opportunities for chartered accountants in healthcare•india's us$60 billion-a-year industry...

2/11/2011

1

Opportunities for

Chartered Accountants

in

Healthcare

- At Bangalore Branch of SIRC, ICAI

February 2, 2011

K.Govind Rajan, Partner – R.Venkatakrishnan & Associates E-mail: [email protected]

Contents

• India – Population Demographics

• Indian Healthcare Industry - A

perspective

• Industry Participants

• Emerging Healthcare Segments

• Emerging Business Segments

• Opportunities for CA in the Healthcare

Sector

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Current Life Expectancy Rates


• Contributes to 5% of the country’s GDP

• India's US$60 billion-a-year industry

second largest service-sector employer in

the country

• Healthcare expenditure growing at 12% pa

• Expected to grow to a staggering US$280

billion by 2020

Indian Healthcare Industry

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• Highly fragmented industry

• Entry of private insurance companies -

Insurance covers only a third of the total

expenses, meaning more than 70% of

health care expenditure in India is out-of-

pocket

Indian Healthcare Industry


Role of Private Players

• Private sector accounts for more than 80% of total healthcare spending in India

• Comparatively a more efficient system in place

• Top Choice for Medical Tourists

• Future capital investment in boosting the bed count is pegged at $25.7 billion, of which only 15-20% is expected from the Government

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Role of Private Players • It is estimated that nearly 70% of all hospitals

and 40% of hospital beds in the country are in the private sector

Hospital Beds - India

Pvt.

Sector

40%

Govt.

Sector

60%

Hospitals - India

Pvt.

Sector

70%

Govt.

Sector

30%


Healthcare Industry Participants

Health

Centers

Diagnostics Pharmaceutical

Companies

Allied and emerging

Derivative Industries

1. Hospitals 1. Diagnostic

Laboratories

1. Medical R&D - New

drugs (new molecules),

Stem Cell research,

1. Medical Transcription

- Primary Healthcare

Clinics

2. Radiology Cord Blood Banking

etc.

2. Medical Records - e.g

Telemedicine

- Multi-Specialty 2. Clinical Research

Organization

3. Medical Equipment

Manufacturers

- Super Specialty 4. Medical Equipment

Research

- Ambulatory Care 5. Reagents Manufacturers

2. Private clinics

3. General

Physicians

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Emerging Segments


• Preventive Healthcare

• Diagnostic Treatment

• Ambulatory Surgery Centers

– Minimally invasive surgical procedures

• Dedicated & Comprehensive care

facilities – Oncology, Diabetes

• Geriatric Care

Emerging Healthcare Segments

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Preventive Healthcare

• Rapidly mushrooming wellness centers

• Market is still largely dominated by unorganized players as entry barriers are low

• Abysmally low penetration level

• Drivers of this shift towards preventive healthcare

– Growing populace in the middle age group

– More sedentary in working lifestyles

– Greater awareness about medical and non-

medical treatments


Preventive vs. Curative

• Wellness and continue to be well

− New medical situations will continue to

emerge

• Curative Health

− Existing pre-disposed situation.

− Medical management.

− Surgical management.

− Continuous medical management.

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Ambulatory Surgery Centers

• Out-patient or same day surgery centers

• Minor Surgeries

• Cost saving for the patient as it eliminates

hospitalization cost

• Eg. Laproscopy, Cataract surgeries


Emerging Business Segments

• Healthcare Tourism

• Teleradiology

• Telemedicine

• Corporatization of Hospitals &

Diagnostic laboratories

• Corporatization of Medical

Education

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Implications

• Rise of Public Private Partnership

(PPP) management in Healthcare

• Growing interest from PE/VC firms

• New concept of Health Cities


Opportunities

for

Chartered

Accountants

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Core Areas

• Statutory, Internal Auditing

• Taxation

• Financial & Accounting Advisory

Services


• Facilitate the growth story

• Governance, Risk and Compliance

– Service Tax effective July 2010

• Establishing Cost optimization strategic

support

• Opportunities in conducting Techno-

Economic Feasibility studies outsourced

to CA

• Valuation

Business Advisory Services

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Clinical Establishments Act 2010

• Passed on May 2010

• Currently in force in all Union Territories and four states - Arunachal Pradesh, Himachal Pradesh, Mizoram, and Sikkim

• Seeks to register and regulate clinical establishments

• Registration of all clinical establishments in the country to be complete by May 2012


Clinical Establishments Act 2010

• Applies to

– Clinical Establishments under various

systems of medicines including Allopathy &

AYUSH

– Hospitals / Clinics including single doctor

establishments, with or without beds

– Laboratories offering Pathological,

Bacteriological, Genetic / Radiological,

Chemical, Biological and other Investigative

services

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• Drawing up an Information

Memorandum

• Business Plan

• Financial Modeling

• Bank and Debt Funding

• Liaison with VC and PE Fund houses

Financial Advisory Services


• Due Diligence for takeover

• Support in identifying institutions for strategic fit in multi geographies

• Negotiating with VC/PE on behalf of promoters

• Documentation

• Documentation Compliance

Guidance in M&A

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Market Deals

• Religare acquires diagnostics business of

Piramal Healthcare – Deal Size Rs. 600

Crores

• Warburg Pincus Invests USD 85 Million

in Metropolis

• CX Private Equity firm invests Rs.188

crores for a 30% stake in Thyrocare

• Sequoia Capital to sell part of stakes in

Dr. Lal Path Labs


Market Deals

• Kalpathi Investments picks up a 45%

stake for Rs.5.1 crores in Primex

Diagnostics

• Touted as the largest overseas deal,

Khazanah acquires Singapore-based

Parkway Holdings for US$350 crores

• Siemens buys Bayer`s diagnostics

division for approximately Rs.420 crores

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• Application of Marginal Costing and Revenue principles

• Drawing up a Cost beneficial AMC for the Lab

• A strong analytical grip on costing of testing procedures

Costing


• Commercial negotiation with medical equipment supplier

–Strong Technical Knowledge to

support upgrades and updates

–Negotiation with vendor

–Medico legal situations

Commercial Negotiations

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• Business Consulting

• Selection of insurer based on business trends

• Fraud Minimization Plans and Controls

• Cost Optimization Techniques to help boost profitability for Insurance Companies

Health Insurance


• Liaison between the Medical

Community and Regulatory

Institutions

• Systems and Process Audit

• Implementation of Quality

Management Systems

• Information Security Management

Systems

Facilitating Accreditation Process

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Opportunities Abound

In a world of Futures & Options

Our Future is not an Option


FOR FURTHER DETAILS CONTACT

K.Govind Rajan

Partner Head – Healthcare Practice

R Venkatakrishnan & Associates

- Chennai, Hyderabad & Bangalore

Tel: (91)-98480-51380

opportunities for chartered accountants in healthcare•india's us$60 billion-a-year industry...

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