69–77.
Kotler, P. , Keller, K. , Koshy, A. , & Jha, M. (2009). Marketing management (South Asian Perspective).
Dorling Kindersley (India), licensees of Pearson Education in South Asia.
Wernerfelt, B. , & Karnani, A. (1987). Competitive strategy under uncertainty. Strategic Management
Journal, 8(2), 187–194.
https://dx.doi.org/10.4135/9781529796056
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Jeevan Nursing Home: Fighting Low-Priced Competitors During an
Economic Downturn

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