changing healthcare landscape 040111
TRANSCRIPT
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Changing healthcare landscape A case of Jaipur city in India
Contents
2
A Overview of Indian Healthcare Market
B Jaipur - From Pink City to Medi-city?
Implications for healthcare providersC
Source: Enam, 2007
Healthcare delivery market accounts for fifty percent of the total Healthcare sector in India
3
15%
10%
25%
50%
Healthcare delivery PharmaDiagnostic Insurance & Medical equipment
100% = US $30 billion
• Indian healthcare industry, which comprises of hospitals and allied sectors, is projected to grow 23 per cent per annum to touch US$ 77 billion by 2012.
• The sector has registered a growth of 9.3 per cent between 2000-2009, comparable to the growth rate of other emerging economies such as China, Brazil and Mexico.
Size of healthcare market in India, $ billion, percent
Source: Enam, Kanvic research
Healthcare market can be segmented into four major categories
4
Key feature Financing Major players
Primary• Mainly at the grass root level• Minimal involvement of
private players in this segment
• Majority of it financed through Govt. spending
Tertiary - Multi-
speciality
• Higher equipment costs and fixed staff costs result in higher gestation periods
• More margins and higher volumes
• Major projects driven through large private players
Tertiary - Super speciality
• Low gestation periods• Can follow a strategy to
initially start off as multi speciality and move towards super speciality
• Major projects driven through large private players
Secondary
• Primarily includes nursing homes and recovery rooms
• Investment in such centres to reduce ALOS of tertiary care centres.
• Majority of it financed through Govt. spending
Key segments of Healthcare market
Note: ALOS - Average Length of Stay
Source: ibef
Indian healthcare market is evolving to provide cure for complex diseases and high quality of services
5
Complexity of disease
Qu
ality
of
Serv
ices
Low High
Low
High
Local nursing homes
Community hospitals
Multi-speciality hospitals
Super speciality
Health City
Type of healthcare providers
Source: Kanvic research
Favourable demographics and improving income levels are driving the growth of healthcare market
6
Favourable demographics
Improving income levels
Increasing preference for
private treatment
Availability of quality healthcare
India’s growing population is augmenting the growth of healthcare delivery market
Population growth and increased disposable incomes are expected to result in better healthcare awareness and higher expenditure on healthcare
India has 0.5 million doctors, 0.9 million nurses and about 1 million beds.
In India, private healthcare accounts for nearly 80 % of the country’s total healthcare expenditure.
Drivers of healthcare growth in India
Note: Figures are rounded to the nearest integer and may not add up to 100. OPD- Outpatient, IPD- Inpatient
Source: MGI, Crisil, NSSO
Increasing healthcare spend and growth in inpatients will further drive the growth
7
1995 2005E 2010F 2015F
Food, beverages & tobacco ApparelHousing & Utilities Household productPersonal product Transportation Communication EducationHealthcare
1 34
11
4 2
14
5
56
42
6
12
38
17
57
3425
5
12
39
19
6
913
9
6
20
113
10
5
32
100% = 60 82 140 248
2006 2011E 2016E
2312
1268
637 1329
903
617
OPD IPD
CAGR 11.6%
CAGR 10.9%
Share of average household consumption, Rs. ‘000, %
Revenue from outpatients and inpatients, Rs. billion
Contents
8
A Overview of Indian Healthcare Market
B Jaipur - From Pink City to Medicity ?
Implications for healthcare providersC
Source: Kanvic research
Jaipur’s healthcare market has evolved over the years
9
1947 2000s
1971
SMS Medical college is set up by the Government
First private hospital Santokba Durlabhji Memorial Hospital (SDMH), run by a trust, is inaugurated
Institute based hospitals are set up after privatisation of medical education in the state
Narayana Hrudayalaya, a leading Cardiac care hospital in India, opens in Jaipur
Soni hospital starts operations with 20 beds
1986
2004
S K Soni Hospital begins operations with super specialities in cardiology, cancer, nephrology and neurosurgery
100 bedded Tagore hospital begins its operations
Fortis Escorts, the first corporate hospital in Jaipur, opens its doors to the public
2006
2007
2010
Evolution of healthcare market in Jaipur
Note: NCR- National Capital Region
Source: Kanvic research
Healthcare market in Jaipur is growing based on sustainable growth drivers
10
Tourism driven economy creating a demand for medical tourism
State capital and major city in Rajasthan, the eighth largest state in India by population
Government initiatives and policies to promote healthcare
Major players in healthcare sector expanding into Tier II and Tier III cities in India
Proximity to Delhi NCR region
Healthcare growth drivers
for Jaipur
1
2
34
5
Growth drivers of healthcare in Jaipur
Note: NABH is a constituent board of Quality Council of India was set up in 2005 to establish and operate accreditation programme for healthcare organizations in India. NABH has standards specific to the Indian healthcare setting, major aspects being the assurance of uniform access, assessment, care of patients and protection of patient’s rights.
Source: NABH
Hospitals in Jaipur are going for quality accreditation
11
Hospital
Fortis Hospital
Apex Hospital
Monilek Hospital
SDMH
BMCHRC
Tagore Hospital
S.K. Soni Hospital
Status of Application
Got Accreditation
In process
Documents received
Documents received
In process
In process
In process
Jaipur Hospitals going for NABH accreditation
0
27.5
55
82.5
110
0 3750 7500 11250 15000
Note: The list of hospitals is not exhaustive
Source: Kanvic research
However, there are some hospitals where doctor to patient ratio is not adequate
12
Number of patients
Num
ber
of d
octo
rs
Distribution of doctors and patients for hospitals in Jaipur
Coping zones
Source: Press clippings, Kanvic research
New hospitals will increase supply of beds in the market
13
Hospital Speciality No. of beds Proposed
investment (Rs. Crores)
Reliance Medicare Super Speciality 800 200
Bombay Hospital Multi Speciality 650 150
Dr. Rakesh Keedawat Hospital Multi Speciality 100 27
International Oncology cancer Hospital Super Speciality 100 54
Sea Rock Hospital - 200 50
Eternal Heart Hospital Super Speciality 150 60
Artemis Hospital Super Speciality NA NA
B M Birla Heart Research Centre - NA 300
Ojjus Medicare - 850 NA
Proposed new hospitals in Jaipur
Note: 1 Demand for beds is based on WHO standard of 35 beds for a population of 10,000.
Source: Kanvic research
While the demand for healthcare services will still be more than supply in near future, the market space may become ‘crowded’ for top end hospitals
14
Total Demand for beds1
Existing supply
Proposed addition
Gap in demand
and supply
11,240
6,000
2,700
2,540
Demand supply situation in Jaipur, number of beds
Contents
15
A Overview of Indian Healthcare Market
B Jaipur - From Pink City to Medi-city?
Implications for healthcare providersC
Source: Kanvic
Healthcare providers will need to look at five major factors in the changed scenario
16
Private Equity will help finance growth of hospitals
New business models will emerge
Quality of non-clinical services will have considerable influence on patient satisfaction
Hospitals will increasingly use mass media to reach out to their markets
Key factors for healthcare providers
Healthcare economics will become important
Key factors for healthcare providers
1
2
3
5
4
Note: EBIDTA- Earnings before Interest Depreciation Tax and Amortisation; SG&A - Sales, General and Administration
Source: Enam, Kanvic analysis
With increasing competition, a clear focus and strategy will lead to favourable economics for hospitals
17
EBIDTA margin%
Revenue
Inpatient
Outpatient
Costs
Rentals
Diagnostics
Diagnostics
Consumables
Consultancy
Consultancy
Diagnostics
Consumables
Personnel
SG&A
• Disease type• Doctor’s reputation• Hospital brand
• Type of investigation
• Location• Facilities
• Disease type• Doctor’s reputation• Hospital brand
• Type of investigation
• Doctor’s profile• Full time vs.
consultation payment
Economics of a healthcare provider
1
Source: Morgan Stanley, Company reports
Awareness of EBIDTA and cash break even will help hospitals in better planning
18
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
59
7383
10290
106
141
155167
174
191
-23
-2
-6
0
2017
20 1921
EBIDTA margin Revenues
Revenue and EBIDTA margin build up of Fortis Escorts, Jaipur, Rs. Mn, percent
1
Break even
New business models are emerging in healthcare delivery
19
Single Speciality Hospital
Day Care Hospital
1.
• Single speciality hospitals (SSHs) provide care in one major speciality where they can offer end to end services. They are a relatively new and rapidly growing segment in India.
• The margins in SSH are high as they are mostly surgery driven. A SSH also needs less manpower, equipment, and infrastructure.
• Maternity care is receiving a much-needed fillip with corporate hospitals launching dedicated standalone birthing centres. Although Apollo's Cradle and Fortis Healthcare's La Femme may be the known names for maternity care, they are not the only ones interested in cashing in on this emerging market.
• New boutique hospitals catering to mother and child care are coming up in Goa and Southern India.
• Day care hospital model is attracting healthcare players in India. In day-care hospitals, patients are not required to stay overnight. They are provided healthcare services and discharged the same day.
• Recently, Nova Medical Centers has launched day care hospital chain based on similar models in the UK and USA. The company plans to set up 25 such hospitals across the country with an investment of Rs. 10 Crore per hospital.
• This model can bring down the cost of treatment for patients as a result of reduced investment in building and land.
2.
Emerging business models in healthcare delivery
2
Hospitals are also combining hospitality and retail to generate new revenue streams
20
Hospotels
Retail Store in Hospital
• Clinical activities are not the only source of income. For instance, the business of Cradle also come from retail stores that offer services for kids (baby clothes and kids' toys, apart from baby accessories, foods and hygiene products), for mothers (maternity wear), visitors (cards, gifts, books, magazines and confectionary), a well-stocked 24-hour pharmacy and a café for visitors.
• Large hospital chains are now turning into 'hospotels' -- a concept that combines the services of a hospital and a hotel. Already, Indraprastha Apollo Hospital has roped in fast food major Nathu's, Max Healthcare has a Cafe Coffee Day outlet.
3.
4.
Franchisee Model
• Considering the huge investment needed for establishing the necessary healthcare infrastructure in the country, franchising is emerging as a viable option for hospitals to expand to newer geographic areas.
• Apollo Hospitals is one among the pioneers to have sought franchisee model for its clinics. Apollo Hospitals unveiled 'Cradle,' a boutique hospital dedicated to woman healthcare through franchisee route.
5.
Emerging business models in healthcare delivery
2
Source: VCCedge, Kanvic research
Healthcare sector has attracted the attention of Private Equity
21
2005 2006 2007 2008 2009 2010
385
121
554
403
290
367
• Private equity and Venture capital are taking interest in Healthcare industry. They are becoming increasingly interested in regional hospitals. For example, Jaipur based Soni Group of Hospitals has attracted PE funding and is planning to expand into different regions.
• Two more hospitals in Jaipur- Narayana Hrudayalaya and Eternal Heart Hospital have attracted interest of PE firms.
• On a national level, Fortis la Femme is a JV with Sunrise Group while Spring Healthcare has made an investment in Oyster and Pearl Hospital.
PE investment in healthcare sector in India, $ Mn
3
Source: Kanvic research
Non clinical factors are contributing significantly in creating a hospital’s brand image
22
Reception services play an important role in patient satisfaction. While not as important as clinic services, they can create a negative perception even if the clinical services are excellent.
Care from doctors and nurses is a key factor in determining satisfaction level of patient.
Quality of Infrastructure is also a major non clinical aspect in assessing a hospital’s image.
Reception
Care from doctors and nurses
Infrastructure
35%
65%
Clinical Non clinical
Distribution of clinical and non-clinical processes in a hospital
1
2
3
4
Hospitals can use mass media for a number of functions
23
Inform about products and services
Create distinct identity in patient’s mind
Educate customers
Launch a new hospitalReview existing services
Reach out to larger markets
Communicate core value
Use of Mass media
Key functions of mass media for hospitals
5
The inclination to use mass media by hospitals has increased in recent years
24
Moolchand Hospital has been successfully advertising their Emergency services on radio. Fortis has been talking about the Maternity services at Fortis La Femme.
The use of print media is very common in hospital sector in the form of brochures, leaflets, pamphlets for disseminating information. Hospitals have been increasingly using newspapers to communicate about their services to the target population.
Technology based marketing includes increased contact with patients (former, existing and future) via email, newsletters and online forums.
Wockhardt Hospitals, India's leading hospital chain launched India's first "Interactive Occupational Health Screening Campaign" for employees across all industries in the country.
Radio
Out of Home (OOH)
Internet marketing
Examples of mass media use by hospitals
5
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