Case - Rockland (A)

W15291
ROCKLAND HOSPITALS: INNOVATING HEALTH CARE IN INDIA (A)
Professor Neena Sondhi wrote this case solely to provide material for class discussion. The author does not intend to illustrate
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Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-07-09
Rajesh Srivastava, chairman and managing director (CMD) of Rockland Hospitals, looked out from his
office window and reminisced on the challenging yet fulfilling journey of the last 10 years. His smiling,
gentle demeanor was no indicator of the passion, ambition and spirit of the man who was the heart and
soul of the organization. Srivastava had begun his entrepreneurial journey by selling books to classmates
while in school. After exploring multiple diverse business opportunities, he had moved to hospitality and
then ventured into health care by building the triad of Rockland Hospitals. The entrepreneur had studied
the health care sector in India carefully and recognized that it was extremely inadequate when it came to
serving the country. It was marked by insufficient and inaccessible medical facilities for the huge
population spread across the country. The question was how one could deliver quality healthcare to the
underserved Indian population. What was the formula that could deliver value?
The Rockland Group of Hospitals (Rockland) was established on August 4, 2004, and in the last decade,
up to 2014, it had successfully set up three hospital units with a total capacity of 800 hospital beds in the
National Capital Region (NCR). Srivastava was absolutely convinced that if one looked at health care as a
business organization with structures, systems and processes in place, then any Indian health care
provider could adequately address not only the needs of the country, but those of neighbouring countries
as well. He knew that Rockland had an exciting journey ahead, but the aggressive expansion drive in
2012 to 2014 had put a considerable financial burden on the group’s capital resources, so he needed a
concrete and immediate plan for growth. The question was: What business model should he adopt to
achieve a balance between filling the health gaps in the country and ensuring profitable growth for
Rockland Hospitals?
HEALTH CARE IN INDIA: AN OVERVIEW
Historically, India had been known as a pioneer in medicine and wellness care, and had given health care
practices to the world such as Ayurveda, yoga and other alternative therapies. However, with the legacy
of colonialism, the country suffered from poor and unhealthy living conditions, malnutrition and wide-
scale epidemics; in addition, there was a neglected and stagnant health care system. In 1947, post-
independence, however, there were other challenges that required immediate attention like dealing with
This document is authorized for use only in Shikha Aggarwal's Advanced Supply Chain Management 1.10.2022 at Goa Institute of Management from Jan 2022 to Jul 2022.
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setting up formal governing policies and grappling with financial deficits and problems of poverty and
malnutrition. As a result of this clear gap and opportunity in servicing the health care needs of resident
Indians, the health care sector saw a considerable rise in involvement among private players in the last 50
years since the independence, and a disproportionate development of private versus public (government-
owned and -managed) health care facilities, with firms in the private sector far outnumbering those in the
public sector.1
Government Initiatives and Reforms
To deal with social class disparities, the National Rural Health Mission (NRHM) was launched on April
12, 2005, to provide affordable, quality health care to rural Indians. Eighteen northern states with
extremely poor health indicators were identified as targets for the mission. This was followed by another
scheme in 2013 — the National Urban Health Mission (NUHM). This scheme was launched to cater to
the needs of the urban poor in India’s metropolitan cities that had populations of more than 50,000
people.2 The Planning Commission of India committed 2.5 per cent of the gross domestic product (GDP)
to health care in the 12th Five-year Plan (spanning 2012–2017).3 The union budget from 2013–2014 saw
an allocation of INR373.3 billion versus the earlier INR307.02 billion. Further, under the new plan, the
NRHM and NUHM came under the jurisdiction of the National Health Mission, and this body was
allocated another INR212.39 billion to deliver quality health care to everyone. Of these funds, INR42.77
billion was allocated to improving medical education, research and training facilities, and INR16.5 billion
was committed to building better health infrastructure through more adequately sized and equipped
medical hospitals.4
The government maintained and enhanced its support to the private sector through various measures like
permitting 100 per cent foreign direct investment (FDI) for hospitals under the automatic route.5 The
government also announced tax benefits to private players — both existing and new — who would set up
hospital chains across Indian cities. The relief would be available to private hospitals with 100 beds or
more. Import and customs duties on medical and life-saving equipment were also reduced from 25 per
cent to 5 per cent.6
Health Care Providers in India
The challenges of the vast terrain of the country and inadequate medical knowledge at the grassroots level
created immense confusion. People living in remote villages or small towns often did not have the
opportunity to receive the right diagnosis and hence were sometimes treated for the wrong disease or by
unqualified medical practitioners. The essential problem was that the health delivery system in India was
both complex and fragmented. Rajiv Tewari, director of health and wellness at Rockland Hospitals,
observed, “There are interesting possibilities if one looks at how technology is simplifying our lives and
making most service delivery operations more efficient. For example, if you look at the advantage that
Google Maps offers in directing you to any destination that you wish to travel to. Maybe we in the health
care domain need to use this simple device to connect and deliver timely health care in the remotest part
of India.”
Of the service contribution to health care system, hospitals accounted for 71 per cent; diagnostics, 4 per
cent; pharmaceuticals, 13 per cent; medical equipment and supplies, 9 per cent; and health insurance, 3
per cent.7 Typically, health care facilities were looked on as concentric circles, with the innermost being
primary care. In India, in accordance with the World Health Organization Alma Ata Declaration of 1978,8
the first level was primary health care, which was to take care of general health, local epidemics, health
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education, family planning, immunization drives, etc. Primary health care was a government-dominated
category; however, a number of private players were considering this as an avenue for business
expansion. The second tier was secondary care, which was generally at the district or block level and
included specialist care that went beyond common medical ailments. The last tier was tertiary care, which
had specialized consultative and surgical care and offered advanced diagnostic and intensive care units.
Secondary care and tertiary care were dominated by the private sector, which operated 78 per cent of the
facilities.9
The hospitals were also classified on the basis of ownership: public (run by the central or state
government); private (owned by a person or group to earn profits); voluntary (funded by the private or
government sector for non-commercial purposes); and corporate (usually a commercial chain of hospitals
registered as a listed company). Hospitals were also classified as general, high-end specialty or super-
specialty. General hospitals were manned by at least two medical officers working around the clock, the
whole year; they had provisions for providing in-house accommodation to patients and provided
treatment for all major diseases. Specialized hospitals were usually attached to a general hospital and
offered specialized treatment, such as heart and cardiovascular hospital services.
Rural hospitals were similar to general hospitals, but usually had only one permanent medical officer.
Due to the remoteness and inaccessibility of rural areas, the health care systems in such areas were based
on networks of smaller centres in villages that were ultimately connected to state or district general
hospitals. The hospitals were categorized as large hospitals (100 or more beds), middle-rung hospitals
(30–80 beds) or nursing homes (facilities with recovery rooms and fewer than 30 beds).
Universally, the bed occupancy rate was a sound indicator of process efficiency; hospitals with an 80 per
cent occupancy rate were classified as efficient.10 Another indicator was average length of stay; the
benchmark was 3.5 days. Operating efficiency indicated that the patients, post-treatment, should be
released from the hospital as soon as possible.11
Competitive Landscape: Health Care Service Providers
The nature of the sector demanded that service providers look at complete start-to-finish delivery
solutions ranging from diagnosis to post-treatment care. Because health care was a high-risk, high-
involvement decision for patients and families, they relied on patient reviews and experts like doctors and
paramedics. To ensure continued business, occupancy and patient inflow, a number of health care
providers sought out insurance and corporate relationships to ensure patient inflow. Some major private
players who dominated Indian health care services were:
Apollo Hospitals: This hospital group founded in 1983 was a family-owned initiative. The chain had
hospitals spread across India, Mauritius, Bangladesh and Kuwait and offered treatment in 50 different
areas, including cardiology, oncology, gastroenterology, orthopedics, neurology and critical care services
and transplants. It had a total capacity of 8,500 beds in 50 hospitals, 1,350 pharmacies, 100 diagnostic and
primary health clinics and 100 telemedicine units in nine countries. Besides health care, the group also
offered health care consulting services.
Fortis Healthcare (India) Limited: Established in 2001, this hospital chain was a subsidiary of Fortis
Healthcare Holding Private Limited. Fortis had a presence in most South Asian countries, as well as
Australia and New Zealand. In India, it had more than 65 hospitals and a bed capacity of about 5,000.
Besides offering treatment in all possible areas — similar to Apollo — Fortis also offered state-of-the-art
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cosmetic surgery, and thus had a huge inflow of medical tourists who came to India in search of low-cost,
high-quality cosmetic solutions.
Other Players: There were also multiple region-dominant domestic players, such as Manipal Health
Enterprises Private Limited, CARE Hospitals and Narayana Health, that had a strong foothold in southern
India, while other players, such as Max Healthcare, were prominent in the north. There were also foreign
players, including Columbia Asia and Wockhardt Hospitals, which had a presence in major and smaller
metropolitan areas as well as satellite areas.
Challenges and Growth Opportunities
The prospects for the Indian health care sector were extremely bright, as reported by a report from
Equentis Capital Private Limited: “The health care sector is growing at a 15 per cent CAGR12 and jumped
from US$45 billion in 2008 to US$78.6 billion in 2012 and [is] expected to touch US$158.2 billion by
2017.”13 These projections are better understood and interpreted by examining key trends that may impact
the numbers.
Adequate health care provisions for a country with a steadily growing population always remain a
challenge. One of the major reasons for this is inadequate infrastructure and an insufficient number of
qualified doctors and nurses (see Exhibit 1). Every year, 40,000 doctors graduated from the 335 medical
colleges in India. However, a huge proportion of those migrated to developed countries for better
prospects and the remainder wanted to stay only in Indian urban metros.14
The drive toward urbanization was not limited to doctors and health care professionals but was also
experienced among rural Indians, who sought to improve their conditions by seeking urban employment
opportunities. As a result of these economic opportunities, there had been a considerable rise in the
average purchasing power parity, which stood at INR20.74 per U.S. dollar.15 There was also an increasing
penetration of a CAGR of 30 per cent in the private health insurance sector. Further, two optimistic
indicators were that the Indian middle class was predicted to become 53 per cent of the total population
by 2015, and that economic prosperity and spending power in tiers II and III16 were also forecasted to
exhibit healthy growth.17
Another significant trend was the sedentary and high-stress urban lifestyle, which was marked by erratic
schedules as well as overconsumption of fatty food products. Hence, an alarming rise was predicted:
Indians suffering from non-communicable and lifestyle diseases like diabetes, cardiac problems, obesity,
cancer and pulmonary diseases would increase from 7.7 per cent in 2005 to 11.6 per cent in 2015.18 This
had caused new-age Indians to become more health-conscious and look at preventive care rather than
only sick care. Further, as a consequence of better living conditions and the availability of health care
services, there had been an increase in the life expectancy of the average Indian to 65.5 years;19 this had
caused an increase in the senior population, which was predicted to increase to 9.3 per cent of the total
population by 2016.20
The opening up of FDI to the health care sector had also resulted in a number of Indian hospitals
becoming associated with world-recognized health care experts, and this had led to the setting up of
world-class health care facilities in the country. These world-class facilities and the advantage of cheap
labour had led to India fast-emerging as a favourite medical tourism destination (see Exhibit 2). This
medical tourist traffic came mostly from the United Arab Emirates, Russia and European nations and was
expected to reach 3.2 million people annually by 2015.
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ROCKLAND HOSPITALS: DELIVERING HEALTH CARE SOLUTIONS
The Rockland Group was a family-run enterprise with Rajesh Srivastava and his two brothers, Prabhat
and Rishi, at its helm. As a young child, Rajesh’s first business stint was procuring syllabus books from
wholesalers and selling them at a small margin to his classmates in school. After two decades of exploring
opportunities like jeans manufacturing and trading and starting cellphone rental services, the Srivastava
brothers moved into hospitality and then progressed to health care and hospitals. “In India, the mindset is
changing from ‘sick care’ to ‘health care,’ and therefore propelling a huge demand in quality health care
services,” noted Rajesh Srivastava. The Rockland Group commissioned its first 100-bed hospital at the
Qutab21 Institutional Area in December 2004. This was followed by establishing the second Rockland unit
in Dwarka22 in 2012. In 2013, the Qutab unit was expanded to double its capacity to 200 beds to cater to
the increasing demand in the area. Soon after, the group realized the potential of establishing a network of
hospitals spread across the NCR that could effectively serve the health care needs of those residing in the
northern belt of the country. Moving towards this goal, in January 2014, the organization operationalized
a 500-bed super-specialty hospital in Manesar, Haryana.
Rockland Hospitals Private Limited was conceptualized as an integrated health care provider with a
planned consortium of four super-specialty hospitals. The group had created what it termed a “medical
corridor” (see Exhibit 3) for the patients in and around the NCR. Rockland was the third-largest private
hospital group in the region in terms of bed capacity. It had three operational units with a total capacity of
808 beds. The group made measured, well-researched decisions with regard to hospital location and
expanding operations. Rockland was UKAS ISO 9001:2008 certified and adhered to all medical and
ethical standards laid down by national and international accreditation bodies. It was one of the first
hospitals to be accredited by the National Accreditation Board of Hospitals & Healthcare Providers
(NABH). The hospital was also included in the referral network of the Boston HealthCare of hospitals for
international patients from the United States, Canada and European countries. Rockland Hospitals were
also recognized as teaching hospitals for Diplomate of National Board (DNB) students.23 Most of the
students who enrolled in these courses — especially in the Qutab hospital — were pursuing their higher
education from All India Institute of Medical Sciences (AIIMS) in New Delhi.
Building the Rockland Brand
The Rockland team had used a 360-degree brand-building exercise for building visibility and recognition
for the group. The hospital group was located in the NCR; therefore, initiatives taken by the hospital were
regularly reported in the dailies and business newspapers. Alongside regular press releases about the
launch of a new wing — cardiology or oncology, for example — there were also seasonal precautionary
public awareness campaigns in the form of flyers that educated the public about symptoms of seasonal
disorders, such as dengue and Chikungunya. The hospital group also undertook a number of outreach and
onsite health camps and checkup drives. It partnered with health-related organizations like Fitness First to
carry out preventive care drives. In 2014, the group decided to execute a series of events targeted at
preventive health care and lifestyle alteration. As part of this strategy, a five-kilometre marathon was held
on the International Day of Sport for Development and Peace — April 6, 2014 — in Dwarka, New Delhi.
The Rockland Super-specialties
The Rockland journey that began with a 90-bed hospital in 2004 had progressed in 2014 to three world-class
hospitals with a capacity of 808 beds (see Exhibit 4). Each hospital had been developed in a corporatized
manner with a sound management system in place. The hospital at Qutab Institutional Area was the group’s
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flagship hospital and contributed the majority of the group’s revenue. “Sixty-five per cent of our revenue
comes from orthopedics, oncology, gastroenteritis, cardiology and neurology,” stated Srivastava.24
“Significant changes have taken place in the past one-and-a-half years, after the advent of Dr. Sameer A.
Khan, the group’s chief operating officer. Rockland was initially recognized for orthopedics, oncology
and gastroenterology; but there has been a considerable and conscious development of specialty units,
such as cardiovascular, renal and neurosciences, and interventions, such as bariatric surgery,” observed
Dr. Pramod Gautam, the medical superintendent of Rockland’s Qutab hospital. “Also, considerable
autonomy to the CEO and the working committees ensures reduced decision time.”
Rockland Practices
The hospital group had Hitachi, GE Healthcare and Philips as its equipment partners and Information and
Communication Technology as its technology partner. The Rockland Group had developed its own well-
defined cross-specialty standard operating procedure in order to deliver consistent clinical delivery. The
day-to-day work was supervised by 15 specially constituted medical committees that oversaw adherence
to the established norms and clinical consistency. “The hospital has a well-defined corporatized structure
and is managed like a corporate business house rather than a hospital,”25 said Navneet Bali, the unit
director at Rockland Qutab.
“Clinical and systems protocols are adhered to and the hospital authorities do [everything] possible to
follow the guidelines of the medical council of India. Monthly meetings of the [specialty] unit
management advisory committee are organized — and that includes all the team leaders and the
administration heads — [and] it is chaired by the senior doctor of the unit. The objective is to closely
review the procedures and performance of the unit. The sales and marketing head shares his team’s inputs
about market data and the committee takes unit-specific decisions about the gaps/improvements in the
existing systems. Quarterly meetings are held with the CEO [and] the corporate team, as well as the
senior doctors from the specialty units. The objective is to review the smooth and efficient interface
between the different departments and units,” said Dr. Pramod Gautam.26
In order to deliver quality health care at an affordable cost, the group had established certain methods.
“The Rockland Group is always committed to working towards a cost advantage. For this, we have
constant dialogue with doctors to understand any new procedures or equipment that can help deliver
better [care] and at a cost advantage. The sales and marketing [department] is always monitoring and
mapping the price and technology advantage in comparison with the other hospitals in the NCR, as that is
where the real competition lies. We are constantly on the lookout for identifying any new surgical or
medical equipment, and in [the] case [that] it meets the quality and safety standards, it is adopted and
offered to the patient who might be seeking a cost advantage,” stated Bali.27
“At Rockland, we are constantly in a research mode and are always on the lookout for conscious cost
cutting by comparing prices and getting equipment that is slightly cheaper and yet has maintained all
quality standards and is at par with the best brands. Our ‘star’ doctors [must] first give the go-ahead to
buy the product; only then [do] we close the deal. You see, the doctor performing the surgery is a
recognized stalwart in his field of specialization — hence there is an immense trust factor for the patients.
The vendor is also happy, as he is able to use the star doctor’s referral for promoting his product,” added
Harpreet Singh, sales and marketing head. Singh continued, “Another reason for the fixed cost advantage
at Rockland is due to its in-house surgeons and doctors. There is a healthy mix of a couple of young, star,
clinically sound and experienced doctors. Our conscious efforts to deliver value to the customer result in
being able to keep our treatment costs at an average of 10–20 per cent less than what would be charged at
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hospitals like Fortis, Apollo or Max.” Singh had been in the health care business for the past 12 years and
observed that, “The freedom to make quick decisions and easy accessibility to the decision heads makes
Rockland truly unique as compared to Max, Fortis [and] Medanta”28 (see Exhibit 5).
The Rockland Team
Srivastava recognized that the initiative could be managed better if the entrepreneurial team was
supported by a team of medical experts and professionals. Thus, he had handpicked a team consisting of
pioneers from the clinical and medical fields, as well as administration professionals with relevant
experience in the health care sector — at the policy formulation, implementation and evaluation stages —
in large-scale public and private organizations (see Exhibit 6).
In 2014, the group had 1,062 full-time employees, including management and corporate executives. The
hospitals offered 24-7 access to consultation facilities for patients through a team of 20 service managers.
These managers acted as a single point of contact between the patient and the general practitioner. This
shortened the response time in delivering timely medical assistance to the patient. “Family entrepreneurs
value human resources and care for the employees, as [they] consider them an extremely valuable
resource. At Rockland, the attrition rate is extremely low — less than 5 per cent,” stated Bali.
Srivastava asserted that “we lay great emphasis on managing cost, be it operational cost or cost of
procedures.” The group recruited minimal “star doctors” — doctors who were renowned specialists in
their respective fields. Those star doctors who were engaged by Rockland were hired based on seniority
and roles that were mutually agreed upon (see Exhibit 7). Some of the distinguished doctors at Rockland,
who were considered star doctors, were Dr. P.K. Dave, former director at AIIMS, the best orthopedic
doctor in the country. He had been awarded the Padma Shri Award. Dr. K.K. Pandey was considered to
be the pioneer of oncosurgery in India. Dr. M.P. Sharma was the former president of the Indian Society of
Gastroenterology. Dr. H. Vardhan was one of the most experienced cardiologists in the country. Dr. R.
Sethi, a plastic and reconstructive surgery expert, had performed over 7,000 successful surgical
operations. Dr. B.K. Dubey, an angioplasty expert, was considered to be the pioneer of the transradial
approach to coronary intervention in India. Rockland Hospitals conducted a thorough credential check
and assessed management skills and research interests of candidates before making final selections. 60
per cent of Rockland’s consultants had been empanelled29 with the hospital for more than six years.
Tewari stated, “Rockland being a teaching hospital as well, we lay a lot of emphasis on continuous on-
the-job learning. Every Thursday we hold a CEM [continuous medical education initiative]. Here, the
senior consultants share case studies and new developments in their respective field. This is done at the
Qutab hospital premises and information is available to doctors in the other two hospitals as well. There
may be DNB students and doctors from other hospitals as well as visiting consultants who join the
sessions.”
Rockland Customers
Rockland Hospitals got a majority of its customers from corporate connections. This included
government employees — central government employees, ex-servicemen and those under the directorate
of health services. The hospitals also had an empanelment with 90 public-sector units (PSUs) and 144
corporate empanelments.30 The second group of customers at Rockland came through insurance agencies.
Rockland had relationships with 30 insurance and third-party administrators. Recently, the group had also
made connections with the General Insurers’ Public Sector Association — a body that was accountable
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for 75 per cent of northern India’s insurance dealings. There were also domestic patient walk-ins from the
NCR or neighbouring states. The hospital group had a strong general practitioner network, where the
doctors came from neighbouring states and were empanelled as visiting consultants with Rockland;
hence, patients were referred to Rockland by these doctors. The last customer group was the foreign
patients. These patients came through overseas facilitators and international outreach clinics. As of 2014,
the group had 34 overseas facilitators in countries such as Afghanistan, Nigeria, Iraq, Uganda, Russia,
Germany, Nepal, Yemen and Congo, and partnered with global agencies including E-Meditek, Meditour
and MediTravels, which provided advice and guidance to patients across the globe.
Rockland Hospitals: Financials
Rockland Group was a privately held company where 88 per cent of the shareholding was by the
promoters and 12 per cent was by the International Finance Corporation. The company had three fully
operational hospitals as of 2014 and closed 2014 with total revenue of INR1.488 billion (see Exhibit 8).
As of fiscal year 2014, Rockland Hospitals had a near-equal balance of debt and equity. The major debt
providers were a consortium of Indian banks.
THE ROAD AHEAD
The journey so far had been satisfactory and well executed. However, the road ahead needed a strategic
push. Srivastava was looking at multiple growth engines — essentially three distinct possibilities that
could be Rockland’s way forward. Briefly, this involved:
 There was a definite demand and supply gap when one looked at the health care needs of the north
Indian domestic market. The corridor envisioned was well integrated and had all the ingredients to
deliver on every count. However, capacity utilization was a concern and needed to be optimized so
that Rockland moved from per-bed profitability to per-patient profitability. This meant that rather
than looking at one-time treatments, the hospital should look at maximizing satisfaction, to ensure
that when it came to availing of any kind of treatment the customer always returned to Rockland.
 The improved infrastructure of the country, as well as the location advantage of the hospitals (being
in the NCR, made international and medical tourism an equally attractive engine for growth. Though
Rockland had a decent inflow of international traffic, it was a very small contributor to the group’s
revenue and needed to be further enhanced. The question was: How could Rockland ensure that it
became the preferred choice for international patients?
 There was also a service failure at the service level — Indians residing in remote areas of the country
were deprived of affordable and accessible medical care. This opportunity inspired the concept of a
health care delivery model that could be envisaged as a network, with the Rockland medical corridor
as the tertiary care option, connected to customers through local primary health care workers residing
in the remotest corners of the country. The idea was extremely challenging, but also had interesting
potential. However, this idea would need well-formalized short- and long-term strategies.
All roads looked equally attractive, but Srivastava had to make his choices and then formulate and
implement his strategies accordingly. As he turned to look at the Rockland Hospitals’ snapshots and
growth charts, Srivastava wondered if there really was a simple answer to his dilemma. What was the way
forward for Rockland Hospitals?
The author would like to acknowledge the help received from Mr. Rajesh Srivastava, CMD, Rockland Hospitals,
and Mr. Rajiv Tewari, director of health & wellness, Rockland Hospitals, in the preparation of the case.
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EXHIBIT 1: COMPARATIVE SNAPSHOT OF HEALTH CARE IN INDIA VERSUS CHINA, BRAZIL AND
WORLD AVERAGE
Parameter India China Brazil World

Health care spend as percentage of GDP 3.7 5 9 9.2
Per capita health expenditure (US$) 51 219 39 941
Public spending on health care (percentage contribution to 28.2 54.3 47 58.9
total health care spending)
Out-of-pocket spending on health care (percentage 86 77.2 57.8 49.9
contribution to total health care spending)
Number of doctors/10,000 population 6.5 14.6 17.6 13.9
Number of nurses/10,000 population 10 15.1 64.2 29
Number of pharmacists/10,000 population 5.4 2.6 5.4 6.02
Number of beds/10,000 population 9 39 23 30
Source: WHO World Health Statistics, 2013, www.who.int/gho/publications/world_health_statistics/en, accessed May 1, 2014.
EXHIBIT 2: COMPARATIVE ANALYSIS OF COST OF TREATMENT IN INDIA VERSUS OTHER ASIAN

COUNTRIES (US$)
Procedure India Korea Thailand Malaysia Singapore

Heart bypass 5,200 28,900 15,121 11,430 24,000
Heart valve replacement 5,500 43,500 21,212 10,580 12,500
Hip replacement 7,000 14,120 7,879 7,500 14,000
Knee replacement 6,200 19,800 12,297 7,000 13,000
Spinal fusion 6,500 15,400 9,091 6,000 9,000
Dental implant 1,000 4,200 3,636 345 N/A
Cosmetic surgery 2,000–4,000 5,000–15,300 2,000–3,697 2,000–3,440 N/A
LASIK (both eyes) 500 6,000 1,818 477 N/A
In vitro fertilization 3,250 2,180 9,091 3,819 N/A
Source: Compiled from visiting websites of hospitals and clinics offering the services in these countries and then taking the
median of the same; www.medicalindiatourism.com, accessed April 19, 2014.
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EXHIBIT 3: THE ROCKLAND MEDICAL CORRIDOR
Source: Company documents.
EXHIBIT 4: ROCKLAND HOSPITALS — A BRIEF OVERVIEW
Rockland Hospitals — Qutab: The hospital enjoyed a prime location in the posh south Delhi area overlooking
the city forest. It was at a distance of 10 kilometres from the International Airport. It had been established in
2004 as a super-specialty hospital and was NABH and National Accreditation Board for Testing and Calibration
Laboratories (NABL) certified. It had a built area of about 200,000 square feet.
 Services offered: Internal medicine; surgery-general; laparoscopic; bariatric; oncology & surgical oncology;
orthopedics and joint replacement; gastroenterology; gynecology; pediatrics; renal sciences; cardiology &
cardiac surgery; neurology & neurosurgery; basic & advanced diagnostics; general and basic specialties.
 Medical infrastructure: Operating capacity of 200 beds; six operation theatres and 52 intensive-care unit
(ICU) beds; cardiac catheterization lab; MRI/CT scan; bone densitometry systems and dialysis facilities.
 Medical and other staff total: 675
 Doctors (in-house) - 81; visiting & outsourced - 206
 Nursing staff - 156; paramedical - 64; support - 168
 Key statistics:
- ARPOB1: INR21,523; ALOS2 2.9 days; bed occupancy rate: 68 per cent.
- IPD3 patients: 16,803
- Patient mix: 62 per cent corporate tie-ups; 10 per cent from insurance patients; 5 per cent
international patients; and the rest from domestic patients (walk-ins).
- Revenue contribution: 28 per cent of revenue came from orthopedics; 23 per cent from cardiology;
19 per cent from OPD4; and the rest from other departments.
Rockland Hospitals — Dwarka: The hospital was located in the southwest Delhi area and was 10 kilometres
from the International Airport. It had been commissioned in 2012 as a super-specialty hospital. It had about
120,000 square feet of built area.
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EXHIBIT 4 (CONTINUED)
 Services offered: Plastic and cosmetic surgery; general surgery; oncology & oncosurgery; radiology;
orthopedics; gastroenterology; endocrinology; gynecology; pediatrics; renal sciences; cardiology & cardiac
surgery; nephrology & urology; neurology; basic & advanced diagnostics; general and basic specialties;
critical care and emergency.
 Medical infrastructure: Operating capacity of 103 beds; two operation theatres and 22 ICU beds; cardiac
cath. lab; MRI/CT scan; bone densitometry systems and dialysis facilities.
 Key statistics:
- ARPOB: INR19,068; ALOS: 3.3 days; bed occupancy rate: 60 per cent.
- IPD patients: 6,739
- Patient mix: 60 per cent corporate tie-ups; 16 per cent from insurance patients; three per cent
international patients; and the rest from domestic patients (walk-ins).
- Revenue contribution: 46 per cent of revenue came from orthopedics; 18 per cent from OPD; 11 per
cent from cardiology; and the rest from other departments.
Rockland Hospitals — Ma nesar: The hospital was located in the industrial model township declared by the
government of Haryana. It had been commissioned in January 2013 as a super-specialty hospital. The largest
hospital in the Rockland network, it had a built area of about 500,000 square feet. It was unique as it also
included a 65-bed assisted living centre for long-term patients.
 Services offered: Internal medicine, general and laparoscopic surgery; eye care; ear, nose, and throat
care and cochlear implants; obstetrics and gynecology; pediatrics, dermatology; dental and maxillofacial
surgery; psychiatry; plastic and cosmetic surgery; oncology & oncosurgery; radiology; orthopedics;
rheumatology; gastroenterology; cardiology urology; neurology; basic & advanced diagnostics; general and
basic specialties; high-end critical care and emergency; organ transplant program
 Medical infrastructure: Operating capacity of 300 beds (planned capacity of 505 beds);31 eight operation
theatres and 150 ICU beds; cardiac cath. lab; MRI/CT scan; bone densitometry systems and dialysis
facilities; radiotherapy; cloud-based infrastructure for networked diagnostics
 Key statistics:
- ARPOB: INR32,988; ALOS: 3.8 days; bed occupancy rate: 42 per cent
- IPD patients: 12,068
- Patient mix: 56 per cent corporate tie-ups; 9 per cent from insurance patients; 3 per cent international
patients; and the rest from domestic patients (walk-ins)
- Revenue contribution: 38 per cent of revenue came from orthopedics; 19 per cent from OPD; 15 per
cent from cardiology; 11 per cent from other surgeries; and the rest from other departments
Note: 1 ARPOB: Average revenue per operating bed; 2 ALOS: Average length of stay; 3 IPD: Inpatient department; 4 OPD:
Outpatient department.
Source: Company documents and Rockland Hospitals website, www.rocklandhospitals.com, accessed July 19, 2014.
Page 12 9B15A033
EXHIBIT 5: THE ROCKLAND SERVICE DELIVERY PROCESS: QUTAB HOSPITAL
At 500 metres from the main road, it took two to three minutes to enter the premises. A valet
was available for car parking. There were two entry gates to the premises; each was manned
Premises
24-7 by a security guard. There was also a 24-7 automatic teller machine just inside the
Location
premises. Wheelchair and stretcher accommodations were available at the entry gate. On the
& Description
ground floor there was an in-house canteen for patients, relatives and friends. There was also
a Costa Coffee Express outlet on the ground floor that sold coffee, tea and light savories.
As one entered the hospital, there was a separate OPD registration desk, normally managed
by four people (the station was managed by six people between 11:30 a.m. and 1:00 p.m., as
the flow of OPD patients was highest at this time). New patients registered at this desk
received a unique patient Medical Record Number (MRN) that was entered into the Rockland
database. Once the patient had registered for consultation, he or she went to the basement.
All OPDs — oncology, gastroenterology, orthopedics, urology, etc. — were located here. Each
Outpatient had a dedicated assigned area with signage indicating the location. Here, there was an
Department assistance desk that was manned by three or four Rockland staff. Appointment booking and
(OPD) consultation advice was carried out from the desk. All consultation billing was also done at this
desk. All of the doctors’ office chambers were on this floor and door signage clearly displayed
names and consulting hours. The consultants’ visiting charts and availability were prominently
displayed at the entrance of each OPD section. There were lounges for patients who came for
a health check-up. The international patients who came to this area were assisted during the
entire procedure by a person from the international desk. The hospital’s diagnostic facilities
were also available on this floor. The billing and reports were managed at the same OPD
counter.
Domestic Desk: This desk was manned 24-7 by two or three Rockland staff members. This
desk was for all in-country patients who wanted admission — including the insurance,
Inpatient
corporate empanelled (government, PSU and private) and cash patients. The total process for
Department
admission took 10–15 minutes for empanelled patients and 15–20 minutes for cash patients.
(IPD)
International Desk: This catered to both OPD and IPD patients from other countries and was
manned by four to five people. The opening time for the desk was from 8:30 a.m. to 6:30 p.m.
The staff spoke Dari, Arabic, Russian, French and Uzbek in addition to English and
Hindustani.
Operation The operation theatre and the two ICUs were located on the first floor. The section was out-of-
Theatre, bounds for patients’ family and friends. The station was manned by four doctors, four to five
Intensive Care nurses and four to five paramedical staff members. There was a 24-hour emergency and
Units (ICU) trauma service available with a fully equipped ambulance, as well as an exclusive emergency
and operation theatre to deal with medical emergencies. The emergency section had a complete
Surgical ICU specialty back-up from both the cardiology department and the neuroscience department, in
case the emergency patient needed specialized care or advice.
There were four categories of rooms: economy, double, single-standard and executive rooms.
Inpatient These were located on the second and third floors for the domestic patients. Those for
Rooms international patients — single super-luxury rooms — were available on the fourth floor. Every
floor was manned by a doctor, nursing staff and paramedical and support staff for assistance.
The record section, where the officers managed the records of the patients and maintained a
database based on the MRN, was located on the ground floor. The patients who came to
Rockland for admissions were given a transparent package for the medical
treatment/diagnosis they sought, with the cost of every component and variable — type of
room, surgical procedure and necessary equipment — clearly specified. The patient needed to
Miscellaneous deposit 85 per cent (estimated) of the entire stay’s cost at the time of admission. In the case of
elective surgery, 100 per cent payment for the operation was required in advance. An interim
bill was generated every day so the patient could get an up-to-date idea of expenditures over
the deposit made. In case the outstanding balance exceeded INR5,000, the patient was
requested to pay the necessary amount. Post-treatment, the discharge process took three to
four hours after the clearance had been given by the doctor. Logistics assistance — e.g.,
ambulance — was available in case the patient needed it.
Source: Company documents and author’s observation of the Qutab hospital unit.
Page 13 9B15A033
EXHIBIT 6: ROCKLAND PROFESSIONALS — PROMOTERS, ADMINISTRATION AND MEDICAL

EXPERTS
First generation 20–30+ years of experience in setting up

Mr. Rajesh Srivastava, chairman, Rockland diverse businesses. An innovative and
Group cohesive family group.
Mr. Prabhat Srivastava, managing director,
Rockland Group
Mr. Rishi Srivastava, director, Rockland Group
Promoters Second generation (all under 30 years old) All educated at school level by premier
Ms. Somya Srivastava, director, Rockland Indian educational institutions and at
Group bachelor’s level by British institutions. They
Ms. Sanya Srivastava, director, Rockland had entered the family business in the last
Group couple of years.
Mr. Pranav Srivastava, director, Rockland
Group
Dr. Sameer A. Khan, group chief executive Bachelor of Medicine from Gwalior,
officer, Rockland Group Madhya Pradesh; master’s degree in
health care management from Tata
Institute of Social Sciences; had 18 years
of varied experience. His last assignment
was as chief operating officer at Nova
Medical Centers.
Mr. Sunil Kapur, director of business and A management graduate with extensive
Corporate
sales, Rockland Group experience with automobiles,
Team
pharmaceuticals and health care. He was
currently responsible for looking at
expanding Rockland’s international
business.
Mr. Rajiv Tewari, director of health & wellness, A management graduate with 32 years’
Rockland Group experience in media and communication.
He was responsible for all brand building
and corporate communication at Rockland.
Mr. Ripon Malhotra, chief financial officer, Over 27 years in corporate and strategic
Rockland Group finance in health care. A chartered
accountant by profession, he was known to
have corporatized pathology labs in India.
Ms. Pushpam Kashyap, head of HR, Rockland A postgraduate in human resource
Group management, she was responsible for all
HR-related decisions and policymaking in
the group. She was the ex-head of HR at
Fortis Healthcare.
Mr. Navneet Bali, unit director, Rockland All three came with postgraduate education
Qutab in health care management. Each was the
Hospital Mr. Gunjan Sinha, unit director, Rockland individual head of each of the hospitals and
Head Dwarka ran it as a strategic business unit.
Mr. Mayur Dave, unit director, Rockland
Manesar
Page 14 9B15A033
EXHIBIT 7: ROCKLAND DOCTORS — ROLES & INCENTIVE PLANS
Position Exclusivity OPD IPD Payment/Incentive Model Designation/Grade

Full-time Yes Yes Yes Minimum guarantee1 + Executive
performance-linked incentives director/director/senior
(PLIs)2 consultant/consultant
Full-time Yes Yes3 Yes3 Salary Junior consultant/attending
consultant
Visiting No Yes Yes Fee for services Senior consultant/consultant
consultant
Courtesy No Yes Yes Fee for services Senior consultant/consultant
consultant
1
A minimum guarantee was paid for the first year.
2
PLIs were signed between doctors and the hospital at the time of hiring and calculated on pre-established fee split as per
agreements, paid on an annualized basis.
3
The junior consultants could conduct independent OPD but intensive care had to be delivered under the apprenticeship of
a senior doctor.
EXHIBIT 8: ROCKLAND HOSPITALS — KEY FINANCIALS (IN INR10,000,000S)
Balance Sheet as of Year Ending 2014

Liabilities Assets
Share capital 34.4 Fixed assets 573.8
Reserves and surplus 251.3 Intangible assets 15.4
Total shareholders’ funds 285.8 Capital work-in-progress 0.4
Long-term loans and advances 16.3
Long-term borrowings 271.4 Other non-current assets 0
Deferred tax liabilities (net) 0.1 Total non-current assets 605.9
Other long-term liabilities 12.9
Long-term provisions 0.7 Inventories 0.8
Total non-current liabilities 285.1 Trade receivables 53.5
Cash and bank balances 5.3
Short-term borrowings 25.4 Short-term loans and advances 4.6
Trade payables 54.5 Other current assets 1.4
Other current liabilities 20.6 Total current assets 65.5
Short-term provisions 0.1
Total current liabilities 100.5
Total liabilities 671.4 Total assets 671.4
Profit and Loss for Financial Year 2014
Revenue from operations 146.6
Other income 2.2
Total revenue 148.8
Cost of materials consumed 44.8
Employee benefits expense 39
Finance costs 16.9
Depreciation and amortization expense 15
Other expenses 46.3
Total expenses 162
Profit/(loss) before tax for the year -13.2
Current tax expense 0
Deferred tax expense
Profit after tax -13.2
Page 15 9B15A033
ENDNOTES
1
S. Ma and N. Sood, “A Comparison of the Health Systems in China and India,” Centre for Asia Pacific Policy, 2008.
2
Information on the schemes, http://nrhm.gov.in, accessed April 18, 2014.
3
“Montek: Aim to Increase Healthcare Spending to 2.5% Of GDP,” The Economic Times, September 9, 2011,
http://articles.economictimes.indiatimes.com/2011-09-09/news/30135472_1_healthcare-sector-12th-plan-private-sector,
accessed April 18, 2014.
4
“Union Budget of India,” 2013–2014, http://indiabudget.nic.in/budget.asp, accessed April 18, 2014.
5
FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all
activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time; “Consolidated
FDI Policy,” Department of Industrial Policy and Promotion, www.dipp.nic.in/English/Policies/FDI_Circular_01_2013.pdf,
6
Ibid.
7
“Hospital Market in India,” Research on India, Aranca, 2013.
8
“Declaration of Alma-Ata,” World Health Organization, www.euro.who.int/__data/assets/pdf_file/0009/113877/E93944.pdf,
accessed March 2, 2015.
9
“Healthcare industry — Overview,” India BIZNEWS, October 1, 2009, www.indiabiznews.com/?q=node/513, accessed March
2, 2015.
10
S. Chatterjee, C. Levin and R. Laxminarayan, “Unit Cost of Medical Services at Different Hospitals in India,” PLOS ONE,
8(7), July 23, 2013.
11
R. Bhat and N. Jain, “Financial Performance for Private Sector Hospitals in India: Some Further Evidence,” Indian Institute
of Management Ahmedabad, April 2006, www.iimahd.ernet.in/publications/data/2006-04-08rbhat.pdf, accessed January 16,
2015.
12
CAGR: Compound annual growth rate was useful for assessing growth in a sector that shows wide fluctuations.
13
“India’s Healthcare Sector to Grow to $158.2 Billion in 2017: Study,” The Economic Times, December 1, 2013,
http://articles.economictimes.indiatimes.com/2013-12-01/news/44619572_1_healthcare-sector-healthcare-delivery-fortis,
14
S. Garg, R. Singh and M. Grover, “India’s Health Workforce: Current Status and the Way Forward,” The National Medical
Journal of India, 25(2), 2012, pp. 111–113.
15
Ibid.
16
Tier II cities have a population of one to four million, while tier III cities have a population less than one million.
17
M. Nair, “Emergence of Innovative Healthcare Delivery Models — A Solution to India’s Healthcare Challenges,” Express
Healthcare, 2011, http://healthcare.financialexpress.com/201101/anniversaryspecial12.shtml, accessed April 19, 2014.
18
“Burden of Disease in India,” National Commission on Macroeconomics and Health, 2005,
www.who.int/macrohealth/action/NCMH_Burden%20of%20disease_(29%20Sep%202005).pdf, accessed April 19, 2014.
19
“Country Statistical Profile: India,” OECD Library, www.oecd-ilibrary.org/economics/country-statistical-profile-india_csp-
ind-table-en, accessed April 19, 2014.
20
Ibid.
21
The Qutab Institutional Area was in the south zone of New Delhi, India. It was centrally located and surrounded by a green
belt.
22
Dwarka was a new locality situated in the western zone of New Delhi, India.
23
Diplomate of National Board was a title awarded by the National Board of Examinations, an autonomous academic body
under the Ministry of Health and Family Welfare, to candidates who successfully completed their postgraduate or
postdoctoral medical education under it; http://natboard.nic.in/dnbfamilymedicinerevisedcriteria.htm, accessed July 28, 2014.
24
R. Dutta, “Rock Steady,” Health Care Radius, 2(2), November 2013, pp. 24–29.
25
Author’s interview with unit director on July 6, 2014, at Rockland Qutab Hospital.
26
Author’s interview with medical superintendent on July 6, 2014, at Rockland Qutab Hospital.
27
Ibid.
28
Author’s interview with sales & marketing head on July 6, 2014, at Rockland Qutab Hospital.
29
Empanelled refers to doctors who are not on regular roles but can consult and perform surgeries in the hospital.
30
Empanelment means that employees of the organization can use the services of the hospital at a lower/subsidized cost.
31
Rockland had recently signed a joint venture agreement with a leading medical infrastructure company, and had allocated
125 beds to start a dedicated cancer research centre.

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ROCKLAND HOSPITALS: INNOVATING HEALTH CARE IN INDIA (A)

Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-07-09

HEALTH CARE IN INDIA: AN OVERVIEW

Government Initiatives and Reforms

Health Care Providers in India

Competitive Landscape: Health Care Service Providers

Challenges and Growth Opportunities

ROCKLAND HOSPITALS: DELIVERING HEALTH CARE SOLUTIONS

Building the Rockland Brand

The Rockland Super-specialties

The Rockland Team

Rockland Hospitals: Financials

THE ROAD AHEAD

Parameter India China Brazil World

EXHIBIT 2: COMPARATIVE ANALYSIS OF COST OF TREATMENT IN INDIA VERSUS OTHER ASIAN

Procedure India Korea Thailand Malaysia Singapore

EXHIBIT 3: THE ROCKLAND MEDICAL CORRIDOR

Source: Company documents.

EXHIBIT 4: ROCKLAND HOSPITALS — A BRIEF OVERVIEW

EXHIBIT 5: THE ROCKLAND SERVICE DELIVERY PROCESS: QUTAB HOSPITAL

EXHIBIT 6: ROCKLAND PROFESSIONALS — PROMOTERS, ADMINISTRATION AND MEDICAL

First generation 20–30+ years of experience in setting up

Source: Company documents.

EXHIBIT 7: ROCKLAND DOCTORS — ROLES & INCENTIVE PLANS

Position Exclusivity OPD IPD Payment/Incentive Model Designation/Grade

EXHIBIT 8: ROCKLAND HOSPITALS — KEY FINANCIALS (IN INR10,000,000S)

Balance Sheet as of Year Ending 2014

Source: Company documents.

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