1. OPERATIONS • Competitive Analysis • Benchmarking financial Analysis • Supply chain Analysis • Future Scope and recommendations 2. OPERATIONSProduct and servicesFortis Healthcare (India) is engaged in providing the latest in internationally recognisedmedical care to patients with a variety of ailments and medical conditions.Their Network consists of Super Speciality Hospital Hubs that concentrate on oneor more specialities. These hospitals are interconnected to a larger network of multispeciality hospitals that ensures patient access to expert care for any speciality.This unique network architecture provides expert care to their patients and a level ofconfidence in receiving the latest medicine has to offer.Corporate ServicesHealthy employees contribute to a healthy business! The healthcare delivery services intheir top hospitals are specially designed to suit employee needs. All patient records areaccessible at all their hospitals across India so that employees can access healthcareservices at the centre most convenient to them, choosing from a wide network of theirgroup hospitals.Fortis offers a wide range of products and services to suit the companys needs.1. OPD Services - Fortis network of top hospitals in North India offer special packagesto corporate employees and their dependants on the OPD facilities listed below: • Doctor consultations • Pathological investigations • Radiological diagnostics such as X-Rays, CT Scan, MRI, Ultrasound, Mammography • Non-invasive cardiology like ECG, Echo, TMT, Holter etc. • Neurology investigations such as EEG, EMG etc. • Physiotherapy2. In-patient Admissions (IPD-related services) - Employees of empanelled
corporates are given special offers on all multi- specialty procedures/surgeries and onroom rent.*3. Ambulance Facility - This facility can be availed of in times of emergency.Dependants of members may also be eligible for these facilities.4. Health Awareness Lectures/ Workshops – Awareness workshops and sessionsare organized by eminent faculty members on diverse topics at various hospital unitsas well as the Corporate premises with the intention of promoting a sense of well-beingand fitness among corporate personnel.5. Executive Health Checkups6. Health Check Camps7. Blood Donation Camps*conditions applyList of Empanelled InstitutionsThe Fortis Group is empanelled with a number of top corporates and multinationalcompanies (MNCs), Public Sector Units (PSUs), Government Bodies/ Institutions,Ministries under the Government of India, Insurance Companies and Third PartyAdministrators (TPAs). Many of these clients have chosen Fortis has their preferredhealthcare provider. The employees of these empanelled clients are given special offerson Preventive Health Check- up programmes, multi-specialty procedures/surgeries andmedical management services. This facility can be availed of in times of emergencywherever and whenever needed. All dependants of employees at the empanelledorganization may also be eligible for these facilitiesFortis Operational Management and StructureThe Fortis hospital network was based on a “hub and spoke” model withmultispecialty “spoke” hospitals providing comprehensive health care services and “hub”hospitals with sub specialty services in one or more areas. This model helped Fortisprovide comprehensive health care services from within its own network to a largegeographical area. To make optimal use of the intra-network referral model, the numberof patients referred for surgeries from within the network versus those who came fromoutside were constantly monitored.Fortis’ hospital services prices were among the highest in India. Fortis justified thehigherprices by noting its large investments in infrastructure, equipment, nursing facilities,and prominent doctors with high salaries. The price of procedures at subspecialtyhospitals was higher than the “spoke” hospitals. Fortis bundled services at hospitalsas “Packages,” a single charge for a range of services associated with a diagnosis,including examinations, common tests, room charges and procedure costs.
Fortis refined many hospital protocols imported from the west for the Indian market. Forexample, a typical Indian patient checked in accompanied by three to four attendantsand this number sometimes grew to 10 to 20 for patients from rural backgrounds. Fortisensured that the higher number of patient attendants was factored in hospital designand workflows. It also accommodated cultural practices which varied dramaticallyacross the country. The hospitals provisioned for prayer rooms for different communitiesat different sites.Fortis’ Human Resource PoliciesFortis considered the recruitment and retention of highly skilled doctors, nurses andother personnel its top priority. The staff at hospitals operated and managed by Fortiswas compensated by the respective hospital owners. At its owned hospitals, Fortis hiredreputed physicians at above-market salaries to access the patient roster and increasethe company’s standing in the industry. Cultural fit was also used as selection criterionin the interview process.All specialists and most general practitioners were compensated on a salary plusincentive basis. They worked across the network hospitals, depending on demand. Thephysicians who practiced exclusively within the Fortis network earned a guaranteedincome and had predictable working hours. They could also provide better continuum ofcare to patients, and had more time for resource development and research. AlthoughFortis paid more in salary costs during the initial years, it hoped to lower personnelcosts in the future as physicians’ practices expanded.Fortis outsourced housekeeping, security, grounds maintenance and various othermedical support services.In most cases, Fortis replaced the physician-led management of acquired hospitalswith professional managers. This practice sometimes disturbed the power structurewithin the hospitals, creating friction between physicians and managers. A seniorcardiologist at the recently acquired Escorts heart hospital remarked, “Fortis’management is generating ill-will amongst the physicians, some of whom are the bestin the country. They overrule the decisions of senior surgeons and introduce policieswithout consulting the physicians.” To address such concerns, the Human Resourcesdepartments of Fortis group hospitals focused on balancing business requirementswith the motivational concerns of the physicians. Compensation of physicians variedsignificantly, depending on seniority, specialty, reputation and demand for their services.Fortis had developed a formula to calculate the variable component of salary, whichfactored success rate of various procedures, patient referrals, and rapport with patients,administrative responsibilities and publications. Though Fortis encouraged physiciansto conduct research, it had not developed a clear model to compensate for the time.The physicians in non-core specialty areas, such as dentistry and ophthalmology,and in multi-specialty practices, were permitted to maintain their own separate privatepractices and to consult at other hospitals. They were compensated on a fee-for-serviceor revenuesharing basis.
Fortis’ salaries were considerably higher than the national average. The salaries of themost senior consultants ranged from US$100,000 to US$600,000. In comparison thesalaries for a physician trained in internal medicine in an average Indian hospital were inthe range of US$10,000–US$15,000 post residency and for specialists with fellowshiptraining in medical sub-specialties in the range of US$12,000–US$20,000. The hospitalsexpected the high-paying physicians to generate revenues to justify their pay packages.Marketing and BrandingUnder the guiding hand of Ranbaxy, Fortis understood the importance of creating aspecific and strong brand identity. Fortis hoped that its message of quality would helpovercome the controversy between private primary care practices in the community andhospitals around kickbacks for referrals. The patient referral system in India was similarto other countries and relied on referrals from the family doctor to specialists or directlyto a hospital if the patientsneeded a procedure.Patients frequently conferred with friends, family members and other doctors beforethey chose a hospital. Those who were Internet savvy read about their conditionand identified the best physicians and hospitals. To aid in physician retention, Fortisconducted Continuing Medical Education (CME) programs. It reimbursed the physiciansfor any participation fees but did notcompensate them for the time spent on non-clinical activities. In 2006, Fortis physiciansparticipated in over 400 CMEs.CompetitionThe major competitors of Fortis were the for-profit hospitals in North India, includingthe nationwide chain of Apollo hospitals, and regional operators like Max Healthcare.Fortis also competed with hospitals owned by government agencies or nonprofit trusts,such as the Post Graduate Institute, All Indian Institute of Medical Sciences, andhospitals affiliated with medical schools. As Fortis expanded into the rest of India,it expected to face competition from established local players. A large number ofprivate hospital groups from Singapore, United States and Australia were also planninghospitals in India.With a growing demand for health care services by local Indian population, most marketparticipants felt that there was enough room for growth by addressing the domesticmarket. To build a national brand, the hospitals jointly created the “Indian Health CareFederation” whose agenda was to establish national benchmarks by sharing clinicaloutcomes information among all the member hospitals.Competitive Analysis:
Corporate StrategyThe corporate strategy of the Fortis is based on steady expansion in the new markets.It has adopted a strategy of market development where the business seeks to sell itsexisting products into new markets.There are many possible ways of approaching this strategy; Fortis has adopted thestrategy of MergersAnd Acquisitions which are explained below:Mergers and AcquisitionsAccording to Wall Street Journal, Fortis Healthcare was in process of buying 10hospitals in India, for 9.09 billion rupees ($187 million). And this move was a part ofoverall strategy of Fortis healthcare to expand rapidly in the hospital chain sector. Theseacquisitions will get Fortis to mark of 38 hospitals with capacity of 52,000 beds acrossIndia.In addition to this 10 additional hospitals were added after the Wockhardt’s deal.International PartnershipFortis Healthcare is affiliated with some of the world’s best in the fields of infrastructure,technology, and medical treatments to deliver world class healthcare services in theregion.It continuously strives to provide the hassle-free healthcare services to patients from allover the world. In order to make treatments seamless, over the years Fortis Healthcarehas developed alliance with the top-notch global service providers in the fields of
healthcare, insurance, medical tourism, travel, and other sectors. Which include likesof, Aetna, Bupa, Cigna,GMCserviceetc. The alliance with international partners ensuresseamless healthcare coverage for members patients while living, studying or travellingthroughout India and in the Asia-pacific region. Thus ensuring a larger network ofhospital will be there to support its customer base. The alliance with the service providerfacilitates timely access to world-class healthcare 17 services, medical expertise, andother healthcare related services. This is how Fortis meets its quality service goals.Benchmarking financial Analysis NO DATA FOUND FOR THIS SEGMENT!!!!! I would appreciate if any1 could help me with this.Supply chain Analysis NO DATA FOUND FOR THIS SEGMENT!!!!! I would appreciate if any1 could help me with this.Future Scope and recommendations:Future prospectus evaluation: Fortis is relatively new entrant in healthcare industry. However, in addition to hospital business, they have also entered into retail pharmacy business and also entering into old age home business. Over a five period of time, the growth in the
super specialty hospital business are likely to stagnant therefore, it will be like a cash cow of BCG matrix. The cash generated thru’ cash cow will be used for developing old age home which is relatively new and high growth product (Star in BCG matrix). The hospitals which are not able to generate cash (even though other hospitals are growing) will be like problem child and it would be better to sold those hospitals and invest in Star. Being a relatively new player, there is no dog in their portfolio. The details of various phases on life cycle of product and BCG matrix are show below:Recommendations:
• More Focus required on Organic Growth • Too much focus on specialty • Market extension in tire 2 and 3 cities • Smaller HospitalsMore Recommendations & Suggestions:Some Suggestions for improving the position of the Fortis hospitals1. The general perception that large hospitals, with high bed-occupancy rate, are profitable, is misleading. Global experience shows that hospital with more than 250 beds don‟t do well. Many Indian hospitals are following the US healthcare industry, by decreasing the average length of stay of patients and increasing patient turnover. US research shows that 80% of the revenues form a patient comes in the first 72 hours post- admission. Hospitals generate a lot of revenues from General Inspection, because the patient turnover is very high. A large percent of revenues come from specialized services like operations and surgeries. It is because of these reasons that many corporates are planning for a small 100 beds specialized hospitals, which caters to specific diseases like cardiac, cosmetic surgery, neurology etc. Research shows that there exist a lot of space for super-specialized hospitals with 100-150 beds, which generate revenues equivalent to large 500 bed general hospital. Typically large hospitals with approximately 500 bed capacity takes about 9-10 years to break even whereas super-specialty hospitals with about 100 beds take about 6-7 years to break even. Therefore, going in for super-speciality hospitals
2. Hospitals could also generate revenues from medicines if they are supplying them in-house. Some hospitals make it mandatory for the patients to buy medicines from the hospital‟s chemist shop. A margin of 15-20 % can be charged for such medicinal supplies. Though many hospitals run by Trusts do not earn this way, but new entrants or corporates for whom private healthcare sector is a direct extension of their line of business ( eg. Pharma companies), can generate good returns from medicine supply.3. Health Plan packages can be provided by hospitals to family and corporate. For example Family Health Plan Services (FHP), a subsidiary of Apollo Hospitals does health management of employees of its clients. With a wide net work of Hospitals and Healthcare providers countrywide, and a tie -up with General Insurance Corporation of India, FHP offers a range of services to employees and dependants, such as Preventive Healthcare, Corporate Counseling, welfare Programmes, Claims Administration, Patient-care Coordination and so on. So FHPs healthcare packages, optimize the benefits while keeping the cost under control.4. Apart from preventive healthcare, stress management programs could be provided. For example „Effective Stress Management Programme‟ offered by Wockhardt Hospital. This programme provides a medical perspective of stress and is conducted by a medical professional. The programme includes a series of one-to-one sessions, with a clinical Psychologist highlighting the factors responsible for inducing stress, and the methodologies, which can be adopted to cope with this phenomenon practically.5. Hospitals can become integrated healthcare systems i.e. when medicines, food services, laundry and linen etc will become "purchased" services. These third-party operations will increase the profit margins.6. Mergers could be used for synergy of skills - i.e. to help the merged organisations benefit from one anothers individual strengths by applying them across the board. It also helps them to make joint investments in branding or information technology and also to react effectively to the changed market forces. Alternatively hospitals can go in for Group Purchases, as in USA. The buying power of large GPOs in USA like Premier, VHA / UHC and AmeriNet gives them the clout to exert price pressure on suppliers, particularly for products in lower demand. And as GPOs have consolidated, manufacturers have offered bigger discounts to hang on to their contracts. So there exists a lot of supply management opportunity, which will affect spending productivity.OPERATIONS (IT CAN BE CONSIDERED AS AN EXAMPLE)
Fortis Hospital MohaliFortis Hospital, Mohali has three sub-facilities on one campus: (i) a super-specialtycardiac center quipped to provide advanced cardiac treatments for all forms of heartdisease (ii) a general multi-speciality hospital and (iii) the Fortis Inn RehabilitationCentre designed to provide “step-down” care to outstation patients. It currently has 9operating theatres and 215 beds and has capacity for up to 300 beds. Fortis Hospital,Mohali together with FHL’s satellite centre contributed 84% of the Company’s totaloperating income for the financial year 2007-08. The hospital has recorded an overallgrowth of 12%, achieving operating revenue of Rs. 133.01 crores as against Rs. 118.75crores in the previous year.Multi-specialties like Obstetrics and Gynecology were well established during the year.1018 Cardiac Surgeries (CTVs), 1353 Angioplasties (PTCAs) and 3172 Angiographies(CAGs) were conducted during the year.Fortis Hospital, AmritsarFortis Hospital, Amritsar is a multi-speciality facility with 37 beds. It serves as a “spoke”hospital for Fortis Hospital, Mohali and has a tele-link connecting it to that hospital. Thefacility is currently equippedwith 2 operating theatres, endoscopic suite, a labour room, a nursery and a 24-houremergency room. It is also supported by a fully equipped intensive care unit withventilators. Fortis Hospital, Amritsar contributed 2.57% of the Company’s total operatingincome for the financial year 2007-08.SUBSIDIARIESAs on 31stMarch, 2008, your Company had four direct subsidiaries viz. Escorts Heart InstituteAnd Research Centre Limited, International Hospital Limited, Fortis Hospotel Limited(erstwhile Oscar Bio-TechPrivate Limited) and Hiranandani Healthcare Private Limited and four step downsubsidiaries viz. Escorts Hospital And Research Centre Limited, Escorts Heart AndSuper Speciality Hospital Limited, Escorts Heart Centre Limited and Escorts Heart AndSuper Speciality Institute Limited.A Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiarycompanies is attached to the accounts. In terms of approval granted by the CentralGovernment under Section 212(8) of the Companies Act, 1956, the audited accountsof the subsidiary companies are not attached to this Annual Report. However, the
consolidated accounts prepared in accordance with Accounting Standard 21 of theInstitute of Chartered Accountants of India presented in this Annual Report includes thefinancial information of subsidiary companies.The copy of the annual report of the subsidiary companies will be made availableto shareholders on request and will be kept for inspection by any shareholder at theregistered office and corporate office of your company and its subsidiary companies.