Healthcare delivery in India has Different and unique challenges. They need to provide appropriate quality of care, deal with humanitarian issues, tackle ethical dilemmas and handle emotional problems. To add to all this is the economic survival!!!

1. The Challenge of Minimizing Capital
Costs in Ensuring Effective Healthcare
Delivery
Dr Vijay Agarwal
President CAHO
www.caho.in
December 20, 2015

2. Challenges
• Different and unique challenges.
• Complex operations which expose them to greater
risks.
a) They need to provide appropriate quality of care
b)Deal with humanitarian issues,
c) Tackle ethical dilemmas and
d)Handle emotional problems.
December 20, 2015

3. Increasing Competition
• Competition is intensifying
• High setting up costs
• To keep their operations sustainable:
(a) Pricing of their services
(b) Capacity utilization
(c) Services can not be stored or transferred
from one place to another
.
December 20, 2015

4. HR Issues
• Managing human resources assume critical
significance in knowledge and service
industries
• Hospitals face the challenge of ensuring that
qualified professionals remain associated with
it
• Lack of sufficient trained manpower
December 20, 2015

5. Equipment
• Most of the equipment are imported and are
of high value, paid for in foreign currency.
• Faster technological obsolescence. This
contributes to risk on capital cost invested.
• In order to recover the cost, hospitals also face
the challenge of having an appropriate pricing
policy which ensures the recovery of the cost
of these equipment and utilization rate.
December 20, 2015

6. High Operating Cost
• High energy cost
• Administrative cost
• High Interest burden
• Increasing “Negligence” risk
• Increasing regulations
December 20, 2015

7. Reimbursement
• High private cash expenditure
• Penetration of health insurance in India is still
low causing low utilisation of hospital services
• Irrational Govt and PSU schemes
December 20, 2015

8. Perception Problem
• Perception that private hospitals are making
“huge” money and Govt hospitals are “free”
• In the process, hospitals become financially
vulnerable
• Leads to compromising quality and adopt
unethical practices such as inducing demand
and promoting services through fee-splitting
practices
December 20, 2015

9. Quality
• Increasing competition and growing attention
to the Indian health sector has necessitated
the need to improve the performance for
Indian hospitals
• Accreditation needs to be supported
• Improvement in financial health is necessary
December 20, 2015

10. Some Suggestions
• Invest time in hospital planning
• Hospital made around a “Business Plan”
• Green Hospital Building can reduce energy
cost >50%
• Make use of technology to reduce cost on
security and house keeping manpower
• Select equipment judiciously and with longer
AMC/ CMC
December 20, 2015

11. Suggestions…..
• Adopt a robust HIS
• Make the hospital process driven
• Create a dashboard that gives you crucial
information timely
December 20, 2015

12. Familiar Dashboard
December 20, 2015

13. A Dashboard
“A dashboard is "an easy to read, often
single page, showing a graphical
presentation of the current status (snap
shot) of an organization’s key performance
indicators to enable prompt decisions to be
made at a glance.”
Peter McFadden, CEO of ExcelDashboard Widgets "What is Dashboard Reporting"
December 20, 2015

14. Customizing the dashboard
• A good dashboard should be 360 degree aligned and should
include
– Customer Satisfaction
– Operations
– Financials
– Quality
– Team engagement
December 20, 2015

15. Operations Financial Quality CSAT Engagement
OP/IP Volume Gross & Nett
Rev
Audit scores OP CSAT index Events
compliance
Key procedure Vol Discount % Non
compliances
IP CSAT index Training
compliance
Contribution Incident reports Customer
comments
ESAT score
Cost to revenue Attrition
December 20, 2015

16. Financial Dashboard
Dashboard should reflect the financial health of the
organization and help make key decisions in this regard
Slices of each element in detail should be available if needed.
For example it is not enough to know what the revenue is, it is
equally important to know the composition of revenue (from
room rent, to pharmacy, radiology, lab, medical supplies, etc).
Similarly, other elements of the P&L also need to be further
detailed
December 20, 2015

17. Financial Dashboard
 Gross Revenue: divided into Room Charges, Medical Supplies, Pharmacy,
Radiology, Laboratory, Physiotherapy, Procedure (OT), Emergency Room,
Specialist Consultation, Nursing Services, Equipment Charges, Food & ,
beverages, Dialysis, Dental, and Others
 Discount: Usually P&Ls have a great ability to hide this important figure that
erodes the bottom line! Measure it! Analyse it!
 Gross Margin: for each element of the revenue defined above, it is also
important to measure the gross margin
 Doctor Cost: Doctor cost in each department stacked against the professional
fee generated
 Manpower Cost: Manpower rationalization
 Administrative Cost: correlation to revenue and volume
December 20, 2015

18. MTD YTD
IP Revenue Per Patient Per Day 24,142 22,187
IP Revenue Per Patient 73,568 63,243
OP Revenue Per Patient 1,224 1,172
MTD YTD
REVENUE Rs L COGS Margin % Rs L COGS Margin %
Room Charges 84,14,120 7,63,143 90.9% 8,61,35,029 72,95,020 91.5%
Medical Supplies 1,05,39,723 60,22,463 42.9% 9,15,02,692 5,53,78,914 39.5%
Pharmacy 88,41,892 53,85,664 39.1% 8,43,27,381 5,42,09,044 35.7%
Radiology 63,30,973 3,83,921 93.9% 5,89,99,624 32,69,706 94.5%
Laboratory 1,06,80,231 28,50,058 73.3% 10,45,91,535 2,69,12,842 74.3%
Physiotherapy 6,75,752 642 99.9% 72,04,727 4,966 99.9%
Procedure (OT) 59,91,331 7,78,873 87.0% 5,07,23,948 65,94,113 87.0%
Emergency Room 1,16,825 7,010 94.0% 12,75,299 76,518 94.0%
Specialist Consultation 2,25,27,021 - 100.0% 21,68,11,366 - 100.0%
Nursing Services 39,25,536 - 100.0% 3,79,99,252 - 100.0%
Equipment Charges 26,32,311 2,17,400 91.7% 2,61,57,521 11,59,539 95.6%
Food & Beverages 11,43,735 8,04,320 29.7% 1,20,96,124 87,15,988 27.9%
Dental 4,50,022 2,92,514 35.0% 44,41,717 28,87,116 35.0%
December 20, 2015

19. MTD YTD
Rs L Rs L
Professional Fee Receipt 2,25,27,021 21,68,11,366
MO/Registrar Cost 8,14,449 1,84,15,275
Retainer Consultants Cost 39,48,548 3,76,05,065
Non-Retainer Consultants Cost 1,75,17,657 15,13,71,356
Total Doctor Cost 2,22,80,654 20,73,91,696
Margin 2,46,366 94,19,671
Margin % 1.1% 4.3%
December 20, 2015

20. Monitoring the dashboard
Who owns each element of the dashboard has to be identified. For
example, who owns discounts? Is it marketing or operations?
Who will measure and report each element of the dashboard? While
most of these would be a part of the P&L, it is important that ‘owners’
report the same after their careful analysis of the results
What are the overall goals for each element. They have to be
SMART! How often will we review the dashboard? This depends on
the level at which this dashboard is being viewed
Who will be the central pivot to drive this process?
December 20, 2015

21. Source
It is important to establish consistent and
timely
access to a reliable data source.
The use of a good HIS and integrating it to
Finance helps to ensure that dashboards are
consistently populated with timely and
actionable metrics.
It is worthwhile spending money on a good HIS
December 20, 2015

22. Incorporating benchmarks
and budgets
Comparing performance against benchmarks can help both the
provider and the administrator set reasonable goals and
timely monitoring. Sometimes the best benchmark for
success comes in the form of an internally constructed
financial budgeting.
In our country there is a lack of credible published national data
on benchmarking
December 20, 2015

23. From Data to Dialogue
Like any data, dashboards can be a first step to improvement, but rarely
are
they the last. More often than not, dashboards provide a way to begin a
conversation — about changing behavior or monitoring and tracking
performance goals or aligning a practice's financial and clinical
performance.
As professional reimbursements continue to trend downward throughout the
country, conversations like these are becoming more and more necessary:
providing quality care depends now more than ever on the financial health
of
a practice. A well-informed practice with strong channels of communication
is more likely than most to be able to negotiate the hurdles ahead.
December 20, 2015

24. Measurement to Improvement
• Analysis – Paralysis syndrome!
• Unrealistic expectations, low expectations, or misguided
• expectations
• Identification of actions and execution!
• Execution to sustaining the gains made
Institutionalization!
December 20, 2015

25. Thanks
December 20, 2015