Professional Documents
Culture Documents
Table of Content
Sr. No.
Particular
INTRODUCTION
Introduction to healthcare industry
Healthcare service in India
Health profile in India
Major types of private hospital
Trust
Super speciality hospital
Multi speciality hospital
Objectives
Scope of study
Methodology
Importance of study
Significance for the study
GROWTH AND EVALUATION
Historical background of Indian healthcare industry
Segments of Healthcare industry
Market Size of Indian Healthcare Industry
Graduate Corporatization of the Healthcare Sector
Regulatory Framework
DEMAND ANALYSIS
Demand Determination of the Industry
Price and Income Effects
Technology
Sector growth prospects
Production/Branch Structure
Life Cycle
MARKETING STRATEGY ANALYSIS
Market Research
Current Trend & Challenges
Affordable Care
Throw Out Marketing One Size Fits All Marketing Strategies
A Retail Mindset For Consumer Healthcare
Cyber Security Concerns
Patient Centre Care
Challenges Facing Healthcare Marketers
Segmentation, Targeting & Positioning
Market Segmentation
Healthcare Market Segment
Market Targeting
Positioning in Healthcare
Marketing Mix In Healthcare
Health Care Companies In India
Biggest Innovations In Healthcare Technologies
Quality In Health Care
1.1
1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
1.1.6
1.2
1.3
1.4
1.5
1.6
2
2.1
2.2
2.3
2.4
2.5
3
3.1
3.2
3.3
3.4
3.5
3.6
4
4.1
4.2
4.2.1
4.2.2
4.2.3
4.2.4
4.2.5
4.3
4.4
4.4.1
4.4.2
4.4.3
4.4.4
4.5
4.6
4.7
4.8
Page
No.
7
8
8
9
10
10
11
11
11
11
12
12
12
13
14
14
15
18
19
21
22
23
24
24
25
26
27
28
28
28
29
29
29
30
30
31
31
31
32
32
32
36
37
39
4.9
5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
6
6.1
6.2
6.3
7
8
9
Preface
3
40
43
44
47
50
52
55
56
57
58
61
62
63
67
70
76
77
Knowledge and human power are synonyms, once said the great philosopher Francis Bacon.
However based on the experience within todays global markets, he would probably say,
The ability to capture, communicate & leverage knowledge to solve problems is human power .
This raises the question how exactly one can best capture, communicate & leverage knowledge
especially within world of system engineering.
The answer probably lies in statement itself by communicating your ideas and devising ways and
means to give shape to your plans in to reality, which requires a long-term planning, investment
and shrewd thinking.
The tryst for knowledge and power led us to two years M.B.A. degree course as part of this longterm investment. This course not only enabled us to focus firmly on the current trend but also
helped to focus on future changes.
As a part of this M.B.A. degree, students have to undergo a project, which is designed keeping
the privileges and preferences of industry in mind. This particular project gave us an opportunity to
implement what we learnt within the four walls of classroom.
This report that we are submitting intends to highlight our versatility in sustaining the pulls and
pressure of day to day professional life and put to perspective the facts that we are capable
enough to deliver whenever a challenge is thrown to us.
Acknowledgement
4
Declaration
5
We, Divyaraj parmar , Dhaval devmurari, Divya kahar and Jigar vara , hereby
declare that the report for Comprehensive Project entitled Analysis of health care Industry is
a result of our own work and our indebtedness to other work publications, references, if any, have
been duly acknowledged
Place: V.V Nagar
Date:
Name of the students:
Dhaval devmurari (15F50)
Divyaraj parmar (15F56)
Divaya kahar (15F55)
Jigar vara (15M14)
1. Introduction
These ideas have profound implications for countries such as India and Africa which
have large populations fighting for mere survival. For them the choices of enjoying basic freedoms
that are so routinely guaranteed to people living in developed countries are dependent on the
more fundamental issue of if alive'. With millions dying prematurely due to the non-availability or
unaffordability, or both, of medical attention, it is only reasonable that the focus of development
should be on matters related to providing universal access to health and its determinants such as
water, sanitation, nutrition, primary education, communication and employment. Macroeconomic
environments that pursue such compatible policies view health as central to development, a vital
public good, and a basic human right.
services to the Indian population as well and therefore expanded the network of hospitals and
dispensaries in various presidencies. The expansion of medical care facilities required trained
personnel and this is what promoted the British to invest in medical education during 19 th century
to train subordinate staff who would work in the newly created facilities. Although the main
objective of medical education was to supply subordinate staff, many of these colleges also
admitted private students. As early as the 1880s, these private health care was in existence from
1989. By the 1990 a substantial number of graduates had established themselves in private
practice in the main towns. They took patient away from the hakims (practitioner of Unani
medicine) and Vadis (practitioner of Ayurvedic medicine) as well as from government hospitals and
dispensaries.
Hospitals
Medical devices
Clinical trials
Outsourcing
Telemedicine
Medical tourism
The Indian healthcare sector is growing at a brisk pace due to its strengthening
coverage, services and increasing expenditure by public as well private players.
Indian healthcare delivery system is categorized into two major components - public
and private. The Government, i.e. public healthcare system comprises limited secondary and
tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form
of primary healthcare centers (PHCs) in rural areas. The private sector provides majority of
secondary, tertiary and quaternary care institutions with a major concentration in metros, tier I and
tier II cities.
9
In addition to the public health model there are alternative medical approaches
based on different theories of health and illness
The growth of private health sector in India has been considerable in both provision
and financing.
Types of private
hospitals
Trust run
hospital
Super speciality
hospitals
General
purpose
For profit
General
purpose
Super speciality
10
Multi-Speciality
Corporate/Multi
chain hospital
Super speciality
Trusts
Stand-alone specialist services
Multi specialty hospitals
1.1.4 Trusts:
Trust hospitals in India are run by private trust. Generally these hospitals are set for
the people of middle class families. Such hospitals provide all types services and treatment at
concessional rates. These hospitals are managed and run by the trust.
A non-profit hospital, or not-for-profit hospital, is a hospital which is organized as a
non-profit corporation. Based on their charitable purpose and most often affiliated with a religious
denomination they are a traditional means of delivering medical care in the country. Non-profit
hospitals are distinct from government owned public hospitals and privately owned for-profit
hospitals.
1.2 Objective
11
To carry out the PESTEL and SWOT Analysis and apply Michael Porters 5 force model
1.4 Methodology
The study is mainly based on secondary data. We have gone through large number
of websites and various magazines, books. Also we have gone through various documents and
articles pertaining to Indian Healthcare Industry.
12
The report for our Comprehensive project is related to Indian Healthcare Industry.
Indian Healthcare Industry is highly fragmented market. The study will enable us to gain
knowledge as per objectives mentioned. Hence, we have decided to study this industry.
Understand its circumstances and growth potentials in India.
13
14
Hospitals: Hospitals are of utmost important among them. Hospitals deliver complete
medical care facilities, begins with diagnoses to surgical treatments, or to continuous
nursing facilities. Several hospitals are there having specialization in treating and handling
mentally sick patients or in cancer patients or some are in treating children. These facilities
are provided either on an outpatient or inpatient basis. The combination of professionals
required by hospitals varies according to geographical locations, size or capital structure of
the organizations or on the basis of values, goals and management philosophies. As soon
as organization strives towards efficiencies, facilities start to move towards outpatient basis
from inpatient basis.
Nursing and residential Care: One more segment which work along with hospitals is the
facility of nursing and residential care. These services comprises rehabilitation, inpatient
nursing and health-related personal care to the people required it on constant basis, and
not having the need of hospital services. The other facilities of convalescing are related to
assist those, who required minimum support. In addition the facilities related to residential
care offers 24 hours personal and social care to old age people, to children and to those
who are unable to care themselves.
Physicians: Physicians and surgeons covers around 37 % of industry. They either practice
privately or in groups having specializations either in similar or different fields. Though
various practitioners are willing to work in groups so that they will be able to reduce the
overhead expenses and also get consultation with their colleagues. Nowadays Surgeons
and physicians showing interest in working on salary basis for big groups, for other medical
clinics, or for integrated health systems.
Dentists: Dentist occupied around 20% of the industry. They provide preventative,
cosmetic, or emergency care to the patients required them. Some institutions having
specialization only in particular branch of Dentistry like Orthodontics or Periodontics.
15
Outpatient Care Center: Other diversified establishments in this group contain health
maintenance organization, medical centers, Kidney dialysis centers, substance abuse
centers, outpatient mental health and freestanding surgical and emergency centers.
Other Ambulatory Health Care Services: This segment is relatively small in comparison
to other segments of the industry. It covers ambulance and helicopter transport services,
blood and organ banks, and other ambulatory health care services, such as pacemaker
monitoring services and smoking cessation programs.
billion between April 2000 and April 2011, while hospitals and diagnostic centers have received
FDI worth US$ 1.03 billion in the same period. As per Investment
Commission of India, the healthcare sector has experienced phenomenal growth of
more than 12%per annum in the last 4years and this growth is expected to be driven by different
factors: rising life expectancy, rising income levels of Indian households, increasing penetration of
health insurance and rising incidence of lifestyle-related diseases in the country has led to
increased spending on healthcare delivery.
Major players of Healthcare Industry have announced huge expansion plans in
previous two years. Many big corporate players which have no or very slight existence in
healthcare industry also declared huge investment plans in Healthcare Services. For example:
Philips Electronics India is announced for establishing nations first virtual ICU.
Corporation also has discussed the issues related with the launching of EICU technology by
the year 2012 with various major multi-specialty tertiary care hospitals groups.
Wipro Technologies has also launched a service with an aim to help drug development
owners (DDOs), clinical research organizations (CROs) and other regulatory organizations
for increasing collaborations with multi-region clinical trials.
Manappuram Health Care Ltd announce an investment plan of US$ 222.27 million from
2011-16 for setting up various medical and dental clinics and diagnostic centers across
South India. The future enterprises will be a venture of the Manappuram Group of
companies.
Fortis India Ltd. Is planning to launch hospitals of low budget under their new brand name.
They set the target of 25 new hospitals in every three years. More importantly, in last few
years, Eye market of India has significantly catches the attention of investors. The market is
currently dominated by government hospitals, Ophthalmologists and charitable trusts.
Vasan Healthcare ltd. Which is a specialist chain of eye hospitals has an advanced
discussion with Singapore sovereign wealth fund GIC with regard to sale of its 15 per cent
stake for approx US$ 75-100 million.
consumers and also for Paramedics, Technicians, Nurses, and Emergency medicine specialized
doctors across India. Several multispecialty hospitals give rise to specialist care in the country in
various II tire and III tire cities; even they are the sources of better revenue generation. But major
players of the industry are struggling with the problem of severe brain drain. The various factors
which are responsible for attracting big corporate houses in healthcare sector are:
18
Hospital
Groups
Apollo
Wockhardt
Hospitals
Fortis
Healthcare
Zydus
Hospital
Max
Healthcare
Care
Hospital
Manipal
Health
Systems
9
Number of
Locations
Number of
Hospitals
Number of
Beds
Coverage
11
11
10
13
11
14
53000
1400
1855
600
765
3000
2000
All Metros
Annual
Revenue
(Rs. Crore)
779
Gujarat
Delhi
NCR
South
India
South and
West India
250
137
&
11
20
21
3. Demand Analysis
22
existence of insurance, many health care services are provided at zero or low monetary prices,
and so the standard model would suggest that demand should be infinite, or at least extremely
high. Indeed, excess demand by some insured individuals is seen as a problem in many industrial
economies, but in the developing country context, underutilization is generally more of a concern.
The main reason for this is a lack of supply, especially in rural areas. But even when clinics and
services are available, utilization rates can be low, due to both significant nonpecuniary costs of
consuming medical services and poor quality. With this in mind, the travel costs come into model
of demand, as well as quality variations.
Next it has been recognize that the demand for medical care is not constrained to a
choice of how much, but also of what kind. Thus, individuals can choose among visiting a hospital,
clinic, or traditional healer, as well as how often to visit. The existence of such discrete choices
means that somewhat more elaborate econometric techniques are required to estimate demand
curves. Knowledge of such demand patterns may also allow policymakers to target services more
effectively. Finally, we analyze the extent to which information about demand can be used to make
judgments about social welfare. These techniques will be of use later when we consider
appropriate health care financing mechanisms and the appraisal of health care projects.
very low or zero. In such cases, we would expect demand for health care to be very high
indeed. This is a concern in some of the more advanced economies where the share of GDP
spent on health care is very high, but in many developing countries utilization rates are often low,
despite low monetary prices. There are two related reasons for this. First, the quality of medical
care services may be sufficiently low that demand, even at low prices, is discouraged. The second
is that consumers may well incur significant additional costs in consuming medical care above any
monetary prices charged. These costs include, for example, forgone income and travel costs.
While these costs are present in the industrial economies, consumers are sometimes protected
from the first by provisions in formal employment contracts that allow them to take time off for
medical treatments, while travel costs are usually a relatively small share of income. The large
informal labor markets of developing countries mean that forgone income may, on average,
constitute a larger relative burden than in the industrial economies, and the large, rural populations
mean that travel costs are likely to be greater as well. Generalized travel costs allow economists to
estimate demand curves for health care, even when there is little variation in observed money
prices.
3.3 Technology
Due to high population growth, rising per capita incomes, more investments in the
healthcare sector and changing patient profile, the Indian Medical Technology market has shown a
substantial growth in the recent years. However, it still is in a nascent stage. It is largely dependent
on imports, as most Indian companies do not have the capital for investing in research and
production of new technologies, or imported machines are less expensive than the ones produced
in India due to an unfavorable duty structure. Therefore, the Indian Medical Technology market is
dominated by international players who import the products, while Indian companies focus on lowcost products and maintenance services. This also creates a gap in the quality and availability of
products.
Thus, the Indian Government wants to change this situation and integrate the
Industry into its Make in India campaign. This could boost the industry as it would bring about
ease in doing business. It has already allowed 100% FDI for the Medical Devices sector and other
healthcare branches.
and institutions are also the largest buyers of Medical Equipment. But the demand for great
diagnostic devices also increases through Telemedicines needs for it.
Another key point is the affordability of Medical Device products, as the low- end
market in India is huge. To be able to offer good and cheap service is immensely important in the
Indian market. Thus, companies started to produce cheaper products which can also be affordable
to doctors with limited financial resources, operating in rural areas. This boosts the demand and in
turn helps the industry grow further. These products also help to offer qualitative healthcare in Tier
II and Tier III cities, where quality Healthcare facilities are hardly available as the major players
have traditionally always focused on Tier I cities.
India is also supporting training of young entrepreneurs and innovators in the sector.
This led to recent developments of indigenous products and increased filing of international
patents from India. Skill development is important for the Indian Healthcare sector as it faces
shortages of doctors, specialists, paramedical staff and nurses. It also needs more hospitals that
can accommodate bigger number of patients. The Government of India additionally is trying to
improve healthcare accessibility through insurance schemes which also helps the Medical Devices
sector to grow.
26
27
28
4.2.1Affordable Care:
In 2015, a new provision of the Affordable Care Act will tie physician payments to the
quality of care they provide, which will put a large emphasis on value over volume. Physicians will
see their payments modified so that those who provide higher value care will receive higher
payments than those who provide lower-quality care. For the past several years, marketers for
healthcare plans and providers have tailored messaging to individual consumers and increased
content marketing, allowing them to communicate outcomes and performance.
According to a December 2014 survey by Contently.com, marketing companies have
earmarked nearly a quarter of 2015 marketing budgets to content development and management.
Marketing companies are also considering lifetime customer value (LTV) as a measurable metric,
along with traditional ROI, which indicates that marketers are looking to build relationships with
consumers via content platform experiences and owned channels.
29
30
services.The segment can again be broken up into different sub-segments, as described earlier to
examine their potential to develop profits for healthcare products or services.This broad segment
or its various sub segments can also be graded in terms of desirability for marketing of specific
products or services. It may for example not be very desirable to market anti-cancer checkups and
profiling to the youngest segment, because of their pre occupation with other things and lack of
interest in the issue.
33
Product:
The patient's office visit is a small component of the healthcare services that
providers offer. Providers must also deliver products to patients that can improve their quality of
life. Products can include medications, testing kits and orthopedic supplies, as well as on-call
"concierge" services. Providers must also determine which products and services are suitable to
meet the needs of each patient. For instance, the provider must not only determine if the patient
needs medication for pain management, but which other products can help that patient deal with
their pain.
Outpatient Care: Outpatient Care is provided in a medical treatment facility (hospital, clinic, etc.)
for a condition or course of treatment, which does not require admission to a hospital (in other
words, for a treatment which would require an overnight stay). Outpatient care can be provided by
primary care physicians and various types of medical specialists.
Inpatient Care: If, and as required by the nature of an illness, a primary care doctor or outpatient
specialist can recommend that a patient receive treatment in a hospital (a medical facility of the
inpatient care provider), or the doctor can directly arrange for the patients admission to a
hospital. There are the following types of inpatient health care facilities: acute standard, acute
intensive, follow-up and long-term.
The Health Services Act defines inpatient care as healthcare, which cannot be provided on an
outpatient basis and which requires the patient to be hospitalized in order to provide the patient
with the necessary course or type of treatment. Inpatient care must be provided in a medical
facility of a healthcare provider with 24-hour operating hours.
Dispensary Care:This type of care is given to patients with chronic or long-term illnesses or with a
condition in which there is an ongoing deterioration in an individuals health. Through the active
and long-term monitoring of the condition of such patients, it is possible to get a timely diagnosis of
when there is the need for additional therapeutic intervention.
Spa Therapeutic: Spa treatment can be included as part of therapeutic and rehabilitative care. It
is prescribed by the patients attending physician with a review by a supervising physician. The
prescription for this type of care is submitted by an individuals regular doctor or by the attending
physician while the patient is still hospitalized.
Pricing:
Hospitals have used cost to charge ratios to arrive at average costs. However,
hospital financial experts think in the environment in which hospitals now operate this method of
costing and setting changes is not an effective one. Generally, hospitals priced inpatient surgery
and day surgery at the same rate despite the fact that there were variations in cost in different
settings. More importantly, hospitals cannot make the concept of day surgery popular and attract
patients in large numbers as day surgery is expected to do unless the charges are made
competitive. In many settings, day surgery does cost less, and to charge the same amount for it as
for inpatient surgery is missing the whole point. Pricing hospital services is not as simple as many
34
of us are inclined to think. Many hospitals believe that the complicated exercise of pricing is an
expensive investment in terms of specialist personnel, time and many which most hospitals can illafford rightly. Therefore hospitals adopt short costs, or blindly follow what prevails in the region or
in the industry with little or no variations. But hospitals while pricing their services, they should
know the cost of providing those services and the scientific way of computing and fixing them,
sometimes it is called as rate setting
Promotion:
The promotion of a healthcare provider's service is the most important aspect of the
marketing mix, yet it is often overlooked. Many larger providers, such as major hospital chains or
pharmaceutical manufacturers, use mass media to promote their services. Smaller providers can
promote their services at a grass-roots level. An example of this community involvement is the
Creston Childrens Dental Clinic in Portland, Oregon. It created colorful and educational brochures
to promote their efforts to provide dental care to the area's low-income children.
Corporate hospitals using their promotions in print media, word of mouth
advertisement, cinema theaters etc As digital advertising becomes more prevalent, it can be easy
to underestimate the role that print ads play in todays market. There may be many people
engaging with ads online, but print media still has a firm hold on the advertising world. If anything,
the digital revolution has only increased print advertising effectiveness as the competition for
attention is steep, and advertisers have become more creative in their print ad design approaches.
In fact, especially in healthcare, many advertisers still see print as a go-to medium for reaching
their target audiences. Here are five remarkable examples of print ads from the healthcare
industry that demonstrate the power of print.
her healthcare. However, now there is an awareness about health related issues and problems.
Not just men but women are equally concerned about their health and issues related to it.In past
decade, there have been a number of healthcare companies that have emerged in the country.
Today, if you want to go under a surgery then these hospitals are well equipped to perform any
kind of surgery .Hence people are avoiding going abroad and saving money.
1. Wockhardt Ltd
Wockhardt Ltd is an Indian company founded by Habil Khorakiwala in the year 1960.
It is a global company with huge presence in developing countries like Brazil, Russia, Mexico
etc.The company has manufacturing plants in developed countries like US, UK, France and
Ireland. Wockhardt has state of art treatment facilities and hospitals.
2. Apollo Hospitals
The second healthcare company in our list is Apollo Hospitals. The company or
chain of hospitals was founded by Dr. Pratap Reddy in Chennai in the year 1983. Apollo has over
2000 beds in the hospitals all over the country. Company is growing rapidly and one could see
new hospitals opening all across the country.
3. Fortis Healthcare
The third best healthcare company in our top 10 list is Fortis Healthcare. The
company was founded by DrParvinder Singh in the year 2001. The company has a chain of super
speciality hospitals in cities like Amritsar, Kolkata, Navi Mumbai, Hyderabad, Mohali, Jaipur,
Chennai, Kota, Bengaluru, Gurgaon. Company is also present in Singapore.
7. Siemens Healthcare
The seventh healthcare company in India is Siemens Healthcare. Although it is a
German company but has huge presence in India. The company was founded by Werner von
Siemens in year 1847 in Berlin.Company manufactures different kind of healthcare systems. Many
hospitals in the country uses medical equipment build by Siemens.
8. Opto Circuits
37
Tooth Regeneration
In health care technology comes like tooth regeneration All kidding aside, this could
be an amazing advancement if the technology holds true in the coming years. Colourful fish found
in Africa may hold the secret to growing lost teeth. In a collaborative study between the Georgia
Institute of Technology and Kings College London, researchers looked at the cichlid fishes of Lake
Malawi in Africa, who lose teeth just to have a new one slide into place. Their study published in
the Proceedings of the National Academy of Sciences, identifies the genes responsible for growing
new teeth and may lead to the secret to tooth regeneration in humans.
Another study from a Harvard team successfully used low-powered lasers to activate
stem cells and stimulate the growth of teeth in rats and human dental tissue in a lab. The results
were published today in the journal Science Translational Medicine. Stem cells are no ordinary
cells. They have the extraordinary ability to multiply and transform into many different types of cells
in the body. They repair tissues by dividing continually either as a new stem cell or as a cell with a
more specialized job, such as a red blood cell, a skin cell, or a muscle cell.
Dentures and dental implants may soon become a thing of the past. Stem cell
research
is
making
it
possible
to
regrow
your
missing
teeth!
This is a much-needed medical advancement, especially considering that by age 7426% of
adults have lost all of their permanent teeth.
visible light that continuously disinfect the environment and bolsters your current infection
prevention efforts.
survey results for hospitals for the first time in 2013. The HCAHPS (Hospital Consumer
Assessment of Healthcare Providers and Systems) is a standardized survey created by the federal
government to survey Medicare patients. Over a billion dollars in annual Medicare funding is now
tied to HCAHPS results. These surveys dont just cover cleanliness and doctor competencies.
They also cover the communication skills of office staff and medical staff like doctors and nurses.
These surveys are conditioning patients to recall the entire experience. With a customer service
plan in place, good service becomes second nature and will be recognized by those surveyed.
The internet is becoming a patients best friend.
Review sites like HealthGrades.com and Vitals.com provide free access for patients
to look up information about their doctors and facilities. Other popular review sites such as Yelp,
Angies List and Google+, which are not health care specific, also provide patients the opportunity
to give feedback on their experiences. This means that when a new patient is finding and
researching a doctor, they wont just rely on word of mouth from family and friends. It makes the
entire internet a public source of information about a specific doctor or facility. Having accurate
information online is another way to increase patient customer service. It indicates that you are
interested in keeping your patients informed about the practice and doctors, and as a bonus it
provides additional opportunities to be contacted by potential new patients.
Patient-cantered care is customer service too.
Its not just about the obvious. Good customer service extends beyond a pleasant
demeanour. It has a lot to do about patient- centred care. The IOM (Institute of Medicine) defines
patient-cantered care as: Providing care that is respectful of and responsive to individual patient
preferences, needs, and values, and ensuring that patient values guide all clinical decisions.
Patient-cantered care results in higher instances of patient engagement, and a 2013 study by the
College of Technology at Eastern Michigan University found that better patient engagement is
associated with better patient-perceived health outcomes.
Strategy 1: Facilitate Integrated and Consistent Cross-Channel Interactions The first step in
offering an exceptional customer experience is to offer a multi-channel contact centre comprised of
phone, fax, e-mail, SMS, and perhaps even Web chat, so that patients can conduct interactions
with you exactly when and how they like. For instance, the Genesys Consumer Survey 2006
USA found that 78% of consumers would like to communicate with a company via e-mail and
34% say that e-mail is their most preferred method of communication. With well-integrated
channels, healthcare providers are able to deliver better service, improve pricing and quality
transparency and lower operating costs. Providing consumers with a seamless experience across
all channels ensures that their interactions are as consistent and efficient as possible, which will
help build a solid relationship with the consumer. And, streamlining data exchange and supporting
collaboration across all channels promotes operational efficiency and reduces errors
resources. Business priority routing uses business rules to prioritize calls based on customer
value, available channel resources, hold times, and other factors.
For instance, response times are easily met during times of low call volume and,
therefore, agents have free time to focus on other activities, such as verifying contact and
insurance information. An Example: lts lunch time and no one is available to answer the phones in
Doctor Jackmans office when Samantha calls to make an appointment. However, unlike many
other healthcare providers with less modern contact center technology, Doctor Jackman does not
miss out on this opportunity. If an agent is available in another location to take the call, Samanthas
call is routed there. If no one is available to take the call, she can schedule the appointment via the
IVR without needing to speak to anyone, or she can request that someone call her back at a later
time
43
5. Financial Analysis
investment. When looking at a specific company, the financial analyst will often focus on
the income statement, balance sheet, and cash flow statement. These can be obtained from
published reports of various companies. Furthermore, here we have used Ratio Analysis as a
parameter to analyze the industry data. And certain conclusions & inferences have been made
based upon the calculated ratios as well as charts.
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
EBITD
A
margin
16.05
12.37
18.52
22.9
22.2
23
22.18
21.96
22.84
23.84
45
30
25
20
15
10
5
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
As it seen from the above graph, the EBITDA margin is decreasing from 2007 to
2011 and then there is fluctuating but finally in 2016 it has come down to 16.05 compare to 23.84
in 2007.The reasons behind EBITDA margin decreases are cost of raw material, power
consumption, employment cost and other operating cost
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Net
Profit
Margi
n
6.48
2.2
8.38
13.90
12.41
13.79
12.40
8.23
15.74
13.90
46
18
16
14
12
10
8
6
4
2
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
As it is seen from graph, from 2007 to 2013 net profit margin shows fluctuation trend
though sales were increasing continuously whereas operating cost, depreciation and tax payment
were also increasing, But in 2015 it was lowest of all time having 2.2 percent margin and then it
went to 6.48 in 2016 showing some improvement compare to previous year.
47
2. Leverage Analysis
For this purpose, we have to calculate leverage ratios, which are as under.
Debt ratio
Formula: Debt ratio= Total debt/ Total Assets
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Debt
28.15
28.90
25.60
25.28
22.67
26.74
20.98
28.57
17.17
15.07
35
30
25
20
15
10
5
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
From year 2007 to 2009 with increase in of sales of industry, sectors assets and
debts simultaneously increasing with sales so it shows continuously increasing trend, but in year
2010 it decrease by 8 percent. From year 2012 and 2016 debt and assets of industry were
increasing at lower pace compare to previous period.
48
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Debt - 51.34
equity
Ratio
52.72
41.75
40.93
35.31
48.06
34.50
51.79
26.02
23.40
60
50
40
30
20
10
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
From year 2007 to 2009 with increase in of sales of industry there is increase in debt
compare to equity i.e. it reaches to 52% compare to 23.40 of 2007. In coming year it shows
fluctuating trend and remain 51.34% in 2016.
49
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interest
coverag
e ratio
16
27
47
84
73
58
74
90
80
70
60
50
40
30
20
10
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
A higher ratio is desirable; but too high ratio indicates that the firm is very
conservative in using debt; and that is not using credit in the best interest of shareholders. While a
lower ratio indicates excessive use of debt. In the above graph, in the year 2007-09, there was a
lower ratio while thereafter there was an upward trend.
50
3. Profitability Analysis
Profitability ratios measure a company's level of profitability, at the gross profit,
operating profit and net profit levels. They measure overall performance & effectiveness of the
firm. For companies in the hotel industry, billions of dollars are generated, and many companies
are long-established, meaning high profit margins should be generated at all levels
The profitability ratios are calculated to measures the operating efficiency of the company.
Generally two major types of profitability ratios are calculated:
Profitability in relation to sales
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
ROE
10
11
14
14
12
18
18
51
20
18
16
14
12
10
8
6
4
2
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
It can be seen from the above graph that Return on Equity has shown a downward
trend over the past few years. This is perhaps due to the use of more debt over years by all
companies. This indicates the firm has not used well the sources of owners. In fact, this ratio is
one of the most important relationships in financial analysis because this ratio reveals the strength
of company in attracting future investments.
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
ROI
11
14
14
15
15
14
19
20
52
25
20
15
10
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
From the above graph, we can say that ROI has fallen down considerably from the
past years. This is not a good sign. Further, ROI is directly depends upon EBIT so the companies
must try to increase the earnings before tax. However, the investment in asset (whether total or
net depending upon formula) should be reduced so as to increase ROI.
4. Du Pont Analysis
Return on Net Asset (RONA) or Return on Capital Employed (ROCE) is the measure
of the firms operating performance. It indicates the firms earning power. It is a product of the asset
turnover, gross profit margin and operating leverage. All the firms would like to improve their
RONA. In practice competition puts a limit on RONA. Also, firms may have to trade-off between
asset turnover and gross profit margin. To improve profit margin, some firms resort to vertical
integration for cost reduction and synergic benefits.
RONA = Asset turnover * Gross profit margin * Operating Leverage
A firm can convert its RONA into an impressive ROE through financial efficiency. Financial
leverage and debt-equity ratios affect ROE and reflect financial efficiency. ROE is thus a products
53
of RONA (reflecting operating efficiency) and financial leverage ratios (reflecting financial
efficiency).
ROE = Operating Performance * Leverage Factor
The firm can convert its ROE into growth in equity through retention.
Equity Growth = ROE * Retention Ratio
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
G.P/Sales
0.253
8
0.263
1
0.258
8
0.241
8
0.239
6
0.234
6
0.233
6
0.182
8
0.179
8
0.186
3
SALES/C.
E
0.700
0
0.668
0.633
0.646
0.701
8
0.671
8
0.696
3
0.669
3
0.713
8
0.867
8
EBIT/G.P
0.459
3
0.309
7
0.572
5
0.811
8
0.787
0
0.845
3
0.820
9
1.050
8
1.151
1
1.102
2
EBT/EBIT
0.721
5
0.604
2
0.763
2
0.864
6
0.835
4
0.855
0
0.843
1
0.816
3
0.897
4
0.903
2
EAT/EBT
0.771
9
0.448
3
0.741
4
0.819
3
0.787
9
0.813
6
0.767
4
0.825
0
0.885
7
0.750
0
C.E/N.W
1.537
2
1.551
8
1.421
0
1.415
0
1.360
0
1.546
3
1.345
1
1.517
9
1.260
3
1.234
0
54
1.8
1.6
1.4
1.2
GP/Sales
1
Sales/CE
EBIT/GP
EBT/EBIT
0.8
EAT/EBT
CE/NW
0.6
0.4
0.2
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
The Du Pont analysis is the combined effect. The above is Du Pont chart which can
be used to depict an industrys performance in terms of shareholders return. Further, it is clearly
visible from the above chart that an industrys EBT/ EBIT has deteriorated, the EBIT/ GP has also
decreased while the Sales/ CE ratio has been decreased over a period while CE/ NW has
increased over a period of time.
55
5. EPS
The Earning per Share (EPS) indicates earning power available with share holders.
So, in simple words we can say that EPS shows how much rupees available to shareholders from
net profit. The EPS calculations made over years indicate whether or not the firms earning power
on per-share basis has improved or changed or over that period.
Formula: PAT / Total number of ordinary shares outstanding
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
EPS
13
14
16
14
12
10
8
6
4
2
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
EPS calculations made over the years indicates whether or not the industrys earning
power on per-share basis has changed over the period. EPS simply shows the profitability of the
firm on per share basis. In the year 2007 & 2013, PAT was higher so EPS was nearly about Rs.14
and 13 respectively. Whereas in the year 2016 & 2015 EPS was low with Rs. 5.
56
6. DPS
DPS
simply
means
the
sum
of
declared
dividends
for
every ordinary
share issued. Dividend per share (DPS) is the total dividends paid out over an entire year
(including interim dividends but not including special dividends) divided by the number of
outstanding ordinary share issued.
Formula: Dividend/No. of ordinary shares outstanding
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
DPS
1.3
1.14
3.25
0.7
1.4
1.3
3.5
3.25
3
2.5
2
1.5
1.4
1.3
1
1.14
1.3
0.7
0.5
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
As we can see from graph, in the year 2010, the DPS for the whole industry stood at
Rs. 3.25 per share out of Rs. 7 earned per share which was highest of whole period. The
difference per share is retained in the business.
57
7. P/E Analysis
The price-earnings ratio is the ratio for valuing a company that measures its current
share price relative to its pre-share earning
Formula: - Market value per share/ EPS
Year
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
P/E
Ratio
12
10.8
5.89
3.77
5.25
5.29
4.71
6.6
7.17
1.85
14
12
10
8
6
4
2
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
From the above graph we can see that P/E i.e. profit earnings ratio of industry was
highest in 2016 with Rs. 12 which has shown growth compare to previous year. In 2007 P/E ratio
was lowest having Rs. 1.85.
58
Formula: G= b X r
Where, b= retention ratio (i.e. 1- payout ratio)
R=Return on Equity
Year
Retentio
n Ratio
(b)
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
0.82
0.90
0.94
0.95
0.92
0.92
0.79
0.86
0.88
0.89
10
11
14
14
12
18
18
4.92
5.4
7.52
9.5
10.12
12.88
11.06
10.32
15.84
16.02
ROE (r)
Growth
Rate (G)
59
18
16
14
12
10
8
6
4
2
0
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Interpretation:
As we can see in the above graph, growth rate for the Health care industry is
fluctuating since last five years. It was highest in 2007 i.e. 16.02% because ROE was highest.
From year 2012 & 2016, it was declining and it ends to 5%.
60
So the above whole chapter was about calculating different key financial ratios of a whole
industry. This shows relative performance and tables and charts were used to make the
interpretation more effective and simple.
In the first part, we have calculated two ratios under profit margin analysis. They are viz.
Gross profit margin, net profit margin.
In the second part, we have calculated leverage ratios i.e. basically three: Debt ratio, Debtequity ratio & Interest coverage ratio. This helps to judge the long term financial position of
the firm. These ratios indicate funds provided by owners & lenders.
In the third part, we have calculated profitability ratio as a part of profitability analysis. They
are basically two: ROE & ROI. These ratios measure the overall performance &
effectiveness of the firm. Apart from that, they shows the short term solvency.
In the fourth part, we have carried out Du Pont analysis to show the combined effect. This
analysis depicts an industrys performance in terms of shareholders return.
In the later part, we have calculated EPS, DPS, P/E ratio & Sustainable growth rate
separately.
61
6. Industry Analysis
62
Political
Govt. stability
Taxation policy
Foreign trade
regulation
Social welfare policies
Economical
Business cycle
GNP trends
Inflation
Money supply
Disposable income
Unemployment
Sociocultural
Population
demographics
Income distribution
Social mobility
Lifestyle changes
Attitudes to work and
Legal
Competition law
Employment law
Health and safety
Product safety
The
Organizat
ion
Technological
Govt. spending on
research
Govt. and industry focus
on technology effort
New
discoveries/developments
Speed of technology
Environmental
Environmental
protection laws
Waste disposal
Energy consumption
63
1. Political Factors
Being one of the largest democracies in the world, India runs on a federal form of
government. The political environment is greatly influenced by factors such as governments
policies, politicians interests, and the ideologies of several political parties. As a result, the
business environment in India is affected by multivariate political factors. The taxation system is
well-developed and several taxes, such as income tax, services tax and sales tax are imposed by
the Union Government. Other taxes, such as octroi and utilities, are taken care of by local bodies.
Privatization is also influenced and the government encourages free business through a variety of
programs.
2. Economic Factors
The economy of India has been significantly stable, since the introduction of the
industrial reform policies in 1991. As per the policy, reductions in industrial licensing, liberalization
of foreign capital, formation of FIBP (Forum for international trade training) and so on, has resulted
in a constant improvement of Indias economic environment. The country registered a GDP of
$5.07 trillion in 2013 following a further improved GDP growth rate of 5% in 2014 as compared to
4.35% in 2013. By which the disposable income of the people was increase and they can
3. Social Factors
The social factors refer to any changes in trends which would impact a business
environment. For instance, the rise in Indias ageing population is resulting in a considerable rise
in pension costs and increase in the employment of older workers. India has a population of more
than 1.2 billion people with about 70% between the ages of 15 and 65. Therefore, there are
structures with percentages according to age. These structures contain varying flexibility, in
education, work attitudes, income distribution, and so on. Implication of social factor is to rise the
income level of the people, standard of living improve, which is the positive signs for the corporate
hospitals to increase the no. of consumers.
4. Technological Factors
Technology significantly influences product development and also introduces fresh
cost-cutting processes. India is served with both 3G and 4G technology which has facilitated
several of their technological projects. Furthermore, the country also possesses one of the
strongest IT sectors in the world, promoting constant IT development, software upgrades and
other technological advancements. Recently, India has also attempted to launch their satellites
into space. Implication of technology is to enhancing the productivity of the hospitals. Nowadays
by using mobile person or doctor can recommend to the patient.
5. Legal & Environmental Factors
In the recent past, a number of legal changes have been implemented in India, such
as recycling, minimum wage increase and disability discrimination, which has directly affected
businesses there. However, when it comes to environment, the quality of air in India has been
adversely affected by industrialization and urbanization, also resulting in health problems. As a
64
result, there have been establishments of environmental pressure groups, noise controls, and
regulations on waste control and disposal.
65
Intensity of existing rivalry (external): This is usually the most important determination
of competitive forces. It gauges the level of competition between rivals that compete directly on
prices and quality. Examples include: low exit barriers and low storage costs.
Threat of new competitors (external): New competitors are often drawn to an industry
because of the opportunity to make profits. When new competitors enter markets, they become
rivals to existing market participants, which tends to lower the profitability of all market participants.
An increase in competition lowers profits with all else staying the same. Examples of the external
component include: patents limiting new competition and industry requires economies of scale.
Bargaining power of suppliers (internal): The more pressure suppliers can exert on a
company, the more bargaining power they have over that company. Bargaining power generally
increases profitability for the party that exerts it. Examples that affect bargaining power to
suppliers include: volume is critical to suppliers and there are diverse distribution channels.
Bargaining power of customers (internal): The more pressure customers can exert on
a company, the more bargaining power they have over that company. Bargaining power generally
increases profitability for the party that exerts it. Example that affect bargaining power to
customers include: limited buyer choice and large number of customers.
66
Bargaining
Power of
Consumers
Consumers have
little power and
Threats of Substitutes
67
Bargaining power of
suppliers
Hospitals face some threat
from medical
equipment
companies
as they could
choose
not to sell their
equipment, but there are a
fairly large
number of
suppliers available
Strengths: characteristics of the business or project that give it an advantage over others
Weaknesses: characteristics that place the business or project at a disadvantage relative to
others
Opportunities: elements that the business or project could exploit to its advantage
Threats: elements in the environment that could cause trouble for the business or project
68
Weakness:
Delivering healthcare in India is costly.
We have a limited access to life saving medicines.
A normal middle class family cannot afford the specialty healthcare.
69
Opportunities:
Healthcare industry has good support from the government.
Major pharmaceutical companies to choose India as the preferred hub for their global R&D
and manufacturing operations.
The growth of middle class in the country has resulted in fast changing lifestyles in urban
and to some extent rural centers. This opens a huge market for lifestyle oriented drugs,
which has a very low contribution in the Indian markets.
Threats:
Primary Health infrastructure is the responsibility of the government.
Cost of discovering new drugs is very high.
Trust hospitals (St. Marys Nursing)
70
Challenges
High capital costs:
Depending on the region and real estate costs, an average hospital requires capital infusion of Rs
40 lakhs to a crore per bed (& even more). Industry estimates suggest that any hospital with
capital costs of more than 50 lakhs per bed has high gestation period and even may be unviable.
Land and building together account for almost 40 per cent of the total project cost and affects the
viability depending on the resulting per bed cost.
Medical equipment:
Contributing to almost 40 per cent costs in a tertiary setup, the medical equipment though cutting
edge at the time of purchase poses the threat of inevitable obsolescence within five to seven years
of setup. This problem is compounded by the fact the most of such equipment is imported and
very few local reputed manufacturers exist. This will lead to apportioning to higher treatment costs
and will further lead to lesser competitive edges and low utilisation rates resulting in undesired
operating margins.
Human resources:
As Dr Prathap Reddy puts it, "the biggest challenge for him and Apollo is filling the void of human
resources". The fast-expanding domestic healthcare industry is the third largest employer, but is
severely short of manpower, according to him. As per ministry of health, there is a shortage of
approximately half a million doctors, a million nurses and the deficit needs to be filled in the next
five years. Such shortage will lead to exponential salary hike demands, and further lead to high
patient care costs. With organised sector being the preferred choice now, there will be a huge
demand even for the skilled and quailed health administrators to run the show. Considering one
skilled and quailed administrator is required for every 50 employees, there would be a requirement
of almost 50000 such healthcare professionals in the near future.
Highly regulated environment and unrealistic stringent norms and restriction of entry to the private
entities in the field of medical education has led to further deficiencies in terms of number of skilled
professionals being released for intake by various hospitals.
Conventional models of business:
Rarely an out-of-the-box idea of running a healthcare business is seen. Recent niche segments of
single speciality centres (for eg. - focused on OBGY or other specialities (Cradle etc) )have been
very few. Even in the public health sector, millions of square feet of space is left unutilised,
expensive equipment illmaintained and lack of skilled professionals adding to the -woe, still do not
find adequate initiatives happening towards outsourcing or even PPP.
Almost 90 per cent of private sector in India is run under the unorganised sector. The clinical
establishment bill also has faced immense opposition and a professional healthcare consultancy
firm guided healthcare business is not still seen frequently.
The conventional model would need to be broken to mitigate the presently seen long gestation
periods of five to 10 years of which almost three years are spent in project conceptualisation to
commissioning.
The conventional model of healthcare business would need to change to bring in untapped
opportunities, operational efficiencies and better profitability. This would also attract better private
equity which is now diverted to more lucrative industries.
72
In the public healthcare sector the infrastructure is provided based on the size of the population
instead of epidemiological profile. This many time results in under-utilisation of infrastructure, and
ultimately not meeting the demands of the local population and drainage.
Opportunities
Population:
Many would consider that the massive population of India would be a bane. But it has turned out
to be an immense business opportunity across industries like telecom, broadcast and healthcare.
The 1.17 billion population of 2009 is projected to reach 1.33 billion in the next 10 years. Of which
almost 60 per cent of population is in the 15-64 year age group - which is the active earning
population and will primarily drive the industry, especially the healthcare insurance industry which
will make healthcare accessible over a period of time to majority of the population.
As India 'shines', and we chant 'Jai ho', the disposable income of Indian families has increased by
a whopping 70 per cent since 2004 and is growing at a pace of 10 per cent ever year.
This will lead to increased demand for good quality healthcare even at a premium.
Insurance:
It is estimated that the penetration of health insurance in India is only 2 per cent of the population.
However this figure is expected to rise to a penetration of almost 20 per cent in the next five years
keeping in mind the high growth seen in disposable income of the Indian families. Though this
figure is the country's average, the percentage of insured visiting urban private setups even now is
in the range of 20- 60 per cent of the hospital admissions. With better government health schemes
surfacing for the poor, excellent example being the Aryogyshree, National Rural Health Mission
and kinds, the upkeep of the poor is also not left behind.
Comparative low costs and Medical Tourism:
As per industry studies, almost five million foreigners had availed treatment in Indian healthcare
setups by 2008. With surgical cost almost one tenth in western worlds, the estimated 15 billion
dollar medical tourism industry will only grow further.
This has led to the creation of health cities and medical tourism hub. Now with immense support of
the Indian tourism ministry and its dedicated medical arm, the medical tourism industry in India will
grow leaps and bounds.
Budgetary incentives and PPP:
With various tax incentives thrown in by the finance ministry for the healthcare sector and various
states realising to the fact that PPP is the best way to bring in quality healthcare at no further costs
to them, a huge spurt of activity is seen in terms of new hospital projects launched and PPP
initiatives concluded across the country.
The future
Breaking the conventional model of business: The coming years will see a great out-of-the-box
thinking by the strategists in the field of healthcare, beginning with the way healthcare is delivered.
To begin with, a rise in retail clinics, single speciality, secondary and tertiary care centres are seen
coming to the fore including the recent examples of NOVA day care, BEAMS & Apollo clinics.
Operations and management contracts are being handed over to outsourced partners and the
recent example of FORTIS managing SL Raheja is the best I can cite. There are unheard smaller
O&Ms run across the country now which will soon become very popular.
The recent trends also show how the hospitals have become quality conscious.Reputed hospitals
like Wadia,Continental,Apollo, and Masina in central and south Mumbai and others across the
country have hired a reputed healthcare consultancy firm to do a quality gap analysis and help
them streamline operations and management and suggest ways to bring about better
sustainability.
73
The tier 2/3 cities have suddenly become attractive to the healthcare players, especially because
of the tax sops and increasing disposable incomes among Indian families across the country and
dearth of quality healthcare infrastructure in these locations.
Specially focused on medical tourism, health cities are audaciously being designed and executed
and hospitals with bed strengths of 1500/2000 which were never heard in the private domain are
now coming to light.
The shift is also seen towards Brownfield's and JV for a quick entry in the target area, and the
healthcare sector has been abuzz with M&A activities of FortisWockhardt, and even acquisition of
PPP SPVs in the recently seen Hiranandani FORTIS-Navi Mumbai Municipal Corporation superspeciality project.
Once unheard of, now the non-core operational aspects including laundry, kitchen, housekeeping,
security, all are being outsourced, and the primary focus is put on the hard core patient care. Even
revenue centric departments like imaging, laboratory and pharmacy is being outsourced. Recent
examples of Piramal diagnostics running imaging centres for hospitals can be cited. The trend is
now seen even in the public health units which have outsourced its imaging, kitchen and other
services. Navi Mumbai Municipal Corporation is the best example which outsourced its imaging
department, kitchen and housekeeping.
Telemedicine and remote diagnosis is seen as a rising trend, as part of outsourcing model.
The earlier model of hundreds of visiting doctors being empanelled by the hospital is also slowly
fading away and the full time practice is taking a preference in choice of clinical operations.
Kokilaben-Andheri or HiranandaniPowai and even the recent Seven Hills-Marol have opted for a
complete, or a majority of specialities to have full time consultants on board who do anywhere
from 80 to 100 per cent of the hospital patient volumes in the hospital. This is giving an edge to the
hospital in terms of streamlining of desired quality, training and patient satisfaction which is very
difficult in terms of part time visiting doctors who do not have allegiance to one hospital and may
not adhere to the mission of the concerned hospital. This also attracts such specialists even to far
of locations as major volumes will be guaranteed in a long run promising better prospects to these
professionals. These hospitals therefore could attract skilled and experienced professionals who
were already doing well abroad.
With quality standards in JCI,NABH introduced for wellness and dental centres, and a huge
demand from medical tourists for the same, a chain of such centres will be seen in the near future.
Moreover,with patient awareness increasing the patients not hesitating to take 'second opinion'.
Recent opening of 'specialised second opinion centre's have opened and more could be seen in
near future.
Franchising models followed by both the public and private, but noticibly by the governments of
various states especially in Gujrat, Bihar and Jharkand by partnering with NGOs and individual
doctors to provide affordable and quality healthcare on pay per service model and other incentives
has proved to be mutually beneficial to all stake holders.
In the private sector, leading healthcare entities have been extending their brand name on a
royalty/franchise basis to interested partners to leverage on the brand and attract patients. This is
mutually beneficial to both the provider (he gets more patients because of brand) and the brand
provider (they earns royalty without any capital inflow)
A rising trend is seen in religious centric hospital trusts coming up, but which are of world class
infrastructure. The likes of PAKH, Saibaba Trus etc. This enables the trusts to keep their
commitment to the target society and mankind at large and also brings in higher sustainability due
to continued patronage of the members of the society and devotees.
Health Insurance
Industry gurus always have been suggesting the best governance when the government does not
deliver a product or service, but monitors its quality and ensures that the people get the relevant
service or product through able private players. In this case, government policies are seen to be
74
changing and their role in healthcare is seen shifting from healthcare delivery to financing the
delivery of care. With their launch of health insurance schemes like Rashtriya Swasthya Bima
Yojna, Aroygashree and other similar schemes has tremendously improved healthcare delivery
through private players, the schemes will cover millions of BPL patients in the years to come. The
government will save billions on the capital costs and HR costs by having the private player invest
in the same.
With opening of health insurance to private players, the insurance sector is booming. Especially
with rising disposable incomes, and the highest population being the earning age group of 15-64
years (60 per cent of population), the insurance reach is bound to grow from the present meager
two per cent to 20 per cent as estimated by industry experts. This will bring in demand for better
quality care and a dominant role of insurer on choice of healthcare units for patients in reference to
quality and professionalism.
Patients will have a lot to shop around before choosing the 'right care provider' as he will be armed
with the vital medical insurance.
Trend in keeping their insured clients healthy, have spurted a trend in providing free health
checkups in the policy package so that the clients are detected early for early intervention for
various diseases, especially the life style diseases and thus save on immense cost burdens to the
insurer in the later future in terms of costs towards treatment of their patrons. This will also lead to
a rise in opening of specialised executive health checkup centres as stand alone or in the
hospitals in time to come.
Human resources and medical education
IDFC security studies reveals that there is a clear bias within skilled professionals including
doctors towards the private sector. About 72 per cent doctors are based in tier- cities (mainly
because of lack of incentives, lack of focus on quality standards' and inadequate infrastructure in
the public health sector)
Even then, the private sector finds difficulty in bridging the deficit of manpower. As stated above,
there is a shortage of 1.5 million skilled professionals including doctors and nurses and
administrators. The reason for the same mainly is due to lack of adequate medical education
centres and in adequate numbers. Governments have liberalised the utilisation of AYUSH
practitioners through a GR into mainstream medical care provision specially in tier 2/3 cities, to
bridge their gaps, however the much awaited entry of private players in medical education will
bridge the gap further. With recent opening of numerous hospital management colleges, the gap to
provide able administrators would surely be bridged and more such institutes will be seen
flourishing in the times to come.
PPP activities have been seeing the light of the day by states like Uttar Pradesh(UP) inviting
proposals from private partners to help them setup and run medical and para-medical colleges to
streamline operations, to bring in a professional insight and outlook and further attract the vital
professionals to impart medical education.
Funding and private equity infusion
With the country's healthcare industry poised to grow to 125 billion USD in the next five years, and
only two or three major listed companies with a market cap of less than $ five billion existing, there
is huge potential for many other players to come in to the fray.
With new conventional model of healthcare delivery and for the first time EBITAS in healthcare
reaching the figures of 25 per cent and above in such businesses, venture capitalists and private
equity is hunting for the right partners every day.
A leading consultant having head office in Mumbai and various regional office across the
continent, has revealed that there is a 100 per cent increase in TEV studies, business plan
validations and enquiries for search for JV partners and due diligence.
The growing demand has also attracted a lot of foreign players to venture into the healthcare
industry and are hand-holding the existing Indian players in creating a chain of healthcare units not
just in India, but in foreign locations too.
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Business related to medical equipment, and devices is also growing at a rapid pace, and with
more number of hospitals in the fray, this industry and the pharma industry will further grow
piggybacking on the rising healthcare demand.
Looking Forward
With the personal disposable income rising by more than 70 per cent and over all income of the
population rising, the demand for better quality in healthcare is bound to exponentially rise. With
the CGHS mandating the requirement of NABH for all reimbursements, and hundreds of hospitals
applying to get the coveted ISQua approved NABH-the mark of international healthcare quality,
this is just the beginning.
There is no doubt that the government too is focusing on improving the quality of healthcare
delivery in its own infrastructure and the promising beginning is seen with a public unit getting the
NABH accreditation in Gujrat and more on the anvil.
With only 20 per cent of healthcare delivery provided through public health units and the
government not intending to spend more on capital expenditure, more PPP projects and private
healthcare initiatives would see the light of the day.
To bridge the immense HR gap, especially in the clinical and professional side, the government is
mooting the idea of corporatising medical education and it is just the matter of time when private
run non-trust based medical education on commercial lines will be seen across the country.
Health insurance sector has never seen better days than today and with what is on the anvil. With
a population as strength, even the present two per cent penetration to a five per cent penetration
would mean millions and billions in business. The projected penetration in the next five to 10 years
is 20 per cent of the population, because the earning population of 15 to 64 year age group
comprises of more than 60 per cent of the total population who can afford health insurance. And
with rising awareness and the acknowledgement that insurance is the way to a healthy life, the
demand for medical insurance will only rise further. Trend reveals that at least in the large
corporations and private organisations including public sector units, insurance is provided as a
norm to all employees. This trend will only substantiate in time to come.
With the increase in population and to bridge the gap of number of beds, hundreds of quality
healthcare units will spring up. However, with economy growing, demand for real estate also
grows and further leads to making real estate capital investments for healthcare expensive and
making operational margins tighter. This will lead to (and already has) in unconventional model of
health care delivery by way of single speciality centres, life style units, retails clinics, to bring in
operational efficiencies and increase the EBITAs. A lot of earlier untapped models will be tapped
and the consumers will have plenty to choose.
With tax sops and other government incentives, more secondary and tertiary care units will open
in tier-2 /3 cities.
With quality standards coming on even in AYUSH and alternative medicine, and India's rich
heritage already attracting a lot of tourists, medical tourism will see a marked boom in years to
come. Health cities with an aim to woo medical tourist is on the rise, and the healthcare players
will leverage on the integrated medicine model by providing Aurveda, Homeopathy, Unani, Yoga
and others along with the modern medicine.
This holistic approach will attract patients from far lands further, because the cost of care is almost
one tenth the western worlds costs.
Technology will play a major role in bringing quality in healthcare, be it better nursing
communication systems, patient monitoring devices or telemedicine to provide low cost diagnosis
to remote patients etc.
Companies like HCL, HP and Microsoft are already investing heavily in healthcare technology and
Google trying to ambitiously woo the consumers for a centralised healthcare database, what is in
store for the future of healthcare is limitless.
Pneumatic chutes, PACS, automated laboratories ,Tableau,tabs ,and other technologies are on
the verge of becoming norms in both public and private
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8. CONCLUSION
For a complex and large country like India, and in the time frame available it has not been possible
in a first national profile to establish a comprehensive assessment of healthcare industry. For this
first version of the profile healthcare sectors to be studied in depth and already a number of
conclusions arise from analysis of the situation.
By reviewing history and some introductory information about the word Hospitals and healthcare
industry as a whole, we came to conclude the healthcare industry is a very wide subject and we
have tried to reach in each area related to healthcare industry.
We have seen the broad classification of the Healthcare with respect to different categories. We
also had seen classification of Indian hospitals. From innovation potential provided, it can be
concluded that there is lot of scope for the hospital and healthcare sector to innovate in their
services and facilities to be provided for high customer satisfaction. We also mentioned industrial
and trade policy of healthcare industry which talks about different foreign and trade policy adopted
by government for healthcare industry and how it affects any hospital in India. The healthcare
industry contributing to the national income is in such a manner where economic implication of
healthcare industry and hospital sector can be seen very clearly from each angle and aspects.
Marketing and management control of a particular service provider in a particular field is a too
difficult when it comes in to practice but Indian healthcare industry has proved that they have been
using all tools of marketing to promote for the sake of progress of health sector. Use of social
media and internet are key factors for their marketing activities.
From the financial analysis of the healthcare industry it can be concluded that there is full
completion in the healthcare industry and because everyday technology innovation taken place in
the market its required lots of investment.
Hotel industry inclusive of so many small and large players like apollo hospital, zydus caddila, who
are contributing most of the revenues by rendering services to the different class of the people at
same level of satisfaction and there by rewarded for high level of incomes for further expansion
and development. There is a wide scope for the development and expansion of the Healthcare
Industry.
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9. Bibliography
Books:
Pandey I M (10th edition): Financial Management, Vikas Publishing House,
New Delhi.
Kotler Philip (14th edition): Marketing Management,Prentice Hall publication
,New Delhi
Websites
www.wikipedia.com
www.investopedia.com
www.wikiwealth.com
www.ibef.org
www.demand analysis of healthcare industry.com
www.moneycontrol.com
www.industry analysis of healthcare industry.com
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