fyp - interim report version 3

8/2/2019 FYP - Interim Report Version 3

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ZARRAR SHAHEED TRUST HOSPITAL (ZST)

Report: Interim Report

Submitted By:Group Sub-missal.


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Zarrar Shaheed Trust HospitalFYP Interim Report.docA brief Introduction and Scope:

The efforts during the last 4 weeks on the Zarrar Shaheed Trust Hospital (ZST) entail devising a

cost model and a business model for Zarrar Shaheed Trust. Using these models the trust will be

able to provide quality medical service to the lower privileged population of Lahore specifically to

its neighboring villages and its surrounding townships areas by offering them a low cost medi-care

service. It is safe to state that our scope of work in the weeks to follow will be to come up with:

1- Cost model

2- Business model for Zarrar Shaheed Trust.

Cost Models:

Accurately measuring health care cost has become challenging itself. Due to the medical condition

of the patient and given each one has the same disease; each has to go through different set of

consultation, processes, and treatments to get complete care. Moreover each process involves

various resources such as staff, the equipment and supplies.

Although the financials clearly tell the total cost that is incurred by Zarrar Shaheed Trust (ZST)

hospital, it does not specify the cost per resource ZST incurs to deal with one patient per visit

based on a specific disease. To calculate such cost Time Driven Activity Based Costing will be

used. This methodology requires that we estimate only two parameters at each process step: the

cost of each of the resources used in the process and time the patient spends with each resource. In

order to calculate such cost certain information must be known. Below is the table which

summarizes the information that is required.

Table 1:

Information related to Type of information required

Employees (Doctors and Nurses) Salary, Working Hours, number of workers,

time spent on patient

Equipment Cost of machine, life of machine, duration of

equipment used per patient.

Medicine Cost of acquiring medicine

Staff (not directly involved in patient treatment) Salary, Number of patients per month.

Electricity, Gas and Ambulance Total cost, Number of patients per month.

The information above is used to calculate the cost of each resource per patient. (Exhibit 1)

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Zarrar Shaheed Trust HospitalFYP Interim Report.docAt the moment ZST is running a small operation, it is basically providing services related to

Gynecology and General Diseases (such as cold, fever, diarrhea etc). No proper process has been

defined on how to handle a patient, a lot is based on the instincts of the doctor, and hence acquiring

cost to hospital based on a specific type of disease at the moment seems to be an asking task. To

start of the cost of catering to patient per department (such as gynecology or General Disease) was

calculated.

Currently calculating just medicine cost, only the cost of acquiring the medicine is realized either

because the patient himself buys the medicine from the pharmacy or the medicine is sold to the

patient by ZST at cost price. The table below provides a summary of the cost per patient to the

department.

Table 2:

Business Models:

To cover the scope of the Business Model our focus has been to perform research and study on

Emerging Markets and the Emerging health Models which are being practiced in such markets.

We've read through seven business models, tailored to the circumstances of low-income groups,

that we believe have the best chances of success. Out of this we have identified two models that

fulfill the requirements in the health sector. These models are successfully run by different health

organizations in the developing world.

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Zarrar Shaheed Trust HospitalFYP Interim Report.docA pared-down,No Frills Service model(Exhibit 2) is our first one that meets the basic needs of the

poor at lower prices and still generates positive cash flow and profits through high volume, high

asset utilization, and service specialization. Para-skilling model(Exhibit 3) which combines No

Frills services with a reengineering of complex services and processes into a set of simple

standardized tasks. Once simplified and standardized these tasks and processes can be undertaken

by workers without specialized qualification.

Weve agreed to work on a model which will be a combination ofNo Frills Service model and

Para-skilling model. The generic work could be dedicated to lower staff (nurses) while specialized

service can be provided by doctors (MBBS and specialized). The group aims to work in a direction

keeping standardization and specialization as our prime focus. The whole idea of reengineering of

complex services and processes into a set of simplified steps from the Para-skilling model will be

used to help introduce standardization.

These models selected and used are Profitable or at least self-sustaining without requiring

continuous subsidy (otherwise, theyre merely alternative forms of aid and dependent on the

continuing of donors); and Scalable and thus able to reach and improve the lives of significant

numbers of poor people. The route to scale will depend on two factors: business model maturity,

and the size of the entity implementing the business model. Meaningful scale is achieved in

different ways but invariably takes, especially if large corporations are not involved. Most small

enterprises require at least a decade to reach significant scale. Market- based solutions, therefore,

are not a quick fix to the causes and consequences of poverty, though they promise large, enduring

benefits.

These Business models integrate four elements: the customer value proposition (CVP), the profit

formula, key processes, and key resources (Exhibit 4). Developing new business models always

begins with devising a new CVP. The CVP we plan to focus on is Low-cost provider. The group

intends to follow the clockwise route i.e. Model designed to compete on price proceeds in theopposite way, establishing first the offerings price, then the cost structure, and finally the

processes and resources required.

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Zarrar Shaheed Trust HospitalFYP Interim Report.docExternal Analysis:

For finding out more about our customers and what value proposition we need to pitch in, we have

conducted surveys and focus groups.

The target population was the patients who were coming to ZST and people who live in thecatchment area of ZST (Boan Walla Mohalla, Phullar Wan etc). The catchment areas of ZST

include a population of 40,000 people out of 100,000 total populations. 60,000 of population prefer

Burki Hospitalas it is the nearest hospital (Exhibit 5). Walking distance patients visit ZST because

they perceive ZST as the best quality hospital which is located nearest to them. Most of the people

know about ZST but they perceive that its under construction and not yet fully operational.

Another option to visit is the Cantonment hospitalthat is also nearby.

Further analysis helped determine Maternity cases, hepatitis A/B/C, eye problems, diarrhea,

Diabetes, flu and fever as the commonly occurring medical problems. In case, the disease is minor,

frequent or expensive to cure usually home treatment is preferred and medicine is usually bought

from local pharmacy without visiting the doctor.

The survey also helped establish that mostly, husbands and mother in law are making the decision

regarding which maternity hospital to choose for labor and delivery of the newborn. Parents are

very critical about the health of their children and parents are mostly willing to go to specialist for

best treatment in case they are not satisfied with the services of the local pharmacist/quack (a

person running a pharmacy who is not a qualified doctor). Another reason for not getting satisfied

with the local quack is that these quacks dont offer any antibiotics but just cure patients by an

injection and generic drugs. Quacks usually cure all patients by same stick and reason being that

they buy in bulk and caters volumes. People who cant buy antibiotics, Diabetes and TB medicine

usually come to ZST to get free medicine. They avoid visit to Government general hospitals

because it take an hour to reach govt. hospital and it takes whole day time to get medicine for a

week or two and additionally they had to spent transport cost of Rs. 200 to Rs. 300 to reach the

hospital. This situation becomes drastic when they have to travel with another relative to

accompany them during this long visit to govt. hospital. In short, patients are buying fast cure

instead of slow cures and moreover it is preferred that it is available nearest to home and available

at lowest possible price. The perception of quality is also linked with the advertisement channel;

most of the people perceive medical camps as the most viable way to promote health service. TV

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Zarrar Shaheed Trust HospitalFYP Interim Report.docadvertisement on the Indian soup channels and local news channels through collaboration with

local cable network providers is thought of second best way to advertise.

It was also observed that one of the local maternity hospitals was using media channels along with

a non-conventional way of attracting patients i.e. prize scheme and reducing costs on every next

delivery to attract customers. Specialist doctors in the field of pediatrics and Hepatitis are lacking

in local vicinity.

ZST also has an ambulance which is rarely used to transport patients to government hospitals

because people perceive that ambulance service in general is unreliable and costly; and its more

convenient to transport the patient by using neighbors mode of conveyance or public transport in

case family dont own a conveyance suitable for transportation of the patient.

Local gynecology quack specialist charges half the price that of the local delivery and labor

hospital. Its actually the family culture and history; and lack of awareness that makes quack

compete in the market. Moreover, in emergency situation quack is the one who is available on

time. Additionally, they provide an additional service of keeping a check on patient health. In case

of cesareans operation, they usually refer the patient to the nearby hospital.

But, modern instruments like ultrasound attract the parents to go to the hospitals. It is usually the

first contact of the patient with the doctor and at which point local staff of trained nurses motivate

the patient to visit more regularly and at the same time estimate the income level of the patient.

This information is used to charge the patient later on. This social bound also help patient to

become more confident in using the labor and delivery service later on. Moreover, perceived

switching costs for the patients are also increased by explaining them the cons of going to

competitor for the medical service. In case, the disease is minor, frequent or expensive to cure

usually home treatment is preferred and medicine is usually bought from local pharmacy without

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Zarrar Shaheed Trust HospitalFYP Interim Report.docvisiting the doctor. Unclean water is the major cause of diseases like hepatitis and diseases related

to ENT; and lack of daily activities is the major cause of blood pressure, bone weakness and

diabetes.

The pegging order for treatment is pregnant women; children and then old people i.e. pregnant

women get the best treatment, then the children and then old people. Gynecology and pediatrics

remains the highly demanded specialized areas. With Diabetes, Blood pressure and Hepatitis come

second. For diseases related to children, parents usually visit child specialist and for gynecology

they visit local delivery and labor hospitals because of the emergency nature of service and

unsatisfactory with the service provided at government hospitals. For Blood pressure, diabetes and

Hepatitis poor patients usually go to public hospitals because of the availability of free availability

of branded medicine. Patients prefer to visit local doctor first in case of minor disease; and when in

case the patient is not satisfied with the treatment, then patient would go to local big hospital.

Whereas, in case of chronicle diseases, patients prefer to visit public hospital in case a good

alternate is not available near their home. A good substitute is one which saves them time and

money and provides them good quality treatment.

Time and cost of new entry varies. The cost will depend upon targeted medical services. If

revenue generating medical services are children particularly their normal everyday diseases of

ENT category or similar then time and cost of new entry is Low. Because there can be a new

medical store or a small medical clinic in vicinity of local people providing basic health services

with a minimum setup cost. However, if we are targeting specialized gynae services (handling

delivery cases both normal and other) the time and cost of entry is rather at high end. The setup

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Zarrar Shaheed Trust HospitalFYP Interim Report.docrequires higher cost and time for any new competitor to establish itself in this domain is also

higher.

Specialist knowledge is moderate. Experience is generally preferred. Rather we should say

doctors with good history are preferred. But in our survey we found that credited doctors (who

have clinics near Jora Pul) demanded higher fees. For children parents are willing to go to good

doctors. The experience or specialist might be different in local people minds. They usually think

of a doctor or person who is not even a qualified doctor better just because his treatment is more

effective (in short term: as some clinics give injections which are effective in short term but have

high long term patient health consequences).

ZST has moderate Cost advantages.ZST have a reasonably large setup. ZST medical facility is

almost up to mark for starting medical services for children and gynecology (however specialist

and doctors still are to be hired). As ZST is already up and running our incremental cost will be

moderate as compared to any new incumbent. There are moderate Barriers to entry.Any facility

can open from small to large. Even competitors with no sufficient expertise can open new medical

facility as Government law enforcement is almost not observed.

Number of competitors in the vicinity are Large for both children and gynecology. For children

ZST face competition from medical stores (prescribing medicine to patients), small clinics, local

government funded dispensary, government funded hospitals like Children Hospital and

specialized or credited doctors at Jora Pul. For gynecology, people use traditional daees and those

who prefer medical facility. ZST is rivaled with local Geo hospital, and other government funded

hospitals like Services, Gangaram, Jinnah hospitals.

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Zarrar Shaheed Trust HospitalFYP Interim Report.docQuality difference between substitutes and competitors differs a lot from each other. People

want higher services but at lower cost.Accessibility Advantage is high. People prefer to use local

nearby facilities to save transportation cost and inconvenience. Furthermore people are afraid to

travel after dark as they feel their area is insecure. We have very high end medical facility right at

the corner. We are right in the heart of Bao Wall Mohalla and easily assessable to nearby slums.

Switching Cost is Low. A patient can just switch if he or she finds ZST inappropriate (not satisfied

by our treatment). It will be very much advisable to provide adequate services to new comers so

that they are retained. Customer Loyalty is high. Patients prefer to go to doctor or quack from

which they are getting healthy for last several visits. But, Patients switch as they feel that the

treatment was not effective. Service Cost is high as compared to the quacks but operations are

still not efficient as compared to the other established hospitals.

Some Buyers are Price Sensitive and others are not based on the specialization or general

treatment demanded. Two segments of people encountered are: very price sensitive and

moderately price sensitive. Many people went to local government funded dispensary for

medicines as the cost was only Rs. 2 per patient (plus very little transportation + inconvenience

cost). Families preferred to take their children and wife to better facilities in case the local

treatment was not effective. This was also dependent upon the income level of the patient.

Service Differentiation is moderate. For gynecology local people prefer to stick with doctors for

their case and follow their recommendation for delivery facility. Some interviews also revealed

that people preferred better facilities with delivery specific equipment and staff. Overall buyer

power is high becausePeople have number of medical facilities available both private and public.

They have lot of choices but they also consider accessibility and medical service price.

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Zarrar Shaheed Trust HospitalFYP Interim Report.docSummarizing the survey effort; we conducted interviews with mostly family heads and extracted

various insights regarding disease, money expenditure on health, services at ZST and other

medical institutes, willingness to pay, preferred medical services availed by them, and who usually

requires medical services in a particular household.

Exhibit 1: ZST Costing andSurvey Analysis

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Zarrar Shaheed Trust HospitalFYP Interim Report.doc

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Zarrar Shaheed Trust HospitalFYP Interim Report.docDiseases Health Provider Relationship

Exhibit 2: NO FRILLS SERVICE

No Frills models serve low-income markets by economizing at every stage of offering: Setup and service, in which the provider reduces or minimizes non-core capital and expenses to

provide bare bones service and lower the unit cost of delivery. Quality is kept sufficiently high

to provide customer benefits superior to other options. High throughput/high asset utilization in which high customer volume drives capacity utilization,

pushes down unit costs of key human or physical assets, and provides economies of scale for

purchasing, marketing, and other functions. Service specialization, which enables the provider to focus on a limited array of services,

standardize processes and reduce the need for additional procedures or multi-functional (and thus

more expensive) personnel and training.

Services/protocols, which are highly standardized, documented, routinized, and easy to deliver

for lower-skilled staff.

Health: Vaatsalya Hospitals, Dial 1298, Narayana Hrudayalaya Hospitals,

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Exhibit 3: Para-skilling

Para-skilling entails all of the elements of No Frills model (discussed above) plus: Key processes reengineered into smaller, often disaggregated, discrete parts that can be

performed by lower-skilled workers. Simplified and codified processes that lower-skilled workers can perform on a high-volume basismany times per shift or per day.

Cultivation of a paraprofessional cadre that has less education or skills than the professionals who

customarily perform services. Para-skilling requires finding suitable staff members who see the

business proposition as attractive and making substantial continuous investment in staff training,and heavy investment in segmenting the labor market. Retention through promotion or expansion

is generally a key to success.

Health: Aravind Eye Care, Ambuja Cement Foundation;

Exhibit 4: Building a New model

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Zarrar Shaheed Trust HospitalFYP Interim Report.docExhibit 5: ZST map till border

Exhibit 7: Value Health Quality Variables

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Exhibit 7: Virtuous cycle of value health

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Exhibit 8: Cost measurement System

Cost measurement

Disease

Patient No. medicalcondition complication/comorbidities patientcare cycle

Activity Map (Encircle principal activity and corresponding stage)

principalactivity

prevention

Diagnosing/screening

Preparing forintervention

Intervening

Recovering

Managing

What do patientneed to beeducated about?

informing

What measuresneed to becollected?

measuring

Where do patientcare activitiestake place?

accessing

What activitiesare performed ateach stage?

caredelivery

Process Map

ProcessName

timein:

timeout:

Personal Facilities

Equipment

Supplies(Medic, syrng,bandage etc)

P1

Legend

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