As we see increasing consolidation in the UK private healthcare, it’s interesting to contrast the industrial versus the artisanal approach.
The large, production-line based industrial chains are focused on shareholder value, economies of scale, and “volume of commodity” – in their parlance.
They are big and pride themselves on being big, as if “big” is something to aspire to in private healthcare. The industrial model takes established, often mainstream, methodology and refines and reprocesses it to increase profitability, speed up delivery, and de-skill where possible to reduce business overheads solely for the benefit of distant and unseen shareholders
We, the dumb consumer sees this as a “pile em high, sell em cheap” deals. They often come with temptingly low prices and showy marketing.
And these industrial giants need feeding, they need growth just to survive. There is little or no altruistic thought, nor moral compass guiding the business – the industrial machine exists to consume (borrowed) capital and spit out shareholder dividends and increasing market capitalisation. Period.
By comparison, the artisanal healthcare enterprise is quite the reverse. They are focussed on creating something exceptional, a personal reputation for being special, and a small army of evangelical patients.
For the true artisanal enterprise, the profits made are shared with the team of people who make this niche business succeed – not bled away to group holding companies or offshore investor dividend programmes.
The artisanal enterprise puts people at the heart of the operation, not capital or process. They rely on a peerless reputation and unflinchingly excellent customer service to succeed and, ultimately, thrive alongside the industrial predators that cruise the shallows of the private healthcare marketplace, looking for the weak and the infirm.
For the patient, there is really only one choice to make. Do you want it cheap, or do you want it exceptional? You certainly cannot have both.
Of course, the private healthcare market is not that black and white. There are artisanal businesses that tried to expand into factory production-line models, there are artisanal enterprises that got snapped up by the sharks. And there are hybrid models which try to blend the two approaches.
However, there are no industrial models that became artisanal, nor have we seen the successful purchase of an artisanal business by an industrial one without its eventual loss of reputation and quality.
And this has been borne out even when “merged” brands retain largely separate (external-facing) values. Often, it’s ego of the shark, the aspiration of the industrial business to have what the artisanal business has that ruins the day. That, and differing shareholder aims, obviously.
So, we’re back at the patient’s choice of low price or quality but this time on a sliding scale.
True artisanal businesses are rare and their services are not cheap, but they genuinely care about the patient and their personal reputations. The production-line volume businesses care, too, but more about shareholder value and non-patient centric measures such as EBITDA or CAGR.
Choose wisely, if you can afford to.
