1. Xploryze – IIM Raipur
Team Chanakyas
MuthuNaveen S
Sathya G
NITIE , Mumbai

2. Scope
 Industry Overview
 SWOT
 The Competition
 Business Ethics
 Business Model
 Basic Strategic Plan
 Role of Service Operations
 Competitive Strategies
Organizational Structure

3. Health Care Industry – Opportunities galore
Insurance &
CAGR Med Equip
15% 15%
Indian Scenario : Diagnostics
Only 0.8 beds / 1000 people 10%
HealthCare
Delivery
Healthcare delivery 50%
USD 50 bn Pharma
25%
Increase in lifestyle diseases =>
increase in in-patients
Increasing spend on
4000 health care
In Bn Rs
3000
2312 No of beds in Delhi Medical Tourism in India:
2000 (2011) : USD 2.5bn industry
1268 Demand 28,007 CAGR 30%
1000 637 Supply 19,836
903 1329
0
617
2006 2011 2016 (F)
Huge Demand
Out Patients In Patients Supply Gap
src: ENAM India Research

4. Tertiary Health Care Industry
Strength Weakness
*World class Facilities and Treatments *Lower operational efficiencies
* Increase in health insurance companies *Rough behavior of lower category staff
*Increased Depreciation rate for equipments *Undue delay in rendering service
* Connectivity with Skilled professionals all *Poor Information and guidance system
around the globe *High attrition rate
Opportunities Threats
*Growing Urban conglomerate of NCR *High Competitive rivalry – pressure on
*Increase in life style diseases price & service
*Growing Demand for World-class treatments *Obsolescence of medical equipment
*Growing medical tourism *Capital intensive
*Change in spending attitude on health care *Ayurveda , Unani, homeopathy substitutes

5. The Competition
Group Hospitals Beds Revenue
Fortis Healthcare 66 10,270 1482
Apollo Hospitals 54 8,800 2350
Manipal Health Enterprises 15 4,400 600
Narayana Hrudayalaya 14 5,700 476
CARE Hospitals 12 1,600 NA
Paras Hospitals 2 250 NA
Max Healthcare 8 800 NA
 Competing with Neuro division of
established Multi-Speciality players
Src: Business World, 5 Mar 2012, Fortis Annual Report 2010-2011, Apollo Annual Report 2010-2011

6. Ethical Dilemma
Corporate
Governance
Kohlberg’s stages of moral development
Dr. Ram
•Stage 1:Punishment-Obedience Orientation
Mathur
(Compliance with regulations)
&
Pre •Stage 2: Instrumental Relativist orientation Dr.Sharma
Conventional ( Profit Centered)
CSR
•Stage 3: Interpersonal Concordance orientation
( Living up to Customer expectations)
•Stage 4: Authority and social order maintaining orientation
Conventional (Abiding social conventions)
Business
•Stage 5: Social-Contract Legalistic orientation Ethics
(Working towards greater good for the society)
Post •Stage 6: Universal ethical principle orientation
Conventional (Weighing social welfare over profitability )
Dr.Ashwini
Ethical
Profits
Where Our Heroes Stand…
Src:Corporate Governance Model,
Peter Begley

7. Aspirations Justified
Vision
To bring world class medical facilities to New Delhi and revolutionize the whole
healthcare industry.
Mission
Using his knowledge and expertise of 12 years in Medical field , serving the people of
Delhi, while turning in to a profitable venture.
What it brings?
World class medical service to all those who can afford it and for some who can’t.
Why Should we appreciate?
Initiative to contribute to the society against brain-drain scenario.
Why Justified?
 Dr.Ashwini’s aspirations in the beginning – Hurdle to sustainability and growth
 Enterprise – at an infancy stage :: profit –centric
Later stage:: Interwoven Social Responsibility

8. Business Model
A Hybrid Model
Charity Run Corporate A world class hospital for
Hospitals Hospitals all those who can afford it
and also for some who can’t
Lack of “world class” High operational
facilities efficiency
Mass market
Quality health care Stage 2
but expensive
•5 % of patients served
Ineffective Profit Driven & for free
Management /Services Aggressive Growth
•Differential rates based
on the choice of
High operational costs World Class facilities Stage 1 pre/post treatment stay
& Inability to scale up & Treatment
•Target segment => The •Maintaining the same
A Hybrid Model affluent level of treatment –
•5 % of patients served Same doctors/ OT , etc.
for free : To obtain •Diversify into other
government subsidy verticals
for land •CSR Arm
•Primarily Neuro
specialty

9. Basic Strategic Plan: Size |Investment | Profitability
Single Super Specialty hospital for Neuro care
Demand Supply Gap:
Number of reported Neurocases in India : 300 per 1,00,000
Number of Neurologists practising in India : 1100
=> ~ 32,000 patients per doctor per year
Huge market waiting to be served!!!
Size of the Hospital
Tax deduction to private
investors on the cost of building
infrastructure for minimum 100
bed hospitals anywhere in India
In patients are major
revenue contributors
 Go ahead with Dr Ashwini’s
plan of 150 bed hospital
Src: ENAM Research; Neurology:
The Scenario in IndiaSV Khadilkar

10. Basic Strategic Plan: Size |Investment | Profitability
5 % of patients to be treated for
free to avail governments subsidy
Location: for land .
Out skirts of the city to reduce the cost of land  Advantage from social and
economic point of view
Space Required
507 SqFt per bed for 125 – 175 bed hospital Others Set Up Cost Land
12% 12%
~ 76000 Sq Ft
Building
Total investment required
26%
Investment cost/bed – Rs.75 lakh/bed Equiment
50%
Expected investment on the Hospital =
Rs.112 Crores (approx)
(Src: Economic times dt:1-8-2011, Healthcare bio tech-fortis-to-start-6-new-hospitals-rs-1050-cr-investment-likely)
ENAM India Research
A proposed standard method of Measuring Hospital Capacity , Pg 677)

11. Basic Strategic Plan: Size |Investment | Profitability
(In Lakhs) Yr 1 Yr 2 Yr 3
Operating Exp
Initial Investment 11200 Non Operational Exp
Operational Expenses Revenue
Per Yr / Bed 150 165 181.5 22.8
Net profit
Total 2250 2475 2722.5
Non Operational Expense 108.2
Industry Avg - 50% of operational Exp 1125 1237.5 1361.25 83.2
55.0
Revenue 11.3 12.4 13.6
Income per procedure 0.98 1.078 1.1858 22.5 24.8 27.2
Average length of stay 3.9 Days 3.9 3.9
-44.6
Total income per bed per yr 91.7179 100.8897 110.9787 -90.7
Assumed operational Effeciency 40% 55% 65%
Total Income per 150 beds 5503.08 8323.404 10820.43
Rs in Cr
Contribution 2128.08 4610.904 6736.675
Net Profit -9071.9 -4461.02 2275.656 Year 1 Year 2 Year 3
Src: Appolo
hospitals; ENAM Becoming Cash Positive in third year of operations
Research

12. Key Focus Areas
Manpower
Real Estate Equipment Operations
Outlay
•Go Outskirts •Best Prices •Expertise as •Purchase
• Avail •The best not needed from source
subsidies the latest •Attrition •Usage
•Training •Collaboration metrics
costs with •Cross
•Pay-per-use institutes subsidize
model • Outsourcing •Day care to
reduce ALOS
Medical Tourism:
Neurosurgery Cost comparison: Almost 4 times cheaper than in US
International Accreditation provides more confidence for medical
tourists.
Focus on increasing operational efficiency to increase
competitiveness & reduce cost
Src: ENAM India Research

13. Operations Management – A key differentiator
Operational Expenses account for around 2/3 of the total expenses
Projected expenses of 22.5Cr a year!!
Layout Design Capacity Patient Flow Inventory Procurement Equipment
Planning Management Management management
•Department
•Vendor selection
locations •Estimating the •Wait Time analysis •Aggregate •TPM
•Vendor
•Emergency Entry resources-5M of Patients Planning •Utilization
Managements
& Exits •Hospital •Idle time of •FIFO Mapping
•Contracts
•Man & Material Occupancy Rate consultants •Reverse Logistics •On the Job
Movement •Service
•Scheduling Agreements Training
Advantage:
• Tangible: Bottom Line improvement through efficiency improvement
• Intangible: Goodwill and Trust from customers
Better Patient Care with Improved Returns!!!

14. Capacity |Layout | Patient flow | Inventory | Procurement | Equipment
Capacity Planning
Man
 Forecast and Demand projections based
on medical and demographic
Money Machine  Target bottlenecks through Queuing
theory
 Think “LEAN” – Eliminate wastes
 Increase occupancy level
Methods Material
Cases/year X Length of Stay
Occupancy Rate =
No of Beds X 365
Evaluating utilization before capacity expansion

15. Capacity |Layout | Patient flow | Inventory | Procurement | Equipment
Corelap Matrix
Consider Qualitative Factors
in layout design
Corelap Considerations
o Flow of Material
o Personnel Contact Craft
o Use Same Facilities Refining the initial layout
o Use Common Records based on frequency of
o Share Same Personnel movement and cost associated
o Supervision or Control with it
o Noise, Dust, Fumes
o Interruptions
o Special Mgmt. Needs Optimized layout feasibility
* Discrete even simulation to
Hospital Layout changes are model patient flow and
expensive, futuristic development
Hence future expansion plans
* Decoupling /Service blue Print
should be taken into
consideration * Present fit and flexibility
for future expansion
Ref: A Methodology for total hospital design by Gerald L Delon

16. Capacity |Layout | Patient flow | Inventory | Procurement | Equipment
PATIENT FLOW ANALYSIS
 Value stream mapping of the best practices / current practice to identify
wastes and propose new systems
 Real Time Monitoring
 Wait-time analysis of Patients Identify
inefficiencies
 Idle Time analysis of Consultants
INVENTORY MANAGEMENT
 VED analysis and online monitoring
 Criticality of freshness / shelf
of inventory
life of products
 Better stocking & Inventory Control ;
 Lead times & criticality
FIFO; 5S
associated with particular
 EOQ ordering with safety stock – A
products
trade off between costs, risks of stock
 Seasonal Effects & Costs
out and expiry

17. Capacity |Layout | Patient flow | Inventory | Procurement | Equipment
Procurement
MRP – when, what, how much to buy
Vendor selection – Cost, Quality, Service levels, Reliability, Lead time
Vendor Management – Information sharing, leverage their strength, long term
relationships
 Win – Win Agreements
Contracts – Payment, Shipping, Service, Urgent deliveries, Penalty clauses
Service Agreements – Maintenance Repair and Service of equipment
Reverse Logistics – Return of expired inventory, Disposal of medical wastes
Equipment Management
• Training of staff for best usage and
autonomous maintenance
• Visual instructions for usage
• Poka-yoke to prevent unintended mishaps
• Preventive & Proactive maintenance
• Equipment tracking for better utilization

18. Competitive Edge
Leveraging Unique Strengths:
 Dr. Sharma’s good contacts of creamy layer in Delhi region
 Reliable and high quality sourcing of equipment by Dr. Sharma’s Father-in-law
 Dr. Ram gained expertise with best of medical equipment in USA
 Dr. Ram’s contacts in USA - Referrals – Medical Tourism
Service Specialization
 Specialized services – Better focus and operational efficiency
 “100 bed super-specialized hospitals generate equal revenues as that of 500 bed
multi specialty hospitals” (Source : Economic Times, Apollo)
IT Integration
 Implementation of Hospital Information Management System
 Maintaining Electronic Health records – Error free and timely reports

19. Competitive Edge
Resource based quality Improvement
 Better facilities and motivation for employees to reduce attrition
 SMED – Improve Productivity of surgeons
 Establish Protocols/Systems for all functions
 Maintenance of in-house labs with short TAT
 Churn Rate, ALOS, SERVQUAL for continuous improvement
 Risk Management and Green Initiatives
Public relations management
 Name Labels and Uniform for all functionaries
 Marketing through booklet – create awareness on neuro diseases
 Transparency with patients – trust – word of mouth referrals
 Visiting doctors to promote the hospital

20. Organizational Structure
Dr.Ashwini (COO)
Building Financial Advisor HR & Personnel Head Procurement Manager Hospital Admin
&
Maintenance
Real Estate Fund Raising Vendor Selection
Consultants Dept wise Requirement
Payroll
Accounting Matrix Medical Equipment
Reception
Hospital Design Purchase
& Enquiry
Consultants Budgeting Full Time consultants
Signing Equipment
Contractors Visiting consultants Annual Maintenance
Contract
Facility
Nursing Staff
Legal Advisor Lab Technicians
Land and Construction License IT support
Electricity Clearance Supervisors & Helpers
Water Board Clearance
Sewage and Sanitation Clearance
Future Scope
Biomedical waste disposal Clearance
Fire Department Approval
PRO Marketing
Health Certification

21. References
1)Service operation management return to roots, Robert Johnston – IJOPM 19,2
2) KPMG Report: Emerging trends in Healthcare
3) A Methodology for total hospital design by Gerald L Delon
4) Evaluating hospital design from an operations management perspective
Leti Vos & Siebren Groothuis &Godefridus G. van Merode
Thank You