Xploryze – IIM Raipur               Team Chanakyas               MuthuNaveen S               Sathya G               NITIE ...
Scope Industry Overview SWOT The Competition Business Ethics Business Model Basic Strategic Plan Role of Service Op...
Health Care Industry – Opportunities galore                                                                               ...
Tertiary Health Care Industry                  Strength                                      Weakness *World class Facilit...
The CompetitionGroup                                            Hospitals                   Beds                 RevenueFo...
Ethical Dilemma                                                                                                   Corporat...
Aspirations JustifiedVision          To bring world class medical facilities to New Delhi and revolutionize the whole     ...
Business Model                                                          A Hybrid ModelCharity Run                Corporate...
Basic Strategic Plan: Size |Investment | Profitability               Single Super Specialty hospital for Neuro care       ...
Basic Strategic Plan: Size |Investment | Profitability                                                                    ...
Basic Strategic Plan: Size |Investment | Profitability                                        (In Lakhs) Yr 1          Yr ...
Key Focus Areas                                               Manpower               Real Estate     Equipment            ...
Operations Management – A key differentiator                   Operational Expenses account for around 2/3 of the total ex...
Capacity |Layout | Patient flow | Inventory | Procurement | Equipment    Capacity Planning              Man               ...
Capacity |Layout | Patient flow | Inventory | Procurement | Equipment                                                     ...
Capacity |Layout | Patient flow | Inventory | Procurement | EquipmentPATIENT FLOW ANALYSIS Value stream mapping of the be...
Capacity |Layout | Patient flow | Inventory | Procurement | EquipmentProcurement     MRP – when, what, how much to buy    ...
Competitive EdgeLeveraging Unique Strengths:    Dr. Sharma’s good contacts of creamy layer in Delhi region    Reliable a...
Competitive EdgeResource based quality Improvement  Better facilities and motivation for employees to reduce attrition  ...
Organizational Structure                                                     Dr.Ashwini (COO)Building                   Fi...
References1)Service operation management return to roots, Robert Johnston – IJOPM 19,22) KPMG Report: Emerging trends in H...
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Xploryze Case Solution by NITIE

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Xploryze Case Solution by NITIE

  1. 1. Xploryze – IIM Raipur Team Chanakyas MuthuNaveen S Sathya G NITIE , Mumbai
  2. 2. Scope Industry Overview SWOT The Competition Business Ethics Business Model Basic Strategic Plan Role of Service Operations Competitive StrategiesOrganizational Structure
  3. 3. Health Care Industry – Opportunities galore Insurance & CAGR Med Equip 15% 15%Indian Scenario : DiagnosticsOnly 0.8 beds / 1000 people 10% HealthCare Delivery Healthcare delivery 50% USD 50 bn Pharma 25% Increase in lifestyle diseases => increase in in-patients Increasing spend on 4000 health care In Bn Rs 3000 2312 No of beds in Delhi Medical Tourism in India: 2000 (2011) : USD 2.5bn industry 1268 Demand 28,007 CAGR 30% 1000 637 Supply 19,836 903 1329 0 617 2006 2011 2016 (F) Huge Demand Out Patients In Patients Supply Gap src: ENAM India Research
  4. 4. Tertiary Health Care Industry Strength Weakness *World class Facilities and Treatments *Lower operational efficiencies * Increase in health insurance companies *Rough behavior of lower category staff *Increased Depreciation rate for equipments *Undue delay in rendering service * Connectivity with Skilled professionals all *Poor Information and guidance system around the globe *High attrition rate Opportunities Threats*Growing Urban conglomerate of NCR *High Competitive rivalry – pressure on*Increase in life style diseases price & service*Growing Demand for World-class treatments *Obsolescence of medical equipment*Growing medical tourism *Capital intensive*Change in spending attitude on health care *Ayurveda , Unani, homeopathy substitutes
  5. 5. The CompetitionGroup Hospitals Beds RevenueFortis Healthcare 66 10,270 1482Apollo Hospitals 54 8,800 2350Manipal Health Enterprises 15 4,400 600Narayana Hrudayalaya 14 5,700 476CARE Hospitals 12 1,600 NAParas Hospitals 2 250 NAMax Healthcare 8 800 NA  Competing with Neuro division of established Multi-Speciality playersSrc: Business World, 5 Mar 2012, Fortis Annual Report 2010-2011, Apollo Annual Report 2010-2011
  6. 6. Ethical Dilemma Corporate Governance Kohlberg’s stages of moral development Dr. Ram •Stage 1:Punishment-Obedience Orientation Mathur (Compliance with regulations) & Pre •Stage 2: Instrumental Relativist orientation Dr.SharmaConventional ( Profit Centered) CSR •Stage 3: Interpersonal Concordance orientation ( Living up to Customer expectations) •Stage 4: Authority and social order maintaining orientationConventional (Abiding social conventions) Business •Stage 5: Social-Contract Legalistic orientation Ethics (Working towards greater good for the society) Post •Stage 6: Universal ethical principle orientationConventional (Weighing social welfare over profitability ) Dr.Ashwini Ethical Profits Where Our Heroes Stand… Src:Corporate Governance Model, Peter Begley
  7. 7. Aspirations JustifiedVision To bring world class medical facilities to New Delhi and revolutionize the whole healthcare industry.Mission Using his knowledge and expertise of 12 years in Medical field , serving the people of Delhi, while turning in to a profitable venture.What it brings? World class medical service to all those who can afford it and for some who can’t.Why Should we appreciate? Initiative to contribute to the society against brain-drain scenario.Why Justified?  Dr.Ashwini’s aspirations in the beginning – Hurdle to sustainability and growth  Enterprise – at an infancy stage :: profit –centric Later stage:: Interwoven Social Responsibility
  8. 8. Business Model A Hybrid ModelCharity Run Corporate A world class hospital for Hospitals Hospitals all those who can afford it and also for some who can’tLack of “world class” High operational facilities efficiency Mass market Quality health care Stage 2 but expensive •5 % of patients served Ineffective Profit Driven & for freeManagement /Services Aggressive Growth •Differential rates based on the choice ofHigh operational costs World Class facilities Stage 1 pre/post treatment stay& Inability to scale up & Treatment •Target segment => The •Maintaining the same A Hybrid Model affluent level of treatment – •5 % of patients served Same doctors/ OT , etc. for free : To obtain •Diversify into other government subsidy verticals for land •CSR Arm •Primarily Neuro specialty
  9. 9. Basic Strategic Plan: Size |Investment | Profitability Single Super Specialty hospital for Neuro care Demand Supply Gap: Number of reported Neurocases in India : 300 per 1,00,000 Number of Neurologists practising in India : 1100 => ~ 32,000 patients per doctor per year Huge market waiting to be served!!!Size of the Hospital Tax deduction to private investors on the cost of building infrastructure for minimum 100 bed hospitals anywhere in India In patients are major revenue contributors  Go ahead with Dr Ashwini’s plan of 150 bed hospitalSrc: ENAM Research; Neurology:The Scenario in IndiaSV Khadilkar
  10. 10. Basic Strategic Plan: Size |Investment | Profitability 5 % of patients to be treated for free to avail governments subsidyLocation: for land .Out skirts of the city to reduce the cost of land  Advantage from social and economic point of viewSpace Required507 SqFt per bed for 125 – 175 bed hospital Others Set Up Cost Land 12% 12% ~ 76000 Sq Ft BuildingTotal investment required 26%Investment cost/bed – Rs.75 lakh/bed Equiment 50%Expected investment on the Hospital =Rs.112 Crores (approx) (Src: Economic times dt:1-8-2011, Healthcare bio tech-fortis-to-start-6-new-hospitals-rs-1050-cr-investment-likely) ENAM India Research A proposed standard method of Measuring Hospital Capacity , Pg 677)
  11. 11. Basic Strategic Plan: Size |Investment | Profitability (In Lakhs) Yr 1 Yr 2 Yr 3 Operating ExpInitial Investment 11200 Non Operational ExpOperational Expenses RevenuePer Yr / Bed 150 165 181.5 22.8 Net profitTotal 2250 2475 2722.5Non Operational Expense 108.2Industry Avg - 50% of operational Exp 1125 1237.5 1361.25 83.2 55.0Revenue 11.3 12.4 13.6Income per procedure 0.98 1.078 1.1858 22.5 24.8 27.2Average length of stay 3.9 Days 3.9 3.9 -44.6Total income per bed per yr 91.7179 100.8897 110.9787 -90.7Assumed operational Effeciency 40% 55% 65%Total Income per 150 beds 5503.08 8323.404 10820.43 Rs in CrContribution 2128.08 4610.904 6736.675Net Profit -9071.9 -4461.02 2275.656 Year 1 Year 2 Year 3 Src: Appolo hospitals; ENAM Becoming Cash Positive in third year of operations Research
  12. 12. Key Focus Areas Manpower Real Estate Equipment Operations Outlay •Go Outskirts •Best Prices •Expertise as •Purchase • Avail •The best not needed from source subsidies the latest •Attrition •Usage •Training •Collaboration metrics costs with •Cross •Pay-per-use institutes subsidize model • Outsourcing •Day care to reduce ALOS Medical Tourism: Neurosurgery Cost comparison: Almost 4 times cheaper than in US International Accreditation provides more confidence for medical tourists. Focus on increasing operational efficiency to increase competitiveness & reduce costSrc: ENAM India Research
  13. 13. Operations Management – A key differentiator Operational Expenses account for around 2/3 of the total expenses Projected expenses of 22.5Cr a year!!Layout Design Capacity Patient Flow Inventory Procurement Equipment Planning Management Management management•Department •Vendor selection locations •Estimating the •Wait Time analysis •Aggregate •TPM •Vendor•Emergency Entry resources-5M of Patients Planning •Utilization Managements & Exits •Hospital •Idle time of •FIFO Mapping •Contracts•Man & Material Occupancy Rate consultants •Reverse Logistics •On the Job Movement •Service •Scheduling Agreements TrainingAdvantage:• Tangible: Bottom Line improvement through efficiency improvement• Intangible: Goodwill and Trust from customers Better Patient Care with Improved Returns!!!
  14. 14. Capacity |Layout | Patient flow | Inventory | Procurement | Equipment Capacity Planning Man  Forecast and Demand projections based on medical and demographicMoney Machine  Target bottlenecks through Queuing theory  Think “LEAN” – Eliminate wastes  Increase occupancy level Methods Material Cases/year X Length of Stay Occupancy Rate = No of Beds X 365 Evaluating utilization before capacity expansion
  15. 15. Capacity |Layout | Patient flow | Inventory | Procurement | Equipment Corelap Matrix Consider Qualitative Factors in layout designCorelap Considerationso Flow of Materialo Personnel Contact Crafto Use Same Facilities Refining the initial layouto Use Common Records based on frequency ofo Share Same Personnel movement and cost associatedo Supervision or Control with ito Noise, Dust, Fumeso Interruptionso Special Mgmt. Needs Optimized layout feasibility * Discrete even simulation to Hospital Layout changes are model patient flow and expensive, futuristic development Hence future expansion plans * Decoupling /Service blue Print should be taken into consideration * Present fit and flexibility for future expansionRef: A Methodology for total hospital design by Gerald L Delon
  16. 16. Capacity |Layout | Patient flow | Inventory | Procurement | EquipmentPATIENT FLOW ANALYSIS Value stream mapping of the best practices / current practice to identify wastes and propose new systems Real Time Monitoring Wait-time analysis of Patients Identify inefficiencies Idle Time analysis of ConsultantsINVENTORY MANAGEMENT  VED analysis and online monitoring  Criticality of freshness / shelf of inventory life of products  Better stocking & Inventory Control ;  Lead times & criticality FIFO; 5S associated with particular  EOQ ordering with safety stock – A products trade off between costs, risks of stock  Seasonal Effects & Costs out and expiry
  17. 17. Capacity |Layout | Patient flow | Inventory | Procurement | EquipmentProcurement MRP – when, what, how much to buy Vendor selection – Cost, Quality, Service levels, Reliability, Lead time Vendor Management – Information sharing, leverage their strength, long term relationships  Win – Win Agreements Contracts – Payment, Shipping, Service, Urgent deliveries, Penalty clauses Service Agreements – Maintenance Repair and Service of equipment Reverse Logistics – Return of expired inventory, Disposal of medical wastesEquipment Management• Training of staff for best usage and autonomous maintenance• Visual instructions for usage• Poka-yoke to prevent unintended mishaps• Preventive & Proactive maintenance• Equipment tracking for better utilization
  18. 18. Competitive EdgeLeveraging Unique Strengths:  Dr. Sharma’s good contacts of creamy layer in Delhi region  Reliable and high quality sourcing of equipment by Dr. Sharma’s Father-in-law  Dr. Ram gained expertise with best of medical equipment in USA  Dr. Ram’s contacts in USA - Referrals – Medical TourismService Specialization  Specialized services – Better focus and operational efficiency  “100 bed super-specialized hospitals generate equal revenues as that of 500 bed multi specialty hospitals” (Source : Economic Times, Apollo) IT Integration  Implementation of Hospital Information Management System  Maintaining Electronic Health records – Error free and timely reports
  19. 19. Competitive EdgeResource based quality Improvement  Better facilities and motivation for employees to reduce attrition  SMED – Improve Productivity of surgeons  Establish Protocols/Systems for all functions  Maintenance of in-house labs with short TAT  Churn Rate, ALOS, SERVQUAL for continuous improvement  Risk Management and Green InitiativesPublic relations management  Name Labels and Uniform for all functionaries  Marketing through booklet – create awareness on neuro diseases  Transparency with patients – trust – word of mouth referrals  Visiting doctors to promote the hospital
  20. 20. Organizational Structure Dr.Ashwini (COO)Building Financial Advisor HR & Personnel Head Procurement Manager Hospital Admin & Maintenance Real Estate Fund Raising Vendor Selection Consultants Dept wise Requirement Payroll Accounting Matrix Medical Equipment Reception Hospital Design Purchase & Enquiry Consultants Budgeting Full Time consultants Signing Equipment Contractors Visiting consultants Annual Maintenance Contract Facility Nursing Staff Legal Advisor Lab Technicians Land and Construction License IT support Electricity Clearance Supervisors & Helpers Water Board Clearance Sewage and Sanitation Clearance Future Scope Biomedical waste disposal Clearance Fire Department Approval PRO Marketing Health Certification
  21. 21. References1)Service operation management return to roots, Robert Johnston – IJOPM 19,22) KPMG Report: Emerging trends in Healthcare3) A Methodology for total hospital design by Gerald L Delon4) Evaluating hospital design from an operations management perspective Leti Vos & Siebren Groothuis &Godefridus G. van Merode Thank You
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