19-26 Jan

Healthcare Operations Management
IEOR 4507
Amit Arora
Amit Arora Bio
Professor, Healthcare Operations Management, Columbia University

Professor, Applied Risk Analytics, Columbia University
Professor, Healthcare Analytics, Chitkara University, India
22 years in new product innovation for Fortune 500 employees.
Ex-Cisco, Genpact, Vodafone, Virgin Mobile, GE Capital
2-time Founder – Tech & Ecommerce startups
Board Member – Childhood Leukemia & Lymphoma Foundation

VP – Product Management,
Advisory Board Member – Stealth US Health-tech Startup
Swiss Re
Cadence
Introductions
Be mentally present
Take notes
Phones on silent/airplane mode
Group formation
Share experiences
Class participation gets you better grades! No Zoom attendances please.

Course Contents
1. Healthcare system in the US

2. Comparison of US healthcare systems with other select countries.
3. Use of analytics in healthcare to address challenges around patient safety, hospital
capacity & cost optimisation.
4. Data management in Healthcare
5. Healthcare supply chains
6. Lean operations/Six Sigma in healthcare
7. Healthcare data privacy, security, and compliance
8. Role of pharma, life sciences & insurance industries as a contributor/blocker to better
healthcare.
Grading:
1. Class participation: 40%

2. Group presentations: 50%
3. Professor's impressions: 10% ( arriving on time, sense of humor, not sleeping in class
etc).
Healthcare Systems
US
Singapore
Taiwan
China
Germany
Japan
Indonesia
US
https://www.youtube.com/watch?v=4M0ooFlJmfk
5
5
US maintains highest elderly population
65 and over as % of total population

16%
14.5%
14%
12.0%
12% 11.2%
10.1%
10%
8%
6%
4%
2%
0%
China Singapore Taiwan United States
2014 Life
Expectancy
75.5 85 80.2 78.8
http://www.fhb.gov.hk/statistics/en/statistics/health_expenditure.htm
Work Bank:
The United States spends the greatest amount of its GDP on healthcare
Public Health
2014 % Healthcare Cost Life
Countries Expenditure (% of
healthcare of GDP per Capita expectancy
Gov’t expend.)
United States 17.1% 21.3% $8,895 78.8
China 5.5% 10.4% $322 75.5
Malaysia 4.2% 6.5% $410 75
Singapore 4.9% 14.1% $2,426 85
Thailand 6.5% 23.3% $215 74.7
South Korea 7.4% 12.3% $1,703 81.5
Taiwan 6.6% 20.3% $1,520 80.2
Source: https://www.bloomberg.com/graphics/infographics/most-efficient-health-care-around-the-world.html
Constant rate of increase in healthcare expenditures
Total Expenditure on Health as % of GDP

18%
United States, 17.1%
16%
14%
12%
10% Japan, 10.2%
8% South Korea, 7.4%

Taiwan, 6.2%
6% Hong Kong, 5.7%
China, 5.5%
4% Singapore, 4.9%
2%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
http://www.fhb.gov.hk/statistics/en/statistics/health_expenditure.htm
Work Bank:
United States Healthcare System
Medicare Overview
What is Medicare What is Covered
Medicare is a single-payer, national

social insurance program administered by
the US federal government established in
1965
Who is covered
• 44 million total beneficiaries = ~15%

US population
• 65 yrs+
• Certain disabilities (7.3 million)
• End-Stage Renal Disease (200K under
65 and 175K over 65K)
Breaking down Medicare Coverage
Traditional Medicare: Private Insurance: administered on the government’s behalf

administered directly by the federal Medicare Supplement
government Insurance: Medigap Medicare Advantage Plans
Optional Part C (Medicare Advantage Plans):

Part A (Hospital Insurance): Mandatory
Provides extra health Offered by a private company that contracts
$227-$415 monthly premium
insurance for health with Medicare to provide both Part A and Part B
• inpatient hospital stays
care costs not covered benefits.
• care in a skilled nursing facility, hospice care
by Original Medicare, • generally offer additional benefits, such
• some home health care
• First 60 days hospitalization free, then $1288 such as co-payments,
as vision, dental, and hearing
deductible after day 61 stay then $322 a night deductibles, and health
after for up to 90 days care if you travel Option 1: Part A + Part B
outside the U.S Option 2: Part A + Part B + Part D
Part B (Medical Insurance): Optional Part D (prescription drug): Optional

$100-$134 premium, $183 deductible then 20% Offered under two options
coinsurance A. stand-alone Prescription Drug Plan (PDP)
B. integrated prescription drug coverage
• certain doctors' services
(MAPD) through Medicare Advantage Plans
• outpatient care
(Part C)
• medical supplies
*Government regulate drug reimbursement,
• preventive services 7
private insurance manages drug rebates 7
2018 Drug Reimbursement for Elderly: Branded
2018 Defined Standard Benefit Design – Generals beneficiary; Branded
product
Deductible Catastrophic
Initial Coverage Limit Coverage Gap
Member Coinsurance= Member OOP 5%

25% (with deductible)
33% (no deductible) Member Coverage
Gap OOP
35%
Deductible Federal Reinsurance

Patient pays Pharma Discount
100% 80%
50% for General
Plan Liability 75% to 67% population
(Government
pays 50% for
Dual/LIS
members)
Plan Liability 15% Plan Liability 15%
ICL Limit (2017) = $3,700 Coverage gap limit

Total spending TrooP (2017) =
Troop includes both OOP $4,950
and Pharma
discount
2018 Drug Reimbursement for Elderly: Generics
2018 Defined Standard Benefit Design – Generals beneficiary; Generic
product
Deductible Catastrophic
Initial Coverage Limit Coverage Gap
Member Coinsurance= Member OOP 5%

25% (with deductible)
33% (no deductible) Member Coverage
Gap OOP
44%
Deductible Federal Reinsurance

Patient pays
100% 80%
Plan Liability 75% to 67%
Plan Liability 56%
Plan Liability 15%
ICL Limit (2017) = $3,700 Coverage gap limit

Total spending TrooP (2017) =
$4,950result in patients staying in the
The lack of Pharma discount will typically
coverage gap for longer where their OOP liability is higher than in
catastrophic
Sources of Medicare Revenue Vary (2015)
Where Do You Get the Most for Your Health Care Dollar?
Life Expectancy vs Healthcare cost as % of GDP
#16-17 Taiwan
#25 China
Concerns and Critiques for Medicare
Medicare Spending is increasing rapidly! 1. Average annual growth in total Medicare

spending is projected to be 7.1% between
2015 and 2025, much above inflation
-Baby bloomers adding to the overall

Medicare spends
2.There is no government provision for long-term

care management to control cost
3.Medicare does not cover costly services that

seniors and people with disabilities are likely to
need
- long-term services and supports
Source: Kaiser Family: http://kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ - dental services

SINGAPORE
13
13
Where Do You Get the Most for Your Health Care Dollar?
Life Expectancy vs Healthcare cost as % of GDP
#16-17 Taiwan
#25 China
Singapore Healthcare System
Singapore’s Aging Crisis
Average age of Citizens aged 65 Healthcare

population increase and above expenditures
from increase increase
39.3 to 84.3 62% 8-10%
By 2030
Source:
http://www.lifescienceboard.com/career-advisory/The-Evol
Healthcare Infrastructure
Sociocultural Ideologies Healthcare Infrastructure
“Social Harmony” Ministry of Health (1959)
Paternalism: National Health Plan (1983)

Government Responsibility • Individual
Healthcare as a Right • Government (80%)
• Community
Collectivism: Central Provident Fund (1984)
• Medisave
Care for the Weak • MediShield
• MediFund
• ElderShield
Ministerial Committee on Ageing (2007)

Healthcare Infrastructure
Compulsory Savings: Central Provident Fund
Source:
http://www.herworldplus.com/weddings/wedding-advice/how-afford-your-first-home-cpf
Government-Sponsored Health Insurance Programs
COVERED COVERED COMPULSORY/ FUNDING ELDER

POPULATIO GROUPS VOLUNTARY SOURCE BENEFITS
N
Savings
3 Active & Employer Account
MEDISAVE Retired Compulsory Wages Inpatient
Million Employees Government Outpatient
Medishield Pre.
LONDON
Risk-pooling
Employer
Large
MEDISHIELD 3.39 Citizens,
Voluntary
Copayment inpatient/outpati
Million PRs (<85) Deductibles ent bills
LIFE MediSave Private insur.
Safety net
MEDIFUND 4.81 Financially
Voluntary Government Endowment
Million Needy
Fund
Compulsory
ELDERSHIELD 740,000 Citizens, (Opt-out Self Long-term
PRs (>40) option) care
Source: 19
https://www.moh.gov.sg/content/moh_web/home/costs_and_financing/schemes_subsidies/Medifund.htm
Government-Sponsored Health Insurance Programs
MediSave MediShield Life MediFund ElderShield
Covered pop. (2012) 3 million 3.39 million 481 million --
Covered group Employees and retired All Singaporean citizens and PRs, Financially needy (e.g. All Singaporean
employees including elders up until age 85 unemployed) citizens and PRs over
and people with pre-existing age 40
conditions
Compulsory vs. Compulsory Voluntary Voluntary Voluntary (automatic
voluntary enrollment w/ opt-out
option)
Source of funds ~ 17% employer Government 100% government (when Self: Level-premiums
~ 20% wages Co-payments there are budget based on entry age,
~ 5% government interest Deductibles surpluses from capital payable until age 65
MediSave sum interest income)
Benefits of the elderly Builds up savings account Risk-pooling Safety net – provides Severe disability insurance
for healthcare needs insurance funds to the scheme for long term care
(retirement plan) Catastrophic insurance to help needy via “means-testing”
with larger outpatient and hospital
Can be used for basic inpatient care bills Endowment fund
or outpatient treatment
May be complemented by
Covers some private insurance for higher
MediShield premiums class (A/B1) wards [integrated
plans]
Reimbursement Lower premiums for Class B2/C 100% $400/mo up to 72 months
percentage/amt Avg $732/yr wards Pays for residuals from
Medisave and
MediShielf
Source:
https://www.moh.gov.sg/content/moh_web/home/costs_and_financing/schemes_subsidies/Medifund.htm
Advantages and Disadvantages
Pros Cons
Universal Health Insurance covering Unemployed and Non-Working Class

elderly; self-insurance and stability from unable to get funded through CPF
working age MediFund accounts.
ElderShield Premiums end after
retirement Non-Citizen elderly are left out of the
government’s welfare programs.
High life expectancy
ElderShield payouts are low and many do
not enroll.
Taiwa
n
22
22
Taiwan Healthcare System
Highlights
Taiwan Healthcare Overview

• Single-Payer Universal National Health Insurance (NHI) since 1995
• Everyone has a Health Insurance “Smart Cards” with memory chips
• Uniformed electronic medical records
• No referral system
Paying for NHI
• Very low copays ($2 doctor visit and max $6 prescription cost)
• subsidy depends on income and profession
– Elderly and low-income residents are heavily subsidized
Concerns
Aging population and rising cost of healthcare
Healthcare for the Elderly: The Long Care Act of 2015
Before: Elderly care relied on family caregivers and hospitals to deliver services and supports to its older
citizens
What is the Long Care Passed in May 2015: regulate the provision of care professionals and the establishment
Act: and management of long-term care institutions in Taiwan to cover about 760,000
individuals with disabilities
How many people are ~ 760,000

covered
Who is covered Cover people over the age of 65 with dementia, “disabled lowland aboriginals between
55 and 64 years of age,” disabled people under 49 years of age, and the frail elderly.
What type of Coverage Care includes family-care support, community-based preventive care, integrated services
for aboriginal groups in remote areas, and hospital discharge plans and transition care.
What is the Funding Long-Term Care Services Development Fund, with a minimum amount of NT$12
Sources billion (US$395 million), to be developed by the government over a five-year period.
public coffers
health surcharges on tobacco
donations
interest from the fund and other sources
an increase of inheritance and gift taxes
Premium for Family of Four Averages $75/month
Contribution Ratio (%)

Classification of the Insured
Insured Employer Government
Civil servants, volunteer servicemen,

Insured and dependents 30 70 0
public office holders
Private school teachers Insured and dependents 30 35 35
Employees of public or private owned

Category 1 Insured and dependents 30 60 10
enterprises and organizations
Employers
Self-employed
Insured and dependents 100 0 0
Independent professionals
and technical specialists
Occupation union members
Foreign crew members
Members of farmers’, fishermen’s and
irrigation associations
Military conscripts, alternative military
service, military school students on
Category 4 Insured 0 0 100
scholarships, widows of deceased
military personnel on pensions, inmates
Category 5 Low-income households Household members 0 0 100
Insured 0 0 100
Veterans and their dependents
Category 6 Dependents 30 0 70
Other individuals Insured and dependents 60 0 40
Affordable and High-Quality Care
HSBC’s latest Expat Explorer survey in April/May 2014, n=

9,000
Advantages and Disadvantages
Pros Cons
Doctors/Nurses shortage
Short consultation time

Cultural value of sharing risk between rich
and poor that exists in Taiwan Overutilization
Single buyer/payer system where the
government set and regulate fees with cap Healthcare costs 34% of NHI’s total
expenditure and increasing
China
28
28
China Healthcare System
Introduction to the Medical Reimbursement System
China’s medical reimbursement system is organised into three types:
eBMI: urban employees rBMI: urban residents NRCMI: rural

❖ basic medical ❖ basic medical ❖ new rural cooperative
insurance for urban insurance for urban medical insurance
employees residents
❖ Employees and retired ❖ Urban residents ❖ Rural households

(includes those from
employees
rural areas who live in
urban areas) except
for employees and
retired employees
❖ 380 million population ❖ 670 million population

❖ 290 million population
❖ Voluntary ❖ Voluntary
❖ Mandatory
• All three insurance systems cover outpatient and inpatient care, while only eBMI
offers reimbursement from designated retail stores
Universal Coverage
China’s medically insured population is more than 1.3 billion, with total coverage at nearly
100%, indicating that China has achieved universal healthcare coverage through ongoing
government investment in healthcare in recent years
Govt is increasing healthcare expenditure investments China’s healthcare reimbursement coverage, population
Medical Reimbursement System for the Elderly
eBMI: urban employees rBMI: urban residents NRCMI: rural
Overall Medical System ~ 8% of salary from ~RMB150-650 (USD22- ~RMB100-500 (USD15-

Source of funds employer 84) per year 72) per year
~2% of salary out of Government subsidies Government subsidies
(varies by provinces/cities) pocket and individuals and individuals
Elderly benefits Retired employees don’t Premium heavily Premium heavily

need to pay premium to subsidized by subsidized by
enjoy the reimbursement government depending government depending
on age and household on age and household
income level income level
Elderly reimbursement Usually 70-90% Usually 50-65% Usually 30-60%
%
(varies by provinces/cities)
Elderly reimbursement RMB70,000 RMB50,000-65,000 RMB11,000

cap (~USD10,150) (~USD7,200-9,400) (~USD1,600)
per year per year per year
(varies by provinces/cities)
Challenges for Elderly Care
• Medical costs can increase • In the US, only 26% of

dramatically with age people aged 65-plus have
• Individuals who contribute difficulties completing daily
to government revenues tasks. In China, the
will decline 1. Aging percentage is 38%
2. Shortage of
population elderly care • Lack of elderly homes and
community support
• Historically hospitals
been
had increasing revenues Challenges
5. Excessive 3. Higher
by making excessive sales chronic
of drugs sales of
drugs disease • Cancer, diabetes
• Cost control is key focus for risks
• Improved living standards,
reimbursement reform
and more leisure time
• Tender pricing system without physical activity
to 4. Gap between
lower drug prices urban and rural
• Integration of rBMI and NRCMI

can help narrow the gap between
urban and rural healthcare
Germany
Germany Healthcare System
Demographics
83.8 Mn
Population Rank 19
World Percentage 1.08%
Density 241/km²
Land Area 348,560 km²
Germany Population 2022 (Demographics, Maps, Graphs) (worldpopulationreview.com)

Comparison with other countries

Percentage of GDP spent on Healthcare
• Health expenditure as share of GDP by country | Statista

Insurance
The German healthcare system is a dual public-private system and is one of the
oldest healthcare systems in the world, dating back to 1880s.
The system is organized into two major divisions:
Public Health Insurance.
Private Health Insurance
The German public health care system is based on the principle of solidarity.
Germany Healthcare System - Health Insurance in Germany (visaguide.world)

Healthcare in Germany - Wikipedia
Pros & Cons
ADVANTAGES DISADVANTAGES
There are fewer prescription dependency issues in You will need to pay for elective procedures and some
Germany. prescription medications.
Private insurance plans are possible in the German Doctors do not make a lot of money in this healthcare
healthcare system system
Your hospital and prescription co-pays are Medication is given less freely in the German healthcare
exceptionally reasonable in Germany. system
Employers cannot penalize you for switching from Some people still cannot afford the public healthcare
public to private insurance. costs.
Germany has strict anti-corruption laws. The public health insurance scheme is mandatory unless
you make enough income.
19 Pros and Cons of German Healthcare System – Vittana.org

The Digital Healthcare Act - a Turning Point in the German

Digitization Strategy?
The act was supposed to:
• Encourage Doctors
• Encourage Entrepreneurs
The government dedicates Physicians who do not offer

€200 million per year for the virtual options receive a charge
development of medical of a 2.5% fee.
technology.
Approved on
An end to the paper chaos Secure IT for doctors
November 7,
2019 Online video consultation are to become routine
As of 2021, 24 DiGAs have already been approved

❑ Approachable services at less cost.
BENEFITS TO ❑ Beneficial for the lower strata of the

society.
THE SOCIETY ❑ Time Saver
❑ Prevention before treatment
❑ Expanding the reach of healthcare

professionals
Quality
Service
https://www.mckinsey.com/industries/life-sciences/our-insights/germanys-ehealth-transformation-makes-good-but-uneven-pr
ogress
Contribution 4.3 Billion euros by the
1 German Federal Office for

Social Security
2 3 Billion from Federal Govt.
3
1.3 Billion from the regional
states.
https://dmexco.com/stories/digital-health-the-healthcare-system-of-the-futur
e/
THE FUTURE OF HEALTHCARE
• Germany is setting an example • The price of digital apps
• 50 apps currently in the • The country will soon become

FAT-TRACK, hundreds ultra digital in terms of
expected. healthcare, thus improving the
quality of life and healthcare
sector
Japan
Japan Healthcare System
Demographics
Population 125 Mn (July 2021 est.)
Ethnic groups Japanese 97.9%, Chinese

0.6%, Korean 0.4%, other 1.1%
(includes Vietnamese, Filipino,
and Brazilian) (2017 est.)
Religions Shintoism 69%, Buddhism

66.7%, Christianity 1.5%, other
6.2% (2018 est.)
Languages Japanese
https://www.indexmundi.com/japan/demographics_profile.html#:~:text=124%2C687%2C293%20(July%202021%20est.)&text=Japanese%2097.9%25%2C%20Chinese%2
00.6%25,Brazilian)%20(2017%20est.)&text=The%20World%20Factbook%2C%20the%20indispensable%20source%20for%20basic%20information.&text=Shintoism%206
9%25%2C%20Buddhism%2066.7%25,6.2%25%20(2018%20est.)
Demographics
•-0.37% (2021 est.)

Population growth rate
•7 births/1,000 population (2021 est.)

Birth rate
•11.44 deaths/1,000 population (2021 est.)

Death rate
Net migration rate •0.75 migrant(s)/1,000 population (2021 est.)
•urban population: 91.9% of total population (2021)

Urbanization •rate of urbanization: -0.25% annual rate of change (2020-25 est.)
Education expenditures •expenditures 3.2% of GDP (2017)

Demographics
Mother's mean •7% (2000)

•30.7 years (2018 est.) Health expenditures
•11% (2020)
age at first birth
•2.41 physicians/1,000 population (2016)
Physicians density
Maternal •5 deaths/100,000 live births (2017 est.)
mortality rate
•13.1 beds/1,000 population (2017)
Hospital bed density
Infant mortality •total: 1.92 deaths/1,000 live births
•male: 2.02 deaths/1,000 live births
rate •female: 1.81 deaths/1,000 live births (2021 est.)
Major infectious diseases •respiratory diseases:Covid-19
Life expectancy •total population: 84.65 years

•male: 81.73 years
at birth •female: 87.74 years (2021 est.) Obesity - adult
prevalence rate
•4.3% (2016)
Total fertility •1.38 children born/woman (2021 est.) Children under the age of
•3.4% (2010)
rate 5 years underweight
https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?locations=JP
COUNTRIES LIFE EXPECTANCY RATE %GDP

HONG KONG 85.29 6.8
JAPAN 85.03 11.0
CHINA 84.68 7.1
SWITZERLAND 84.25 12.2
SINGAPORE 84.07 4.1
ITALY 84.01 9.7
SPAIN 83.99 8.9
AUSTRALIA 83.94 9.3
• Japan’s statutory health insurance system provides universal coverage. It is funded

primarily by taxes and individual contributions.
• In addition to premiums, citizens pay 30 percent coinsurance for most services, and
some copayments.
• There are also monthly out-of-pocket maximums. The national government sets the
fee schedule.
Universal Health Coverage
• Japan’s statutory health insurance system (SHIS) covers 98.3 percent of the
population.
• The SHIS consists of two types of mandatory insurance: employment-based

plans.
• Health Insurance for the Elderly plans, which automatically cover all adults age
75 and older (12.7% of the population).
• Although the majority (more than 70%) of the population holds some form of
secondary, voluntary private health insurance,12 private plans play only a
supplementary or complementary role.
• Historically, private insurance developed as a supplement to life insurance.

Advantages Disadvantages
1. The standard of healthcare in Japan is 1. There is no concept of the “family
exceptionally high. doctor” in the Japanese system.
2. It operates on a non-profit business 2. Everyone pays taxes into the healthcare
model. system in Japan.
3. The system functions through a universal 3. Language barriers exist in the Japanese
system of care. healthcare system.
4. You can receive free care for many 4. Japan’s psychiatric hospitals are well
services. behind the times in terms of global
5. Patients using dialysis in Japan have a standards.
significantly longer life expectancy. 5. It forces healthy people to pay for the
6. Cancers are treated more aggressively in costs of medical care for others.
the Japanese healthcare system 6. This system may not encourage good
health practices.
Indonesia
Indonesia Healthcare System
PESTEL Analysis
POLITICAL ECONOMIC SOCIAL

• Stable country from decades of • Largest economy in SE Asia • Indonesia will add additional
autocratic rule 17 years ago • 86% of GDP derived from 90 million global consumers
• The government have and will urban Indonesia
continue to reform investment with considerable spending
• 100% population medically insured
climate to make safe and power
• High out of pocket expenses
attractive investment destination
• Healthcare spending 3.1% of GDP • 4th largest country by population (
• Private health care dominates 53%lives in urban areas),
86% derived from urban
the market (60%) over public
• Middle class will double by 2020 (96
TECHNOLOGICAL • Severely underserved health market
ENVIRONMENTAL million in 2014 to 140 million in
LEGAL
2020)
• Invest in infrastructure: high quality • Air, water, etc. pollution as a • Majority of health care transaction in
medical equipment’s and IT–hub significant driver of morbidity Indonesia are cashed-based
• Telemedicine from CC Ohio and mortality in Southeast Asia • Investors will exit eventually by
to manage patients in • Impact of healthcare sector on the an IPO or M&A
Indonesia
environment
• Online scheduling an
roster management
New Universal
Healthcare Law:
Growing, ageing Passed in 2005, enacted
Expansion of
January 1, 2014
population and GDP
Universal Coverage:
per capita growth:
Rising personal income $ 10 , 250 Universal health insurance for
in 2015 to $ 15 , 500 in 2025 entire population by 2019
Healthcare ( 250 million)
in Demand for Quality

Brands – No
established/trusted Indonesia Healthcare:
clinical brand Healthcare Supply Travel to Singapore for quality
care
Shortage:
.31 physicians per 1000
patients, .97 beds per 1000
patients
Demographics and structural changes in the Indonesian healthcare market are

creating a favorable environment for future private healthcare
developments
Shaping into a Nation of Global Consumers
Middle Class Population Will Nearly Double by 2020 A Snapshot of Indonesia

160 141 Sound Economy – Indonesia is an emerging global powerhouse; it is
140 the largest economy in Southeast Asia with a GDP of US $889 billion
120
100
80
Political Stability – Since emerging from decades of autocratic rule
Million
80 17 years ago, Indonesia has succeeded maintaining political

60 stability in young democratic country
s
40
20 Investment Climate – The government have and will continue to
0 reform investment climate to make a safe and attractive investment
2014 2020 destination
Demographics – Indonesia will add an additional 90 million

Indonesia in 2030
global consumers with considerable spending power, stronger
than any economy of the world apart from China and India
7th Largest Economy
Domestic Market – As the 4th biggest population in the world, more
86% of GDP Derived from Urban
than 53% of the people live in urban areas with a modern lifestyle
Indonesia and increasing purchasing power
135 Million Global
Consumers Global Influence – Indonesia is playing a more dominant role in
100% of Population with Healthcare
global affairs. It is Southeast Asia’s only member of the G-20 and is
Insurance forecasted to be the 7 th largest economy in 2030
Doctor to 10,000 Population Total Healthcare Spending as % of GDP
Australi 32.7 USA 17.1

a
UK 28.1 Australi 9.4
a
USA 24.5 UK 9.1
South 21.4 South 7.2

Korea Korea
Singapor 19.5 Vietna 6
e m
China 14.9 China 5.6
Malaysi 12 Singapor 4.6

a e
Vietna 11.9 Malaysi 4
m a
India 7 India 4
Indonesi 2 Indonesi 3.1

a a
0 5 10 15 20 25 30 35 0 2 4 6 8 10 12 14 16 18
Indonesia: Leading Causes of Death
1. Stroke 21%
2. Ischemic Heart Disease 9%
3. Diabetes 7%
4. Lower Respiratory Infections 5%
5. TB 4%
6. Cirrhosis 3%
7. Chronic Obstructive Pulmonary Disease
3%
8. Road Injury 3%
9. Hypertensive Heart Disease 3%
10. Kidney Diseases 3%
Source: WHO Country Health Profiles 2012: Indonesia

Case Study of 2002 Bali Bombings
2002 Bali Bombings HH’s Termination of Raffles Medical Group
▪ Killed 202 people (including 88 Australians, 38 Raffles Hospital is a tertiary care private hospital and
Indonesians, and people from more than 20 the flagship of the Raffles Medical Group, a leading
other nationalities) private healthcare provider in Singapore and South
▪ A further 209 people were injured East Asia.
Case Study of 2002 Bali Bombings (Cont.)
• The local Sanglah hospital was ill-

equipped to deal with the scale of
the disaster and was overwhelmed
with the number of injured,
particularly burn victims
• There were so many people injured

by the explosion that some of the
injured had to be placed in hotel
pools near the explosion site to ease
the pain of their burns
• Many of the injured were forced to

be flown extreme distances to
Darwin (1,800 km or 1,100 mi) and
Perth (2,600 km or 1,600 mi) for
specialist burn treatment
Minimal Healthcare Accessibility Throughout Indonesia
Public Regional Standalone National Hospitals

Hospitals Hospitals
World’s Largest Healthcare Transformation Opportunity?
Majority of Healthcare Opportunity Captured by Private Sector
NHS Supportive Across Healthcare Segments Strong Growth Lead by Private Hospitals
350
Demand for More Hospital Beds 306
300 273
Beds (Thousands)
238
National Demand for More Drugs (Generics) 250
Health 200 170

144
Insuranc Demand for Medical & Diagnostics Equipment 150
e 100
Demand for Skilled Healthcare Professionals 50
0
2010 2011 2012 2013 2014
Per Capita Healthcare Costs Estimated Healthcare Market by Segments in 2019

700 660 14,000
11,700
600 12,000
Revenue ($ Million)
500 10,000 8,400
400 8,000
Million
300 6,000
s
200 4,000
84 2,000 1,465
100
0 0
Public Privat Private Pharmaceutica Medical
e Hospital l Technology
Attractive Growing Market
260 Million 4th Most Populated

People
$889 Billion in 5.3% Annual GDP
GDP Growth
16 th Largest Economy 2016-2020
13,667
Islands
45 Million Members
Investment Grade
of Consuming
Fitch (bbb-) & Moody’s
Class
(Baa3)
Middle & Affluent Population in Asian Countries Economic Indicators
160 2015 2015 2016’A 2017’A

140.9
140 2020
Economic Growth (%) 4.8 5.2 5.3
120
Millions of People
96.7 Inflation Rate (%) 3.35 4.0 4.0

100
80 Exchange Rate (RP/USD) 13,795 13,300 13,300
60 45.4 49.4
38.9 3-Month SBI Rate (%) 7.5 6.5 6.5
40 32.7 33.2
19.3 18.7 Oil Price (USD/bbl) 50 40 45
20 11.7
8.5
0 5.8 Oil Lifting (k bbl/day) 779 820 780
Myanma Banglades Vietna Philippine Thailan Indonesi
r h m s d a
Healthcare Demand will Continue to Increase
Population Growth National Healthcare Spending
800
640
600
260 Million 360 Million 400
USD
$Bn
2016 2040 200
20
0
2016 2040
Universal Coverage Per Capita Healthcare Spending
2000
1780
2016 2019
1500
USD
1000
500
82
0
2016 2040
Covere Uncovere Covere Uncovere
d d d d
Enormous Healthcare Opportunities

Public Private Partnership Acquisition & Management of Regional Hospitals
800 350
306
640
300 273
Beds (Thousands)
600 238
250
400 200 170
USD
$Bn
144
150
200
20 100
0 50
2016 2040
0
2010 2011 2012 2013 2014
Universal
Coverage Challenge Tremendous Potential
s
2016 2019 ▪ Low Occupancy Ratio ▪ Strong Cash Flow
▪ Attractive Margins
▪ Physician & Nurse ▪ High Occupancy Rate
Shortage
▪ Strategic Location
▪ Operational Inefficiency ▪ Newly Constructed Building
▪ Municipal Support/Participation
Covere Uncovere Covere Uncovere ▪ Redline Margins
d d d d
Healthcare Investment Analysis
Rising Middle Class: 141m in 2020

Booming Middle Class
Exploding Rising Personal Income: GDP/Capita to be $15,500 by
2025
Lowest Healthcare Penetration: 3.1% of
Demand Improved Access to GDP
267 Million people to be insured in Indonesia in 2019
Healthcare
Global Standards: 267, 000
Shortage of
Supply Physicians
OECD Standards: 718,086
Global Standards: 229,491

Shortage Shortage of Hospital Beds OECD Standards: 977,189
Indonesia: 33%
Superior Sustainably High India: 22%
Profitabilit EBITDA
USA: 11%
Margins
y
Public-Private Partnership (PPP)
Universal Healthcare Coverage Achieved in 2019 Impact on Healthcare Services Industry

▪ Commenced rollout in January 2014 to providee universal health coverage by 2019 • It is expected to increase both public and private healthcare expenditure as the
in government intends to subsidize medical expenses for all Indonesians
several phase • Its roll-out is expected to drive patient volume at public hospitals and participating
▪ Administered by a single payor, quasi-government entity known as BPJS private hospitals
▪ Set
(Badan Penyelenggara Jaminan
up to harmonize Sosial)
existing with an
national initial
and investment
regional of schemes to
healthcare • However, the middle class segment is expected to switch to the private sector due to:
US$2.6Bn
help the poor access healthcare • Better health insurance coverage
▪ Funding will come from employer and employee contributions, with • Overcrowding in public hospitals as more people take advantage of the program
government subsidies for those unable to contribute • In addition, the government is also rolling out additional schemes (e.g. Coordination of
▪ Approximately 1,720 hospitals (mostly state-owned) have signed up Benefits program) to encourage participation from the private sector and ensure a
▪ Limited participation by the private sector due to the low reimbursement level win-win result for all parties
Robust Growth in Healthcare Expenditure (2009 – 2016) Hospital Development Lead by Private Sector
$50 $45
$40 $38
$31
USD $Bn
$30 $27 1,510 Privat

$24 1,195 1,337
$20 893
$20 $18 e
$15 4.6%
CAGR Public
$10 828 888 907 947
$0
2012 2013 2014 2015
2009 2010 2011 2012 2013 2014 2015 2016
Economic Power Outside of Jakarta
CLEAR REVENUE OPPORTUNITIES LIE BEYOND

JAKARTA
Comparison to Southeast Asia Countries
Kalimantan
$91Bn
Sulawesi is almost as large as Myanmar
Sumatra Sumatra’s GDP is larger than

$219Bn Vietnam’s
Sulawes
i Sumatra’s GDP is comparable to The
$44Bn Philippines’
Java
$534B
Clear Revenue Opportunities Beyond Jakarta
n
National Healthcare Program Drives Patient Volume Population GRDP [RP.Bn] GRDP / Capita [Rp.m]
(mm)
4000 DKI Jakarta 9.6 1256 130.7
Daily Patient Volume
3000
3000 Riau 5.5 522 94.3
2000 Kepulauan Riau 1.6 100 59.7
1000
1000 420 400 600 Kalimantan Timur 3.6 425 119.7
300
0 Papua Barat 0.8 501 67.0
Bandun Sumedan Tegal Papua 2.8 93 32.9
g g
Private Sector to Spearhead Healthcare Growth
Given extremely low penetration of hospital services and rising healthcare needs in Indonesia, the new hospitals
in smaller cities can potentially generate positive EBITDA within two years of operations
High Occupancy Rate

Biggest Strongest
Supply & Growth in
Demand Sustainably Attractive Margin Healthcare
Mismatch Fast Ramp-up Demand
Low Development
Healthcare of Standalone Inefficiently Declining Distressed Healthcare
Penetration Hospitals Managed Patient Base Hospitals Acquisition
Healthcare Operations objectives
•Clinical Care Management
•Risk Management
•Financial Management
Healthcare Operations…achieving the objectives by:
•Capturing the Data
The process of capturing and reporting about the facility and patient data can be tiring. Electronic health records
and clinical communication software provide minimal help. The main focus is whether your practice is
interoperable or not. If it isn’t interoperable, you will have to adhere to disparate data sources that need to be
reconciled. Capturing data effectively will assist compliance and auditing. It will drive critical business decisions
and will keep your organization ready for any unforeseeable crisis.
•Decrease in Clinical Variability
The delivery of care is affected by clinical variability. It will ensure that inventory levels, supply expenditure, and
workflow are accurate. With the reduction in clinical variability, not one aspect of medical organization will be
left behind from receiving the benefits. This will have a positive effect on both staff and patients.
•Productiveness in EOC
EOC stands for Environment of care. It comprises three cornerstones; physical space, the facility’s layout,
equipment used to strengthen the support delivery of care and building operations, and most importantly, the
people that make up the activity within that facility. A combination of these three elements will lead to a positive
patient experience.
Healthcare Operations…Focus areas
5 areas:
•Gigantic variations in clinical practices.

•High rates of improper care.
•Unreasonable rate of preventable care-related patient injury and death.
•Striking incompetence in executing what we know works.
•Massive amount of waste.
Lean Healthcare
https://www.youtube.com/watch?v=7mA1L_a_FX4
Lean Healthcare
Lean Healthcare…contd
Reduce Waiting / Idle Time
According to lean principles, any time patients or employees are required to stand by,
waste happens. Patients sitting in waiting areas, meetings stalled for latecomers,
appointment waiting lists, and idle high-tech equipment are all areas that represent
opportunities for healthcare organizations to tap the creativity and imagination of their
teams to reduce waste.
Minimize Inventory
Inventory represents tied-up capital and storage cost. Surplus supplies and medications,
superfluous equipment, extraneous data, or stockpiles of pre-printed forms all translate to
inventory waste. Moreover, excessive inventory increases the risk of loss from being
stolen or becoming obsolete. Employees throughout the organization can be trained to
recognize excessive inventory and find novel ways to decrease it.
Eradicate Defects to Improve Quality of Care and Increase Reimbursement
Process or system failures, medical mistakes, and misdiagnosis are examples of defect
waste in healthcare. Healthcare-acquired conditions such as blood clots and
infections, medication or surgical errors, avoidable readmissions, preventable allergic
reactions, incomplete or erroneous medical records all illustrate defect waste in
healthcare. As payers move toward pay for performance models that reward/penalize
outcomes, organizations can leverage lean principles to mobilize every employee to
Transportation – Decrease the Movement of Patients, Supplies, and Equipment to
Improve Patient Flow
Transportation waste in healthcare involves moving people, supplies, and medical

equipment unnecessarily. Transporting patients to different departments and running
around to gather supplies also increase the risk of patient or caregiver injury (defect
waste) and create delays in care (waiting waste). Lean thinking can be used to analyse
patient and caregiver movement through the hospital facility to save time, reduce injury,
and improve patient flow.
Prevent Injuries and Save Time by Reducing Motion
Waste in motion occurs whenever hospital workers perform movement within their
workspace that does not add value for patients. Reaching or stooping for frequently used
supplies and equipment, increased walking due to poor building design, or non-ergonomic
patient transfers between beds, wheelchairs, or operating tables are potential instances of
motion waste.
Maximize Resources by Minimizing Healthcare Overproduction
Overproduction waste entails redundancies, creating too much of something, or creating it

at inappropriate times. Preparing medications for a discharged patient, duplication of tests,
or extending hospital stays beyond medical necessity are all examples of overproduction
Remove Waste from Over-Processing
Over-processing occurs when unnecessary work goes into treating patients. Needless
tests, filling out different forms with the same information, and performing data entry in
more than one system are examples. When time, effort, and resources do not add to the
quality of care or improve patient outcomes, it has the potential to be changed or
eliminated through lean analysis. By viewing all processes through the lens of lean
healthcare, staff can help identify repetitive, redundant, or less than valuable processes to
save time and money.
Understand how Healthcare Waste Leads to Untapped Human Potential – the

Pinnacle of Waste in Healthcare
When workers’ time is consumed by any of the above, they are unable to use it to
leverage their creativity and talents for work that promotes patient care and optimized
operations. Waste in healthcare detracts from time that employees could use for
educational pursuits, building relationships with patients, or implementing systems-based
improvements. Adopting a lean culture not only leads to improvements in care quality and
decreased
Healthcare services & Operations
Lean examples
•Redesigned Patient Rooms At ThedaCare, supplies, medications, and

electronic-record-keeping systems were relocated into patient rooms which
allowed nurses to spend 70% more of their time with patients. Additionally,
patient safety was improved by equipping rooms with ceiling lifts, beds with
alarms and scales, and other equipment.
•Crash Cart Inspections Nicklaus Children’s Hospital reduced crash cart
inspection times from three hours to ten minutes through visual optimization and
the reduction of excess supplies and equipment.
•Lean Scheduling — Dyad Mother/Newborn Appointments for Postpartum
Care Denver Health’s Eastside Clinic experienced a large number of no-shows
for maternal postpartum checkups due to transportation barriers and long
appointment wait times. To solve this dilemma and to promote patient-centered
care, the clinic combined the mother’s and infant’s appointments into one. The
result was a decrease of no-shows from more than 50% to just 15%.
•Patient Safety Alert (PSA) System One of the numerous initiatives at Virginia
Mason is their Patient Safety Alert (PSA) System through which all staff are to
report possible patient safety issues. Reported concerns are quickly
investigated, and interventions are promptly implemented. Because of this
system, liability claims at Virginia Mason decreased by 74% from 2005 to 2015.

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Healthcare Operations Management

Professor, Healthcare Operations Management, Columbia University

22 years in new product innovation for Fortune 500 employees.

Ex-Cisco, Genpact, Vodafone, Virgin Mobile, GE Capital

2-time Founder – Tech & Ecommerce startups

Board Member – Childhood Leukemia & Lymphoma Foundation

Phones on silent/airplane mode

Class participation gets you better grades! No Zoom attendances please.

1. Healthcare system in the US

1. Class participation: 40%

65 and over as % of total population

United States 17.1% 21.3% $8,895 78.8

China 5.5% 10.4% $322 75.5

Malaysia 4.2% 6.5% $410 75

Singapore 4.9% 14.1% $2,426 85

Thailand 6.5% 23.3% $215 74.7

South Korea 7.4% 12.3% $1,703 81.5

Taiwan 6.6% 20.3% $1,520 80.2

Total Expenditure on Health as % of GDP

10% Japan, 10.2%

8% South Korea, 7.4%

What is Medicare What is Covered

Medicare is a single-payer, national

• 44 million total beneficiaries = ~15%

Traditional Medicare: Private Insurance: administered on the government’s behalf

government Insurance: Medigap Medicare Advantage Plans

Optional Part C (Medicare Advantage Plans):

after for up to 90 days care if you travel Option 1: Part A + Part B

outside the U.S Option 2: Part A + Part B + Part D

Part B (Medical Insurance): Optional Part D (prescription drug): Optional

Member Coinsurance= Member OOP 5%

Deductible Federal Reinsurance

ICL Limit (2017) = $3,700 Coverage gap limit

Member Coinsurance= Member OOP 5%

Deductible Federal Reinsurance

Plan Liability 15%

ICL Limit (2017) = $3,700 Coverage gap limit

Medicare Spending is increasing rapidly! 1. Average annual growth in total Medicare

-Baby bloomers adding to the overall

2.There is no government provision for long-term

3.Medicare does not cover costly services that

- long-term services and supports

Source: Kaiser Family: http://kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ - dental services

Average age of Citizens aged 65 Healthcare

Sociocultural Ideologies Healthcare Infrastructure

“Social Harmony” Ministry of Health (1959)

Paternalism: National Health Plan (1983)

Ministerial Committee on Ageing (2007)

COVERED COVERED COMPULSORY/ FUNDING ELDER

MediSave MediShield Life MediFund ElderShield

Covered pop. (2012) 3 million 3.39 million 481 million --

Universal Health Insurance covering Unemployed and Non-Working Class

Taiwan Healthcare Overview

How many people are ~ 760,000

Contribution Ratio (%)

Civil servants, volunteer servicemen,

Private school teachers Insured and dependents 30 35 35

Employees of public or private owned

HSBC’s latest Expat Explorer survey in April/May 2014, n=

Short consultation time

China’s medical reimbursement system is organised into three types:

eBMI: urban employees rBMI: urban residents NRCMI: rural

❖ Employees and retired ❖ Urban residents ❖ Rural households

❖ 380 million population ❖ 670 million population