HEC's Hospital Equipment Strategy
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HEC's strategy in the 1980s was to concentrate on the high end, that is, the acute care hospitals, where replacement beds, at a price of $2500 to $3500 was considered "normal". HEC left the smaller-margin markets- nursing homes- to its competitors. However, in the 1990s, costs of hospitalization became a critical factor, and patient-days were reduced. Therefore, the company had to embark on a features-added campaign. "HEC also hoped to expand into other areas of patient room equipment. These included related furnishings such as over-bed tables. Chairs for use by those visiting a patient, and, more importantly, building architectural products such as lighting, control panels, and power columns" (p. 335). In addition, even as the acute care market matured, HEC attempted to reduce the life-cycle of its electric beds to as little as ten years. However, the problem in rolling out the over-bed tables was a low priority, and a budget of only $65,000 for design, engineering, and consumer research. The initial offering priced the tables at $150, which met resistance, "so in March 1990, manufacturing and engineering initiated a cost-reduction program. Finally, by 1991, HEC's over-bed table was in volume production and was rolled out nationally. Prices had been lowered while margins had been increased, and the table was well received in the marketplace." (p. 342) What this case study demonstrates is that sometimes there is not sufficient team-work among engineering,
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Approximate Word count = 896
Approximate Pages = 4 (250 words per page)
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