An Affordable HealthcareOutlines for a Public HospitalDecember 2012

Healthcare Business: An Overview

Competitive Advantage for the Healthcare Industry

3

Penetrate New Markets: Evaluate opportunities in different geographies, in other parts of the value chain, and through new lines of business

Grow Revenue: Ensure optimal pricing, optimize product/service portfolios, and expand distribution channels

Track Competitors and Drive Differentiation: Track competitors' product developments, customer markets, and geographic expansion; identify unique and sustainable product and brand positioning

Acquire and Retain Customers: Develop a deeper understanding of customers' diverse requirements and unmet needs

Predict and Respond to Market Dynamics: Monitor, forecast, and proactively respond to trends in regulations, technology, and emerging business models

http://www.bostonanalytics.net/business_research_analytics/healthcare_analytics.html

Healthcare Value Chain

4http://www.scientiaadv.com/blog/2011/01/11/was-2010-the-engagement-year-between-pharmaceutical-and-diagnostic-companies/

Research Tools

Product Development

Regulatory Approval and

Reimbursement

Healthcare Delivery

Genomics

Proteomics

Metabolomics

Pharmaceuticals

Diagnostics

Regulators

Governments

Payors

Physicians

Pharmacies

Hospitals

Healthcare Business

Healthcare Development

5http://lumetrasolutions.com/integrated-solutions/value-convergence/

Proactive Procedures

Information Technology

Resources & Logistics

Clinical Workflow

Optimization

Sustainability

Prevention Programs

Payor Issue

6http://www.healthonomics.org/2007/11/healthcare-value-chain-new-business.html

ProducersDistribution IntermediateProvidersFinance

IntermediatePayers

Cost

Innovation

Classic Approach

Producers

Distribution Intermediate

Providers

Finance

Intermediate

Payers

New Approach

Consumer

Driven

Healthca

re

Personalized Healthcare

Retail HealthcarePublic Health

care

http://www.cross-check.com/blog/bid/158182/Medical-Payment-Services-Help-with-Rising-Costs

Obamacare: Complexity of Healthcare

7http://www.generationamerica.org/obamacare/

Healthcare Spending in E&NA

8

Healthcare @ GDP

9http://economix.blogs.nytimes.com/2009/07/08/us-health-spending-breaks-from-the-pack/

Hospitalization: In most countries, this just means care that takes place in a hospital. The US is in outlier, in this case, though. Here, doctors might be employed by a hospital, or they might contract with one. In the latter case, a doctor would use hospital facilities but be paid by patients (or insurers). OECD counts this as ambulatory care.

Ambulatory care: Care that happens outside of hospitals, which may include general out-patient services, specialist practices and private clinics.

Public health: Efforts, usually on the part of governments, to manage the well-being of a population, for example vaccination campaigns, education and disease response.

Pharmacies and medical goods: Drugs, syringes, stents, wheelchairs and other purchased goods related to health care.

Administration: The overhead costs of health care, from billing to building maintenance, essentially everything not related to patient care in a system. In the U.S., "administrative costs" includes the cost of managing public programs such as Medicaid and Medicare, as well as the administrative costs of the private health insurance industry.

Data Sources: OECD Health Data 2009, World Health Organization World Health Report 2000.

Healthcare Reform

10http://www.pbs.org/newshour/indepth_coverage/health/healthreform/july-dec09/chart_08-18.html

Cost Breakdown

11http://healthcare-economist.com/2011/02/24/patient-centered-health-spending-categories/

Rethinking entire production processes and

business models

The First is to contract out ever more work

The Second money-saver is to use existing

technology in imaginative new ways.

The Third way to cut costs is to apply mass-

production techniques in new and unexpected

areas

“Frugal” Constraint-Based Innovation

Reverse Innovation

Henry Ford's Style

A health-insurance scheme, working with various local self-help groups, that covers 2.5m people for a premium of

about 11 cents a month each

A sliding scale of fees is used for operations so that richer customers subsidize poorer ones

Hospital group reports a 7.7% profit after taxes

Dr Shetty has performed more than 15,000 heart operations and other members of his team more than 10,000

Narayana Hrudayalaya Hospital in the “Electronics City” district of Bangalore, has 1,000 beds (against an average of

160 beds in American heart hospitals), and Dr Shetty and his team of 40-odd cardiologists perform about 600

operations a week.

An Indian Breakthrough

12http://www.economist.com/node/15879359?story_id=15879359

A Hospital

13http://www.reverehc.com/Consulting.html

Logistics and Supply Chain

Mobility & Reach-out

Emergency & Trauma

Departments

Medical Centers & Clinics

Type of Hospital

Medical & Technical Staff

EPC Cost Plan

14http://baydim.com/BayDim02HospitalCosts.htm

Creating Fable 2.0Like its predecessor, the Fable 2.0 hospital is an imaginary facility located in a medium-sized American city. It is a new three-hundred-bed regional medical center built to replace a fifty-year-old institution. Fable 2.0 provides a comprehensive range of inpatient and ambulatory services. It is located on a donated urban site, so the cost of the land is not included in the calculations. Fable 2.0 is approximately 600,000 square feet (2,000 square feet per bed) and costs $350 million to construct. Construction costs have increased substantially since 2004. According to Turner Construction, the average cost per square foot in an average city has more than doubled, from between $170 and $185 per square foot, to approximately $450 per square foot today. While construction costs in some areas are significantly higher or lower, we chose $450 per square foot as our baseline. Fable hospital's leadership promotes superior clinical quality, safety, patient-focused care, family friendliness, staff support, efficiency, community responsibility, and ecological sustainability. Reflecting the latter goal, Fable 2.0 decided to achieve a sustainable building that met LEED's gold-certified level using a range of construction and operational initiatives.

http://www.medscape.com/viewarticle/736012_3American Hospital Association Resource Center Blog

Apollo Hospitals - India

15http://www.apolloglobalprojects.com/images/news_pdf/Financing%20Healthcare.pdf

Healthcare in Africa

Diseases in Africa

17The future of healthcare in Africa, A report from the Economist Intelligence Unit, sponsored by Janssen

Treatable diseases continue to blight the futureThe continent’s continuing struggle with communicable diseases such as HIV/AIDS and tuberculosis (TB), parasitic diseases and poor primary and obstetric care has been a major factor in stalling the development and the extension of healthcare services in African countries at the most basic level.

Life Expectancy in Africa

18The future of healthcare in Africa, A report from the Economist Intelligence Unit, sponsored by Janssen

Healthcare Spending in Africa

19The future of healthcare in Africa, A report from the Economist Intelligence Unit, sponsored by Janssen

Payors in Africa

20The Business of Health in Africa, IFC, World Bank Group

Healthcare Funds in Africa

21The Business of Health in Africa, IFC, World Bank Group

Consistent with international trends, this growth in GDP will drive a greater demand for health care and an increase in per capita expenditure on health related goods and servicesBased on projected economic and population growth rates, the health care expenditure in Sub-Saharan Africa is expected to grow from $16.7 billion in 2005 to $35 billion in 2016 an annual growth rate of 7.1 percent per annum.

This report also estimates that around $25–$30 billion in incremental investment will be required for the physical assets (hospitals, clinics, distribution warehouses, etc.) needed to meet this increased demand over the next ten years.

Healthcare HR in Africa

22The Business of Health in Africa, IFC, World Bank Group

Healthcare Investment in Africa

23The Business of Health in Africa, IFC, World Bank Group

The priorities include:1. Developing mechanisms for creating and enforcing quality standards for health services and medical product manufacturing and distribution;2. Including as many of the population as possible in risk pooling programs;3. Channeling a portion of public and donor funds through the private health sector;4. Enacting local regulations that are more encouraging of a private health care sector; and5. Improving access to capital, including by increasing the ability of local financial institutions to support private health care enterprises.

Comparison of Unit Cost

24ANALYSIS OF HOSPITAL COSTS: A MANUAL FOR MANAGERS, by Donald S. Shepard, Ph.D., Dominic Hodgkin, Ph.D. and Yvonne

Anthony, Ph.D. , September 29, 1998, Institute for Health Policy, Heller School, Brandeis University

Cost of Hospital Care for HIV/AIDS Patients

25

PatientFinancing

and location

Totalnumberof cases

Daysper

patient

Costper

Day+

Costper

Patient+TotalDays

TotalCost+

Private coverage 906 34.0 52.5 1,785 30,804 1,617,210

Civil servants 1,812 20.0 10.6 212 36,240 384,142

Other urban Abidjan 8,699 16.3 15.0 245 141,794 2,126,906

Other urban interior 3,624 14.0 5.0 70 50,736 253,680

Rural 3,081 5.0 5.0 25 15,405 77,025

Total or Average* 18,122 15.2 16.2 246 274,979 4,458,965

* This row represent totals for columns with heading beginning with “Total,” and averages for other columns.+ All monetary amounts are in thousands of F CFA, where 1,000 F CFA equals US $2.00.

Côte d’Ivoire, 1995

ANALYSIS OF HOSPITAL COSTS: A MANUAL FOR MANAGERS, by Donald S. Shepard, Ph.D., Dominic Hodgkin, Ph.D. and Yvonne Anthony, Ph.D. , September 29, 1998, Institute for Health Policy, Heller School, Brandeis University

Hospital Construction Cost Model

26http://www.maps-jo.com/www.maps-jo.com/Calculate_Gross_Hospital_Area_Construction_Cost.php

Proposal Outlines

Investment & Development Management

FeasibilityPlan

The Hospital Facility

Theme Approach

28

Patient

Free Paid Combined

Self Paid

Fully Insured

Investment StructureDonors

Impact Investor

Seed Investor

Government

Operator Funds OPEX

Recoveries

CAPEX

Volunteer NGO

SustainabilityFramework

Project Management

OperationsManagement

Critical Success Factors (CSFs)

29

Information Management Systems

Procurement Governance

Optimized Design Solutions

Logistics & Supply Chain

Resources & Training

Marketing & Sales

Performance Monitoring

Financial Model

30

Sustainability

Growth

Innovation

Optimization

Outflows

OPEX

Recovery Plan

CAPEX

Initial Investment InvestmentPlan

Inflows

Subscriptions

Self-Paid Patients

Insurance Policies

InvestmentPlan

Facility Model

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Target CAPEX US$ 150k/Bed

GFA 20,000 m2 100 m2/Bed

Public Basic Infrastructure

Minimum Area50,000 m2

FAR 0.4Single Story

Accessible to Public Transit

160 Ward Bed20 Single Bed

20 Double Beds

ER200 Visits/Day

OP20 Clinics

ICU10 Beds

FF&E CostUS$ 2,000/m2

Target Profitability

5%

Served Population

200,000 Capita

CSR, Vocational and Volunteer

Programs

Compliances to WB. IFC, UNDP

& ADB Codes

Land/PlotCapital Investment

Development Baselines

StatuaryPermits

Conceptual Master Plan

Independent Operating Corporate

Target OPEXUS$ 2,000/Case

Construction Cost

US$ 2,000/m2

EPC Contract18 Months

Strong Payors Programs

Timeline

32

H1/Year -2 H2/Year -1 H2/Year 1H1/Year 1H1/Year -1H2/Year -2

ESC Corporate & Capacity Building

Hospital EPC, FF&E and FM

Corporate Social Contribution Plan

OrganizationStrategy & BD

Finance

LogisticsEngineering

Quality

Procurementof Contractors,

Operators & Suppliers

FF&E

FM Operator

FF&E DLP

Medical Operations

Marketing & Sales Operations

Implementing CSR Programs

EPC

HRLegal

Procurement

SalesMarketing

Internal Audit

Planning CSR Programs

EPC DLP

Thank You

33