march 2012 - funding & taxation

1 | December 2011 Healthcare ExEcutivE

CMC Vellore: Service & sacrifice is their ultimate mottoPg 66

The Dynamic Leader: Dr. Azad Moopen Pg 63

Nuances of financing your healthcare project

Pg 35

Healthcareexecutive

Vol 1 Issue 2 | March 2012 | `100

A i d i n g s m a r t b u s i n e s s d e c i s i o n s

INSIDEExclusive

article from

harvard

business

review

Pg 28

in Healthcare

Healthcare ExEcutivE March 2012 | 3

Editor in chiefDr. Vivek Desai

Publisher Narendra Karkera

General Manager Ganesh Lakshmanan

Editorial Deputy Editor Jayata Sharma-Sand

Sr. Correspondent Arunima Rajan

Marketing & SalesHead Sales Deepti KhannaMarketing & Subscriptions Isha Khanolkar

Art & DesignGlowrt Design HouseCover Design - Pramod J

Print and ProductionPrinted by Abhishek Ostwal and Published by Narendra Karkera on behalf of Hosmac India Ltd., 120 Udyog Bhavan, Sonawala road, Goregaon (E), Mumbai – 400 063. Disclaimer: Views and opinions expressed in this magazine are not necessarily those of HOSMAC India Pvt. Ltd., it’s Publisher and/or Editors. We, at HOSMAC India Pvt. Ltd. do our best to verify the information published but do not take any respon-sibility for the absolute accuracy of the information. HOSMAC India Pvt. Ltd. does not accept the re-sponsibility for any investment or decision taken by readers based on the information provided in the magazine. HOSMAC India Pvt. Ltd. does not take responsibility for returning unsolicitated material sent without due postal stamps for return postage. No part of this magazine can be reproduced with-out the prior written permission of the Publisher. HOSMAC India Pvt. Ltd. reserves the right to use the information published in the magazine in any manner whatsoever.

Dear Readers,Thank you for the tremendous positive response shown for our 1st Issue.

This time we have brought to you a Finance special edition, to shed light on the recent trends taking place in healthcare investments.

While every hospital and management personnel takes care of most expenses in a healthcare set-up, there is one thing that escapes the eyes of most healthcare profes-sionals. That aspect is “Activity-based Costing”.

All Healthcare Providers should relook at their costing and find out areas where cost reduction is possible to maintain their profitability without increasing tariff. This can be done by process re engineering and accepting the most modern method of costing i.e. Activity Based Costing. One of the benefits of adopting ABC is that non revenue generating departments are given equal importance while performing the costing ex-ercise.

ABC can be used when the overheads are high, when services are diverse and com-plex, when cost of errors is high, and when competition is stiff.

A set-up needs to control its overheads and not pass it on to the patients. Inefficiency and under utilisation are not patients’ problems and passing this cost to patients is not ethical. ABC could help in finding the true cost of the service. Hence, it results in accurate costing, and focused approach to hospital overheads. In conventional costing, the service centre overheads are either apportioned or allotted to the revenue centers and revenue centers add their cost and margin to arrive at a tariff rate. Under ABC, no overheads are passed on but actual billing is done by service centre to the revenue centre for the service taken, hence there is an internal tariff of all service centres. This process would make all cost of the revenue centre direct except its own departmental cost.ABC has a lot of advantages too, like it gives equal importance to service centre like revenue centre. Today we give more importance to only revenue centre, but under ABC, even a service centre would get equal importance since it too would generate billing. Under ABC, service centre charges would be compared with the market prices. Hence, service centers would have to keep their cost under control. Under utilisation and inefficiency of both revenue and service centre are highlighted.

I would thus suggest to all healthcare managers to seriously give a thought to ABC and implement it for better profit margins and improved healthcare delivery.

HealthcareexecutiveA i d i n g s m a r t b u s i n e s s d e c i s i o n s

Form IVStatement about ownership and other particulars about magazine Healthcare Executive to be published in the first issue every year after the last day of February.

1. Place of Publication : Mumbai 2. Periodicity of Publication : Monthly3. Printer’s Name : Abhishek Ostwal Nationality: Indian Address : A-12, Sri Balaji Complex, 125, Sultanpet, Bangalore – 560 053.4.Publisher’s Name: Narendra Karkera Nationality: Indian Address: 120, Udyog Bhavan, Sonawala Road, Gorgeaon (E), Mumbai – 400 063.5. Editor’s Name : Dr. Vivek Desai Nationality : Indian Address: 120, Udyog Bhavan, Sonawala Road, Gorgeaon (E), Mumbai – 400 063.

Shareholders6. Names and address of individuals who own the magazine and partners or shareholders holding more than one percent of the total paid up capital as on 29-2-2012. a)Dr. Vivek Desai 3-A, Sanket , Panduring Wadi, 4th Road, Goregaon (E), Mumbai-400 063. b)Dr. Mrs. Sunita Desai 3-A, Sanket , Panduring Wadi, 4th Road, Goregaon (E), Mumbai-400 063. c) Mrs. Vimal Desai 3-A, Sanket , Panduring Wadi, 4th Road, Goregaon (E), Mumbai-400 063. d) GACL Finance Limited 102, Maker Chambers III, 10th Floor, Nariman Point, Mumbai -400 021

I, Narendra Karkera, hereby declare that the particulars given above are true to the best of my knowledge and belief. Sd/- Narendra Karkera

4 | March 2012 Healthcare ExEcutivE

CONTENTS

NEwS06The latest in the world of healthcare. This section has both national and international news of your interest. Read it to stay updated

ChallENgES20A feature on how hospitals can bring significant improvements in their efficiency and help in better patient safety by use of Health IT

BriCk & MOrTar23 Hospital construction costs have been an issue of worry since ages. But, is this problem easy to

solve? Find out the answer in this section

CaSE STudy28 A noble mission doesn’t guaran-tee financial solvency. That’swhy the chief medical director at one hospital needed to finda way to keep the mission lofty and the bottom line healthy

COvEr STOry35The healthcare industry has evolved quite a bit in the last few decades. Now, the industry is keen not just on serving patients, but serving them better by making profits and ploughing them back in the business. And for this, the industry needs huge investments. The Cover Story explores this very aspect

lEadErS SpEak44 Healthcare, pharma & biotech industries are becoming the fa-vourite destinations of investors

u aSk48Kapil Khandelwal juggles with frequently-asked questions regarding the financial woes of the healthcare industry

dEBaTE50Last year, the government brought in a mixed bag of offers for healthcare. The industry now awaits a better Budget this year

glOBal praCTiCES55Lessons from the private sector suggest the business models for several innovative private healthcare organizations have

MARCH | 2012

Volume 1 Issue 2


some key things in common and can provide inspiration across industries

pOrTraiT63With exemplary vision and full of successful business ideas, Dr. Azad Moopen is a boon to the healthcare industry worldwide

FOCuS66As a motto Christian Medical Col-lege, Vellore adopted the words of Jesus, “Not to be served, but to serve” and this drives everything at CMC

BOOk rEviEw70There are scores of self help books that deal with various

perils and hardships of being a leader, but the book, ‘The Habit of Winning’ by Prakash Iyer spells out the ingredients of good leadership through stories and simple straight forward advice

happENiNgS71A listing of various events from across India and all around the world

JOBS72A section that would capture best jobs in the healthcare industry

CEO pagE74Rajen Padukone shares his visions and dreams along with sharing a bit of his lighter side


Publicis Healthware International launches its Indian arm

National

Piramal Healthcare announces Q3FY2012 resultPiramal Healthcare Limited (“PHL”, NSE: PIRHEALTH, BSE: 500302) recently announced Q3 results for FY2012. Total operat-ing income for the quarter was up by 15.5% to 617.6 crore.

During the quarter, the R&D division of Piramal Life Sciences Limited (PLSL) has demerged into PHL. Due to the effect of demerg-er, the R&D expense of PLSL for nine months ended 31st December 2011 of Rs. 94.0 crore was booked in Q3 FY2012. PHL’s investment

of Rs. 2,856 crore to acquire 5.5% equity stake in Vodafone India Limited in August 2011 has resulted in interest/current income generating investments being replaced by Vodafone investment. As a result, income from Invest-ments was lower at Rs. 58.9 crore for Q3FY2012 as compared to Rs. 132.2 crore in Q3FY2011. Hence Operating Profit (OPBITDA) for the quarter was lower at ` 36.6 crore compared to Operating profit of 114.1 crore in Q3FY2011.

The Operating profit margin for the quarter was lower at 5.9%. Net Profit for the quarter was 9.7 crore and EPS was 0.5 per share.

For Q3FY2012, Pharma Solu-

tions (CRAMS) business registered strong growth of 57.4% with sales of 367.3 crore as compared to 233.4

crore in Q3FY2011. The revenues from Indian facilities grew ¬by 68.9 % to 224.0 crore. The growth has been driven by increase in sales from Formulations and API generic businesses.

Sale from facilities outside India also registered robust growth of 42.2% with sales of Rs. 143.3 crore. This growth has been driven by new early phase development business in Morpeth facility as well as from favorable currency movement.

Publicis Healthware Interna-tional (PHI), an integrated agency focused on improving communica-tions across the healthand& well-ness community, with a strong eHealth and information technol-ogy focus, recently launched its Indian arm. The organisation is part of Publicis Healthcare Communications Group (PHCG), the largest healthcare communica-tions network in the world. As one of the largest global digital agen-cies, PHI has developed a strategy focusing on three key service offerings: consulting (innovation planning, change management and e-business strategy), com-munications (digital marketing, web development, e-detailing, e-CRM, e-learning, e-science, health 2.0 and KOL management) and eBusiness solutions (software platforms, business solutions and proprietary tools to increase the deployment of the digital tactics).

The agency will be based in

Mumbai and would be spear-headed by Abhijit Shitut, Jt. Managing Director and Kiran Pai, Jt. Managing Director at Publicis Life Brands Watermelon.

The company recently launched its most recent product, Videum.com. Videum is a global health video portal able to globalise video assets leveraging an exclusive subtitling technology and featuring unparalleled search engine optimisation.

Roberto Ascione, President of PHI said, “India has the largest population of new users after the US and China. Healthcare needs are growing and so are awareness levels. People are demanding bet-ter and more effective healthcare solutions. In fact, ‘healthcare’ is one of the most searched and googled words among young and old people in India. Launching PHI will help us widen our reach and aid us in getting a strong foothold in India.”

NEWS

The growing need for well-trained doctors and nurses in India will now get a step up, thanks to a new agreement announced between Medvarsity, a medical e-learning initiative by Apollo Hospital Group, and an innovative software company from New Zealand.

It is estimated that India will need nearly four times as many healthcare personnel by 2022 –nearly 10 million new trainees. The new software system from New Zealand Company SIMTICS will offer an effective online method for medical and allied health students in India learning complex medical procedures.

“By studying the SIMTICS modules online, at their own pace, our customers will be able to learn the steps of a procedure, which instrument to use and where to

apply it, and the relevant anatomi-cal structures. That means they will be better prepared and can concentrate on more advanced aspects when they are exposed to clinical time in a hospital,” said Sanjiv Zutshi, CEO, Medvarsity Online Ltd. “Medvarsity is de-lighted to have secured the right to distribute the unique SIMTICS solution in India,” he added.

Cherry Vanderbeke, GM, SIM-TICS, said India is a key market. “It was extremely important for SIMTICS to identify a partner that shares similar goals to us, that understands the education re-quirements of the local healthcare sector in India, and that can reach customers through a national network while providing first class service and support,” said Ms Vanderbeke.

Apollo, NZ Co. partner to train medical personnel


Dr. Mukesh Batra has been hon-ored with the Padma Shri, India’s fourth highest civilian award, by the President of India for his distinguished service in the field of medicine.

Announced on the occasion of Republic Day this year, the award will be conferred upon him by the President of India, Smt Pratibha Patil, at a function at Rashtrapati Bhawan during the first quarter of this year. Mukesh Batra has been the recipient of several awards for his dedicated contribu-tion to the field of healthcare and medicine. He received the International Medical Excellence

Award along with a Certificate of Medical Excellence in the year 2009 at a seminar on Economic Development organised by the Institute of Economic Studies (IES) at New Delhi.

He has been honored with the Pride of India Award at the prestigious Indo Thai Economic Co-Operation seminar held in Bangkok in 2009. In 2002, he re-ceived the Annual Salute Mumbai Award for excellence in medicine.

Mukesh Batra’s organisa-tion (Dr. Batras’ Positive Health Clinic Pvt. Ltd., also known as Dr. Batra’s) was the recipient of the Retailer of the Year award and also topped some of India’s lead-ing service brands in 2009.

Being a philanthropist, Mukesh Batra established Dr Batras’ Positive Health Foundation which supports the underprivileged and deprived across various organisations and institutions all over India. He has been instituting the annual Positive Health Awards since 2006 to honor those people who have displayed outstanding courage in their fight against disease and disability.

Nisargalaya Herbals would launch more than 100 new brands in Ayurveda and Healthcare space in the next five years. Manag-ing Director Prabhu PB recently declared about the new product line of the company. Nisargalya products include speciality/pro-prietary ayurvedic cosmetics and medicines for Skin Care, Hair care, rejuvenation and reproductive health.

“The use of plant based ayurvedic products in cosmetics and healthcare has accelerated in recent years. Nisargalaya firmly believes in the authenticity of Ayurveda as a cost effective and safe form of medicine to treat common and complicated ailments, providing long term

relief and no side effects. When combined with modern scien-tific research it can help create new medicines and methods to improve the health of mankind. What sets Nisargalaya apart from the competition is our deep knowl-edge of ingredients and special herbs which comes from guanine source, nurseries and farms,” said Prabhu.

Nisargalaya products are manufactured based on the body’s ability to perform specific functions and eventually aim to achieve general well-being. The company manufactures products which undoubtedly are an effec-tive therapy that can correct small imbalances long before they turn into more serious symptoms.

Padma Shri for Dr. BatraNisargalaya to launch new Ayurvedic cosmetics

DaVita NephroLife has further enhanced its presence in Chennai with the opening of an exclusive Flagship Centre in Kilpauk, to provide India’s first high-end kidney care under the guidance of renowned nephrologists.

This new centre is in addition to two other centres in Chennai at BRS Hospital, Nungambak-kam and Kumaran Hospitals at Poonamallee High Road that are operated by DaVita NephroLife.

Speaking at the launch, Dennis Kogod, COO, of the US Head-quartered DaVita Inc., said, “Our focus on clinical outcomes has

ensured our centers are consis-tently among the best in the world for patients and we are excited to bring our high quality services to the people Chennai.”

The 21-bed Flagship centre is the first standalone kidney centre of its type where nephrology, vascular access and urological procedures will be performed in a day-care environment.

Furthermore, DaVita Nephro-Life in Kilpauk will house services for all forms of Renal Replace-ment Therapy (RRT) including hemodialysis and peritoneal dialysis.

DaVita Nephro Life opens new centre in Chennai

DM Healthcare, a Dubai-based private healthcare group will invest 2 billion dirhams (about $ 544 million) into expansion over the next three years and plans to launch an IPO (initial public offering) to raise funds for the expansion, the group’s chairman announced recently.

“We plan to invest 1 billion dirhams each in the GCC and India by 2015 in order to expand operations in the two regions. As we grow, it is only natural that we would need to opt for an IPO for further expansion.

Though we haven’t set a fixed date it looks like we would need to go for an IPO in two to three years’ time,” Azad Moopen,

Chairman of DM Healthcare, said recently.

He said that the company would “look at existing market conditions” at the time to see where it would want list.

“We plan to increase our total number of units in the GCC and India from the present 129 to about 300 in 2015. The expansion includes primary and tertiary health care units,” he said.

DM Healthcare’s India plans include opening new hospitals in Tier-II and Tier-III cities.

“By 2015, we will have about 12-15 hospitals in India under our Aster brand name with each equipped with an average of 200 beds,” he said.

DM Healthcare to invest $544 million in expansions


Nova Medical re-brands itself as Nova Speciality Surgery Nova Medical Centers, India’s pre-mier surgery provider, recently un-veiled its new brand identity. The new logo expresses the essence of Nova’s new identity – “the joy of good health.” Nova Medical Centers will now be known as Nova Specialty Surgery.

The new name and carefully crafted lettering communicate the commitment to expert, world-class standards that Nova facilities offer their physicians and patients. The logo symbol “n” represents through its fluid shape the vitality of life. The simplic-ity of the overall design cues the uncomplicated and personal care that patients and their families have come to experi-ence at Nova. To complete the look, a vibrant blue-green color vignette has been used to leave onlookers with a carefree and joyous feeling.

Standalone ambulatory surgery centers are prevalent in the USA, UK, Australia, and Europe. Short-stay and even same-day patient discharge enabled by advanced surgical and pain management techniques promote faster patient recovery and reduced health care costs. Nova Specialty Surgery has pioneered this patient-centric care delivery format in India,

establishing nine such facilities in neighborhood locations across the country since it launched its first center in Bangalore in June 2009.

Speaking at the brand re-launch, Mr. Suresh Soni, Chair-man and CEO, Nova Specialty Surgery, said, “ since its inception, Nova has been recognised as an innovative provider of health services. This new logo symbol-ises our commitment towards bringing world-class surgical care to the masses in India. Our new logo and identity will enable us to spread our services and ethos in a simpler, more enthusiastic

fashion and promote a feeling of “joie de vivre.”

Ray+Keshavan | The Brand Union, the creative force

behind the rebranding exercise remarked, “The focus of the Nova Specialty Surgery rebranding exercise has been to communicate the uniqueness of this care model, best exemplified in the saying ‘life is not merely to be alive but to be well.’

The customer-centricity of the Nova format exemplified by its easy to navigate, world-class fa-cilities in neighborhood locations that enable faster patient recovery through highly experienced doc-tors and personalised care.”

Sudhir Valia, Director, SUN Pharma was awarded the Best Performing CFO in the Pharma/Healthcare Sector for his commit-ment and performance.

Hosted by CNBC-TV18, the event witnessed many prominent names from the industry like YM Deosthalee-Chairman & Managing Director-L&T Finance Holdings, Mr. Keki Mistry, Vice Chairman & Chief Executive Of-ficer, HDFC Ltd amongst others.

CNBC-TV18’s CFO awards have recognised and acknowledged the wizards of the financial world.

Under their leadership, they have steered their institutions through the financial downturn to achieve new heights on the domestic as well as global platform.

Udayan Mukherjee, Managing Editor, CNBC-TV18 said, “It takes intuition, leadership and vision to guide India’s corporates through the current turbulent phase. If the current growth figures, even in the time of an imminent European recession are anything to go by, India fares well in terms of its corporate financial growth.”

SUN Pharma honored at CNBC-TV18 CFO Awards 2012

Taking heat detection to a new level of sensitivity and speed, a team of scientists at GE Global Research, the technology develop-ment arm for the General Electric Company (NYSE: GE), announced new bio-inspired nanostructured systems that could outperform thermal imaging devices available today. This discovery adds to a growing list of new capabilities that GE researchers have devel-oped through their studies of Morpho butterfly wings.

GE scientists are exploring many potential thermal imaging and sensing applications with their new detection concept such as medical diagnostics, surveil-lance, non-destructive inspection and others, where visual heat maps of imaged areas serve as a valuable condition indicator.

“The iridescence of Morpho butterflies has inspired our team for yet another technological opportunity. This time we see the potential to develop the next generation of thermal imaging sensors that deliver higher sensi-tivity and faster response times in a more simplified, cost-effective design,” said Dr. Radislav Po-tyrailo, Principal Scientist at GE Global Research who leads GE’s bio-inspired photonics programs. “This new class of thermal imag-ing sensors promises significant improvements over existing detectors in their image quality, speed, sensitivity, size, power requirements, and cost,” said the scientist.

This discovery is a result of extensive studies conducted at GE Global Research.

New Butterfly-inspired Design From GE


Sorento Healthcare Commu-nications Pvt. Ltd., a specialist healthcare integrated communica-

tions company, has brought Sour-abh Mishra on board as Business Strategy Consultant.

Mishra meanwhile also contin-ues as Chief Strategy Officer at Saatchi & Saatchi, India.

Mishra started his career at Contract Advertising as a management trainee in 1992. He has also worked at Ogilvy as head of planning for Bangalore and Hyderabad, and later as planning director at Ogilvy Mumbai, and at McCann Erickson as head of planning for Bangalore.

He joined Everest Brand Solu-

tions as national planning director in 2004, and then took over as the national head of planning at TBWA in May 2007. He joined Saatchi & Saatchi India as Chief Strategy Officer in May 2009, where he continues at present. He has also worked in brand management at BPL Telecom and Reliance Capital.

Talking about his new associa-tion, Sourabh Mishra said, “The opportunity to enhance the value of Sorento’s communications solutions in healthcare by better integrating the strategic planning process is exciting.

Sorento has already moved much beyond conventional mass media based communications. In that context, the task is also to see how we can better integrate the various offerings it has, in order to provide more holistic solutions to clients.

Sourabh Mishra joins Sorento Healthcare

Govt. Converts hospitals

Fortis Healthcare (India) Ltd., a leading integrated healthcare company in the Pan Asia-Pacific region, announced recently its unaudited consolidated results for the quarter ended December 31, 2011. The Company maintained its growth momentum during the quarter and reported consolidated operating revenue of Rs 605 Cr, representing a growth of 63% over the corresponding period last fiscal. This includes Rs 122 Cr (net) from the Diagnostics Vertical (SRL). Operating EBITDA stood at Rs 83 Cr, up 54%. Net profit for the quarter stood at Rs 29 Cr against a loss of Rs 12.6 Cr in Q2FY12.

Operating revenue from the hospital business was Rs 482 Cr, representing a robust growth of 30% over the corresponding period last fiscal. The growth has been led by Fortis Escorts Jaipur, Fortis Escorts Faridabad, Fortis Mulund, Fortis BG Road, Fortis Shalimar Bagh and Fortis Anan-dpur. Operating EBITDA stood at Rs 74 Cr, a growth of 37% and margin of 15.3%, an improvement of 80 basis points over the cor-responding period.

Commenting on the results, Mr. Aditya Vij, Chief Execu-tive Officer, India Business said “The third quarter of the fiscal has witnessed a robust growth momentum for Fortis. We remain committed to patient-centric healthcare and have renewed our focus on medical excellence, with the appointment of Dr. Bishnu Panigrahi to lead our Medical Operations Group. Dr. Pani-grahi brings with him extensive experience, of over three decades in clinical and administrative roles, and will help underline our emphasis on clinical quality. We continue to expand our pres-ence in India and have launched new medical programmes and growth initiatives across various hospitals.”

Keeping the development rail run-ning in the Hills with emphasis on healthcare, the government has decided to convert govern-ment hospitals in the Hills into super specialty hospitals. While complete overhaul of the Darjeel-ing and Kalimpong sub-divisional hospitals are on the cards, the government hospital at Kurseong on the other hand will double up as a Medical College.

The state has already formed a committee to conduct surveys for implementing the projects. The committee is headed by Punit Yadav, the MD of the West Ben-gal Health Commission (WBHC). The WBHC MD will survey the infrastructure of the existing hospitals to see how they could be converted into specialty units. After the survey, the committee will make recommendations to the state government.

Fortis Health-care Q3 rev-enue up 63%

Suneeta Reddy, joint managing director of Apollo Hospitals recently confirmed that the company will invest Rs 1650 crore in the coming financial year. “Currently, we are working on for-mulating the strategy on how to take the healthcare through retail format,” said the joint managing director.

Apollo hospital chain’s pharma-cy business turned around during the quarter ended December 31,

2011, by posting an Rs 2.2 crore Ebit profit as compared to loss of Rs 90 lakh a year ago. Once clarity on the FDI policy emerges then the hospital chain would rope in a strategic partner in its pharmacy business, said K Padmanabhan, group president, Apollo Hospitals. Total capex lined up was Rs 1,860 crore, of which Rs 225 crore was already invested. The proposed in-vestments will take up the number of beds owned by Apollo to 8,500

by 2017 from the current 5,888 and number of owned hospitals to 49 from 37. The average revenue per occupied bed is increased by 11.2 per cent to Rs 20,147 crore from Rs 18,125.

“We have cash in hand of around Rs 400 crore, which was raised through QIP and through promoter infusion and another Rs 1,000 crore will be funded through debt and internal accruals,” hospi-tal CFO said.

Span Diagnostics might sell 25 percent of its promoter stake soon. The company is expected to dilute about 25 per cent pro-moter stake. The Bombay Stock Exchange-listed entity may sell its stake to US and European diagnostic according to sources. The company, based in Gujarat’s Surat, has appointed Singhi Advi-sors to run the sale process.

Veeral Desai, managing director of Span Diagnostics, said the

company was looking to bring strategic partner into it. “We have plans to expand our presence in global markets by roping in a global player,” he said. The official refused to disclose the percentage of stake the company will dilute.

According to sources, the 1976-founded company is looking for a valuation of Rs 250-300 crore, and expecting to raise about Rs 75-80 crore through the stake sale.

Span Diagnostics manufactures various kinds of diagnostic/pathology lab devices, including sample test devices. The company has technical arrangement with the US-based Awareness Technol-ogy, Hitachi Chemical Diagnos-tics, and R&D Systems.

The possibility of consolida-tion in the scattered diagnostic industry in India will attract more foreign as well as private equity investments.

Apollo Hospitals to invest Rs. 1,650 crore

Span Diagnostics eyes 300 crore stake sale


CRISIL Research has recently published its report on Apollo Hospitals Enterprise. The re-search firm gave the fundamental grade of 5/5 to the company in its February 16, 2012 report. We continue to use the discounted cash flow method to value Apollo. The firm has revised the fair value to Rs 655 per share from Rs 533. Given the current market price, this translates to a valuation grade of 3/5.

As per the report, Apollo Hospitals Enterprise Ltd’s (Apollo’s) Q3FY12 revenues and margins were in line with CRISIL Research’s expectations but earn-ings were higher than expected. Healthy growth in the pharmacy and healthcare services busi-nesses supported revenue growth. Increase in other income due to high cash balance and decline in interest cost led to strong earnings

growth during the quarter. “We continue to remain positive on Apollo given its leading posi-tion in the domestic healthcare industry, which has good growth prospects. Factoring in higher cash balance and resultant in-crease in other income, we have raised our earnings estimates for FY13. We maintain our funda-mental grade of 5/5,” stated the report. Revenues grew 2.1% q-o-q and 19% y-o-y to Rs 7,148 mn, supported by healthy growth in the pharmacy and healthcare ser-vices businesses. The pharmacy business registered a growth of ~7.8% q-o-q and 29.6% y-o-y to Rs 2,246 mn. The healthcare services business was flat q-o-q and up 14.6% y-o-y to Rs 4,903 mn. Historically, Q3 sees a decline in healthcare activity due to post-ponement in medical procedures during festive season.

Apollo Hospitals’ fair value rises

Infosys BPO, the outsourcing arm of Infosys recently declared that the vertical would be their major growth driver in the coming year.

According to Vice-President, A Radhakrishnan healthcare vertical would see a lot of growth in this fiscal with the North American markets seeing extensive focus in this segment.

“Spending in healthcare will be spearheaded by North America, which would be relatively higher than all other locations,” said Radhakrishnan.

According to industry esti-mates, however, the healthcare vertical accounts for only around 5 per cent of the company’s rev-enue, the chief contributor being manufacturing, with around 35 per cent of its revenues.

Infosys BPO also announced the launch of its Business Excel-lence Centre (BEC) in Manila,

Philippines. The BEC, made at an investment of few million dollars (specific figure undisclosed) would combine the best of process and technology innovations and will help clients address issues related to efficiency management and customer satisfaction.

The company also said that in order to leverage local talent it is not only hiring local people but also recruiting local leaders to head their delivery centers across the world.

“Our centre in China is headed by a Chinese and the one in Brazil, by a Brazilian,” added Radhakrishnan.

Commenting on the 11 to 14 per cent IT BPO growth rate projected by Nasscom for FY’13, Radhakrishnan said though they can’t give exact figures at this moment, they are optimistic about surpassing that outlook.

Infosys: Healthcare vertical will be a major growth driver

Medico.com, Inc., a global health-focused Internet company, has launched Medico. in, a platform for consumers to find health information, and to become well-informed and active drivers of their own health. The platform will have high qual-ity health reference information, community features, and a power-ful question and answer platform that will allow the user to learn from the experience of others. The website is free for users to share information, and to ask and answer questions.

“With the launch of Medico. in, we will be providing highly informative and locally relevant health information to our users across India. I hope our users in India will use our platform to share their knowledge and learn from the experiences of others with similar concerns. I expect the platform to be very valuable to our Indian audience,” said Elan Dekel, Founder and CEO of

Medico.com Inc.“There a number of healthcare

information portals in the US like WebMD. However, there are very few online health platforms available for rest of the world that are locally relevant and easily accessible.

Medico is set to change that, and it goes beyond just being a health portal to include an engag-ing Q&A based community of

local citizens, local healthcare pro-viders and experts. We are thrilled to have partnered with Elan and team as part of our seed funding program and to see the launch of the platform in Spain, Brazil and now in India.

I am sure that Medico. in is well poised to grow into the “go to” healthcare site that Indian consumers trust,” said Jishnu Bhattacharjee of Nexus Capital.

Narayana Hrudayalaya has made it to the list of the world’s top 50 most innovative companies drawn up by US business magazine Fast Company.

While Narayana Hrudayalaya Hospitals has been ranked the 36th most innovative company for changing the face of health delivery in India, online booking platform RedBus has been rated 48th for making bus ticketing and routing easy for passengers and operators alike.

Medico.in – India’s New Health Reference Community Portal

Narayana Hru-dayala among top 50 innova-tive companies


New medical city to fill healthcare gap

A feasibility study into a planned $1bn medical city in Oman stated that it will fill a gap in the healthcare market in the Middle East. Apex Medical Group, the company behind the mega project, said a consortium of Kane Health-care Consulting Group, Ernst & Young and Atkins had completed a detailed study into the project.

It said the study “clearly indi-cated the great need of medical

and surgical specialties based on the prevalence of emerging life style diseases in the GCC and the greater MENA region”.

AMG also said the medical city, to be built on a 800,000m2 site in Salalah, would particularly fill “a huge growing gap” in the demand and supply of human organs.

The Middle East Society for Organ Transplantation (MESOT) has estimated that there is an average of 200 patients per mil-lion populations (PMP) in need for renal transplantation in MENA region. Furthermore, 40-50 (PMP) are in need of liver means 35,000 patients requiring liver; most patients in MENA countries die while waiting for these organs.

The demand of liver trans-plants for patients suffering from hepatitis B and C in GCC only, is projected to be 10,069 liver trans-plants by 2020, while only 872 patients are expected to receive the liver transplants based on the historical data.

Sean Ebner named President of AMN Locum TenensAMN Healthcare, the nation’s innovator in healthcare workforce solutions, recently announced that Sean Ebner is joining the com-pany as President of its Locum Tenens division, effective March 5, 2012.Mr. Ebner will be replacing Tim Boes, who held this position since October 2008.

“Sean’s proven track re-cord of success in staffing and his extensive sales leader-ship, opera-tions, business development and manage-ment experi-ence makes him ideally suited to lead our locum tenens business,” said Susan Salka, AMN President and CEO.

“We’re thrilled to have Sean join our senior management team and look forward to the impact we expect he will make with the team

in improving top line growth and profitability.”

Most recently, Mr. Ebner led a very successful division within Technisource, which is part of Randstad, the second largest staff-ing company in the world. His tenure with Technisource’s vari-

ous businesses spans more than a decade, leading teams working on an array of staff-ing and work-force solutions opportunities. His career has focused on innovative enterprise sales and market-ing strategy, operational

excellence, performance manage-ment and strategic planning, along with comprehensive P&L management.

Mr. Ebner earned an MBA and BS in Finance from Arizona State University.

International

Dell inks pact with Siemens for Cloud Computing Dell and Siemens will come together to provide a massive amount of cloud storage space for medical images.

According to reports, the two companies will create the Siemens Image Sharing and Archiving (ISA) service, which will provide a cloud platform for vendor-neutral image archiving and sharing. ISA will incorporate Dell’s Unified Clinical Archive. The Dell archive will also provide redundant archiving support for the Siemens Healthcare Cloud Computing Center.

Dell and Siemens formally announced this agreement at the HIMSS12 health IT event held recently in Las Vegas.

“With Siemens, they’ll have a first copy in their data center; the other copy will be in our Dell Uni-

fied Clinical Archive,” Dr. Jamie Coffin, vice president and general manager for Dell Healthcare and Life Sciences, told reporters recently. The Unified Clinical Archive stores images from Com-puted Axial Tomography (CAT) scans, electrocardiograms (EKGs) and magnetic resonance imaging (MRI) tests.

Siemens’ ISA will allow radiolo-gists to store medical images as well as other types of medical data. In addition, it could help im-aging departments lower the cost of maintaining imaging archives, said Kurt Reiff, vice president of business management for SYNGO Americas at Siemens Healthcare. Siemens makes picture archiving and communication systems (PACS) as well as CT and MR scanners.


Press Ganey Associates appoints new CEO

Hill International receives con-tract expansion from SEHA

Ganey Associates, Inc., a recog-nised leader in healthcare perfor-mance improvement, announced recently that Patrick T. Ryan has been appointed as Chief Execu-tive Officer of the company.

Robert Draughon, who served as CEO on an in-terim basis since July 2011, will resume his prior role as President and Chief Finan-cial Officer for the company.

Ryan has held various leader-ship positions throughout his 30-year career in the health care industry. Most recently, Ryan served as Chairman and Chief Ex-ecutive Officer of The Broadlane Group (which was acquired by MedAssets Inc. under Mr. Ryan’s leadership).

Mr. Ryan has also served as CEO at several leading health care companies, including PolyMedica Corporation, the nation’s largest

direct-to-consumer provider of blood glucose testing supplies and related services under the Liberty Medical Supply brand, and Physi-cians Dialysis, Inc., a nationwide network of dialysis clinics.

Mr. Ryan is a director of Af-filiated Managers Group, Inc. AMG +0.29% and Atrius Health, and is also active in the non-profit community,

currently as a director of Avon Old Farms School.“It’s a privilege to join an organisation that is an innovator in patient-focused care, particularly during this dynamic period in the health care industry,” said Mr. Ryan. “I believe that Press Ganey’s suite of high qual-ity analytic and advisory services is critical to the advancement of the industry as our clients inte-grate new delivery approaches, payment models and partnership structures.

Hill International HIL, the global leader in managing construction risk, announced recently that it has received a contract expan-sion from SEHA Abu Dhabi Health Services Company PJSC to provide project management services during construction of multiple health-care facilities located in Abu Dhabi and Al Ain. The two-year contract expansion has an estimated value to Hill of approximately AED 18.0 million ($4.9 million).

The healthcare facilities include Al Wagan Hospital and the Al Mushreef, Khalifa B, Al Falah and Al Towaya Ambulatory Health-care Centres. The five projects have an estimated total construc-

tion cost of approximately AED 268 million ($73 million).

“We look forward to working with SEHA to make these im-portant projects successful,” said Mohammed A. Al Rais, Senior

Vice President and Manag-ing Director (Middle East) for Hill’s Proj-ect Manage-ment Group.

Hill International, with 3,100 employees in 100 offices worldwide,

provides program management, project management, construction management and construction claims and consulting services. Engineering News-Record maga-zine recently ranked Hill as the 8th largest construction manage-ment firm in the United States.

Pfizer acquires Alacer Corp.Pfizer Inc. PFE -0.09% recently announced the acquisition of privately-held Alacer Corp., the maker and distributor of Emergen-C products, the largest selling branded Vitamin C line in the United States.

Based in Foothill Ranch, California, Alacer is well-known among health-conscious consum-ers as a provider of Vitamin C supplement products. It produces almost 500 million packets of Emergen-C annually, and its

products are sold in health food stores, supermarkets, drug stores, mass merchandisers and club stores nationwide.

“We are very pleased that the Emergen-C family of products will become part of Pfizer’s portfolio. We expect that our global network and deep expertise in dietary supplements combined with our desire to provide consumers with high-quality products will make Emergen-C more accessible

than it has ever been before,” said Paul Sturman, President of Pfizer Consumer Healthcare. “Emergen-

C products add to and greatly complement our market-leading dietary supplement portfolio.”

Emergen-C is an effer-vescent, powdered drink mix vitamin supplement that supports active and healthy lifestyles. Available in more than 15 flavors, each of the seven

lines of Emergen-C is packed with nutrients, Vitamins C and B, electrolytes and antioxidants.

Healthcare seeks Xerox help to tackle IT, Federal reformsHealthcare organisations and state agencies are increasingly turning to Xerox to help tackle their growing list of IT and fed-eral reform requirements. From preparing for the new ICD-10 medical coding system – to securely hosting healthcare data in the cloud, Xerox’s work with

customers places new emphasis on patient safety and healthy outcomes.

“Navigating new and ongoing regula-tory issues is a criti-cal, demanding task. Xerox can help by offering IT expertise, insights and solutions

that allow healthcare providers to remain compliant while ensuring their patients’ well-being,” said

Heather A. Haugen, PhD, head of research for The Breakaway Group, A Xerox Com-

pany. “Organisations that success-fully prepare for the changes with

technology and education will be better able to monitor patient safety and boost the quality of health services.”

Using the experience of The Breakaway Group, Xerox is working closely with providers to adopt ICD-10 coding standards before the government’s deadline.


Abraaj Capital acquires Aureous CapitalAbraaj Capital, a private equity player in emerging markets, has widened recently acquired Aureos Capital. Several analysts consider that the company is trying to widen its footprint in the East Af-rican region with this acquisition.

Towards the end of last year, Aureos Capital had made two investments through its Africa Healthcare Fund — $2.75 million in Revital Healthcare EPZ Ltd, a Mombasa-based syringe manufac-

turer and $2.5 million in Avenue Group, a Kenyan hospital and health insurance firm.

In a statement, Abraaj said the transaction has strengthened its position in the private equity land-scape and created “the world’s largest emerging markets small and medium enterprises focused private equity platform” through Aureos Capital, together with its $650 million Riyada Enterprise Development platform, a fund

dedicated to SMEs in the Middle East locations.

“The combined entity will have approximately $7.5 billion in assets under management, a pres-ence in over 30 countries across all global emerging markets, and 153 investments managed by a seasoned team of over 150 investment professionals with unmatched local expertise,” the statement read.

Aureos Capital has operations

in Asia, Africa and Latin America, $1.3 billion in funds under man-agement and has sealed over 250 deals in the SME segment in the past two decades.

Abraaj Capital Group manages eight Funds: Four private equity funds; Riyada Enterprise Develop-ment; Kantara, a fund dedicated to small and midcap enterprises in North Africa; ASAS, an income-generating, real estate Fund and a 2004 vintage real estate fund.

Regional healthcare innovations gets £500,000

Ras Al Khaimah eyes medical tourism

A new £500,000 initiative has been set up to provide a boost for small and medium businesses working on new ideas, devices and technology to improve health-care. ‘The Innovation Pathway North East’ will offer businesses working on healthcare innova-tions access to sector experts, advice on stimulating new ideas, protecting intellectual property and disseminating innovation across the region’s NHS Trusts.

The new organisation will be based at RTC North offices in Sunderland and Gateshead, and will help companies engage with the healthcare sector, NHS Trusts and newly formed Clinical Commissioning Groups. The joint project between NHS Innovations North and the Health Innovation and Education Cluster North East (HIEC NE) hopes to bring cohe-sion to the sector.

Dr Philip Nichols, director of HIEC NE believes that this project will be a major boost to the regions healthcare sector, and believes it has the potential to cre-ate jobs which will ultimately im-prove patient care. He commented: “Innovative ideas can originate from many sources, including front line health professionals in the NHS, innovators in industry or academics in higher education.”

Ras Al Khaimah is all set to join the race with other health care providers as a medical tourism destination. With its health care, hospitality and airline pulling their weight in a combined effort, this might not be a difficult task, suggest reports.

RAK Hospital, the northern emirate’s largest privately owned health care facility, is close to unveiling a deal with RAK Air-ways under which patients can fly in free of charge for treatment. Another one with Etihad Airways is also on the cards, according to

a top official with the health care operator.

“When you talk about medical tourism, you can’t just talk about the medical aspect alone,” said Raza Seddiqi, executive director at ETA Star Healthcare. “Patients want to go to a place that can take care of the tourism side as well.

“That’s the reason why a good hospitality environment has to be

there. Medical tourism can take off only when health care meets hospitality.” The emirate has al-ready been making headway as a tourism destination. Accord-ing to Mario Volpi, head of sales and leasing at Cluttons Dubai,

“Ras Al Khaimah is reinventing it-self with the advent of expanded landing rights to its airport, to broader areas of Europe and Rus-sia especially. This is bringing in more tourists from Russia, the UK and Italy specifically.”

Dr. BR Shetty, managing director and CEO, NMC Healthcare, was named ‘Healthcare CEO of the Year’ last week at the inaugural Indian CEO Awards, held at the Armani Hotel in Burj Khalifa, Dubai.

The awards ceremony was hosted by CEO Middle East magazine, a sister publication to Arabian Business. The Award was given to Dr Shetty in recogni-tion of his outstanding contribu-tion in the field of healthcare.

Dr B R Shetty, considered a pioneer in healthcare, is one of the most renowned and decorated entrepreneurs in the UAE. He has been credited for being the first to integrate and offer comprehensive medical services under a single umbrella. An alumnus of Harvard Business School and a recipient

of an honorary D. Litt degree from Georgia State University, Dr Shetty has worked with a mission-ary zeal towards the introduction of affordable, quality healthcare in the UAE.

Dr Shetty’s accolades include the ‘Order of Abu Dhabi Award’ in 2005, conferred by General

Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, in recognition of Dr Shetty’s remarkable contribution to healthcare in the region. He is also a recipient of the ‘Padma Shri’, one of the highest civilian awards conferred by the Govern-ment of India for exceptional achievements.

NMC Healthcare is the largest private healthcare provider in the UAE, both in terms of its nationwide network of facilities and services as well as in terms of patients treated. NMC Healthcare operates hospitals, pharmacies and distributes pharmaceuticals, scientific and medical equipment, FMCG, food, veterinary and edu-cational products across the UAE.

Dr. BR Shetty Healthcare CEO of the Year


Avnet Technology Solutions (NYSE: AVT) will be the only distributor of Oracle Corp.’s (NASDAQ: ORCL) health sciences solutions in Canada and the U.S., the company announced recently.

“This is Avnet moving into the applications environment,” said Chris Swahn, vice-president and general manager for Avnet’s Oracle Solutions group in the Americas. “This is taking us into the next realm of solutions distribution,” he added

The distributor will now offer its partners Oracle’s recently upgraded Health Information Exchange (HIE) and Enterprise Healthcare Analytics products. The two communication and business intelligence offerings are particularly useful to healthcare organizations trying to manage growing data and comply with electronic health records require-ments and best practices, the companies say.

“You don’t want to enter a marketplace that’s matured or declined, you want to enter at the inertia of the technology ramp,” Swahn said. By capitalizing on an area of healthcare with growing potential, Avnet will increase both its partners’ profitability and their loyalty, he argued.

Avnet will later add other solutions from Oracle’s health sciences business to its portfolio. The offerings will become part of

Avnet’s Health-Path practice,

the healthcare element of its vertically-focused SolutionsPath program.

It currently has seven partners signed on to offer these Oracle solutions, including Ottawa-based Maplesoft Group. That number will likely grow to between 20 and 30 partners. “I’m not going to put a cap on the program,” Swahn said. “We’ll expand when we find the right customers or there’s a need we can fulfill.”

Ventas to Market 64 Health-care Assets

Peerless to enter Healthcare Market

Ventas, Inc. VTR +0.21% declared recently that it intends to market 64 healthcare assets (the “Marketed Assets”) currently leased to Kindred Healthcare, Inc. KND +0.47% (“Kindred”) under four Master Leases (the “Master Leases”) and comprising $77 million of current annual cash rent.

Ventas will continue to receive rent from Kindred on the Market-ed Assets at the contractual rate, including an escalation on May 1, 2012, until the expiration of the lease term on April 30, 2013.

“We believe these assets will be attractive to a wide variety of respected and quality healthcare providers,” said Ventas Chairman and CEO Debra A. Cafaro.

Ventas believes that current rent for the Marketed Assets, which include 54 skilled nursing and rehabilitation centers (SNFs)

and ten long-term acute care hospitals (LTACs), approximate market levels. A comprehensive plan to market these properties to qualified healthcare providers is underway, the Company said.

The 64 Marketed Assets generated EBITDARM (earnings before interest, taxes, depre-ciation, amortisation, rent and management fees) to cash rent coverage of approximately 2.1x for the trailing twelve-month period ended September 30, 2011 (the latest date available).

Included in the $77 million of current annual cash rent for the 64 Marketed Assets is $9 million of current annual cash rent for six SNFs and two LTACs (the “Reset Assets”), for which Kindred has previously provided a renewal notice and which are currently subject to a fair market rent appraisal process.

Peerless®, the leader in innovative audio and visual solutions, recent-ly announced its formal expan-sion into the healthcare market with the launch of the PeerCare™ brand of highly adaptable fixed and mobile IT product mounting solutions for both traditional and emerging computing platforms within healthcare IT.

“We are proud of our work in development of the power system for the PeerCare EMR Hybrid Cart and look forward to collaborating with Peerless in the future as there is a natural synergy between our solutions,” said a spokesperson of the company.

Peerless’ initial line of Trade Agreements Act (TAA)-compliant products include the PeerCare™ Electronic Medical Records (EMR) Hybrid Cart optimised for iPad and Android tablet platforms;

adaptive, fully articulating and high-traffic-area wall systems, including a low profile unit deployable in space constrained areas like hallways; and, the PeerCare™ Enclosure Pod, a lock-able unibody constructed design that secures and protects IT equipment accommodating both PeerCare™ and competing wall systems to prevent un-authorised access, such as in children’s hospitals and public access areas. The PeerCare™ Enclosure Pod delivers an industry first ability to convert a standard healthcare wall system into an enclosure.

Peerless also unveiled Peer-Care™ Antimicrobial Mounting Solutions, the industry’s first antimicrobial fixed and ar-ticulating wall and ceiling mount solutions to use Agion®-branded coatings.

The TriZetto Group recently announced new enhancements to the benefits administration, care management and network management capabilities of its enterprise solution platform. The upgraded platform will help healthcare organizations improve administrative efficiency; achieve compliance; enhance the cost, quality and delivery of care; and compete to win in an emerg-ing retail environment. These enhancements are the first in the 5.X series of transformational

releases that will be introduced throughout 2012.

“Our 5.0 release for core administration, care and network management is an important mile stone on our way to a con-solidated suite that will help our clients optimise their investment in TriZetto technology,” explained Pierre Samec, TriZetto’s executive vice president and chief technol-ogy officer. “The solutions take advanced, enterprise-wide func-tionality, scalability and quality to the next level.”

TriZetto Launches new Enter-prise Solution series

Avnet to distribute Oracle healthcare solutions

MAQUET Medical India Pvt.

Ltd.

II Floor, Mehta Trade Centre

No.1, Shivaji Colony,

Plot No. 94, Sir M V Road,

Andheri (East)

Mumbai - 400 099, India

Phone: +91 22 40692105

Fax: +91 22 40692155

[email protected]

www.maquet.com

EASIER AND SAFER OPERATIONSIN THE SHOULDER REGION WITHTRIMANO 3D SUPPORT ARM

WATCH THE VIDEO ON WWW.MAQUET.COM

Improved workflow: TRIMANO acts as a “third

hand” for the surgical team, securely and safely

immobilizing the patient’s arm in any desired

position.

Ready for use immediately: no additional

connections necessary.

Flexible positioning: Using the “Click and Move”

system, TRIMANO can be moved in any direction

and securely fixed in any position. The sterile

arm rest can be locked and unlocked during the

operation to monitor the patient’s arm

movement.

MAQUET — The Gold Standard.


MAQUET Medical India Pvt.

Ltd.

II Floor, Mehta Trade Centre

No.1, Shivaji Colony,

Plot No. 94, Sir M V Road,

Andheri (East)

Mumbai - 400 099, India

Phone: +91 22 40692105

Fax: +91 22 40692155

[email protected]

www.maquet.com

EASIER AND SAFER OPERATIONSIN THE SHOULDER REGION WITHTRIMANO 3D SUPPORT ARM

WATCH THE VIDEO ON WWW.MAQUET.COM

Improved workflow: TRIMANO acts as a “third

hand” for the surgical team, securely and safely

immobilizing the patient’s arm in any desired

position.

Ready for use immediately: no additional

connections necessary.

Flexible positioning: Using the “Click and Move”

system, TRIMANO can be moved in any direction

and securely fixed in any position. The sterile

arm rest can be locked and unlocked during the

operation to monitor the patient’s arm

movement.

MAQUET — The Gold Standard.

“There is scarcity of credible information about healthcare sector. I hope that the new magazine would bridge the gap for reliable infor-

mation in the industry. Great Golfers is India’s first golf tournament for healthcare professionals. I would like to congratulate the organizers

for creating the platform for communication.”Hardeep Singh, Country Manager, Forbo Flooring Systems

“The success of events like this illustrates the need for an appropriate platform for healthcare professionals to communicate with each other.”

Shankar Rao, Director of Healthware

It was a reunion of sorts for CEOs of sev-eral healthcare organizations at the launch of Healthcare Executive, held at DLF Golf course, Gurgaon on February 5. Several senior executives of healthcare industry were found hobnobbing with each other at golf event which was held recently as a part of the launch of the new magazine of Hosmac India Private Limited. The launch ceremony was quite a crowd puller with the best and brightest names of the healthcare industry. The event drew close to 300 senior executives from private as well as public healthcare sector. The or-ganisers had named the event as ‘Great Golfers of Healthcare’ as it was the first ever Golf tournament for business lead-ers of healthcare.

The first issue of HE was jointly launched by Daljit Singh, President, Fortis Healthcare, Anjan Bose, Business Head, Consumer Lifestyle, Philips India, Narendra Karkera, Director Operations of Hosmac, Dr R Chandrashekar , Chief Architect, DteGHS, Dr AK Mukherjee, Director, Indian Spine Injuries Centre and Dr Vivek Desai, Managing Director of Hosmac.

Speaking at the event, Dr Vivek Desai said, “Golf is a premium game that is played by most honchos from different industries. It is a good platform where busi-ness and pleasure go hand in hand. This tournament would help identify the great golf players from the healthcare industry.” The new magazine will be pitched at CEOs as well as senior executives of healthcare fa-cilities. Sharing more details on the launch

of the magazine, he said, “The study and magazine will be exclusive healthcare re-source guides for ideas, strategies, technol-ogy and practices in creating, leading and transforming the healthcare scenario in In-dia. They will focus on a range of aspects of

the industry including infrastructure, man-agement, technology and personnel.”

Another highlight of the event was the launch of Hosmac’s new initiative Best Plac-es to Work in Healthcare. The study titled ‘Best Places to Work in Healthcare’ will rec-ognize outstanding employers in the health-

care industry at a national level. This report which will culminate into a ground event re-warding the companies is jointly being done with ‘People Strong’. ‘People Strong’ is one of the leading HR consulting and solutions provider in India and is a pioneer in driving

such reports. The consultancy had recently invited companies to par-ticipate in its online surveys. The ini-tiative was launched jointly by An-ubhab Goel, Business Head for HR Shared Services of People Strong, Kiran, RPO division head at People Strong and Sumedha Sen, Director, Business Development of Hosmac .

Underlining the need for the new magazine, Hardeep Singh, Country Manager, Forbo Flooring Systems said that information tools like Healthcare Executive would bring a major change in the way decisions are taken in the healthcare industry.

Out of the 100 participants of the tournament,Bhupinder Singh, Mark Balanche and Santosh Chandra and Aakar Amit emerged as winners of the tournament. The event also had few fun sessions like lucky draw, which saw honchos like Sudhir Bahl, co-founder of Irene Healthcare walking away with prizes like airline

tickets, which would let them travel to any corner of the world.

The event was jointly sponsored by Ray-monds, Forbo Flooring Systems, Jaguar, Healthware, Microsoft, Air Arabia, Shapoor-ji Pallonji & Co. Ltd, Draeger Medical India Pvt. Ltd, and Pernord Recardo.

Change begins at DLF GoLF Course

Launch of Healthcare Executive magazine

Announcement of Best Places to work in Healthcare

“Healthcare Executive magazine is reader friendly and I hope that over the years this magazine would emerge as the most

authentic point of reference in health care consulting. There are large number of healthcare managers at different levels in public

systems, who are largely insulated from path breaking ideas from experts in the corporate sector .I hope that “Healthcare Executive” would also cater to this segment resulting in some

innovations in the public sector delivery of health care services,” Dr. Dinesh Agarwal, Programme Officer at UNFPA.

“Great Golfers of Healthcare was a great event, which brought together various stakeholders of industry on a

single platform. It is a very timely effort by someone who understands the healthcare space very well. It will be a

great help for decision makers of the industry.” Daljit Singh, President, Strategy and Organisational Development,

Fortis Healthcare Limited.

Registrations

Soaking In the Ambience

Tee Off

Lucky draw winner

The winners of the first Great Golfers of Healthcare

Off to the greens


The Indian economy has made significant strides over the last two decades

with the size of the economy increasing five-fold and growing at an impressive CAGR of a little more than 8% over the last seven years. Even though a lot remains to be done, especially on the infrastructure front, the economy certainly has come a long way from the BOP crisis in 1991, when the growth had been a more pedestrian CAGR of around 4% in the all previous years since independence.

Varying estimates put the required investment numbers be-tween 25 and 40 billion USD over the next 5-10 years. The boards and executive leaders within the sector will have to contend with a significant increase in the size and scale of their operations and devise strategies to scale seam-lessly, while driving efficiencies and improving the standards around the quality of care.

A strategic enablerThe Information Technology sector played a stellar role in the India growth story and has po-sitioned India as the IT services hub for the world. What started as an export oriented activity to support the world is increas-ingly looking within to enable the growth across the various sectors in the domestic economy. Today’s savvy consumer is more likely to make a bill payment over the

internet and probably have a 4 in 1 banking account that enables one to track all the financial transactions in Current, Savings, DMAT and Credit Card accounts right down to the last paisa. And quite evidently the experience of the average consumer in the re-tail, banking, telecom and travel sectors has changed significantly in the last decade from an overall customer experience perspective

with Information technology playing a large role in enabling workflows with significant cus-tomer touch points.

The same cannot be categori-cally said about the healthcare sector and one can say that healthcare IT (HCIT) adoption in the country is still in the nascent stages. While there has always been willingness to invest in the latest medical devices, the same

cannot be said about investing in something that comes in a Compact Disc or something that is even down loaded remotely. The sector has made great strides in catching up with the ever increasing demand for qual-ity healthcare driven by rapid urbanisation. We have world-class physicians and surgeons, operating out of some of the best healthcare facilities in the world

Reducing financial burden by use of Health IT Healthcare IT adoption can lead to significant efficiency improvements, increased patient safety and better health outcomes, says Rama Nadimpalli

Challenges


that have the best that medical technology has to offer.

But when it comes adopting IT, the healthcare sector still lags behind the other sectors. This in itself is not surprising as this is very similar to the situation even in developed economies like US, where the healthcare sector spends about 3% of the revenues on IT as against the 6% that is spent on IT within the financial services sector. What does stand out though is the visible gap in the overall consumer experience within the healthcare sector vis a vis the other sectors – on one hand you have banking sector where you can track all your financial transactions online and the other hand when you enter a hospital, you are probably entering a system that knows enough about you to recognise you but not enough to contextu-ally provide the right information at the different venues within the hospital to provide a seamless

and smooth customer experience as well as provide the best clini-cal outcomes possible.

While the banking and the other sectors are by no means perfect and still have a long way to go from a consumer experi-ence perspective, they seem to be ahead of the healthcare sector in the IT adoption journey and us-ing IT as a strategic enabler. The reality is that there are signifi-cant changes taking place in the

healthcare landscape within the country, like, the increase in size and scale of operations of hos-pitals; higher insurance penetra-tion levels; the growing medical tourism segment; and individual/consumer expectations around quality of service and outcomes.

These changes will compel the

sector to start looking at IT as key enabler in driving efficiencies and facilitating growth. There needs to be a transition from what has hitherto largely been a fragmented approach to HCIT with more emphasis on the ad-ministrative aspects of running a hospital, to a more integrated approach of looking at both the clinical and the administrative aspects of running a hospital. Given that clinicals constitute

the core activity of running an efficient hospital, it is important to look at IT adoption in clinical activities also and not only the administrative aspects of run-ning of a hospital.

There has to be realisation though that this is a journey and the C suite within the hospital

needs to look at this from a long-term perspective and start building capabilities to be able to effectively implement healthcare IT in a phased manner. The HIMMS (Healthcare Information and Management Systems Soci-ety) 7 stage EMR adoption model can provide a very valuable road map that can serve as an effective guide for the executive leader-ship to draw up a road map to implement HCIT in a phased manner, while establishing proof points with respect to ROI as well as gaining the buy in from the end users.

RAND Study & Benefits of HCITRAND Corporation, a well respected California think tank concluded a study of 2 years in 2005 in US which showed that proper implementation of IT can result in annual savings of 162 billion dollars per annum for the US healthcare sector. The

Effective implementation of HCIT can provide significant and tangible

benefits if done correctly and can be a crucial success factor


breakup of the savings is across the following categories: • Increased Efficiency: 77 Billion ` USD• Reduce Occurrence of Adverse drug events: 4 Billion USD• Improved Chronic Condition Management: 81 Billion USD

The implementation cost of HCIT was estimated at 8 Billion USD per annum. The role that HCIT can play in driving efficien-cies and improving patient safety and health outcomes across the system is the reason behind the HITECH (The Health Informa-tion technology for Economic and Clinical Health) Act and the meaningful use of dollars being provided as incentive to the US healthcare sector by President Obama to implement HCIT. The care providers have to demon-strate that they are using EMR in a meaningful way by 2015, fail-ing which they will be penalised with reduced reimbursements through the Medicare/Medicaid programs.

Though a comparative study estimating the benefits from the adoption of HCIT does not exist in the Indian context, it is reason-able to assume that we are indeed looking at similar benefits ensu-ing with successful implementa-tion of HCIT. The deterrent for the sector has been the perceived high costs of acquiring a robust integrated HCIT solution with-out the concomitant tangible returns. However, an enterprise wide HCIT implementation will entail just a one-time acquisition cost and some ongoing annual maintenance costs. In the initial stages, the business transforma-tion and the change management efforts do make it seem like there are no significant net savings. But as the change processes take root, the benefits realised will sig-nificantly outweigh the costs in the later stages. The broad ERP sector has gotten to that point with fairly wide spread adop-tion within the corporate and in some cases the public sector as well in India. There is no reason why IT couldn’t play a similar

role in the healthcare sector. The effective implementation of HCIT will create an information/data platform that will in turn provide the basis for creating an effective decision support platform that can provide the right inputs to the decision makers to further accelerate benefits realisation.

ROI framework & approach: Indian ContextThe broad framework used in the RAND study at the sector level can be used to create a ROI framework for individual hospitals to estimate the benefits and drive an IT transformation

initiative that clearly outlines the journey in phased manner with all the key measurable milestones that need to be hit for each and every phase. A sample set of potential benefits are listed in the table here below.

These specific set of benefits create a ROI framework that can be driven from the hospital’s financial, operational and clinical outcome data to establish the benchmarks against which future improvement can be measured.

A combination of the HIMMS 7 stage HCIT EMR adoption model from a clinical capa-bilities perspective and the ROI framework with clear milestones

identified from benefits stand point should provide a compel-ling road map for the sector to realise the potential benefits of HCIT. For example, Lab, Radiol-ogy and Pharmacy termed as key ancillaries by the HIMMS for Stage 1 EMR adoption account for significant portion of the revenues for a typical multispe-cialty hospital and become prime candidates for HCIT adoption in the first phase of any long-term transformation strategy.

The long-term approach means that CIOs have to make decisions based on the long-term needs and make technology decisions that can scale with the growth in size as well as complexity.

Effective HCIT makes you a leaderIn a way, the nascent stage of HCIT adoption in the sector in India could serve as a blessing as the sector can learn from the evolution of EMR adoption in the more developed markets and plan better for an IT enabled trans-formation with respect to how health is managed and care is delivered. The use of HCIT can change what is essentially a reac-tive process – an individual falls sick and that triggers the entire care process and there is not as much emphasis on how health is managed from a preventive perspective. The use if HCIT to actively engage individuals and get them connected to the health-care systems via the technology platforms and improve their experience while giving rise to new business models centered around giving individuals more control over their health manage-ment working with a digitally enable healthcare sector. Effective implementation of HCIT will provide significant and tangible benefits if done correctly and will be a crucial success factor that will separate the future leaders in the sector from the rest.

The author is VP & GM, Cerner India

Potential Benefits

Quality Improve-ment

Infection Control/Prevention, Adverse Drug Events, Pressure Ulcers Prevention, Im-proved Customer Service, Improved Critical Outcomes

Revenue Genera-tion

Charge Capture, Optimisation of Operation Theatre Utilisation, New Business models extending the Information platform to the consumer

Efficiency Im-provements

Improved Operation Theatre Utilisation, Improved Resource Utilisation, Improved Discharge Process, Device Integration and Interface Efficiency, Supply Chain Ef-ficiencies, Insurance Management, Billing Leakages


Hospitals are among the most costly, complex and time consuming build-

ings. Some say that construction of a corporate hospital could cost Rs. 60 lakh to Rs 1 crore per bed.

“It is extremely important to look at avenues where by one can reduce construction costs of hospital buildings, which constitutes almost 60-70 percent of the total budget outlaid for a hospital project, equipment being 20-30 percent,” says an expert with the Confederation of Indian Industries.

Why is it expensive?As per data, there are numerous factors which contribute to high building construction costs of

hospitals. While on the one hand managements have to shell out for sophisticated electromechani-cal systems, on the other hand they have to ensure stringent indoor air quality as well as lighting. Further, the designs of hospitals are customised to offer safety and quality patient care to the inmates.

Sameer Mehta, Director -Projects at Hosmac India, a healthcare consultancy firm admits that the construction cost is linked to complex structural design of a hospital. “Developers have to take in to account unique features of a hospital building like the high traffic as well as heavy equipment. A 100-bed hospital would have a staff of

nearly 400 and the occupancy at the peak hours could be in the vi-cinity of 300 plus. Even a single MRI machine could weigh more than 15 tonnes. These factors call for an intricate building design,” says Mehta.

Another reason for the high cost is that project managers are bound to follow numerous rules and regulations prescribed by several agencies.

“Further, hospitals are meant to withstand earthquakes as the structures are conventionally designed to a level higher than the zone specified. For instance, Delhi is in seismic zone IV, but a hospital there would be designed to zone V strictures. And this translates in to more steel,

concrete and there by a heavier and relatively costlier structure,” explains Mehta.

High construction costs are also attributed to the energy consumption of the building. A hospital that functions 24x7 is designed not merely for comfort but for infection control as well as healing. To cite an instance, a wholly, centrally air-conditioned 100 bed hospital would entail 300 TR. With prescribed air changes and filtration levels for asepsis, the cost per tonnes could be in the tune of Rs 80,000.

Besides, there are numerous design regulations prescribed by civic agencies and the govern-ment to ensure the safety. “Needless to say, plumbing is

It’s all about smart planning How can organisations reduce costs when constructing healthcare facilities? Can technology aid in better design and project delivery? Arunima Rajan tries finding answers to these questions

brick and mortar


not merely supply and drainage of water as one would see in a commercial building. Akin to a five star hospital, one requires provision for hot water and steam. The water requirement is so high that a sewage treat-ment plant becomes necessary. Elaborate provisions are also made for firefighting, sprinklers are installed in several areas to ensure the safety of the inmates,” says Mehta.

Yet another possible reason for the high construction cost is that the electrical systems go beyond merely providing power and lighting. The connected load for a typical 100-bed hospital would be in the range of 1,000 KVA. The low voltage systems span beyond the voice and data systems to include smoke detec-tion, public address, audio visual, MATC, CCTV, access control as well as nurse call and patient call systems.

When it’s time to construct a hospital, builders and manage-ments also have to deal with microbicidal and bactericidal properties of the building ma-terials chosen by them. Today, depending on the facility mix and the level of technology, the medical equipment budget of a 100 bed hospital could be Rs. 100 million and above. It is also a known factor that the cost of the land forms a crucial ingredient of the project cost of a hospital. “While some metros recognise this and are allowing greater floor space index, the fact that a comprehensive bed facility could entail 90,000 sq ft of con-struction and commensurate land parcel, itself adds significantly to the cost,” says Mehta.

Recent debate on cost-effective models of constructionAlthough competition and grow-ing demands of consumers are changing the way hospitals are constructed in the country, pru-dent choices remains the corner stone of the industry.

Every aspect of a hospital

building construction can have a cost-benefit aspect to it, be it construction of basements for parking and housing services or the high-end interior finishes to the external façade systems.“In Fortis, the hospitals are designed keeping in view efficiencies both in terms of square foot per bed and the utility systems without compromising on the patient safety. With large hospitals in the network, evidence-based data gives the additional advantage in optimising the design,” says Rajesh Sivan, General Manager- Projects, Fortis Hospitals.

Hidden CostsWhile the above listed are very visible costs, there are other hidden avenues of cost reduction in terms of engineering services like air conditioning, electrical systems, access control systems, and IT, where the clients knowl-edge is generally found wanting. “Hidden costs are those which cannot be established at the be-ginning and these mainly come from the statutory expenses, regulatory bodies and occasion-ally from technical advances of medical equipment,” adds the Sivan of Fortis.

Other important criteria would be optimal design with an aim

to conserve energy; selection of material where longevity and ease of maintenance should be given more importance over aesthetic value. Considering that India needs to triple its health-care infrastructure in terms of the number of beds per thousand population, these aspects will be-come more important as money gets invested in the sector and there is a dire need to educate promoters about these aspects.

DesignThere are various mean of sav-ing costs both on the operating and design fronts. Optimal design always is derived from a careful study of the whole system, when it functions both on full or partial capacity. For example, design of an HVAC system for a centrally air-condi-tioned hospital can be done with the actual ambient temperature data of the place where it is lo-cated and also by understanding the actual cooling effect required within various departments in a hospital. Like the administrative blocks and support systems, the clean utility, stores, lift lobbies etc. do not require the same level of cooling as an operation theatre or an ICU does. A careful heat load calculation in this can

reduce the overall tonnage of the chiller, thus reducing both the capital and running costs. “The same could be done while designing electrical systems by studying the lux levels and usage of the fixtures,” adds Sivan.

Lifecycle costing is perhaps a good solution to evaluate investments in such engineering systems. Life cycle costing is the sum of recurring and fixed costs over the full life span of the hospital. Operations and maintenance costs over the typical 30-year life cycle of a hospital contribute up to 70% to this equation, so anything the designers can do to facilitate maintenance and reduce total life-cycle cost will have tremen-dous returns on a relatively small up-front investment.

“Lifecycle costs play a major role for the management to decide on the capital investments to be made for the hospital, espe-cially in the areas of sustainable design, energy efficient buildings etc. The advantages of a lifecycle costs are always in the long run and have a direct impact on the bottom line,” explains Sivan.

One of the most asked ques-tions is the area required per bed. At one end of the spectrum, you have nursing homes and the


public health institutions which are barely at 300 sq ft per bed, as compared to the other end of the spectrum, which have 1,300 sq ft per bed. The optimum fit perhaps is around 800-1,000 sq ft per bed. More area built would mean that much more area to be engineered and air conditioned. Size thus becomes a key criterion to reduce the construction costs in hospital projects.

Providing sufficient parking for a hospital is also a challenge. Hospitals in metros face this as generally the land which is available is small and comes at a premium. So the FAR available is used to the fullest possible. “The development regulations across cities in India specify the minimum parking required for a hospital and stipulate the use of basements for this and hence this area is free of FAR. This cost can be reduced or equated if the building regulations have a mechanism of granting addition-al FAR for construction in lieu of

this parking space provided or by allowing single entry ramps and valet parking,” said Sivan.

Space policiesOver the years, developers have realised that parking is not a luxury in big cities. Several devel-opers are increasingly veering to-wards mechanical, tiered parking to optimise the use of space. The ‘visible’ costs are better reduced by designing for elevations that are more in keeping with the local climes. “DGU could cost in the vicinity of Rs. 7,000 per sq m. But a good textured, weather proof coat that could also give a stone like finish would cost in the vicinity of, say, Rs. 500 per sq m. Thus, the fad of aluminum and glass facades does leave an op-tion to reduce the visible costs,” concedes the project head of a healthcare consultancy firm.

MaterialsAs expected, the place from where materials are procured

also forms an integral part of construction. Architects note that sourcing raw materials which is easily available in the locality will bring down the construc-tion costs. Avoiding structural glazing in elevation treatment can reduce the project cost to con-siderable extent note architects. Using hollow bricks and concrete blocks is also often adopted by the architects to bring down the construction costs.

Geographic location and climatic conditions would generally govern the selection of architectural elements. Materials like natural stones, aluminum composite panel or any smooth surfaces with lesser offsets can ease the maintenance. This becomes more essential with the structure going high, else the provision for maintenance will itself become a cost.

Currently, interior finishes have a huge impact on the build-ing and maintenance costs of a hospital. For instance, hospital

corridors can quickly be dam-aged, unpleasant to look at and possibly shelter hospital bugs when not adequately protected. Added to this, the costs and time associated with running repairs and maintenance of heavily-trafficked areas like these can be a significant drain on budgets. “One way to reduce maintenance costs is to protect corridors cor-ner guards and crash rails that rapidly pay for themselves many times over in saved time, reduced maintenance costs and improved hygiene. Similarly, door-edge pro-tectors help reduce damage and expensive repair costs, as well as keeping vulnerable edges safe for visitors and increasing the life of doors significantly.

Use of technologyIn order to prevent errors during the implementation stage, archi-tects also take help of technolo-gy. Over the past couple of years, several architects have benefitted from architecture building design

Plastikkirur giska Institutet - The Hospital which has used steel for its construction


software like Autodesk Revit, which are often use for Building Information Modelling. Design-ing process is often made more effective with the use of this software. According to architects, it is easier to make changes in the design with the help of the software. “It helps us identify potential problems in our design, which we would have noticed only during the design stage. This saves time as well as money to a great extent,” says Raajjesh DA, a project architect.

Going greenGreen building materials helps eliminate the use of other materi-als and energy and contributes to the economy. However, the most criticised issue about construct-ing environmentally-friendly buildings is the price. Most green buildings cost a premium but yield 10 times as much over the entire life of the building.

So, is to possible to strike a balance between ease of maintenance and aesthetic value, saving costs at the same time? “Yes,” says Sivan. “But when

you put both these together the cost factor comes into play. With new technology and materials available, the cost factor can be overcome leading to better systems for maintenance and at the same time giving aesthetic values. Also today, we have lot of opportunities to import materials from China and other oriental countries which are equivalent to indigenous materials and main-tain a certain degree of quality,” says Sivan.

FutureWith the rising price of sand, bricks and labour, several ana-

lysts suggest that pre-engineered building solutions might be the answer. Sudhir Kashyap, of Lindab, which designs and develops building components for the building industry, points out several hospitals in Western countries are built with pre-engineered steel framework. “India is still doing concrete structures whereas all over the world steel structure buildings have been very popular for over 100 years,” says Kashyap. He emphasises that these building elements are faster to assemble and cost effective. “As these are completely engineered products,

there is no wastage. It also takes one third of the time to erect these elements. Additionally, it does not require maintenance like the traditional building solutions. Moreover, it can save up to 30-40 percent of the air condition costs. Unlike concrete, Steel has a much longer life and is also recyclable,” adds Kashyap.

However, he concludes that the initial investment for these buildings might be higher as the concept is still not so popular in the country.

With inputs from Anooj Vakil, GM-Turnkey design, Hosmac


Case study

Saving Money, Saving Livesby Jon Meliones

My epiphany came at seven o’clock on a hectic November

evening in 1996. I was the attend-ing physician in the intensive care unit at Duke Children’s Hospital (DCH) in Durham, North Carolina. A six-month-old named Alex lay in a crib in the ICU with a stiff plastic tube in her throat. Awake and moving after heart surgery, the tiny girl was ready to come off the ventilator. As Alex squirmed and tried to breathe, the ventilator forced more air into

her lungs. Her exhausted parents grew distraught. “Why can’t she come off the ventilator?” her mother asked. “Because we’ve had to cut back on night staff,” replied the busy nurse. “There’s no respiratory therapist avail-able.” Alex was uncomfortable. She received medication to help her sleep and to keep her from fighting the ventilator until the therapist arrived in the morning. But her parents didn’t sleep; they were too confused and upset.

As I watched Alex and her

parents, I thought back to similar scenes I had witnessed over the years at DCH, a 134-bed pediatric hospital located on the fifth floor of Duke University Hospital. Here, 800 employees care for patients in our neonatal intensive care unit, pediatric intensive care unit and pediatric emergency room, bone-marrow transplant and intermediate care units, as well as in our subspecialty and outreach clinics. When I came to DCH in 1992, we had a $4 million annual operating loss;

it had grown to $11 million by 1996, which forced administra-tors to cut back on resources. As a result, some caregivers felt that the quality of clinical care had deteriorated. Parents’ complaints increased. Some dissatisfied doctors threatened to send their patients elsewhere. Frustrated staff quit.

And then it struck me. I saw with perfect clarity the reason that DCH was struggling to meet the needs of its customers—our patients and their parents. And


I knew what had to be done to make things right. The problem was that our hospital was a col-lection of fiefdoms: each group, from accountants to administra-tors to clinicians, was focusing on its individual goal rather than on the organization as a whole. We would be a far more effec-tive organization if we could stop that from happening. Most companies in the United States had this insight 20 years ago, but the nonprofit world remains, for the most part, unaware of it. I realized that DCH needed to start thinking less like a money-losing nonprofit and more like a profit-able corporation.

A sense of mission, of course, is critical to any organization’s identity. The institutional mission of a hospital is to promote the health of the community. But during difficult periods, it’s easy to lose sight of the big picture and focus solely on your fief-dom’s specific goals. Clinicians—that is, doctors and nurses—want to restore their patients to health; they don’t want to think about costs. Hospital administra-tors have their own mission—to control wildly escalating health care costs.

Cost cutting in a vacuum traumatizes patients, frustrates clinicians, and ultimately cripples the hospital’s mission. The deci-sion to cut a respiratory therapist from the night shift, for example,

affected Alex and her parents as well as their insurance company, which had to pay an additional $2,000 to cover the cost of the ventilator and ICU care. The decision also left the clinicians feeling powerless, since decisions regarding clinical practice were being made without their input. Such trade-offs between quality of patient care and cost control cause intense conflict for health

care professionals. In worst-case situations, efforts to improve profit margins actually have the opposite effect—they chase away customers, cost executives their jobs, and put the entire hospital at risk of financial ruin.

Regaining Our BalanceConsidering the magnitude of the issues we faced—a $7 million

increase in annual losses in four years—it’s hard to believe that we ever turned things around. But we did, by changing people’s minds and hearts, inch by inch, day by day. In 1997, the chief nurse executive, nurse managers, and I began working together to start turning the organization around. First, we discussed our current realities with the entire clinical team. We opened the meetings by talking about our goals for our patients. “We want patients to be happy,” the doctors and nurses agreed, “and for them to have the best care.” We also described our pressing financial challenges.

We showed the clinicians our raw data. The average length of stay at DCH was eight days—20% longer than the six-day na-tional average. The average per-patient cost was $15,000—more money than we were bringing in. If we continued to spend at the same rates, we would be forced to cut clinical programs, staff, and beds. The quality of patient care and our reputation would then suffer, and we would fail to meet the needs of our community.

Confronted with this grim picture, the clinicians began to understand that if we wanted to save our programs and our pa-tients, create an environment in which staff are fulfilled, and keep our jobs, we would all have to readjust our individual missions

A look at the NumbersUsing the balanced scorecard method, Duke Children’s Hospital’s cost-per-case average fell from near;y $15,000 to $10,500 and its margin soared from an $11 million annual loss to a $4 million gain

Cost per case Net Margin


and start paying attention to costs. If the hospital didn’t show a margin, clinicians wouldn’t be able to fulfill their mission. Thus, we adopted the now-familiar mantra in health care: no margin, no mission.

It was also clear that the administrators needed to be highly involved. To bring the administrators’ and the clini-cians’ missions into alignment, we turned to a practical manage-ment approach that had worked well in numerous Fortune 500 corporations: the balanced scorecard method. Developed by Robert Kaplan and David Norton, it had improved customer service, driven organizational change, and boosted bottom-line perfor-mance in leading companies like AT&T, Intel, and 3M. Our goal was to become the health care leader in the balanced scorecard.

Our balanced scorecard aligned the hospital’s goals along four equally important quad-rants: financial health; customer satisfaction; internal business procedures; and employee satis-

faction. We explained the theory to clinicians and administrators like this: if you sacrifice too much in one quadrant to satisfy another, your organization as a whole is thrown out of balance. We could, for example, cut costs to improve the financial quadrant by firing half the staff, but that would hurt quality of service, and the customer quadrant would fall out of balance. Or we could increase productivity in the internal business quadrant by assigning more patients to a nurse, but doing so would raise the likelihood of errors—an unacceptable trade-off. Our vision, which became the new mission statement, was to pro-vide patients and families with high quality, compassionate care within an efficient organization.

Taking Our Medicine Developing and implementing a balanced scorecard is labor intensive because it is a consen-sus-driven methodology. To make ours work required nothing short of a pilot project, a top-down

reorganization, development of a customized information system, and systematic work redesign. The most difficult challenge was convincing employees that they must work in different ways.

At first, doctors and managers saw attempts to move them into teams as a shift in their power base. Nearly everyone com-plained that applying a system-atic approach to cost manage-ment was “cookbook medicine.” It took a good deal of persuasion, persistence, and reassurance to get some individuals to buy into our process. One cardiologist routinely stormed out of meet-ings when we talked about cost per case.

We knew that changing people’s minds would be hard work. But once people saw how successful the balanced scorecard approach was in one area of the hospital, we reasoned, it would be easier to sell the methodol-ogy throughout the rest of the organization. So we decided to launch a pilot project. Some phy-sicians were much more willing

to change than others. Those who understood the importance of applying systems to medicine—such as surgeons—became our first champions. So we started the balanced scorecard in one very important microcosm of the hospital—the pediatric intensive care unit, which I lead.

First, we reorganized the roles that individuals play in the ICU. We moved from mission-bound departments in which people identified only with their particular jobs (“I am a manager,” “I am a nurse,” and so on) to goal-oriented, multidisciplinary teams focused on a particular illness or disease (“We, the ICU team, con-sisting of the manager, the nurse, the physician, the pharmacist, and the radiologist, help children with heart problems”). We called these teams clinical business units—what other industries call business or operating units. The lead physician and the lead administrator shared responsibil-ity in these teams. Together, they reviewed financial information, patient and staff satisfaction


data, and information on health care trends and initiatives.

The various clinical business units worked together to organize “care coordination rounds” and brainstorm solutions to difficult patient cases. They created a patient’s care plan—a docu-ment, shared with the parents, that records everything from treatment recommendations to post-hospital care.

The teams also developed protocols we call clinical path-ways—a set of best practices for various treatments. For example, a respiratory therapist, a nurse, and a physician developed a se-ries of steps a nurse could follow to remove a patient from a respi-rator without having a therapist present. As the clinicians devel-oped new pathways, they shared their successes with the entire organization so we could all learn from their experience.

By developing and promoting protocols like these, we improved care dramatically. For example, we knew that babies recovering from heart surgery had trouble feeding and that parents needed to learn how to help them. Before we had formed the pathways, we would wait until the day of discharge to teach parents how to do so. Once people started shar-ing their expertise to develop the pathways, we learned that there was no reason to wait so long and moved the training to the day after surgery. Patients were able to go home much sooner, and their hospital costs were cut by 28%.

We developed more protocols by comparing patient data. A study of 20 heart patients, for example, revealed that treatment costs varied dramatically. One child received two days’ worth of antibiotics; another received seven days’ worth for the same condition. One child underwent ten laboratory tests; another had only three, and so on. As a group, the clinicians went over each case, comparing notes and reviewing the medical literature. They decided which tests were

unnecessary and eliminated them.

Within six months, our bal-anced scorecard approach in the ICU was garnering impressive results. We reduced the cost per case by nearly 12% and im-proved our measured patient sat-isfaction by 8%. In fact, our pilot project was working so well that we implemented it in pediatrics, then in all of the other areas of DCH, within a year. We didn’t use a cookie-cutter approach; rather, leaders in each unit customized the scorecard template for their specific areas.

Over time, even the physician who had angrily left our initial meetings began to find ways to lower his cost per case without compromising patient care. For example, instead of keeping some patients awaiting surgery in the hospital, he discharged them overnight to a nearby hotel, lowering the total cost by $1,000 per day while making the patients and their parents much more comfortable.

A Measure of Prog-ress Like most hospitals, DCH collects a tremendous amount of data. We rigorously detail things like length of stay, number of staff, cost per case, and so on. But we were culling very little useful information from the data—and some of it was false. For example, the first report card on my own performance showed that I had discharged 70 patients with an average length of stay of 29 days and an average cost per case of $70,000. Taken together, these numbers deserved a grade of F. I knew that since I’d been head of the intensive care unit, I’d cared for and transferred 1,500 patients. What was going on here? A closer look at the data revealed that they reported on only the 70 patients who had died, not my total caseload.

Clearly, we needed to approach the data in a new way and turn it into useful information. Unless we did, we wouldn’t know where our potential cost savings were.

We didn’t know, for example, that babies were needlessly kept on $2,000 ventilators at night, nor did we know how much that decision was costing the hospital. So for every clinical business unit, we created a measurement system for each of the four bal-anced scorecard quadrants.

To measure our progress, we asked our IT department to help us develop our own database and cost-accounting system. Using information pulled from national databases, we determined nation-al averages for indicators such as length of stay and complication rates. (In 1997, custom develop-ment was our only option. We’ve since installed StrategicVision software from SAS to support our extensive data management, trend analysis, and performance reporting needs.) The system logged each patient’s treatment history and costs for everything from a $15 hypodermic needle to a $5,000 heart-lung bypass opera-tion. The system also tracked the average waiting times for admis-


sion and discharge, blood culture contamination rates, and so on.

The new system helped us find ways to improve our performance in each of the four quadrants. Many of the steps we took were small, but cumulative-ly, they made a big difference. For example, our clinical pathways included a “patient care guide” for parents that explained in lay terms what they could expect to happen on a daily basis during their child’s hospital stay. We also learned from our customer sur-veys that parents felt frustrated by not knowing who their child’s attending physician or nurse was at any given time. So we simply put identification cards on the doors, naming the attending doctor and primary nurse. Our customer satisfaction scores rose sharply.

We made other changes, too. For the financial quadrant, for example, we reviewed the most significant data points, such as the number of patients admit-ted, treated, and released, and

the cost per patient. The clinical business units reviewed cases of patients whose diagnostic, surgi-cal, pharmacy, and postoperation costs had been the highest, and tried to determine why. In many cases, our research showed us new ways to do business. For example, we learned that children often stayed longer than neces-sary in our $1,700-per-day ICU, in which the nurse to patient ratio is 1 to 1 or 1 to 2. That was because the patients weren’t quite ready to move to the regular pediatric floor, where the ratio of nurses to pa-tients is 1 to 5 and the cost is $700 per day. So we created a six-bed, $1,200-per-day transitional care unit, where the nurse to patient ratio is 1 to 3. Patients could stay there until they could be moved to the general floor. Not only did our cost-per-patient numbers drop but also our patients’ families got to spend more time with their recovering children.

Overall, the results we’ve achieved at DCH by using the balanced scorecard have been

stunning. By increasing the number of clinical pathways and communicating more with parents, our customer satisfac-tion ratings jumped by 18%. Improvements to our internal business processes reduced the average length of stay from 7.9 days in 1996 to 6.1 days in fiscal year 2000, while the readmission rate fell from 7% to 3%. And employees noted a 45% increase in satisfaction with children’s ser-vices and with the way the entire administrative team performed its job.

Impressive results occurred on the financial front, too. The cost per patient dropped by nearly $5,000—a fact not lost on parents, insurers, and our own senior leaders. By FY 2000, we had gone from $11 million in losses to profits of $4 million, even though we were admitting more patients. We achieved a reduction in costs of $29 million over these four years, without staff cutbacks. Our methodology has proved so successful that the entire Duke

University Hospital now uses it as a framework. With the balanced scorecard we have drastically im-proved our margin and achieved our hospital’s mission.

Lessons Learned Yes, DCH has navigated a tremendous turnaround, but I don’t want to suggest that it’s been easy. Adopting the balanced scorecard approach presented us with huge management challeng-es on a daily basis. In the early stages, we often found it difficult to keep discussions on target. We spent nearly a month debating whether a certain goal or target belonged in the internal business process quadrant or the customer satisfaction quadrant. We learned to limit those discussions—it was too easy to get embroiled in semantics and lose our focus on patients and staff.

Survival Strategies Communicate, Communi-cate, Communicate • If your organization is in trou


ble, be honest. Make it abso lutely clear to everyone in the company that survival depends on cost management. • Listen to what employees are saying; they know their jobs better than you do. Instead of issuing orders, ask them, “What can we (as an organization) do?” • Share the pulpit. People with other expertise can help build consensus. • Change people’s roles; instead of identifying with an in dividual job (“I am a nurse”), employees should identify with goal-oriented teams (“We, the ICU team, work together to help children with heart problems”). • Offer constant feedback. Fre quent evaluations help keep the organization on track. • Publicly celebrate every em ployee and team success. • Cultivate your sense of hu mor—people will respond if you can laugh at yourself.

Chart Your Path • Start with a pilot project; suc ceeding in one department will pave the way for organization

wide change. • Set conservative goals at first; you’ll gain the confidence needed to set more aggressive targets. • Focus on a few key goals; changing everything at once leads to failure. • Turn data into information. Work with your information technology people to ensure that employees can correctly interpret measurements and statistics. • Let employees compete with their own performance, not

with some abstract competitive or statistical target.

Never Stop • When mapping your business to the balanced scorecard, don’t get sidetracked by semantics. • Be willing to experiment; learn from failures. • Constantly revise and improve practices. • Encourage strategic thinking at all levels.

We also found that people became demoralized if we com-pared their performance to an ab-

stract or too-lofty target. For that reason, we encouraged employees to use their own performance as the primary benchmark. Still, if they wanted to see how their performance compared with the hospital as a whole, or with a na-tional average, they could review those data points as well.

We learned to set our targets conservatively at first: an annual 10% reduction in the length of stay was something most of us felt comfortable reaching for, but a goal of 20% would have been too intimidating. As we became more successful, we set more ag-gressive targets.

And I learned that there’s a fine art to communicating with professionals who know more than you do about their particular subject and who are passionate about their work. You can’t just order them around. You have to get inside their heads and figure out what they’re going through.

Before 1996, I thought I was a decent communicator. But over time, I’ve had to learn to listen carefully not only to what people are telling me but also to what


I’m saying to them. Today I know that I can’t make a point in a conversation by talking in the abstract. I have to say something that personally matters to the other individual. I learned not to say things like, “Duke Children’s Hospital is losing $11 million per year.” Rather, I opened conversa-tions with a question, such as “How important do you think it is to have a therapist on this unit to work with your patients?” When they said it was important, I’d follow up with “How can we work together to manage our costs so we can preserve the therapist’s job?”

I learned that little things make a big difference when it comes to morale building. We created all kinds of communica-tion and feedback mechanisms. I started a newsletter, “Practicing Smarter,” so staff members could share best practices and keep one another apprised of their prog-ress. We honored “team members of the month,” started on-line discussion groups, and spon-sored a series of staff brown-bag lunches and open forums. These approaches may sound simple, but they really did help to change

our culture. For the first time, employees felt that their opinions mattered.

I discovered how important it is to share the pulpit during dramatic organizational changes. Not only did I respect the chief nurse executive, the managers, and the administrators as part-ners, but I knew that they could communicate more effectively with their own constituencies than I ever could.

Even in the most earnest con-versations, I’ve found that having a sense of humor is essential. For example, I developed a Letter-man-style list of the “Top Ten Reasons for Using the Balanced Scorecard,” poking fun at myself in meetings. Once, I even walked

through the hospital dressed up as the eminently poke-able Pillsbury Doughboy. Keeping things light made it easier for us all to endure the tremendously challenging course we’d set for ourselves.

I learned, too, to respect the persuasive power of meaningful information. I spent hours with members of our IT department, telling them what the staff was telling me—trying to slice and dice our enormous mountains of data into useful informa-tion. When we finally presented people with accurate tracking measures about their personal performance, they were fascinat-ed—and anxious to improve.

It’s been four years since we

set out to improve performance at Duke Children’s Hospital, and changes are still happen-ing. We talk about our scorecard constantly; we’re fine-tuning what works and discarding what doesn’t. Whenever a clinician comes up with a better pathway, we spread the word through our newsletter and on our bulletin boards.

Of all the changes that have occurred, the most telling are the ones we see in our patients. Consider the case of Ryan, a four-month-old who recently recovered from heart surgery. At 8 pm, Ryan was breathing with a ventilator—just as Alex had—and his parents kept vigil by his crib. But unlike Alex’s parents, Ryan’s parents knew exactly who was responsible for their child’s care, what his care entailed, and that he’d soon be transferred to an intermediate care unit. At 9 pm, Ryan began breathing on his own. The nurse skillfully removed the plastic tube and gently placed him on his mother’s lap. For me, seeing Ryan sleeping peacefully in his mother’s arms was a rewarding end to a long, hard, but ultimately satisfying journey.

The Author is the chief medi-cal director at Duke Children’s Hospital in Durham, North Carolina, and a professor of pediatrics and anesthesia at Duke University Medical Center. He can be reached at [email protected].

‘Reprinted with permission from Harvard Business Review’.


COVERSTORY

Funding in HealtHcare Witnessing a neW Horizon

Who would have thought one day healthcare will be officially termed as a business! But here it is for all of us to see. The healthcare industry has evolved quite a bit in the last few decades. Now, the industry is keen not just on serving patients, but serving them better by making profits and ploughing them back in the business. And for this, the industry needs huge investments. Read more to find out everything you wish to know about financing your healthcare project,

says Jayata Sharma-Sand


as we all know, India is lagging behind the world average in terms of bed

to patient ratio. We still have just 9 beds per 10,000 people, as opposed to the world average of 40 beds per 10,000. To fulfill this gap and improve their services, the Indian healthcare sector is keen on expansions. Every major group in recent times has charted huge growth plans. And, the most important aspect for realis-ing the dreams of expansions is ‘funding’.Gone are the days when trusts and the government were the only ones to start or fund hospitals. It’s the era of corporate healthcare now.

In recent years, the Indian healthcare industry has seen a lot of financing taking place. In the hospital segment, we have Sahya-dri, where IDFC has acquired a significant minority stake; Apollo Hospitals, which has seen an investment of the PE fund Apax partners of Rs. 426 crore for a 12% stake; DM Healthcare, in which Olympus recently invested Rs. 500 crore; and many more.

In fact, in eye care itself, we have seen funding pouring in for Vasan Healthcare, Centre for Sight, Eye-Q & Medfort Hospi-tals. Then we have NOVA, R.G. Stone & BEAMS in day-care/specialty segment. The growth in Indian healthcare industry attracts a huge number of PE/VC investments. In 2010 alone, about eight PE/VC deals took place with an overall investment of $277 million in healthcare service space. In contrast, 2009 witnessed about 4 deals with an overall investment of $176 mil-lion in healthcare service space with the highest investment from Goldman Sachs in Max India.

A more recent example can be of UAE’s Zuleka Hospitals Group which has applied to the IFC, a unit of the World Bank Group, for a $24m loan to fund the expansion of its Sharjah hospital and the roll-out of its first facilities in India. In part, the finance package would be used to kick-start Zulekha’s expan-

sion into India. Some $21m of the proposed loan would be used to build a 189-bed hospital in Nagpur.

Not just infusions, there have been successful exists as well. A case in point is Actis exiting Sterling Hospitals. It sold its 80% stake for Rs. 430 crore in December 2011. The above facts confirm that Indian healthcare

is witnessing a new horizon, with an increasing number of financial firms ready to fund it. So, what is it that makes Indian healthcare an attractive proposi-tion for investors? Let’s find out.

a lucrative optionUntil a few years ago, the health-care industry had to struggle to bring in funds; however the scenario has changed quite a bit. The Indian healthcare industry

is now a growth story and a lucrative option for investors. The rapid growth is paced at 13-15% per year and is expected to become an industry of US$ 280 billion by the year 2020. Given its size (in terms of population) India has huge gap between the demand and supply in qual-ity healthcare delivery system. This, coupled with the growth in

insurance sector, has made the healthcare industry more viable than before. “Looking at the very healthy CAGRs in the industry and huge scope available for new players and new avenues, financial investors are show-ing interest in investing in the industry,” says T Ramoji, Chief Financial Officer, Manipal Health Enterprises Pvt. Ltd.

The industry is also showing visible signs of transformation

through international standardi-sations, cutting-edge technology, infrastructure changes, service-culture changes, innovations, expansions, clinical bench marks, wonder drugs, contemporary facilities, international patients traveling to India for Medical Value, and so on.”India has a demand for $60 billion funding, out of which, 50% (almost $30 billion) is in healthcare itself. This makes India a hugely attractive market, especially for foreign investors,” says Sujoy Shetty, Director, Pharma Life Sciences, PwC.

With proper governmental sup-port and policies, the healthcare industry has the future potential to check-mate the past growth of the IT Industry in India in the last 2 decades.Dr. GSK Velu, Managing Director, Trivitron Group, agrees to this, “Indian private healthcare offers the most attractive growth rate of over 15 to 20% or even more in several market segments; this is the highest growth rate in the world. In the western world, the growth in healthcare market has flattened out and hence interna-tional funds are looking at the Indian healthcare market.”

According to WHO reports, the life expectancy of an average Indian has grown from 57 in the year 1990 to 61 in year 2000 and then to 64 in the year 2010. This positive tendency also neces-sitates the need and growth for different sub specialties in healthcare services during the average life-span of an Indian. Almost 1.2 billion population, and less than 7% of them enjoy insurance coverage as of now. As the insurance coverage of the population goes up, which is quite likely and an immediate necessity, the healthcare industry growth rate would also record quantum jumps.

“Well-established healthcare chains are able to demonstrate visible success in their ven-tures through expansions and acquisitions. Respected indus-try/business houses who have

experts predict that access to Pe would help the healthcare sector

grow at 15 % year-on-year


established their reputation and brand in other industry sectors are also eying and trying their hands in healthcare. This is an encouraging sign of the future potential of healthcare industry,” says R Basil, who has worked on financial aspects extensively with Manipal and Apollo groups.

Yet another area of growth and potential investment is medical tourism. Tourists come to India to attain quality healthcare at an inexpensive cost. So far, 13 hospi-tals in India have been accredited by the Joint Commission Interna-tional for this purpose. “Reduced cost, easy communication, since most Indians speak English and international standards, has made India the prime destina-tion for healthcare. According to recent studies conducted,

around 4,50,000 foreigners have come to India

for healthcare last year.

The Indian healthcare industry is working hard to meet the grow-ing demand, by striving to match the international medical health-

care system. And this opens up huge opportunities for investors to put in money and make prof-its,” says Dr. Dharminder Nagar, Managing Director, PARAS Healthcare Pvt. Ltd. Opportunities for in-vestors Due to the growing demand and the entry of reputed private players, and the enormous invest-ment needs, there is growing interest among foreign players and non resident Indians to enter the Indian healthcare market. In fact, in the hospitals and medical devices segment alone, there are

reportedly at least 20 interna-tional players competing to have a share. These players have entered mainly via joint ven-

tures with Indian companies or through technology and training collaborations.

Yes, investors are now seeing the large number of opportuni-ties in the Indian healthcare in-dustry. There have been various reports and findings to confirm their beliefs. According to a re-port by PriceWaterhouseCoopers, an estimated 189 million people in the country will be more than 60 years of age by 2025, needing higher healthcare spends. In fact, a combined study by an industry body and Ernst & Young sug-gests that India will need as many as 1.75 million additional

beds by the end of 2025. Further, an investment of US$ 86 billion is required to achieve 1 doctor, 2 beds and 2.3 nurses per 1,000 population by 2025! A McKinsey-CII report also estimates the number of potential insurable lives at 315 million with a poten-tial of US$ 7.7 billion in health insurance premium by 2015.

These figures further establish the fact that Indian healthcare is overflowing with opportunities waiting to be explored. Now, who would not want to have a share in such a profitable pie! The kind of prospects the industry is offering are just too good to ignore for investors.

The rural healthcare sector is also witnessing considerable growth, with the number of primary health centers in the country growing by 84 per cent.

Due to the growing avenues, even the allied services of healthcare are booming. For

100 % Fdi is permitted for health and medical services under the

automatic route


instance, the increasing hospital trade proves to be an attractive business opportunity for other sectors such as food retail. How? Well, some large hospitals get almost 1,000-1,500 outpatients per day and visitors for inpa-tients are potential customers for food chains. In fact, you might be surprised to know that food retail has about 15 per cent of its business coming from hospitals alone.

Technology is also playing its part well. With 3G, now it is pos-sible to provide treatment from remote locations and diagnosis of patients through mobile phones is also a reality now. In fact, with the number of cell phone users currently at 600 million and rapidly increasing by 20 million every month, some telecom op-erators and value-added service developers such as Nokia and BlackBerry are considering usage of mobile phones for diagnostic and treatment support, remote disease monitoring, health aware-ness and communication.

As per the report, ‘Healthcare Information Technology Market in India’ released by Frost & Sul-livan, electronic medical record (EMR) services have a high growth potential at an estimated

CAGR of 13.5 per cent from 2009 to 2016.

In fact, despite the meltdown in the last couple of years, the healthcare industry kept grow-ing. Huge new projects were rolled out; like the cardiologist and healthcare entrepreneur Dr Naresh Trehan’s Rs.1,000-crore Medanta Medicity in Gurgaon, the 1,500-bed (‘Asia’s largest hospital’) Mumbai’s SevenHills, Apollo’s 200-acre wellness hub in Lavasa or the technology paradise called Kokila Dhirubhai Ambani Hospital in Mumbai.

What’s more? More projects are slated to start in the next couple of years totalling an investment of Rs.3,415 crore!

This shows that whatever happens, investors can be rest assured of their money invested in the healthcare sector.

investment players in indian healthcareYes, there are opportunities; yes there are players willing to invest; and yes, the existing players are ready to invest more. But, who are these players? According to

an analysis by Feedback Ven-tures, funds such as ICICI Ven-tures, IFC, Ashmore and Apax Partners have invested around $ 450 million in the first six months of 2008-09 compared to $ 125 million in the same period a year ago, pointing to a growing trend. In fact, Feedback Ventures ex-pects PE funds to invest at least $ 1 billion in the healthcare sector in the next five years. According to a Venture Intelligence study, 12 per cent of the $ 77 million venture capital investments in the July-September 2009 quarter were in the healthcare sector. And since then, the amount of investments has only grown.

The government is also not lagging behind and has plans to invest around $ 1 billion-$ 2 billion for making India one of the top five global pharmaceuti-cal innovation hubs by 2020. The Andhra Pradesh government has successfully implemented the US$ 59.68 million Health Management Project funded by the Department for International Development (DFID) of the UK. Other states as well are consider-ing implementing similar models.

Recently talks were also on regarding the leading interna-tional clinic chain Asklepios International entering in the Indian healthcare sector. As part of the 2.3 billion euro group’s strategy to enter the

Source: Healthcare Services in India: 2012, the path ahead. ASSOCHAM-YES Bank, 2009; McKinsey 2007


sub-continent, Asklepios was mulling the launch of a US$ 100 to US$ 200 million fund for this purpose. Another example is the Gulf-based healthcare group DM Healthcare, which is investing over $ 200 million for setting up hospitals and eye-care centers across India. Healthcare major, Fortis Hospitals has already started applying its funds of $ 55 million to expand its facilities pan-India.

Having established the fact that there are enormous growth opportunities in Indian health-care, and almost the same amount of players willing to invest, let’s move ahead and find out how healthcare organisations, planning expansions and mulling to take funds, can go about decid-ing which funding option can work best for them.

deciding what’s best for youBefore deciding which option will prove best for you, let’s get to know which are the differ-ent ways in which a healthcare project can be funded (refer flow chart).

After knowing the various ways to fund your project, you should then thoroughly evaluate the current state of affairs, size of the fund requirement, future plans etc of your company. This is vital, as after one assesses his/her project; they might find one or the other options better. For some cases, debt fund will look attractive whereas some other cases will justify equity fund.

Some more parameters to decide a suitable funding option are current financial strength and credit position (credit rating, debt equity ratio etc.); available source of funds and macroeconomics (rate of interest at domestic market & international market, banking trends, credit outlook, etc.); selection of funding source based on the analysis of cost of borrowings, equity valuation, possibilities of leasing of assets - equipment/land etc.

“Use of right financial profes-

sionals and institutions – mutual personal comfort and under-standing of the complex nature healthcare service industry is an important requirement,” opines Basil. Even though there are a lot of options available, the industry is biased towards generating funds through debt. Dr. K Ravindra-nath, Chairman & Managing Di-rector, Global Hospitals, who has taken funding for his expansions, says, “Indian banks can prove to be the best place to get funding from, provided they make their policy flexible for our sector. It takes 5-6 years for a hospital to break-even, but banks only provide one-year monetorium and 7-years repayment option for us. Whereas, ports have a 9-year repayment facility. Also, banks right now dictate the interest rates and keep them as high as 13-14%, which is most times not affordable in a healthcare set-up.

This is one main reason why our industry looks at venture capital-ists and international funding options.” He further adds that the healthcare industry needs at least a 3-year monetorium and 8-years repayment facility.

Funding through debts can be a good option because it offers benefit of taxation, better control and management on the organisation without diluting the equity, flexibility in loan repay-ment, and creating valuation without dilution. Paras Hospitals, which used debt to start off their business vouch for the safety this option has. “Debt is the most effective instrument along with internal to full growth of an early stage growth organisa-tion. During our 1st expansion phase, we also looked at alternate source of funding through VC/PE funding but soon realised that with our size and projected growth put severe limitations

on our valuations and therefore those were a very expensive source of funding and would put undue pressures on our operating business. We therefore decided to go with a mix of debt and raised equity through internal accruals,” says Dr. Nagar, who has used debt for his two projects in Bihar; a 350-bed hospital at Patna and a 100-bed facility at Darbhanga.

Along with debt, there is an increasing amount of interest for private equity too. Dr. Nagar adds that going ahead, they are surely looking at other forms of funding. “We do intend to explore all the funding options including private equity for our second round of expansion, where we will look to take our bed strength to double of the planned 1,000 beds in the first phase.”The industry believes that such investments definitely serve to increase the level of financial discipline and controls as well

during our 1st project, we took very little debt to keep project cost lower, making our operating business really

profitable in early stages with low interest burdenDr. Dharminder Nagar,

Managing Director, PARAS Healthcare Pvt. Ltd.


as the operating efficiency in the sector, in addition to supplement-ing management bandwidth, a key constraint that is seen across the Indian healthcare space. Dr. Mahipal Sachdev, Chairman & Medical Director, Centre for Sight, New Delhi, who recently got PE infusion for expansion of his chain, supports this view completely, “Majority of the private equity funds have a good thought process. Most PE firms give a good valuation and provide long-term debts for hospital projects at a lower cost. This is a vital point, as we do not get much support from the Indian government. For instance, healthcare in India has not been given the infrastructure status that it deserves, especially eye care. Budget distributions have been based on number of beds per hospital, which is irrelevant in an eye care set-up where hos-pital beds do not translate into the quantity and quality of care being provided! In such scenario, it’s a natural course to look at external funding options.”Overall, the healthcare industry is open to all kinds of funding, the experts simply advice to be careful while selecting an option. “Look at raising PE money only when you have very aggressive plans to achieve economies of scale,” advised Sandeep Naik, Apax Partners, in a recent health-

care investment conference.While all options might seem

lucrative, they all have their pros and cons. For instance, bank loans (debts) might seem better as banks act as external inves-tors and move out of your project after they get their money back. However, they do ask for a col-lateral property, which a private equity firm does not. Because the PE Company usually looks at co-ownership and co-owners can’t sell their own property to recover their investment! Now, while you might be happy in not having to give a collateral property, you must be equally sure to share ownership with someone else.

Additionally, if your project plans an IPO, it can be achieved only after you have made your mark in the market, if you have goodwill in the industry. Share money comes with zero interest, which is good, but you must make sure that you release shares time to time and only when required; to ensure continuous flow of funds.

Also, experts advise that if you are sure to make money on an immediate basis, then go for debt. But if your business model will generate money over 4-5 years, then go for a PE/VC, as there will be no pressure of paying back the money immedi-

ately. All this has to be based on cash projections of your project. While banks are more interested in the recovery of their money, PE firms are more interested in performance. However, ultimate-ly, all funders will ask you for security; so you need to have a project plan with a solid base. In the end, weigh all these and then take a final call.

What investors look forAfter you decide which funding option works best for you, comes the difficult part. Convincing the investors that your project is worth investing in. You’ve got to be prepared with the information your lender needs to make a deci-sion in your favor. “We usually see the market size, scalability of the business model, market opportunities and the market value before investing. Out of these, the market size and the scalability are most impor-tant aspects, as they both are key points to derive where the project will head,” says Sandeep Sinha, Co-founder and Managing Part-ner of Lumis Partners, who has invested in quite a few healthcare projects.

Experts say that lenders typi-cally evaluate four key factors: previous business experience; ability to repay the loan; col-lateral and personal guarantee; and character. “Prepare your documents thoroughly — they include your business plan, bal-ance sheet, cash-flow statement, income statement, personal financial statements, personal and business tax returns, and a description of the terms and loan amount, including how it will be used, secured and repaid,” advices Dr. Nagar.Investors also evaluate whether the identified business op-portunity has the potential of ‘sustainable profitable growth’ in the future. The other important criteria are consistent success-ful track record and ability of the leadership team to deliver on strategic business plan in


at least next 3-5 years horizon. “They put lot of emphasis on effectively conducting the process of financial, legal, commercial and human due-diligence for which they use reputed players. They also validate the market opportunity either in-house or through some outsourced agency as it is critical for success. The key is to analyse the owner com-mitment post transaction, if he is required for successful transition or for delivering the strategic business plan,” informs Gaurav Malhotra, Managing Director & CEO at Patni Healthcare, who has plans to set up a chain of daycare surgery centers all over the country. Their total project outlay is of Rs. 500 crore, out of

which Rs. 300 crore is via equity and Rs. 200 crore is through debt financing. “In the initial stages of a start-up, it is prudent to go in for own investments rather than PE/VC investments, provided one has the required financial capa-bility. In fact, we have followed the same principle,” he adds.

Overall, investors look for a strong target market (size, growth and industry structure), clear well-thought business model with clarity of focus to realise a significant share in the target market, strong teams and professional management with a track record of success and hygiene, and proven or likely exit opportunities after 4-7 years with high probability of obtaining their desired returns (typically between 20-35% IRR).Abhishek Menon, Corporate Relationship Manager, Axis Bank Ltd., agrees to this, “Our top priority is clarity on project

cash flows with a strong legal framework in tapping those cash flows. Next vital points are the capital structure of the project (debt equity structure), location of project and total project cost.”Another key factor which PE firms look at when investing in a healthcare project is profitability. “Normally, the gestation period for a hospital is 5-7 years and it’s essential for them to exit before their fund closure. Another criti-cal aspect is the scalability. For example, whether the hospital is a standalone or has regional presence. How easily can the number of beds be increased or a regional chain can be converted in to a national chain,” says Mr. Kirti Shah, Director, Corporate

Finance Advisory Services, BDO.Size of the project also plays a vital role. Usually, investors are not interested in low-wcost proj-ects. Elaborates Vishal Gandhi, Senior VP & Head – Life Sciences Knowledge Banking, YES Bank Ltd., “Minimum size of a project that can generate our interest should be around Rs. 20 crore. In fact, if you are planning a hos-

pital of even 100 beds, then the project cost automatically shoots up to Rs. 40-50 crore. Also, the best scenario is if the funding is in 50:50 ratio, equally distributed

among equity and debt. We also prefer projects where 50% funds come from the promoters.”

So, are hospitals the only projects that interest investors? “We are interested in all kinds of projects, be it value chains, nurs-ing colleges or medicites. In fact, we are quite bullish on medical education and projects like day care centres,” says Gandhi, whose Yes Bank is one of the funders of Dr. Naresh Trehan’s Medicity.

Sinha of Lumis adds, “We usually look at funding asset-light projects, those which are service-oriented and have better opportunities for larger scalabil-ity in the market.”

Where do hospitals fall shortEven after acquiring funds, many healthcare projects fail to take off. In many cases, the projects do not even get past the fund-ing process. What can possibly lead to a negative response from investors? Especially when the industry has huge potential and great scalability, then why is it that some players lag behind in seizing the opportunity? Let’s try

and find out. Industry experts say that the

most important challenge is the high capital cost involved in set-ting up hospitals, the long gesta-tion period of such investments, and the relatively low returns on investment. This may not be an attractive combination for foreign investors, though 100% FDI is permitted in this sector. Also, the new hospital projects in metro cities are very expensive business proposals involving huge upfront capital-intensive in-vestments and very high running costs. The industry also feels that somewhere the government is to be blamed.

“Though healthcare is always talked about as a top priority for the government, none of the policies really favor them. For I.T and export sector, the govern-ment gives substantial incentives including land at concessional prices. However, if one wants to set up a new hospital, the land has to be bought at market prices,” rues Basil.

In fact, the way, the Economies of Scale work in the hospital sector, the smaller options may

an investment of uS$ 86 billion

is required to achieve 1 doctor, 2 beds and 2.3

nurses per 1,000 population by

2025

Projects which are capital inten-sive & have long break-even time are less attrac-tive to investors

Sandeep Sinha, Co-founder and Managing Partner of Lumis Partners


not be sustainable in the long run. The availability of land with good access to the general public is also a challenge and market rate of available land in such localities is beyond the workable business model. These were the external challenges; let’s also get to know which internal weaknesses hamper the funding process of healthcare set-ups.

“Most of the owners are ob-sessed with their ‘creation’ rather than taking an objective view of how it will create long-term value for the investor. The major challenge is in the estimation of the market opportunity and also the growth projections, which are usually significantly higher than the past track record. The strate-gic business plan is a major gap area, as most of the time they fail to convince the investors on successful delivery. Another gap which comes strongly during hu-man due-diligence is the quality of the talent. The major concern is on corporate governance issues in owner-driven organisations,” opines Malhotra of Patni.

Additionally, many hospitals also fall short on the manage-ment team parameter. Most have managed to achieve a lot while still running as mom and pop organisations, driven primarily by the owner/s. Post investment, they need to make the transition to professionally-run companies that operate in consonance with investor goals. Most hospitals fail to demonstrate this capability. Owners usually recognise this, but management talent is scarce therefore expensive, and they’re reluctant to make the investment while the funding is uncertain.

“We come across people who do not have a robust plan, are too optimistic, too bullish, and hardly keep track of the competition. This makes it difficult for us to give them a positive response,” avers Gandhi from YES Bank.

Occupancy estimation plays a major role too. “Assuming too much occupancy in the initial years, which mostly may not happen, and wrong assumptions

on fixed and variable costs in initial years also indicates typical lack of good understanding of the business. This usually does not go well with the investors,” says Menon of Axis.

Shah from BDO agrees to this, when he says, “Occupancy is a very critical criteria for health-care set-ups while presenting their case to the funding com-panies. They need to ascertain whether the hospital is in the right catchment area. Also, they should highlight their specialties. E.g. whether the hospital has special focus on particular illness (e.g. cancer, eye treatment, renal, neuro, etc.). As availability of trained doctors is an issue, they should also have a plan as to how to retain them with suitable pay structure and by adopting new technologies. If the hospital is affiliated to any brand (domestic/international), it helps in garner-ing revenues.”

Another issue is that most

hospitals end up branding them-selves as Me Too – i.e., no com-petitive differentiation. Poorly thought out focus models (e.g., focus on every clinical specialty or value medical travel or medi-cal tourism in Tier 2 locations), or no real team (e.g., doctor + part time friends), and premature fund raising – sometimes it is better to raise from family and friends and prove a model to some scale that works before going for signifi-cant fund-raising; also dampens the spirit of investors.

The above statement can be termed true as it’s better to take a reality check than falling flat on the face. “There have been examples of few hospitals that raised funds but could not meet the demands of the investors. This is due to the failure in delivering the promises or over expectations from the investors. While raising the funds, it is very essential to have realistic projec-tions and a sound term sheet,”

avers Manipal’s T Ramoji.ROI is also an important

aspect here. “Projects whose ROI is not attractive, are capital intensive, and take long time to break-even are less attractive to investors. All these things mean that the project will have low margins, somewhere between 9-12%, which investors avoid. Also, as projects like hospitals have a lot of operational chal-lenges and are complex in nature of functioning, usually investors take their steps slowly,” informs Sinha from Lumis.

While the industry is juggling with numerous issues, isn’t it the responsibility of the government also to step in and offer a helping hand? Of course it is! “There is a big role the Government can play in overcoming some of these challenges. First, the long pend-ing request from this industry for considering healthcare under priority sector status needs to be acceded to. This will help us

Most owners are obsessed with their ‘creation’ rather than taking an

objective view of how it will create long-term value for the

investorGaurav Malhotra,

Managing Director & CEO at Patni Healthcare


access funds with low interest rates, similar to the infrastruc-ture sector. Second, the Govern-ment of Karnataka had setup a venture fund - KITVEN for the IT sector. Similarly, if the Government sets up a VC fund exclusively for healthcare sec-tor, it would help both the fund seekers and the general public,” says Basil. Further adding, “Last one, as part of the Government’s urban planning exercise, if they identify lands and exclusively demarcate them for healthcare facilities in all developing areas, it would help future needs. It could also contain the growing healthcare cost.”

There might be some teething problems with the healthcare industry, and, along with the government and the healthcare industry itself, even the inves-tors can play a part in combat-

ing these problems. How? Let’s see. The industry feels that as most of the investors have wide experience and knowledge of best practices of other industries and sectors, this knowledge can be leveraged to bring in many in-novations in healthcare manage-ment.

Also, as there are many unethical trends and practices in the hospital business, inves-tors should take special care to discourage such practices by avoiding undue pressure on the management for short-term financial performance. If investors keep their money for at least 5 years’ time, it could help hospitals to stay focused on the quality of service and financial performance. It is important to understand that there are de-finitive gestation periods for any initiative in healthcare, even if it

is not a new venture.“Lastly, first-time investors

into healthcare space must take efforts to learn the nuances of the industry and that under-standing will be of great help to offer true value to the hospitals,” opines Basil.

Future trendsThe industry has witnessed a lot of changes in the funding pat-terns in the past few years. Many options are still in the ‘explora-tion’ phase; some have nestled down well, and some are yet to find their feet. “The future shows an increasing trend in healthcare will be angel investors investing in ventures started by successful professionals. This will be a new era of successful collaboration,” says Malhotra of Patni.

Yet another trend is that the medical technology manufactur-

ers are also coming up with their own funding firms.

“Additionally, investors have been showing keen interest in projects that are an amalgama-tion of allopathy and ayurveda or complimentary therapies. And, it’s a welcome change to see the increasing number of PE players entering India. The healthcare in-dustry is now not just dependent on the banks!” says Gandhi from YES Bank.

Experts also feel that as the hospitals are backed by assets, they can also leverage secured funding from banks based on assets as against PE funding. So they need not dilute their equity.

“Consolidation is another trend visible in this sector. Many re-gional as well as national brands are acquiring or giving affiliation to stand-alone hospitals to widen their presence,” says Shah.

Nobody knows what the future holds. But we do know what is happening right now, and how can we work better to make the most out of it. As time goes by, the healthcare industry will surely work on its weaknesses and play on its strengths to become one of the most viable business opportunities for inves-tors worldwide.

the Karnataka government had set-up a venture fund - KitVen for the it sector. Similarly, if the government sets up a Vc fund for healthcare, it

can be of great helpR Basil,

Industry expert and has worked on financial aspects extensively with Manipal and Apollo groups

The Do’sR Make the projections (promises to investors) reasonable. Once you miss the numbers, credibility will be lost and it will be difficult to raise the funds againR De-risk the operations in terms of dependability and sustain abilityR Have a sound governance systemR Consider all the tangible and intangible factors valued ap propriately before applying for the fundsR Be sure that you can let go of your rights; as a third party entering will mean your decision power will reduceR Explain how the proposal relates to the financial projectionsR Make sure that your loan proposal tells the ‘story’ of your businessR Great vision for the Institution and the sincerity, passion and commitment of the leader must be evidentR Plan an exit strategy for the investors R Make it transparent if and from where any other money is coming from

The Don’tsQ Do not entertain non-serious investors. You may unnecessarily leak your business intelligenceQ Do not commit for the projects and run around for the moneyQ Do not look for funds till appropriately leveraging the balance sheet. Else, you may forgo good valuationQ Don’t keep relevant information from the lenderQ Don’t assume that your lender has the same level of optimism as you do about your business Q Don’t restrict yourself to one financial institution with your proposal, make sure to have at least 2-3 institutions review your proposalQ Avoid presenting an unrealistic budget planQ Do not present a huge list of things you want to do – without a clear implementation planQ Do not make vague or conflicting statements about what you want to do

The Dos and Don’tsIndustry experts point out the Dos and Don’ts that hospitals/healthcare set-ups must be careful of, while exploring funding options:


Leaders speak

The year 2011 was the year of investment opportuni-ties for the healthcare

sector, including pharma and biotech companies. Rapidly changing policies have provided impetus to the healthcare compa-nies and changed the way they have been doing business, which led to the possibility of the entire healthcare system undergoing

transformation. The industry re-corded growth in VC investments as firms opened up their invest-ment portfolio to accommodate companies with niche technolo-gies to address unmet medical needs. Q4 2011 recorded a total of 238 PE/VC deals, indicating an increase of nearly 21%, as compared to that in Q3 2011. Out of the 805 deals recorded in 2011,

105 were PE deals and 700 were VC deals. PE/VC investments re-corded a rise in total investments in Q4 2011 with $6.2 billion, as compared to $4.1 billion in Q3 2011. All these investments mean the industry is on the growth path and the future will surely be bright. This also means that the demand-supply gap in the industry might finally be on its

way to reduce a bit. We, at GlobalData, expect PE/

VC investments to remain buoy-ant in the near future as the mar-ket provides growth opportuni-ties. These firms invest with the intention to exit profitably from their investments. The biggest exit opportunities for PE/VCs are public offerings or acquisitions by bigger companies.

Healthcare & Pharma: New destinations for PE/VC firms The healthcare industry in recent times have recorded growth in VC investments as firms opened up their investment portfolio to accommodate companies with niche technologies to address unmet medical needs, says Manisha Das


With some of the major drugs expecting to lose their patents soon, pharma majors have begun to focus on the takeover of small biotech companies with innova-tive technologies and unique compounds that are likely to develop into potent remedies in the treatment of a number of diseases. According to our research, pharma majors have been on the lookout for com-panies with expertise in niche segments and new categories. This will enable them to chart out long-term growth plans and help the pharmaceutical industry meet the unmet needs of patients and practitioners.

Market scenarioSmaller firms and start-ups constituted the largest number of firms that were trying to enter the market. Such firms have to rely on innovation and the development of new technologies to ensure their success. PE/VC firms invest in smaller firms and start-ups to aid them in R&D and product development. In return, the PE/VC firms obtain a stake in the company. Usually, this is followed by the appointment of a

representative from the PE/VC to the board of the smaller firm.

In 2011, VC firms made substantial investments in healthcare, pharma and biotech companies, especially in start-up firms; with such investments accounting for 46% of the 700

deals recorded. Investments in the expansion stage firms ac-counted for 39% of the deals, fol-lowed by 8% of the investment in later stage firms, recorded in the year. VC funding was adopted by investors and healthcare & pharma companies to give quick

access to new and advanced technologies and avoid barriers to entry, expand their portfolio of products and improve their asset valuations. In fact, in terms of the value of investments, growth capital/expansion took the lead, attracting nearly 43% of the dollar value, start-up stage firms followed with 40% of the total value.

A few examples of start-ups receiving funding: Sympho-gen A/S, a biopharmaceutical company engaged in develop-ment of therapeutic polyclonal antibodies (pAb), a new class of biopharmaceuticals to treat serious human diseases, received nearly $133m from Novo A/S, Es-sex Woodlands Health Ventures, and new investor Danish Pension Fund PKA; TESARO, Inc., an oncology-focused biopharmaceu-tical company received $101m in Series B financing round from Kleiner Perkins Caufield & Byers (KPCB), apart from founding investor New Enterprise Associ-ates (NEA) and new investors including InterWest Partners, LLC, T. Rowe Price Group, Inc., Pappas Ventures, Oracle Partners, L.P., Deerfield Manage-ment and Leerink Swann LLC; Rempex Pharmaceuticals, Inc. a biopharmaceutical company engaged in the development of new therapies to combat the growing menace of antibiotic resistance, received $76m from Frazier Healthcare Ventures, Vivo Ventures, LLC , SV Life Sciences Advisers LLP, OrbiMed Advisors, LLC and Adams Street Partners, LLC.

Oncology therapeu-tics sees growthThe global oncology therapeutics market grew rapidly last year, given the pace of growth of aging population and the intro-duction of innovative therapies targeting specific molecules. In fact, the number of cancer prod-ucts that will lose patent rights is going to rise significantly in the next 10 years, creating a sub-stantial opportunity for generic

VC Deals by Stage of Financing, 2011Number of deals (%)

Seed 2%Later 8% Later Stage 15%

Growth Capital/ Expansion 39%

Growth Capital/ Expansion 43%

Start up 46%

deal Value (%)

Seed 7% Start up 40%

Stage of Financing Number of Deals

Deal Value (US$ m)

Start-up 326 2,645.0

Growth Capital/Ex-pansion

272 2,839.0

Later 54 990.6

Seed 48 117.9

Note: Deals include all announced healthcare & pharmaceuticals deals, deal values included wherever disclosed ,Source: GlobalData - Medical eTrack Deals Database


manufacturers. In the recent past, new products have resulted in better treatment outcomes for millions of patients suffering from cancer. Recent develop-ments in targeted agents, oral delivery and preventive cancer vaccines have helped overcome obstacles and provided better treatment options.

Huge amounts have been invested by pharmaceutical companies around the world in innovation to develop products such as antineoplastic monoclo-nal antibody therapies, anti-metabolites, colony-stimulating factors and aromatase inhibitors for cancer. These innovations have helped patients by increas-ing their survival rates for several types of cancer, improved quality of life, and delayed disease progression. Attracted by the increasing growth in this sector, PE/VC firms have focused their investments on companies that have been developing inno-vative and challenging technolo-gies to meet the unmet needs of customers.

Oncology therapeutics market recorded a total of 163 deals val-ued at $2.2 billion in 2011 with a 23% share in the number of PE/VC investments in the pharma sector. PE/VC firms focused more on start-up and growth capital investments in this sector, owing to the innovative technologies developed by the companies.

A few examples: Agios Pharmaceuticals, Inc., a bio-pharmaceutical company that carries out the discovery and development of therapeutics in the field of cancer metabolism, raised $78m in Series C financ-ing round. The financing was provided by Agios’s strategic partner Celgene, along with sev-eral new, undisclosed investors, including three leading, large public investment funds, and existing investors ARCH Venture Partners, LP, Flagship Ventures and Third Rock Ventures, LLC. Merrimack Pharmaceuticals, Inc. (Merrimack) is a biopharmaceuti-cal company that undertakes the

discovery, design and develop-ment of innovative therapies and life-enhancing medicines.

To augment its efforts in developing medicines for the treatment of autoimmune disease and cancer, the company secured $77m in Series G round of financ-ing. The financing was provided by new and existing investors including Credit Suisse First Boston Next Fund, Inc., Crocker Ventures Ltd., funds advised by Fred Alger Management, Inc., Noonday Asset Management, L.P., Jennison Associates, LLC, TPG-Axon Capital Management,

LP and WT Investment Advisors Fund LP. Cleave Biosciences, a biopharmaceutical company, secured $42m in Series A financ-ing. The financing was provided by U.S. Venture Partners, 5AM Ventures, Clarus Ventures, LLC, Orbimed Advisors, LLC and As-tellas Venture Management LLC.

CNS drugs encompass a vast range of therapeutic agents including anti-depressants, anti-epileptics, anxiolytics, anti-histamines and anti-psychotics. “Even though the CNS market reached a stage of maturity, there is still high scale R&D underway,

especially in the field of drug delivery. This has led PE/VC firms to increase their focus on the market, which led to a total of 121 deals worth $1.3 billion in 2011,”observed our Business Head, Life Sciences Practice, Dr. MS Azimi. Some of the high value PE/VC deals in this market in 2011 include, Abide Thera-peutics, Inc., a pharmaceutical company developing a serine hy-drolase inhibitor, raised $2.2m in series A venture financing round; Axonia Medical, Inc., a company engaged in developing technol-ogy aimed at repairing severed or damaged peripheral nerves, raised $1m of its planned $5m seed financing round; Extinction Pharmaceuticals, Inc., a company engaged in developing drugs for the treatment of anxiety disor-ders and other afflictions, raised $0.05m in financing.

North America is one of the biggest markets for PE/VC investment in pharmaceuticals industry in 2011. The region recorded 602 deals worth $12.2 billion, accounting for almost 75% of the total number of deals in 2011. The US is the most attractive region for PE/VC deals in the global pharma industry

Quarter Number Of PE Deals

Total Value Of PE Deals (US$ m)

Number Of VC Deals

Total Value Of VC Deals (US$ m)

Q1 2011 29 4,173.6 157 1,449.0

Q2 2011 27 703.9 158 1,708.2

Q3 2011 27 2,447.9 169 1,627.1

Q4 2011 22 4,425.5 216 1,808.2

PE/VC Deals Summary, 2011-2011

Note: Deals include all announced healthcare & pharmaceuticals deals, deal values included wherever disclosedSource: GlobalData - Medical eTrack Deals Database


due to a higher concentration of companies with major products and technologies in the develop-ment stage. A robust research program, considerable public and private funding opportuni-ties, protection of intellectual property, ample infrastructure and public entrepreneurship pro-grams have created the perfect atmosphere for innovation in the United States.

“In terms of the number of deals, North America was fol-lowed by Europe with 19% of the deals. In terms of deal value, North America recorded invest-ments worth $12.2 billion, fol-lowed by Europe with $5 billion in 2011,”found out Dr. Azimi.

Some of the deals announced in North America include: The Carlyle Group and Hellman & Friedman LLC, acquisition of Pharmaceutical Product Develop-ment, Inc. (PPD), a contract research organization, for a cash consideration of $3,900m or $33.25 per share. This transac-tion enables PPD to expand and enhance its platform, and broad spectrum of therapeutic expertise to develop new drugs at lower costs; TESARO, Inc., an oncology-focused biopharmaceu-tical company, secured $101m in series B financing round. The financing was led by Kleiner Per-kins Caufield & Byers (KPCB), with participation from founding investor New Enterprise Associ-ates (NEA) and new investors including, InterWest Partners, LLC, T. Rowe Price Group, Inc., Pappas Ventures, Oracle Partners, L.P., Deerfield Man-agement and Leerink Swann LLC; Intrexon Corporation, a synthetic biology company, raised $100m in its series E preferred investment round in many tranches to provide work-ing capital for its commercial divisions and for expansion of its UltraVector platform. The financing was led by new inves-tors, in participation with exist-ing investors, including Randal J Kirk, Intrexon’s chairman and CEO, and Third Security, LLC.

Firms such as New Enterprise Associates, Polaris Venture Partners, Orbimed Advisors LLC, Third Rock Partners and Arch Venture Partners were ranked at the top in investments in the pharma sector. New Enterprise Associates and Polaris Ven-ture Partners took the lead by

investing in a total of 15 deals each valued at nearly $400m and $266m respectively in 2011. These firms invested primarily in new and developing companies based in North America.

Companies such as Intrexon Corporation, IntegenX, Inc. and Lux Biosciences, Inc., all based in North America (United States), managed to attract several rounds of investment in 2011. Intrexon Corporation raised $185m through four rounds of funding and IntegenX raised $80.6m through three rounds of funding.

Asia Pacific recorded a total of 38 deals worth $916 million

during the period. Some of the deals which took place in Asia Pacific include: Hua Medicine Ltd., a China-based biotechnol-ogy company, received financing commitment for $50m to advance its internal development pro-grams, and for the acquisition, development and commercializa-

tion of additional programs. The financing will be provided by a group of US and Chinese healthcare investors, including ARCH Venture Partners, LP, Fidelity Biosciences, Fidelity Growth Partners Asia (formerly Fidelity Asia Ventures), Venrock Associates, Sino-Alliance Inter-national Ltd and WuXi PharmaT-ech Corporate Venture: SymBio Pharmaceuticals Limited, a biopharmaceutical company engaged in identifying and devel-opment of drug candidate for the treatment of drugs to target the underserved medical needs in the areas of autoimmune, oncology and hematology diseases secured

JPY2,000m ($24.46m) in series E financing round.

The financing was led by its existing investors Cephalon Inc. and JAFCO Co., Ltd; Biosceptre International Limited, a bio-technology company, secured AUD8m ($8.3m) in venture financing round. The financing was led by Silvercrest Invest-ment Holdings Limited; Shantani Proteome Analytics Pvt. Ltd., a biotechnology company, secured funding in seed financing to advance its chemical proteomics technology for small-molecule target identification. The financ-ing was provided by Technology Development Board of Govern-ment of India through Entrepre-neurship Development Center (EDC)/Venture Center (VC).

GlobalData expects invest-ments to increase in Asia Pa-cific region with pharma majors worldwide eyeing to acquire new start ups with innovative technologies and low cost. This momentum will make PE/VC firms favor investments in this region to exit profitably from their investments.

The author is Associate Project Manager (Financial Deals) at GlobalData

Global, PE/VC, Number of Deals and Deal Values, Q1 2011 – Q4 2011

In 2011, VC firms made huge invest-ments in healthcare, pharma & bio-tech, especially in start-up firms;

with such investments accounting for 46% of the 700 deals recorded


Kapil Khandelwal runs his own investment banking and advisory services

company, Makven Capital. In his 25 years of his career, he has carried out over 30 transac-tions including cross-border. His particular area of focus is invest-ment banking, business advisory, and driving business results through mentoring leaders and his passion is connecting people and making an impact on the lives of people in this region.

He holds the unique distinction of being among the elite club of Chief Information Security Of-ficers (CISOs) in the early-phase drug discovery in the world. He has played an influencing role with the Governments in India and abroad. Kapil is a recognised industry leader and speaker on topics like health and business strategy. He also serves several company boards and industry advisory committees. He was the Founder Board Member of DMAI; and among other positions, currently is a Member-Advisory Board at Pfizer and the

Fund Advisory Board Member for IncuCapital.

Here, he tries answering some of the frequently asked questions on healthcare finance…

Q. We are in the course of expanding our hospital services. How can we choose the right PE partner?First and foremost, for expand-ing the services, you need to really ask, if you are ready for welcoming a PE firm into your governance. As a running hospi-tal, you need to evaluate if you can do with bank/institutional debt to fund expansion of your additional service lines. If you have exhausted all your bor-rowing limits, then you need to consider PE funding.

Secondly, the question you

need to ask is: Is your service expansion plan large and siz-able enough for a PE to justify investments and upside on the investments?

If your answers are affirma-tive to the two issues, then you should start looking at the right PE firms as investors into the hospital. The key points that you should look into are:1. Hospital/healthcare services industry experience including portfolio companies where the PE firms have made investments in the past and exited them suc-cessfully or are currently holding investments in similar ventures2. Working understanding and comfort with the PE team3. The hospital operator should look for industry references4. Networking in the hospital industry in India and abroad

5. Lastly, a question that needs to be asked is will the PE firm in question add strategic value to the hospital for the growth in the services.

Q. What should we keep in mind while presenting our case for fund requirement, so as to receive a positive response?Every healthcare entrepreneur’s dilemma is getting the business model right and articulating it properly to the PE or VC or investors through the funding proposal or the information memorandum (IM). Having defined the value proposition correctly as outlined above, the corresponding delivery proposi-tion and the financial proposition has to be outlined clearly. These

Solving the funding formulas Kapil answers some of the questions hovering in your mind on funding

U Ask


would become the inputs to putting the formal funding pro-posal that clearly articulates the purpose of seeking the funding (money), clarity in describing the opportunity we are addressing through the medical technology (markets), and the ability of the team to ensure the results (man-agement). I call them the 3Ms.

Q. What are the top 3 factors that the PE/VCs look for while in-vesting in healthcare?My assessment of any funding proposal in healthcare is judged on the following 3 issues: • First, does the product/service improve clinical quality, or at least deliver equivalent outcomes in a less costly and better way?• Second, does the product/service more than offset its cost through reduced overall health care expense to the system, such as reducing costly side effects or replacing or eliminating other expensive procedures?• Third, does the product/service offer clinical and/or financial ad-vantages for patients, insurance, and providers alike?

Q. When to raise mon-ey and from whom?The promoters must determine how much money to raise, and when to raise it. Promot-ers typically start out raising a small amount of money to prove the feasibility of the product or services idea, and then raise more over time. How much money to raise and when to raise it is an issue that needs to be mapped to major milestones over the life of the venture.

Q What strategies should be followed and at what stage of funding?Each stage in the business life cycle of the venture brings about different issues and opportunities and hence each stage is unique from the other in terms of risks, problems, rewards and outcomes that accompany it.

The strategies that can be followed need to be carefully considered by the promoters before seeking the funding from different funding sources. The effect on the business cannot be considered in isolation but has

also to be viewed in the light of the changes that will occur as a consequence of the funding. How does the VCs and PEs funding process work out?The typical process followed by VCs and PEs which are active in the healthcare space is set out below:• Determination by the potential promoters that cash is required in the venture for growth, buy back existing investors, or buying out IP, etc.• Preparation of business plan and funding proposal (IM)• Initial presentation to the VC or PE firms• Preliminary analysis by the VCs/PEs followed by meetings and visits• Preliminary offer letter (term sheet)• Discussions of the terms by the promoters and their consul-tants• Acceptance of the indicative offer given by VCs or PEs

• Due diligence by the VCs and PEs team and their advisors• Study of results of due

diligence and indicative offer confirmed or modified term sheet• Investment committee proposal by the VCs or PEs and indica-tive terms approved, modified or rejected• Issue of full offer letter (subject

to legal stages) by the investee• Legal stages, which are first meeting between the VCs or PEs and their lawyers to draft the shareholders and legal agree-ments, then meetings between the venture and their lawyers to consider its reply and finally a series of meetings between what has been offered and what will be accepted and agreed• Signing and completion of the contracts between the VCs or PEs, their lawyers and the promoters and their lawyers• New investor joins the com-pany and their board (in most cases)• New governance processes after this.

Q How reliable are for-eign PE and VC play-ers? Do they under-

stand Indian healthcare so much to be able to invest

with us?

That is a million dollar question in itself. India

is an attractive destina-

tion for PE and VC firms and hence many PE and VC firms have started their Indian opera-tions headed by Indian partners and associates. Hence, it is fair to say that they do possess the depth and knowledge to invest in Indian healthcare sector over the last few years.

Q Mostly, we see for-eign investors pump-ing money here. Are there any Indian play-ers too, with whom we can source funding and investments?We do have a large number of In-dian players who are very active LPs. Indian healthcare investors include business families trusts and their investment arms – in-cluding the Reliance, Birlas, Tatas, Azim Premji, etc; PEs such as ICICI Ventures, TVS Capital, Apax Partners, Matrix Partners, Lumis Partners, Ven-ture East, ePlanet Capital, Nexus, Helion Partners, Song Invest-ments, NEA, Bearing PE, Sequoia Capital, and many more.

Q Should I appoint professional advi-sors? My venture can-not afford it!I always recommend that promoters appoint professional advisors for their technical inputs in preparing the business plan and the funding proposal that you would like to present to the VCs and PEs.

However, it is prudent to restrict their scope of work.

Outside lawyers and accountants have their con-tribution in the funding pro-

cess, however they should be employed at the right time.

Some considerations are:• costs burden will increase

on the venture at the start up phase (certainly)

• time taken to complete will extend (probably)

• harmony between the manage-ment team will unravel (possibly).

Every healthcare entrepreneur’s dilemma is getting the business model right and articulating it

properly to the PE or VC or investors through the funding proposal or the

information memorandum


Daljit Singh, President, Fortis Healthcare

Expectations: The most urgent need of the industry is the status of infrastructure. Last year, the FM had promised to accord the infrastructure status to both education and healthcare. It’s time to act on that statement now. If the industry gets an infrastructure status, it will surely encourage more investments. This will also help us avail long-term soft loans to expand our reach.

It is high time that the govern-ment demonstrates its priority and not just in theory but also ac-cept in practicality that develop-ing healthcare is very important for our country. Healthcare has

not seen much growth due to its capital-intensive nature. The high cost of land, equipment, long break-even time, all sends shud-ders down the spine of investors. If we get the infrastructure status, we will be able to attract more investors.

The government should also work more towards developing the PPP model. Maybe it can consider making a dedicated panel to oversee the progress of PPP projects. Medical education: We all know that India is facing an acute shortage of healthcare profession-als. To combat this, the govern-

ment must bring in resolutions to better the usage of current medical institutions, so that they can churn out more doctors and nurses.

Dr. Devi Prasad Shetty, Chairman, Narayana HrudayalayaExpectations: Health sector needs infrastructure status des-perately. We need to add close to 3 million beds and the resources we have in this country are not simply sufficient. Government is in no position to add this number of beds with just 1% of the bud-getary allocation for healthcare. Taxing issues: There has to be

Health Budget 2012-13: What it holds for Healthcare?Last year, the government brought in a mixed bag of offers for healthcare. The industry now awaits a better Budget this year, finds out Jayata Sharma-Sand

Debate

It’s that time of the year again. When hopes rise and the dream of a better healthcare structure is awaited by the

industry to come true.Last year, the government brought in a

mixed bag of offers for the industry. However, the unanimous feeling of the industry was that the government gave less and created more turmoil by way of trying to impose taxes on hospitals with central air condition-ing and diagnostics.

However, efforts from the entire industry bore results and the Government had to re-consider the whole situation.

Few positives that came out were the increase in allocation of healthcare plan by 20% to Rs. 26,760 crore and the increase in coverage of the Rashtriya Swasthya Bima Yojana. The hiked spend of 23% in the infra-structure sector was welcomed, but it hardly gave any impetus as the healthcare industry was yet again kept away from the status of ‘infrastructure’.

From the medical technology perspective too, the Budget was hardly helpful. Consider-ing that Indian healthcare is a 90% import dependent industry, and spends about Rs. 12,000 crore on importing of medical technol-ogy, some fiscal incentives and tax breaks to attract FDI and improve manufacturing investments would have helped.

Not just this, the government managed to irk even the complimentary therapy industry by taxing Ayurvedic and Unani medicines, which were already costing more than the allopathic ones.

Even the increase in excise duty from 4% to 5% had minimal effect on drug prices. However, cold chains being classified as an infrastructure sub-sector did have a positive impact on the pharma cold chain, helping in-jectables, vaccines and biologics in particular to increase their reach and penetration, espe-cially in tier-II to tier-VI and rural markets.

Well, that was last year. The industry kept its patience and hoped that next year will

bring better results. So, what is the industry awaiting this year? The overall air says that the industry is

vying for an infrastructure status, certain tax benefits, increase in insurance coverage, better models of PPP, reduction in import duties, steps to attract FDI for medical device manufacturing, and a boost in the preventive healthcare segment.

We all are aware that investments in medi-cal infrastructure and medical tourism are pouring in from various segments. This is the right time for the government to give the industry the much-awaited infrastructure status. And, if hospitals get tax benefits, the entire profit could be ploughed back into the industry itself, thereby increasing the penetration of healthcare services.

To further know what’s going on in the mind of the healthcare industry, we spoke to various industry leaders. Read ahead to know what the Indian healthcare industry awaits this year.


tax incentives for more investment to come for the healthcare. When hospitals come up in difficult ar-eas where there is acute shortage of resources, especially in Eastern region, the investors should be protected of their money, which is not possible currently. If some tax concessions are given, it will be an encouragement for the industry. It is pointless saying that the hos-pitals do not have to pay taxes in the first five years in these areas, since most hospitals do not make any profit in the first five years anyway!Insurance: There has to be great support for the micro health insurance schemes like Yeshas-vini, RSBY and various other government and private schemes. Today, 8% service tax has to be paid for even micro health insur-ance scheme. I can understand when rich people pay a premium of Rs. 5,000 or Rs. 10,000 you can add service tax. However, individual insurance of Rs. 50 to Rs. 100 per month per individual should not attract any service tax.

This will encourage more and more people to buy micro health insurance scheme. Custom duty on expensive equipment like CT Scan, MRI, Cath Labs and any medical equipment which is imported has to be removed also, so that the cost of these procedures can come down. I just want to emphasise that our government spends 1% of the GDP on healthcare and while even the Sub Sahara African countries spends more than this.

The 47% of the rural and 37% of the urban population borrow money or sell their assets to pay for the healthcare. Around 80% of the national expenditure on healthcare is borne out of pocket. In this scenario does the govern-ment really have the right to tax them more to save their lives?

Dr. GSK Velu, Managing Director, Trivitron Group of Companies

Expectations: Domestic medi-cal technology manufacturing and innovation is being ignored for over two decades by the Govern-ment. Through AIMED/AMDSI and several other associations we have represented the need for cre-ating a level playing field and giv-ing incentives for manufacturing and R&D in medical technology space. We hope the government acts on it at least in this budget!Infrastructure status: Of course the healthcare industry inclusive of pharma/medical technology should be given the in-frastructure status as it fulfills all the criteria to be recognised as an infrastructure industry. In a coun-try where private healthcare plays such a dominant role, providing infrastructure status to healthcare industry as a whole will provide the necessary impetus to improve access and affordability.Taxing issues: There is anomaly in the current import tariffs for medical technology products, wherein components and raw materials attract more customs duty than finished goods,

which kills the manufacturing industry. Also, the MT products attract VAT in some states as high as 12%! There should be rationali-sation of traiffs to incentivise and grow the domestic manufacturing industry in the MT space.

Dr. Ranjan Pai, CEO, Manipal Education and Medical Group Expectations: Universities should be allowed to source money through the ECB route, at least for the universities which are attracting foreign students and earning portion of the tuition fees in terms foreign exchange. In fact, such universities should be allowed to avail EPC, for good and cost-effective working capital management. Also, research proj-ects initiated whether private or public should be at par from vari-ous tax perspectives to motivate public private partnership.Infrastructure status: It is high time that the classification of universities is done under ‘infra-structure’ as defined by Reserve Bank of India. This will definitely help our country to get an increase in the number of medical professionals, which is the need of the hour right now.

Taxing issues: Foreign exchange earning should be allowed to avail DEPB benefits. I think they should most definitely be classified as export of services and service tax on pro rata input should be nil. For such inputs, it can be treated like deemed exports.

Joy Chakraborty, Director-Administration, PD Hinduja HospitalExpectations: In this chal-lenged economic scenario, this Union Budget should further fuel the growth. Budget must

encourage investment opportuni-ties in non metro cities to create better accessibility of healthcare. Investors must be encouraged by giving tax holidays to attract more investment in healthcare.Infrastructure status: It is needless to say that to develop organised provider network in a friendly environment we need stakeholders with confidence to explore the market. Infrastructure status will get them the confidence and interest in the process.Taxing issues: Different taxes have only made healthcare more costly and expensive for the end users. An approach to curb these taxes on life saving medicines and equipment will support providers and beneficiaries in a great extent and in the long term it will ensure that our health industry doesn’t face the same problem the West-ern world is facing today.

Dr. A Velumani, CEO, ThyrocareExpectations: Right now, diagnostics is proving very expensive for the patients. This is mainly because many items like instruments or reagents, which have no local alternatives, are heavily charged custom duties. I expect this year the government will review this issue properly.


Infrastructure status: Being in the healthcare industry, we feel that we are deprived of this sta-tus. If given, it would boost funds

flow, courage to invest, confidence to get returns as an organised industry.Taxing issues: Custom duty which is applied casually without understanding the category on some items is heavily damaging the business priorities. Govern-ment should exempt medical or diagnostic products from paying anything more than 10% custom duty or internal taxes, to ensure that this industry senses the opportunity and help to create solutions that government alone cannot create.

Dr Rajen Ghadiok, Executive Director, Medical Strat-egy, Nova Specialty SurgeryExpectations: a) Reduction in taxes on import of medical equipment, specially life saving equipment, to ensure high quality healthcare at lesser costs; b) Open-ing up of the insurance sector to encompass a larger segment of the population, more so from the lower socio economic strata; c) Proactively pursuing the PPP model to widen the foot print of healthcare delivery. This through better financial understandings so that it becomes attractive to pri-vate healthcare groups; d) Making it mandatory for private health-care groups, who seek subsidy, to adopt sections of the population for providing healthcare, primary, secondary and tertiary, at a no

profit basis. This to be linearly linked to the size of the subsidy. e) Linking financial allocation, borrowings, to healthcare delivery parameters, such as clinical outcomes, quality etc. This will ensure quality in healthcare.Infrastructure status: The healthcare industry should be given an infrastructure status as it truly forms a component of growth. Containing costs and saving wasted man hours will ultimately help the growth of the

economy. Countries that ensure good health have sounder econo-mies through enhanced work outputs.Taxing issues: There are a host of taxes, on equipment, drugs, services etc. These costs are passed on directly to the consumer, in this case the patient. The escalation in costs leads to a host of mal practices, practiced both by the organisations and the medical fraternity. Remov-ing taxes is not the answer. The answer lies in a more rationalised form of financial understanding for the industry that should be ap-plicable across all strata, be it the government sector or the private sector. Healthcare costs have to be looked at radically and informed decisions have to be taken.

Bishwajit Nayak, Head – Health Claims & Network-ing, Future Generali India Insur-ance Co. Ltd.Expectations: The most basic expectation is the increase in the FDI limit from the current 26% to 49%. This will relax some stress

for the insurance industry which needs regular infusion of funds. The health insurance sector specifically needs special impetus as the penetration of health insurance is almost negligible. The minimum capital for health insurers can be brought down to 50 crore to allow more players in this sector.

The government must look at increasing the penetration of the national health insurance schemes by making it more attractive for private insurers to take such risks. Premiums in such national schemes need to be rationalised and ensure that these schemes do not run into losses due to the way they are struc-tured. This would require more investment from the government in the healthcare sector. The government should improve the health delivery mechanism and reduce the dependence on the private sector. Infrastructure status: The long break-even period for hospi-tals and the lower than expected return on capital employed acts as a disincentive for potential inves-tors. The infrastructure status would help in reducing the input costs for healthcare projects by reducing taxes paid for construc-tion and also giving extended tax holidays to such projects will be beneficial. This will also bring in

the possibility of having a regula-tor for the industry and achieve some standardisation in hospital infrastructure.Taxing issues: There are huge

taxes on import of equipment by hospitals which prohibits the benefits of advanced technology to be available to the population at affordable costs. Hospitals today blame the taxes they pay for water, electricity etc for the high rates of their services. The government should consider some relaxation of taxes for hospitals but at the same time ensure that there is a proper mechanism to ensure that such concessions are passed on to the patients. Reimbursement by employers to employees for medical expenses is currently not taxable up to INR 15,000. Considering the high cost of medical treatment and inflation, these limits need to be revised upward.* The above responses are as per my personal opinion and not that of my employer organisation

Dr. Parag Sancheti, Chairman, Sancheti Institute For Orthopaedics & RehabilitationExpectations: Government should raise the healthcare

expenditure from 3.5% of GDP to 5% at least. Also, there must be a decrease in import duty so that we can get sophisticated medical equipment at a reasonable cost enabling us to extend the benefits to people at affordable cost. In addition, the government should focus on improving primary healthcare in rural areas.Infrastructure status: Yes, healthcare should be given infrastructure status. Healthcare is a fast growing industry and


if given a status of infrastruc-ture it will definitely get more investments, thus creating better opportunities for employments.Taxing issues: Various taxes like Service Tax, Excise, Vat, are applicable to industry right now, which ultimately increases the cost to the patient. Maybe taxes can’t be removed entirely, but the government can surely reduce unwanted taxes like the service tax, import duty and customs. Mr. Ratan Jalan, Founder & Principal Consultant, Medium Healthcare Consulting Pvt Ltd.

Expectations: Given such a low public healthcare spend in India, the budget allocation for healthcare should increase significantly over the years. And in light of wide-spread cor-ruption in the administration of various state government healthcare benefit schemes, it is equally important that proper regulatory mechanisms are put in place to ensure better utilisation of allocated funds.Government should encourage a greater role for Public Private Participation at various levels.Infrastructure status: Such a logical and valid demand has been neglected for far too long. We pay a huge price for ensuring that India, as a country, enjoys the fruits of good health. Infra-structure status will certainly help in accelerating the pace of development in this sector.

FICCI in its pre-budget memo-randum has given its recom-mendation to grant infrastruc-ture status to the healthcare sector to make healthcare access universal. Following reasons provide a strong case to support above recommen-dation.

Expenditure on healthcare is rising in geometric progression as compared to an individual’s incoming resources, result-ing into a mammoth strain on home budgets. Healthcare costs have escalated drasti-cally making it a luxury and sometimes a painful necessity. Providing infrastructure status to healthcare would enable long-term funding to the healthcare industry at lower rates of interest from agencies and would provide a boost in investment into this sector. This would help in lowering the cost and make it more acces-sible for the people at large.

The Rangarajan Commis-sion report has specified the criteria for obtaining the ‘Infrastructure Status’. The healthcare industry meets more than the specified criteria for obtaining the infrastructure status. India is a member of the Millennium Development Goals (MDGs). MDGs require world’s nations to achieve development objectives by the year 2015. MDG has empha-sised on the importance of healthcare which is visible from the statistics as 3 out of 8 goals and 6 out of 21 targets of MDG pertain to healthcare sector.

This recommendation is specifically important in a country like India, which is well behind the curve in public spending and cover-age of healthcare services to its population. Spending of Indian government is merely 1% of the GDP on healthcare;

as compared to 14% in US and 8% in European coun-tries. In India, less than 10% of the population can afford a surgery today. Almost 47% of the rural and 37% of the urban population have to bor-row money or sell assets to avail the healthcare facilities. Statistics show that total beds per 100,000 people fell from 73.64 in 1981 to 69.34 in 2001. It shows that investment in healthcare is not keeping pace with oozing population and increasing urbanisation, result-ing into the gaps between the demand and supply chain.

The technology angleIndia is on the pathway to be-coming the global healthcare destination and technology would play a big role in this growth story. Technology has already made a big difference in diagnosing dreadful and non curable diseases. Once 4G and broadband become a reality, technology would change the face of the health-care industry in India.

Relief from taxesCurrently, hospitals are paying huge taxes in form of import duty on imports of medical equipment and machinery and even on imports of medical consumables. These taxes restrict hospitals from making costs reasonable. Private hospitals also pay huge sums just for water and electricity consumption. Providing infra-structure status to healthcare industry would provide various tax benefits like, exemption from payment of service tax to commercial or industrial con-struction companies (for the infrastructure development for hospitals, etc), thereby reduc-ing input costs of healthcare projects.

Currently, healthcare

projects located in select non-urban areas, which have commenced or would be com-mencing operations during the period April 1, 2008 to March 31, 2013; enjoy a five-year tax holiday under a Section 80 IB of the Income Tax Act, 1961. The proposed infrastructure status to the healthcare indus-try would enable them to enjoy a 10-year tax holiday under Section 80IA of the Income Tax Act, 1961.This proposal is envisaged to be beneficial for healthcare sector since the existing tax holiday period of 5 years is insufficient to the industry given the fact that health care projects generally take minimum 3 to 5 years to break even.

All the above reasons justify the demand of the healthcare industry to be granted with the infrastructure status to the industry. In order to lower tax burden, following suggestions are also proposed.

To enable hospitals to expand hospital beds and to improve the healthcare facilities, it is vital that sav-ings be granted in the form of 100% Tax Deduction of the profit derived from operating and maintaining hospitals for a period of 10 consecutive assessment years in any 15 years starting from date of operation of hospital facility.Healthcare sector should be exempt from Minimum Alternate Tax. Any new capital expenditure towards replace-ment of old machinery/equip-ment, at any time should be entitled a 100% deduction. Healthcare sector should be eligible for loans/financial assistance on a priority basis, at concessional rates, as provided to the infrastructure sector. Any services provided to the healthcare sector to be exempted from service tax.

Why an Infrastructure Status is so ImportantVoiced by Yash Arya, Director, Tax Advisory Services, BDO Consulting Pvt. Ltd.


Amol Naikwadi, Joint Managing Director, Indus Health PlusExpectations: Healthcare ser-vices including preventive health check-ups for corporates and indi-viduals should not come under the Service Tax ambit. The culture of prevention of lifestyle diseases can lead to huge savings in the economy. So, the Government should encourage and incentivise individuals, and not tax them! Section 80D of ITA which

gives benefit on premiums paid towards health insurance should be broadened to include health check-up expenses and invest-ments. Maybe, corporates that invest on prevention programmes for their employees can also be incentivised. Infrastructure Status: Yes, the healthcare industry should be given the infrastructure status. This will help in reducing the cost of capital. Quality healthcare is the right of every citizen. We all know that the healthcare business is very capital intensive and has long gestation period. Giving it an infrastructure status will help in attracting more investments.

Dr. G Bakthavathsalam, Chairman, KG Hospital & Post Graduate Medical Institute Expectations: India needs additional 3 lakh beds with an investment of Rs.75,000 crore. To achieve the target, the Govern-ment should provide tax benefits to the private sector hospitals that are willing to set up new hospital

irrespective of rural or urban area. 70% of the healthcare ser-vices are provided by the private sector to the public in India, but

no incentive is given to the private sector hospitals except for hospi-tals in rural areas. Also, ceiling of deduction for payment of medical insurance under Section 80D should be increased to Rs. 50,000 per annum. The premium of medical insur-ance claim deductable from the income of the assessee should be increased from Rs. 15,000 to Rs. 30,000 and for senior citizens from Rs. 20,000 to Rs. 50,000. This will enable people to subscribe for more amount of insurance. At present, only the sponsors of clinical research are getting tax incentives under the provi-sions of the Income Tax Act, the hospitals which are providing the clinical test and assisting the pharma companies in the research programs should also be given a share of tax benefit.Infrastructure status: When infrastructure status is granted, new private hospitals may get tax holiday of five years. This will help them generate long-term capital. Infrastructure status will help raise capital/funds for new constructions and purchase of equipment by issue of tax free bonds (exempted from long term capital gains tax). Taxing issues: The Govern-ment should withdraw wherever possible all duties and taxes on medical equipment, chemicals and medicines, including the proposed

Goods and Service Tax (GST). The ceiling limit of Rs. 15,000 of the tax exempted perquisites should be increased to Rs. 30,000 as this ceiling limit was fixed about 12 years back! The ceiling limit of Rs. 2 lakh gross sal-ary limit of employee should be increased to Rs. 5 lakh. Cenvat Credit on capital goods is spread over 2 years. Such deferring of the Cenvat Credit increases the financial burden of the healthcare units and so hos-pitals should be allowed to avail Cenvat Credit in the 1st year itself.

Dr. Damien Marmion, Chief Executive, Max BupaExpectations: In our opinion, steps like incentives, besides tax savings, for people buying health insurance and allocation of resources for PPP to increase health insurance penetration will be a positive move for the sector. Insurance business is a capital-intensive business. The industry needs capital inflow on regular basis for its operational needs. Many insurance companies would like to invite foreign partners to raise their stake. At the same time, raising the cap to 49% will provide enough incentive to for-eign companies to invest in Indian insurance sector.

Imposition of service tax on preventive health check-ups is another area that needs to be looked into. There is a need to encourage such preventive check-ups instead of putting them under the tax net.

Infrastructure status: Infrastructure status to hospitals would entitle them to tax exemp-tion on their entire profit for 10 consecutive years, beginning with the initial assessment year in any 15-year period starting from the date of operation of a new hospi-tal facility anywhere in India.

Gautam Khanna, Executive Director, Healthcare division, 3M India and Chairman of FICCI – Medical Device Forum

Expectations: It is proposed that the Government focus on medical insurance, which can bring a larger section of the population under medical care and ultimately lead to healthy nation. To do so, Government can ask insurance providers to change the premium pattern (increase it for early years and reduce it for people above 60 as they have limited income). There should not be rejection due to age limitations for senior citizens even with non-continuous/no provision of health insurance coverage. Infrastructure status: I suggest that Government should take this year’s health budget as an opportunity to work towards building an accessible and afford-able health industry in India.Government must raise the healthcare expenditure as a sizeable portion of the Gross Domestic Product (GDP) to 3.5% in this budget. Taxing issues: The Govern-ment should exempt healthcare industry from the Minimum Alternate Tax.


While healthcare chal-lenges abound in every society on earth,

there is an overriding demand for improved services for the 2.6 billion people who are living on less than $2 a day. Not surpris-ingly, this group faces consider-able barriers, including limited health insurance, low health literacy and residence in slums or remote areas that are frequently underserved. Such barriers must be carefully considered in the design of any product or service created for this group.

Due in part to significant gaps in the availability of public health services, the presence of private providers in low- and middle-income countries (LMICs) has become significant. Recent

estimates suggest that the poor seek care in the private sector for up to 95 per cent of cases of childhood diarrheal and respira-tory illnesses across a wide range of countries. Of course, private care is not without its critics. Concerns include the under-provision of public goods in free markets, lack of access to care for the indigent, and the potential for providers to induce demand for unnecessary services to generate profit. However, because public health services are not al-ways available or may be of poor quality, private healthcare has become a fact of life in LMICs, and it is therefore important to understand its potential contribu-tion to robust health systems.

One particular area where the

private sector can contribute is as a source of innovation – and in particular, ‘disruptive innova-tion’, whereby organizations develop simple, high-quality and inexpensive services that reach new sets of consumers that were previously excluded from conventional markets.

A growing number of social enterprises are developing pat-tern-breaking models that have the potential to be scaled up to improve the availability of high-quality healthcare for the poor. In this article we will describe some of these disruptive innova-tors and explore the potential of their models to create more inclusive and effective health services in resource-starved settings.

Innovative ExemplarsBusiness models consist of four components: a product or service; managers that bring together the resources required to deliver the product or service; processes whereby employees and resourc-es work together to generate the product or service; and a profit formula to ensure that the costs of the resources and processes are covered.

Healthcare service delivery models are simply business mod-els adopted for the provision of health services. For our purposes, we define a healthcare innovation as something new that has the potential to drive change and re-define healthcare’s economic and/or social potential. The ‘newness’ in an innovation can be achieved

Innovative Healthcare Models for World’s PoorLessons from the private sector suggest the business models for several innova-tive private healthcare organizations have some key things in common and can provide inspiration across industries

Global Practices


in various ways: by recombining old ideas in a new way; by creat-ing a new process or product; by using a process from one indus-try in another that has not used that process; or by reordering an organization in a new way. In our search for innovative exemplars, we focused on organizations that employ innovative service delivery models to improve the affordability, accessibility and/or quality of services for the poor, particularly those that had expanded beyond pilots and had detailed descriptions of their strategies.

Figure One lists the organiza-tions we selected as exemplars. In analyzing these organizations, we found that they achieved significant innovations within the following three activities: market-ing, financing and operations. We will discuss each in turn.

1 Innovative Marketing Activities: The marketing

strategies used by many of these organizations included both the promotion of services to the poor and the design of these services to meet the needs of this group.Social Marketing: Social mar-keting refers to the application of marketing techniques to achieve behavioural changes. It is not a new concept, but Population Ser-vices International (PSI) in Africa and the Population and Com-munity Development Association (PDA) in Thailand have both applied this strategy in innova-tive ways. PDA uses humour to address taboo subjects such as contraception and HIV awareness and has achieved unprecedented success in garnering positive public attention. Their social marketing initiatives include ‘Condom Nights’ and ‘Miss Anti-AIDS Beauty Pageants’ in the red light districts of Bangkok.

PDA has also established train-ing and peer education programs that focus on behaviour change in the country’s schools, prisons, sex industry and the public in general. The results: their condom-distribution network

covers one-third of Thailand, and their family planning effort contributed to the decrease in the population growth rate in Thailand from 3.3 per cent in the 1970s to 0.6 per cent in 2005. The organization developed a national AIDS education program in partnership with government, contributing to Thailand’s 90 per cent reduction in new HIV infec-tions in 2004.

PSI, meanwhile, operates three social marketing programs that offer educational programs on reproductive health for urban youth in Africa. The programs address the taboo subject of safe sexual behavior through means that target youth, such as magazines, television spots, call-in radio shows and radio drama. A survey found that 90 per cent of youth had read the monthly magazine at least once and 70 per cent had viewed the televi-sion spots, with corresponding increased rates of contraceptive use and HIV testing, demon-strating the potential of these educational social marketing programs.

Tailoring services to the poor: Another marketing tool employed by these organiza-tions is tailoring the design of products and services to the needs of the poor. The Bhagwan Mahaveer Viklang Sahayata Samiti (BMVSS) is the Indian organization that developed the Jaipur Foot, an artificial lower-limb prosthetic intended to meet the needs of amputees living in developing nations, where squatting, sitting cross-legged and walking barefoot is com-mon but largely impossible with typical prosthetic limbs. The Jaipur foot costs $35 to produce, and is made by artisans using locally-available materials, as compared to thousands of dollars for imported prostheses.

In addition to providing a novel product, the BMVSS clin-ics have adapted their services, allowing patients to check-in at any time of the day or night and providing free room and board if they have to spend the night. Since fittings can be completed in one session (as opposed to the usual several visits), time away

from work and transportation requirements are kept to a mini-mum, which is very important to patients with limited means and mobility. Franchising: Franchising has been used to facilitate rapid expansion and the sustainable distribution of products and services of a specified quality in reproductive health. Greenstar Social Marketing Pakistan is one of the first health franchisers, and has grown to provide over 26 per cent of all contraceptives in Pakistan by targeting non-users of contraceptives through a ‘total market approach’, which is the organization’s way of expressing that it uses different price points for each segment of the popula-tion. The organization operates a franchise network of over 7,500 private independent healthcare providers, most of which are located in low-income urban and peri-urban areas in Pakistan. Greenstar signs franchising agreements with providers for distribution of products and social services, and keeps regular contact with the aim of ensuring quality. It also provides medical training, supply of goods, public education, technical support, quality control and program evaluation to its franchisees.

2Innovative Financial Strategies

Most of the organizations we studied were funded by local entrepreneurs who wanted to make an impact on society; just two initially received funds from international NGOs and have since grown to be more indepen-dent. Many also received support from partnerships, government funding, grants and donations and some recovered part of their costs from user fees. While some innovated to generate funds for sustainability, many redesigned cost structures in ways that allowed products and services to be more affordable to the poor. Dramatic reductions in cost were achieved through rigorous expense management, capital


funding and revenue-generating programs.

Lower operating costs through simplified medical services: In several cases, operating costs were lowered by simplifying the medical services provided under innovative protocols that allowed the services to be provided by community workers rather than physicians. For example, VisionSpring’s financial strategy includes a ‘business in a bag’, which involves training rural community members to become Vision Entrepreneurs (VEs) who can provide vision screening, identify far-sightedness and pro-vide glasses for vision correction. VEs are provided a kit with items intended to help launch a busi-ness, including multiple styles, colours, and powers of reading glasses, screening equipment and marketing materials. Vision-Spring helps replenish supplies of reading glasses and provides additional support as required. This strategy is intended to en-able motivated workers to gain access to an entrepreneurial op-portunity without the barriers of high set-up and operating costs.High volume and low unit costs: The Narayana Hrudaya-laya Heart Hospital (NH) in India, the largest provider of pediatric heart surgeries in the world , has reduced the unit cost of cardiac surgeries through volume by performing eight times more surgeries per day than the Indian average. The Hospital rents ma-chines for blood tests and pays only for reagents, which satisfies suppliers given the high volumes. NH also reduces cost by relying on digital X-rays rather than expensive films and by reducing inventory and processing times using comprehensive hospital management software. The qual-ity of care has not been compro-mised by the high volume: in fact, NH uses high volume to improve the quality of care by allowing individual doctors to specialize in just one or two specific types of cardiac surgeries.

The success rates are high: a

1.4 per cent mortality rate within 30 days of coronary artery bypass graft surgery vs. 1.9 per cent in the U.S. NH’s average cost of open heart surgery is about $2,000 USD, for which NH charges $2,400 as compared to $5,500 in an average Indian private hospital. One third of the patients don’t actually pay out of pocket: the founder of NH partnered with the state of Karnataka to start an insur-ance plan that costs $3 a year per person and reimburses the hospital $1200 for each surgery. The hospital makes up the differ-ence by charging more for the 30

per cent of patients who opt for private/semi-private rooms. Cross-subsidization: Some of these organizations have achieved financial sustainability through a cross-subsidization strategy, whereby they exploit the greater willingness and ability to pay amongst wealthier patients to cross-subsidize ex-pensive services for lower-income patients. Some have developed efficient ways of assessing financial need and implementing a cross-subsidy. Aravind Eye

Care System, the largest eye care provider in the world, attracts wealthier patients who pay mar-ket rates and provides the same services to the poorer 70 per cent of patients at a highly subsidized rate.

Differential pricing is estab-lished by the patients’ choice of amenities and the type of lens to be inserted in the eye, not by the quality of treatment received. All patients -- regardless of ability to pay -- receive the same care, but paying patients can choose soft lenses and sleep in private rooms, while non-paying patients are given basic hard lenses and sleep

in open dormitories on mats. This approach, called ‘quality targeting’, is an efficient way of assessing financial need because those who can afford private rooms and soft lenses are much more likely to choose them.

Another example is 1298 Ziq-itza Health Care Limited, which provides private ambulance ser-vices using a tiered-fee system. Patients call the ambulance ser-vice and are charged according to the hospital they have arranged to be transported to: those going

to private hospitals are charged above cost, while those going to free government hospitals pay a nominal fee and trauma patients do not pay. A patient’s ability to pay is inferred from the choice of hospital under the theory that pa-tients reveal their abilities to pay because their choice of hospital reflects the hospital amenities they prefer. The result: approxi-mately 20 per cent of patients over the last three years were subsidized, allowing Ziqitza 1298 to be financially sustainable.

In addition to formal tiered payment systems, an informal system of cross-subsidy can be created by encouraging providers to provide subsidized services to the poor. Dentista Do Bem is a large network of private, for-profit dentists in Brazil who have agreed to see a few poor patients every day for free. This form of charity has a limited impact on the earnings of for-profit providers, as paying customers indirectly ‘subsidize’ the cost of caring for poor patients within a given practice. Children are screened in schools and recruited to join the program until age 18. The result: though each dentist only sees a few free patients per day, the large number of partici-pating dentists made it possible to see more than 12,000 children in 2009. Providers derive some recognition for providing this ser-vice. The network reaches poor people across all 27 Brazilian states and in six Latin American countries.Generating Revenue: Thailand’s PDA developed 16 for-profit companies that are affiliated with the organiza-tion. Each puts funds towards the NGO to facilitate expansion and supplement operating costs. PDA’s innovative commercial ven-tures include the Cabbages and Condoms Restaurants, located in different parts of the country, where condom-themed food and drink help bring money into the organization. This unique set-up allows the companies to generate revenue independently while

A growing number of social enterprises are developing

pattern-breaking models that have the potential to be scaled up to

improve the availability of high-quali-ty healthcare for the poor


using novel social franchising mechanisms to spread informa-tion about safe-sex practices.

3Innovative Operating Activities

Some organizations modify op-erating strategies to increase the availability of services in remote areas by making judicious use of human resources in settings where widespread shortages of skilled labour are the norm.Optimizing human resourc-es: One of the great tragedies in resource-limited settings is the shortage of trained medical workers in settings where disease is common and the population is abundant. Organizations expand

the use of community health workers into new areas, helping laypeople acquire skills that were previously exclusive to trained professionals.

The services supported by models of this type include the distribution of oral contracep-tives (PDA) and the performance of eye exams (VisionSpring). By shifting tasks to trained com-munity members, these organi-zations have reduced operating costs, increased the availability of staff, and empowered local communities. Aravind Eye Care System trains high school gradu-ates from rural areas into para-medical staff like patient flow managers, providers of simple

diagnostic procedures, and even optical technicians. Process and product reengineering: In addition to distributing ready-made eyeglasses for the far-sighted, VisionSpring is working together with the d.o.b foundation to offer new adjustable lens (U-specs) to the near-sighted, and especially to children. The innovative de-sign of U-specs comprises of two adjustable lenses that can be shifted to adjust the refractive strength of glasses. This makes mass production easier, reduces costs and offers an alternative to the traditional customized

construction of eye-glasses. In another example, Aravind Eye Care System improved efficiency by reengineering its operating rooms to allow surgeons to work on two tables in alternation, shift-ing from one case to another.

While one surgery is in prog-ress, a team of four nurses and paramedical staff prepares the next patient. The result: Aravind

Like most design educators, I am excited about the increased interest in creativity in business thinking these days. Yet I worry about what the outcome will be. My fear is that creative types are coming to the table simply to make more fancy do-dads for the top one per cent of the economic pyramid. Will they instead make a more meaningful contribution? Below are just a few prom-ising business models that promote a laudable combination of creativity and social responsibility and hopefully, will inspire other business ventures.

Micro Entrepreneurship: Oorja StoveMicro Entrepreneurship models create jobs for the poor, and one of the most elegant applications of this principle that I’ve seen is Oorja Stove. The product is innovative because it helps people who traditionally cook on wood fires -- which is bad for health and the environment -- transition to cooking on fires made from agri-cultural waste pellets. What is most innovative about the stove is the way it is distributed and sold: it is designed so that sales can be handled by people who live within the communities in which the products are sold, creating a door-to-door sales force. TIP: If you’re thinking about creating a new product or service, think about how your venture could be designed so that it creates jobs for people who really need them.

Buy One, Give One: Toms ShoesBuy One, Give One is a business model in which for every prod-uct sold, another is given to someone who needs it. Toms Shoes is a shoe company that gives away a pair of shoes for every pair sold and the shoes have a distinct look that is becoming instantly recognizable. This model is creative because the charitable giv-ing is not hidden away in an annual report; instead, it becomes symbolically embedded in the product itself. The shoes empower the purchasers to take pride in their contribution and to spread awareness about the company’s mission.TIP: If you are thinking about including charitable giving in your

business, think about doing it in a way that delivers not only the charity, but an awareness about the cause.

Hyperlocal Collectives: Good Food CollectiveLocal farmers in New York State were having a tough time com-peting with factory farmers in the marketplace, so they banded together to share resources, knowledge, marketing power and distribution channels. The Good Food Collective is now in its third year of coordinating sales between local farms and local consum-ers. Another successful example of a food collective is Full Plate Collective, just outside of Ithaca, NY. TIP: If you are developing a product or service that is trying to compete with similar offerings from mega-corporations, consider forming a ‘hyper-local’ collective to share resources with like-mind-ed businesses in your region.

Knowledge Sharing: Toyota Ideas for GoodThis model is an alternative to the prevalent model that compels stakeholders to protect their intellectual property (IP) at all costs. Toyota and other Japanese car companies have received recog-nition for the way they share knowledge with each other. Com-peting companies get together and share technological break-throughs, then go back to their respective labs and implement the technologies in different ways. These competitors decided that sharing knowledge was in the best interest of the entire group. I am also excited to see that Toyota is extending this concept to consumers with its ‘Ideas for Good’ campaign, a knowledge-sharing campaign that asks people to apply a technology to areas outside of the car industry. TIP: If your business offers an innovation that has the potential to make positive change in the world, think about sharing that inno-vation with as many people as you can and asking for their input.

Xanthe Matychak is a visiting lecturer at the Rochester Institute of Design. She is a regular contributor/blogger at core77.com.

Creative Capacity of Social Business Modelsby Xanthe Matychak


is able to perform a cataract surgery in 10 minutes - one third of the industry standard. Despite the shared space for patients, their infection rates are four per 10,000 cases, which is better than the published rate in the UK of six per 10,000. Increasing outreach: Aravind Eye Care System and Narayana Hrudayalaya Heart Hospital provide health camps to reach patients in rural areas. NH provides camps that focus on cardiac diagnosis with transpor-tation to the hospital for patients who require it. In addition to

health camps, Aravind has also set up internet kiosks in remote villages run by community members, who take pictures of patients’ eyes using a webcam and send the images to a doctor from Aravind along with a com-pleted online questionnaire about the patients’ symptoms. The doc-tor is able to access the images instantaneously, and talk with the patient online in real time to assess whether the patient requires consultation at the hos-pital. These kiosks reduce both the time and expense incurred by an unnecessary hospital visit.

Innovative Private Sector Health Service Organizations Figure One

Organization(Country/Year Started)

OverallPerformance

Social ImpacthImprovednNo change? Unknown

Quality ofEvidence

Sources of Fund-ing

Availability Affordability

Aravind Eye CareSystem(INDIA/1976)Eye Care Services.Manufacture ofintraocular lenses;cataract surgery;vision screening

Largest and mostproductive eye carefacility in the world;2.5 million havereceived outpatienteye care and > 300,000 have under-gone eye surgeries from April 2009 to March 2010

hIncreased availabil-ity of services to ruralareas through outreach camps, internet kiosks and vision centers

hCost of cataractsurgery reducedto $25; 70% ofpatients receive caresubsidized or free

Self-reported evaluations; externally reviewed publications

Local entrepreneur

Dentista Do Bem(BRAZIL/2002)Dental Care for youth. Free treat-ment provided by existing practitioners

Reached > 12,000children in 27 states in Brazil in 2009; model is being replicated in 6 Latin American Countries

nExistingpractitioners providefree services

hServices providedby existing providersfor free to poor youth

Self-reportedquestionnaire andreview; foundationwebsite

Local entrepreneursupported by partnerships with dentists andfundraising

Greenstar SocialMarketing Paki-stan(PAKISTAN/1991)Reproductive and child health educa-tion, intervention, monitoring and evaluation

2nd largest familyplanning providerafter the Govern-ment in Pakistan with a franchise network of over 7,500 activeproviders

hOutreach workersreach over 2.5 mil-lion people every year

hServes higher proportionof poor clientsthan the governmentand provides mod-ern contraceptives ataffordable prices

Self-reported reviewand questionnaire;third party evaluation

Initially funded byinternational NGO with support from various government and private founda-tions and user fees

Jaipur Foot(INDIA/1968)Lower limb prosthet-ic manufacture andfitting

Distributed> 200,000 artificiallimbs in India and> 13,000 in 18 othercountries

hDistribution throughclinics and outreachcamps, 24 hours a day

hReduced cost ofa prosthetic leg andfitting to $35; pros-thetics are distribut-ed to clients for free

Self-reportedstatistics; third partyevaluation

Local entrepreneursupported by localgovernment anddonations


The Emerging InsightsBased on our analysis of the strat-egies employed by these innovative organizations, we have identified four distinct characteristics of their models.

1Complete marketing, finance and opera

tions solutionsThese organizations managed to innovate across marketing, finance and operations, and each had at least one unique innovation in

each area. There appears to be no single effective approach to improving health delivery -- which may serve as a cautionary note to organizations looking for ‘silver bullets’ to improve care for the poor. However, each exemplar in our study has developed a novel and comprehensive approach, simultaneously addressing the fact that poor people are often unaware of services, have limited funds and live in hard-to-reach areas.

2 Narrow Clinical FocusVirtually all of these orga-

nizations have a narrow disease focus built around a few medical processes. While this may be an artifact of our search strategy, none of the organizations dis-cussed here provide broad-based comprehensive health services. This could be related to the fact that it is easier to manage and experiment within well-defined healthcare delivery systems with a narrow focus. The predictabil-

ity of the health problems and treatment strategies make it easier to simplify processes, delegate tasks to lower-trained personnel and measure quality, all of which can reduce costs while increasing reach and quality. Though vertical approaches have limitations, they may lead to innovations whose benefits could be captured by replication or by linking them to broad-based health services, as in the case of PDA’s collaboration with the Thai government on HIV

Innovative Private Sector Health Service Organizations (Cont’d) Organization(Country/Year Started)

OverallPerformance


Sources of Fund-ing

Availability Affordability Quality of Care

K-MET(KENYA/1995)Maternal and child care. Trains exist-ing providers on reproductive health, family planning, safe abortion care

Network of 204health providers andcommunity-basedworkers

hProvides carefor rural communi-ties where govern-ment services areunavailable

hServes clientsslightly poorer thancommunity average;services benefit allincome quintiles

hGives loans toclinics and providestraining to improvefacilities and ensuresafety and highquality of care

Local NGO withsupport fromdonations andinternational grants

NarayanaHrudayalaya HeartHospital (NH)(INDIA/2001)Coronary arterydisease. Heartsurgeries andcardiac care

The 800-bed hos-pital performs high quality surgeries with eight times more volume than average Indian hospitals

hHigh volumehospital; 54 tele-medicine centers,outreach camps andbuses reach out tothe rural poor

hHigh-volumestrategy allowed NH to reduce cost of cardiac surgery to Rs 65,000 from Rs 150,000 (aver-age Indian private hospital); 18% ofpatients receive caresubsidized and 1% free

hEnsures high quality and efficient services by training surgeons and nurs-es, use of topquality equipment; higher overall success rate in coronary arterybypass surgery thanthe U.S average

Local entrepreneurwith the help ofcapital funding fromfamily members and Asia Heart Foundation plus user fees

Population andCommunityDevelopmentAssociation (PDA)(THAILAND/1974)Family planningand HIV/AIDSeducation. Contra-ceptive/ vasectomy/pregnancy termina-tion services

Contributed to thedecrease of Thai-land’s population growth rate from 3.3% in 1970s to0.6% in 2005; helped establish national HIV/AIDS prevention program in Thailand which reduced potentialnew infections by 90%; model adopted by the governments of many countries

hNation-wide publiceducation cam-paigns; outreach and mobile clinics reach 10 millionThais in 18,000 villages and poor urban communities;provide bloodtests, family plan-ning and pregnancy termination services for the poor where services were previ-ously unavailable

hMost services arefree; owns innovativecommercial venturesto fund communityhealth and develop-ment projects

hQuality of care unclear; aims to improve safety of services (e.g. reinforced safe abor-tion practices etc) and provides health education to the public

Local entrepreneurwith support through donations and revenue from their own commer-cial ventures rang-ing from restaurantsto industrial health services


Innovative Private Sector Health Service Organizations (Cont’d)

Organization(Country/Year Started)

OverallPerformance


Sources of Fund-ing

Availability Affordability Quality of Care

PSI’s TopReseau/100%Jeune/CentreDushishoze(MADAGASCAR, CAMEROON,RWANDA/1999)Sexual/ReproductiveHealth. Peer coun-seling; education; contraceptiveservices; multimedia promotion

Increased contra-ceptive use among young men from 29% to 53%, among young women from 20 to 39%; in-creased numberof people gettingHIV test in Rwandaand reproductiveservices in Mada-gascar

hBroad reach through multimedia campaigns and outreach

hProvide services ata subsidized rate(Madagascar) andcheaper than otherhealth clinics (Cam-eroon)

hContinuous evalua-tion to ensure highquality and effectiveyouth programs

International NGOsupported by grantsand user fees

Vision Spring(INDIA/2001)Vision correction.Screening, provision of glasses, adjust-ments

“Business in a Bag”strategy allows1200 VisionEntrepreneurs todistribute > 100,000pairs of glasses in13 countries

hEntrepreneursdistributed glasses in poor communi-ties and rural areas; door-todoor service with easy screening and testing methods

hGlasses are $4 apair instead of $40-60 at optical shops

hQuality of glassesare in general lowerthan those fromexpensive opticalretailers, but higherthan competitorswithin their price-range

Foreign entrepre-neurs supported by venture philanthro-py, philanthropicinvestors anduser fees

Ziqitza 1298(INDIA/2005)Ambulance Service.Transportation andemergency care; public education

70 ambulances inMumbai and Keralahave served more than 60,000 patients

hThe first singleemergency num-ber for ambulance service in Mumbai; 24-hour ambulances with GPS tracking

hCross-subsidiza-tion made services more affordable to the poor

h90% of ambulanc-es in urban India did not have adequate equipment and trained paramedics;Ziqitza’s ambulanc-es provide trained paramedics, lifesupport equipment and continuous evaluation to ensure safety and quality of services

Local entrepreneurssupported by venture philanthropy and user fees

control: the partial integration of PDA’s program into health system functions has contributed to a nation-wide reduction of the HIV infection rate. In fact, studies show that seldom are interventions wholly unintegrated (i.e. purely vertical) or fully integrated into health system functions, and the heterogeneity in the extent of integration is influenced by inter-vention complexity, health system characteristics and contextual

factors. Since the organizations selected for our study vary by disease area, geographic, economic and political environment, there is no doubt that the intent and extent of integration of these targeted health interventions into the health system will also vary.

3 Cost-Reducing Innovations

Many of the organizations we studied have designed services and products for poor consumers who


were previously excluded from access. Jaipur Foot’s artificial foot and VisionSpring’s ready-made reading glasses are disruptive in the sense that they fill gaps in conventional markets. The vertical approaches described above also allow for refinements in qual-ity while reducing cost through simplification and delegation of certain processes to community workers. For the most part, they break the tradeoff between cost and quality by pursuing both low costs and high quality at the same time. Most organizations adapt services to the needs of their clients, and some reduce the ‘frills’ while providing high qual-ity clinical care.

4Business Process Innovation

The core innovations of most of these organizations are in business processes rather than medical processes, demonstrating that it is possible to have large scale impact using innovative marketing, finance and operating

strategies. Indeed, some of the strategies described herein have been successfully reproduced by larger entities, for example, by the Thai government in the case of PDA, and by other hospitals using the consulting services of Aravind Eye Care System.

In closingAs we have shown, the private health organizations that have emerged to serve the poor in low- and middle-income countries -- of-ten called social enterprises -- have developed many exemplary and innovative techniques to improve care for the poor. We believe that the private sector has been and can continue to be a potent source of innovation in healthcare servic-es worldwide, and that it can serve as an inspiration for imaginative organizations in any industry.

“Reprinted with permission from Rotman Magazine, the magazine of the University of Toronto’s Rot-man School of Management.”

Onil Bhat-tacharyya is a professor of Family and Community Medicine and Health Policy,

Management and Evaluation at the University of Toronto, as well as a clinician scientist at the Li Ka Shing Knowledge Institute of St. Michael’s Hospital.

Anita McGa-han is the Associate Dean of Research and the Rotman Chair in Manage-ment at the

Rotman School of Management. Peter Singer is CEO of Grand Challenges Canada and director of the McLaughlin-Rotman Centre

for Global Health, University

Health Network and University of Toronto. He is also Professor of Medicine and Sun Life Financial Chair in Bioethics at the University of Toronto.

Abdallah Daar is a professor of Public Health Sciences and Surgery at the University of Toronto and

senior scientist and director of Ethics and Commercialization at the McLaughlin-Rotman Centre for Global Health. He is also Chief Science and Ethics Officer of Grand Challenges Canada. Sara Khor is a research as-sociate at the Pharmacoeco-nomics Research Unit at Cancer Care Ontario and the Li Ka Shing Knowledge Institute of St. Michael’s Hospital. David Dunne is an adjunct professor of Marketing at the Rotman School of Management.

About the authors:


Simple, grounded and someone with great business acumen – these

aptly describe in few words what Dr. Azad Moopen, Chairman, DM Healthcare & Malabar Institute of Medical Sciences (MIMS) is all about. The dynamic leader has had an illustrious career, starting as a physician and then turning into an entrepreneur. He has successfully combined professional and management excellence, while passionately pursuing healthcare delivery and philanthropic activities.

Dr. Moopen hails from the Moopen family of Kalpakanch-ery in Malappuram district of Kerala. His father, Ahmed Unni Moopen, had been a social activ-ist and philanthropist, actively involved in the freedom struggle during the 1940s. Not to forget, he was a successful businessman too! In fact, Dr. Moopen contrib-utes his sharp business sense straight to his father.

Getting started Dr. Moopen passed this MBBS with gold medal and MD in General Medicine from the Government Medical College, Kozhikode, Kerala, and thereafter his Diploma in Chest Disease from Delhi University. He served as a Lecturer at the Calicut Gov-ernment Medical College for five years before relocating to Dubai in 1987.

Raising the bar with each step

Starting a single-doctor practice at his own clinic, Dr. Moopen went on to establish the largest chain of healthcare facilities in West Asia with more than 125 medi-cal establishments consisting of hospitals, polyclinics, pharmacies and diagnostic centres, under the brand Aster and Medcare, spread over UAE, Qatar, Oman and Saudi Arabia over a period of 25 years.

DM Healthcare, under his Chairmanship, has become

the Numero Uno of healthcare institutions in the Middle East; it employs about 3,000 people in the Gulf, who serve more than 3 mil-lion patients every year. And, Dr. Moopen has gigantic expansion plans. He plans to further expand the chain to 300 units in the GCC and India by the year 2015.

Setting foot in IndiaAfter establishing a flourish-ing business in the Gulf, Dr.

Moopen entered the Indian market by spearheading the 600-bed, high-end tertiary care Malabar Institute of Medical Sciences (MIMS) at Kozhikode in 2001 with a group of NRIs. After this, he went on to establish the 150-bed MIMS Hospital at Kottakkal in Malappuram in 2009. The 2 MIMS Hospitals currently employs about 3,000 people directly. Not just this, the MIMS Academy Trust, under his Chairmanship has been set up in a 32-acre campus at Karad in Malappuram District, which has more than 1,100 students in vari-ous disciplines; from certificate to PG courses in various medical and nursing subjects.

DM Healthcare has also embarked on an ambitious project to establish the Aster MedCity at Kochi. This iconic project, with an investment of Rs. 1,500 crore, shall facilitate the reverse brain drain of healthcare professionals and exploit the potential for health tourism in the country. Work has already started on the 40 acres of Phase I of the project at an esti-mated investment of Rs. 500 crore.

Dr. Moopen is setting up a Medical College at Wayanad in Kerala too, a backward district with a sizeable tribal population with no access to modern medical facilities and is expected to start its functioning in 2013.

Additionally, The Phase II developments of its Aster – Adhar Hospital a multi-speciality hospital at Kolhapur in Maharashtra have started in January 2012. Dr.

The Dynamic Leader With exemplary vision and full of successful business ideas, Dr. Azad Moopen is a boon to the healthcare industry worldwide, says Jayata Sharma-Sand

Portrait


Moopen has also set up Aster – Eye Care, a comprehensive eye care centre at Faridabad, Haryana and at Lajpat Nagar Delhi and is planning similar 20 facilities across India very soon.

The CSR Streak Dr. Moopen has been at the fore-front of philanthropic and social initiatives in India and abroad. MIMS Charitable Trust and DM Foundation are planning Com-munity Dialysis Centres (CDC) in all the 14 districts of Kerala to provide free and subsidised di-alysis to the underprivileged. The first one of it is at Vadakara in Kozhikode and is functional with 11 dialysis machines and a total investment of Rs. 1 crore. The second centre has been set up at Nallalam, near Calicut and the third in Thiruvananthapuram. MIMS Charitable Trust under his leadership is extending free and subsidised medical treatment to the tune of Rs. 50 lakh a year to the poor.

The Trust had established a Rural Health Centre at the back-ward Vazhayoor Panchayat near Kozhikode in 2008 and adopted 7,000 BPL members for com-prehensive free OP and IP care. It also provides assistance for free paediatric cardiac surgery through a special programme called Save the Little Heart.

Not just this, Dr. Moopen’s Fam-ily Foundation is setting up the Hu-man Resource Management Centre in his native village of Kalpak-anchery to address the educational backwardness with a donation of Rs. 2 crore.

He is also running a School for the Children for Special Needs in the village and his family has also donated the land and money for establishing the MA Moopen Me-morial MES High-Tech School and an ITI at Kalpakanchery, provid-ing vocational training to boys and girls. The Trust is planning to help for the rehabilitation of the Gulf Returnees in the area as well.

Along with the above, Dr. Moo-pen is also quite active in infra-structure development activities.

Below are some of the excerpts from the interaction Healthcare Executive had with him

Q What, according to you, are the essential qualities required to run a business successfully?A The essential quality to run a business successfully is the ability to recruit and maintain a leadership team who work passionately in building the organisation. This can be achieved only by empowered delegation to your subordinates.

Q What motivated you to leave active medical prac-

tice and venture on your own?A Well, it might sound clichéd, but the fact is this is not the way in which I had planned my ca-reer! I was happy being a teacher and a physician. However, a sabbatical of 2 years changed my life forever. During that tenure, I took a trip abroad to help one of my friends in his business venture. I was confident that after a couple of years, my return to India was certain. But as they say, God had different plans for me. After a year of working with my friend, he pushed me to start something of my own.

I took fancy to the idea and we re-located to Dubai.

My business career has been the most uncalculated and non-schemed! In fact, I would say this was imposed on me by someone else (laughs). However, I took the jump and it paid off well. I always describe this as, “When opportu-nity knocks at your door, you can either open the door or complain of noise pollution!” Obviously, I was one of those who open the door! After a while, I started enjoy-ing the process; maybe having a business family had some influ-ence on me.

Q Why Dubai and not India to start your entrepreneur-ial career? A When I came to Dubai, the place didn’t have good healthcare facili-ties, especially for the expatriates in the private sector. Hence, there was a visible chance of provid-ing care as well as establishing a business. Also, during those times, Dubai was growing at a rapid pace. There were a lot of people re-locating here from various countries, including India. We had, and still have, a multi-national crowd. In fact, today Dubai has a mix of about 60-70 nationalities. I loved the opportunity that was present here, of working with such a vibrant crowd.

In addition, Dubai has always

• Padmashri by the Government of India (2011)• Pravasi Bharatiya Samman Award the by Government of India (2010)• Arab Health Award for Outstanding Contribution of an Indi vidual to the Middle East Healthcare Industry (2010)• Arabian Business Achievement Award for Best Healthcare Company in GCC (2010)• Best Doctor Award the by the Government of Kerala (2009)• Aslam Kshema Award by Kshema Foundation (2009)• Kerala Ratna Award by Keraleeyam (2008)• NABH Accreditation for MIMS Hospital by Quality Council of India (2007).• Kerala State Pollution Control Board Award for MIMS for 3 consecutive years from 2007 with Excellence Award in 2010.• Dubai Service Excellence Award by the Government of Dubai for the Group (2004)• Best Medical Practitioner Award by the Arabia Daily, UAE (2001)

Awards and Recognitions


had visionary rulers. We do not have many resources in Dubai; even oil, water and fertile soil are imported! However, the Ruler of Dubai was open and support-ive in facilitating anyone who wanted to grow and establish a business.

This gave us great confidence. Usually it is said that America is a ‘land of opportunities’; I would say Dubai is simply a smaller version of it. Overall, I found the country and the people congenial for business activities 25 years back. This is the reason why I established business in Dubai.

Q What’s the most suc-cessful ‘strategy’ imple-mented by you for DM Healthcare?A The most successful strategy was the branding of Group establishments under Aster & Medcare which gave significant visibility and increased business across all verticals and geogra-phies.

Q What hardships did you face in your journey till now? How did you over-come those?A There was requirement for funding and people. The private equity partners helped in ad-dressing the first challenge and our contacts in various countries helped us to get people to man the organisation.

Q How does it feel to be a Padmashri, along with being a recipient of many coveted awards?A I felt proud being bestowed with the Padmashri by the Government of India last year. This increases my responsibility in serving the people and upholds the flag of our great country.

Q You have extensive expansion plans for India, (MedCity, acquisitions). Kindly elaborate.A We have an extensive plan for

expansion in India over the next 3 years with Aster MedCity at Kochi, Medical College at Wayanad and two clusters of hospitals with a total investment of Rs. 1,200 crore. The funds we acquired from Olym-pus of $100 million will be used for funding these projects.

In the next 5 years, we will be the 3rd largest healthcare group, behind only Fortis and Apollo.

Q Talks are on that DM Healthcare is planning an IPO. Kindly tell us more about this.A We are surely planning an IPO, but in 2-3 years’ time, most prob-ably in India itself.

Q What advice would you give to budding doctor-entrepreneurs?A I would like to encourage doc-tors to take up healthcare delivery and related business as a destina-tion. Because they could do much better than other professionals due to the intricate knowledge of a

complex subject like healthcare. There are many doctor entre-

preneurs who are highly success-ful at a young age proving this.

Q What is your business mantra? A The most important business mantra in a service industry like healthcare is people, people and people. People are our most important asset. Hence, we try to recruit and retain the best talent.

Q With so much in your kitty, how do you manage work life balance?A Role balancing in life is an art which I am trying to learn! Split-ting time between personal, profes-sional, business, family and social life is a great balancing act. I am lucky to be able to allocate time for most of these important roles allowing a satisfactory work life balance. I spend time on intro-spection and reading, along with meditation which helps to give insight into my life.


CMC, Vellore, a historical entity in itself, is a refer-ral tertiary care hospital

and seeks to help transform the health status of India. The hospital itself does little, but the biggest impact comes from those who have been trained here and have then gone out to serve, treat and teach others. CMC graduates also stay on to work in hospitals affiliated to the Christian Medical Association of India.

The college is owned and administered by the Christian Medical College Vellore Associa-tion, which is a Society registered under the Societies Registration Act of India. The association is made up of 54 churches and many other Christian medical organisations. CMC has over 7,900 staff, including over 1,290 doctors and 2,400 nurses. Most of these people are involved in

providing medical care although they may also have teaching and research responsibilities. Almost every clinical specialty is catered for, and many departments are sub-divided into units, each of which has particular expertise in specific areas as well as it pro-vides services of a more general nature.

Christian Medical College has pioneered the concept of provid-ing care to the lowest strata of society and also spear heads the provision of healthcare to com-munities that are in dire need of help. The insight that they share is that it is not enough to provide free services to the poor; the patients need to feel that they are being taken care of. In all of the community outreach work, there has been recognition that better education and economic develop-ment can have a greater impact

on health than medical services. Improvements in basic infra-structure (especially safe water and sanitation) can save more lives than vaccination. These principles have driven many groundbreaking initiatives.

The college itself plays home to over 1,500 students, many of whom have held the dream of joining CMC from their younger years, and is rated as one among the top 10 medical colleges in India. The Wi-Fi enabled campus and state-of-the-art labs are an icing on a cake rich with speciali-sations of cardio-thoracic, neuro-sciences, urology, endocrinology, gastroenterology, hematology, and many more.

Medical missionaries and a legacy CMC Vellore was founded by an American missionary, Dr. Ida S.

Scudder. “America and marriage to millions” was the dream that Ida Scudder held as a 20-year-old woman as her memories of India were ugly. As the daughter of Dr. John Scudder Jr., her memories of India included corpses lying beside the road during the famine which pushed her away from wanting to stay in the country. Upon learning that her mother had taken ill, Ida returned to India in 1890 to attend to her where she had a revelation of sorts. During this visit with her family, she became aware of the great need for women doctors as on one fateful night she was approached by three men who sought her help for their wives who were giving birth at the time. Her inability to help them due to lack of medical training and their eventual death led Ida to her true calling. Consequently,

Service and SacrificeAs a motto Christian Medical College, Vellore adopted the words of Jesus, “Not to be served, but to serve” and this drives everything at CMC, says Isha Khanolkar

Focus


Ida went back to America, entered medical training and, in 1899, was one of the first women graduates of the Weill Medical College of Cornell University.

Shortly thereafter, she returned to India and started a one-bed clinic in Vellore in 1900. In 1902, she built a 40-bed hospital. In 1909, she started the School of Nursing and, in 1918, a medical school for women was opened under the name Missionary Medical School for Women. In 1928, ground was broken for the “Hill site” medical school campus on 200 acres (0.8 km²) about 8 ki-lometers west of Vellore. In 2003, the Vellore Christian Medical Center was the largest Christian hospital in the world, with 2,000 beds, and its medical school is now one of the premier medical colleges in India.

Enviable infrastruc-tureCMC was recently conferred with the best multi-specialty hospital of the year in the non-metro category as well as an award for its Cardiology Care Department

at the annual India Healthcare Awards 2011. One of the advan-tages of being situated in a town like Vellore is that CMC has a magnificent sprawling 160 acre campus untouched by the hustle bustle of the metro life. The college is set amidst lush greens in a building that is virtually a heritage structure.

The main campus is found in the heart of Vellore town and is now a large 2,695 bed hospital.

There are 95 wards including 15 ICUs. About 76% of the beds are in general wards and are subsidised to reduce the financial burden on patients and each department has one ‘free bed’ where they can admit a patient who will be given fully free care, including food. There are 39 major operation theatres and a

further 18 facilities for minor procedures. The hospital houses 121 specialised departments and the building that was origi-nally built by Ida Scudder, has undergone significant expansion without distortion of the original scheme. The Ida Sophia Scudder Centenary Center (ISSCC) for Women and Children is often just called the Centenary Block. This block provides facilities for the departments, which look after

women and children. It includes out-patient clinics, in-patient beds, surgical beds and operating theatres. There are 424 beds for in-patient care in this building.

Medical college par excellenceBeing a referral hospital, CMC is able to cultivate multiple special-

ties under one roof to treat pa-tients for more than one ailment or disease. One of CMC’s key roles is to help train the skilled and caring medical professionals who are desperately needed for hospitals throughout remote and rural areas of India. The educa-tion fees here are amongst the lowest in the world for a private institution. CMC offers more than 110 courses including MBBS, nursing, allied health sciences, many postgraduate medical spe-cialties, plus distance learning courses and PhD programmes. The Medical Records course at CMC was the first-of-its-kind being offered in India.

The distance education pro-gramme uses a variety of peda-gogic methods such as interac-tive problem-based modules and video conferencing to support students through their courses. The College of Nursing at CMC has been conferred an Award for Excellence for its work in the fight against AIDS. Students from economically-disadvan-taged backgrounds are helped still further through scholarships

CMC offers more than 110 courses including MBBS, nursing, allied

health sciences, many postgraduate medical specialties, plus distance

learning courses and PhD programmes.


that can cover all fees as well as hostel accommodation and food. This ensures that no one needs to be burdened by an education loan to study at CMC, and many can then go on to serve in the deprived areas of India.

Inquisitive mindsIn the area of research, CMC strives to understand God’s purposes and designs, fostering a spirit of enquiry, commitment to truth, and high ethical standards. CMC has a strong track record of training medical profession-als and promoting both field and basic research. The inculcation of an attitude of inquiry, acquisi-tion of knowledge of basic methods of research and the conduct of research, at various levels of healthcare are a part of the culture of the institution. Longstanding ties between US hospitals and teaching institu-tions have provided a research climate of a higher caliber than what is usually found in develop-ing countries. CMC is a recipient of more than 80 externally-fund-ed basic and clinical research grants, generating an estimated $3.8 million in direct costs per year. Currently, there is an agree-

ment of co-operation between Tufts University and CMC to continue to develop collaborative programs.

Guiding Hand of GodCMC Vellore is a hospital draw-ing its inspiration from the example of Jesus Christ and seeking to model its values, priorities and activities on his life and healing ministry. All patients are welcomed and treated with-out regard to their faith, caste or

other status. The staff represents a variety of faiths and each individual’s beliefs are treated with respect. A large Chaplaincy Department serves patients, staff and students providing spiritual counsel and support and organis-ing worship services in many languages.

Delivery of CareCMC is particularly well known for certain departments such as Gastroenterology, Neurosciences and Hematology (where it is a national leader in the treatment of rare blood disorders and bone marrow transplantation). Howev-er, it also gives high importance to less prominent specialties such as Rheumatology, Physical Medicine and Rehabilitation, De-velopmental Pediatrics and Pal-liative Care. Diagnostic services are provided in house by the Radiology Department, Nuclear Medicine and the Laboratories. Radiology reporting is through a filmless digital system (PACS), enabling doctors to view X-rays and scans on any computer on the network. All laboratory test results are also available through the hospital intranet, as part of the ‘clinical workstation’ hospital information system. The labora-tories are highly automated and also provide quality control ser-vices to many small hospital labs

throughout India and abroad.

Empowering Public HealthCMC began ‘roadside clinics’ in 1906; Ida Scudder and a small team used to go out in a bullock cart to visit local villages and run clinics under a shady tree. These began to multiply and bullock carts were replaced by motor ve-hicles. The Department of Com-munity Health was established in 1957 to integrate with CHAD team, mobile clinic teaching and the research with the community programme.Today, CMC runs extensive community-based health services around Vellore, resourced by the secondary-level hospitals CHAD and RUHSA, which have led to major improvements in health indicators in their focus areas. In addition, the low-cost effective care unit, college of nursing, community health services, and smaller outreach clinics provide localised care to people living in the urban and slum areas of Vellore.

CMC is seeking new ways to impact the health of the popula-tion, including diabetes screening programmes, a cancer screen-ing programme for women and health screening and education camps. These not only check for disease symptoms but also teach

1950 Medical postgraduate courses started

1961 First successful open heart surgery in India

1966 First Rehabilitation Institute in India for physically disabled

1971 First kidney transplant in India

1983 Low Cost Effective Care Unit opens providing ser-vices to urban slum areas of Vellore

1986 India’s first bone marrow transplant

2003 Vellore Bombay Artificial Hand developed; Palliative Care Unit; Fellowship in HIV Medicine Course

2006 PG Diploma in Family Medicine distance education course

2007 Centre for Stem Cell Research; Fellowship in Sec-ondary Hospital Medicine started

2010 Foundation stone for Chittoor Campus laid

Over a century of Milestones: CMC,Vellore

The College Chapel


participants to embrace lifestyle changes to reduce the risk or severity of non-communicable diseases that are becoming in-creasingly important in India.

Community Health and Development (CHAD) The CHAD program is working closely with the government and other NGOs and has demon-strated the principles of primary healthcare, namely affordability, accessibility and acceptability, intersect oral approach and com-munity participation by render-ing healthcare to the communi-ties that it serves.

In addition, it also demon-strates an efficient information system and a functioning referral system from the grass roots through a monthly mobile clinic to the 80-bed secondary hospital, and, when required to the tertiary care hospital. This system has served as an efficient model for the Reproductive and Child Health approach, which is worth emulating.

The Community Health Department has been committed to offering holistic healthcare to individuals affected with leprosy. This is probably the only medical college with a leprosy control programme of the Government of India with award for the care of leprosy patients with reac-tions, ulcers and other medical problems. Today, the depart-ment plays a significant role in implementing several of the national programmes of India – the DOTS program, HIV/AIDS, Reproductive and Child Health, the control of diarrheal diseases and several others. In 2003, the department was recognised as the Nodal Centre in the South Zone for the Revised National Tuberculosis control program.

The Rural health centre functions as a first referral unit, and, with increasing activities expanded from 6 to 30 beds and then to its present state of a 80 bed hospital demonstrating a model First Referral Unit (FRU).

The Rural Health Centre is now referred to as the CHAD hospital, has an outpatient facility cater-ing to 180-200 patients, a labor room, a theatre, a nursery and a laboratory providing ample train-ing opportunities for doctors and nurses to work in a secondary care set-up.

Rural Unit for Health and Social Affairs KV Kuppam and the surrounding areas are served by RUHSA - the Rural Unit for Health and Social Affairs. RUHSA is a department of the Christian Medical College and Hospital (CMC) in Vellore. It was initially set up in 1977 as an

outreach project by Dr. Daleep Mukerji, who is now Head of Christian Aid. RUHSA now covers well over 1,20,000 people in the area around KV Kuppam and has been involved in all aspects of rural development; agriculture, animal husbandry, adult education, vocational train-ing, women’s training and help for the elderly and people with disabilities.

Workers are placed in the field in two ways. Each village has a Rural Community Officer (RCO); a well educated and trained local man. Initially there were female RCO’s but social pressures meant over time and hence they all

resigned. The RCO works with local people organising every-thing from youth clubs to literacy classes to government loans.

Low-cost Effective Care Unit The Low-cost Effective Care Unit was formed to service the poor of those in Vellore town. Whilst most of the patients pay for their treatment, any surplus arising in one area is reinvested to give sub-sidies and free care for those who cannot afford the full cost, and to fund educational and training activities. All the core activities are achieved without external funding from the government

or elsewhere. However, external resources are needed to fund research, the development of new programmes and infrastruc-ture and to extend the free and subsidised treatment given to the poor and through the outreach programmes. The treatment at CMC is meted out to patients on the basis of need and not on their ability to pay.

The Road Ahead As part of the new era, CMC has received approvals for the much-needed expansion in its academic offerings. CMC administrators are excited that government and academic authorities have re-

cently approved nine new courses of study for post-graduate physi-cians at CMC. These include MDs in Geriatrics, Transfusion Medicine, Respiratory Medicine, Endocrinology, Rheumatol-ogy, Hepatology, Neonatology, Endocrine Surgery and Vascular Surgery. Of these specialties, Geriatrics and Rheumatology will be offered by CMC for the first time ever.

All the courses are at least 3 years in length, so the increases will add at least 225 post grad doctors to the CMC staff. The new courses will also allow more people to develop in their special-ties within CMC, rather than going outside the institution for post graduate training. These new doctors will be productive members of their clinical teams, giving relief to existing hard-pressed clinicians who are now seeing upwards of 6,000 people a day.

The AP Government, under the leadership of the late CM Dr. YS Rajasekhar Reddy, made a more than 250 hectare block of land available for the ultimate building of a College and Hospital to rival the size of the present Vellore facilities. As the land was not ad-equate for the purpose, CMC had to purchase at the existing market value further land and thus own a total of 640 acres to establish the campus.

On 24 April, 2010, the founda-tion stone for a boundary wall around what is called ‘the CMC Vellore, Chittoor Campus’ was laid in the presence of many distin-guished Government and CMC officers. CMC proposes to set up a super specialty hospital, a medical college, pharmacy college, dental college, nursing school and bio-medical engineer-ing college.

Had Ida scudder been alive today, CMC Vellore would have done her proud with their work and stayed true to their vision of being, a witness to the healing ministry of Christ, through excel-lence in education, service and research.

Mobile clinic visiting a village

The treatment at CMC is meted out to patients on the basis of need and not

on their ability to pay.


Name of the Book: The Habit of Winning Author: Prakash IyerNo. of pages: 264Price: Rs. 299

There are scores of self help books that deal with various perils and hardships of being a leader, but the book, ‘The Habit of Winning’ by

Prakash Iyer spells out the ingredients of good leader-ship through stories and simple straight forward advice.

In a corporate career span-ning 25 years, Prakash has worked with teams selling everything from soaps and colas, to watches, yellow pages and diapers and is currently the Managing Director of Kimberly Clark Lever.

The book is a cleanly written and easy to read, making it

the perfect companion for those frequent domestic air travels. It is divided into 11 sections like vision and goals, self-belief, hard work, winning with teams etc and each section has a number of well-written motivational short stories. The examples he quotes in the introduction come

in like a breath of fresh air. What makes it more interesting is the use of instances that are more relevant for the Indian audience. The chapters are short, just one story per chapter and end with a message covering the gist of the story. Most of the stories are contemporary real-life stories, which you can relate with, and not those typical teaching stories or inspirational gems of ancient wisdom, parables or fables; except for a few familiar ones like The Water Bearer, The Cracked Pot, and Making a Difference, and The Starfish Way.

The basics of superior leader-ship and principles of team work, commitment, people manage-ment, communication and such are dealt with utter simplicity, making this book easy to identify with. Iyer combines his experi-ence of working with people with varied backgrounds as he weaves in important life lessons with admirable ease.

What makes him different from other motivational writers is his emphasis on the principles. His argument is that unless we have a character built on strong principles, there is no everlast-ing success. Prakash also gives emphasis on making the founda-tion right, through building up of solid principles, to make the way forward.

The stories provided by the author have been crafted in expertly and are apt for driv-ing the author’s point through in every sense. For example, he states in the chapter on the One-Degree-More Habit that doing all expected makes you mediocre,

but doing a degree more brings out a winner and an achiever out of you. He also emphasises on the perception of an employee’s role in the organisation by using the analogy of being in a role of a stone breaker; where one could either perceive oneself to be breaking just stones or think that he is contributing in making the world’s tallest cathedral. The au-thor narrates the stories person-ally to the reader and that makes it the best reading experience.

He correctly points out, how some things are not taught at B-schools and how flying a kite is an important management les-son. The author is an avid cricket fan, which comes through the numerous stories of great feats by Sachin Tendulkar, Marvin Attapatu, Steve Waugh, Anil Kumble, and the likes. He brings to life the traits of some of the accomplished leaders, known for their conviction, self-belief, perse-verance and many other positives to make you take that first step to achieve what you thought was impossible.

Fresh thoughts and concepts are the theme throughout the book, except some parts where it becomes a little monotonous. Ev-ery chapter has fodder to inspire, motivate and unleash the winner within you.

As you continue reading the book with love, your approach to life, work and your surroundings will seem different. Pick this one up and get started on making better decisions and living life to the hilt.

Review by Isha Khanolkar

Management Mantras

BookREVIEW


NationalINDIA HEALTH CONGRESS 2012India healthcare Congress is a unique, invita-tion only event driven by pre-scheduled busi-ness meetings between prequalified solution providers and senior executives. Thought-provoking conference sessions, discussions and innovative networking opportunities round out the agenda, resulting in two days of focused, structured business development. Unlike traditional conferences or tradeshows, the primary focus and benefit of India Healthcare Congress is for new relationships to be forged and existing partnerships to be enhanced. We only invites senior executives with the highest credentials and solution providers with the most cutting-edge capabilitiesOrganiser: InnovetaContact: Ms Neha Chopra Tel: 9972221142E-mail: [email protected]: http://www.indiahealthcarecon-gress.in

Lab Expo & Conferences, PuneLab Expo & Conferences Pune is going to be one of the greatest and appealing expo which will be held at Pune on April 20-22, 2012. For many years the Indian government has been conducting this expo in different places of India. Exhibitors of various lab commodities from all over the world will come to display their newly launched products to their guests.Lab Expo & Conferences Pune will be one of the greatest venues where exhibitors will exhibit their products, instruments and equip-ments. The exhibitors will display huge range of modern technologies in the fair. It will play an immense role for broadening their invest-ment market and technology. The participants will also be able to exchange their experiences with the viewers.Organiser: Paramount ExhibitorsContact: Mr. Harish Arora Tel: +91-172-2274801Website: www.paramountexhibitors.com

Famdent Show, MumbaiFamdent Show Mumbai is now the undisputed leading Dental Event in India which is held

annually, the event is an excellent blend of education with a trade expo. The event will take place on Jun 03, 2011 - Jun 05, 2011. Fam-dent Show Mumbai will showcase the latest trends of Dental medicine and Dental technolo-gies equipment under one roof. Professionals from the field of Dental services, Production, Wholesale, Scientific research, Information/consulting services, Educational establishment, Doctor, Scientific researchers will attend the event. Organiser: FAMDENT PUBLICATIONS & EVENTSTel: +91 22 2673 2260/65049697E-mail: [email protected]/[email protected]: http://www.famdent.com

XIVth National Seminar on Hospital / Healthcare Management , MedicoLe-gal Systems and Clinical ResearchIn commemoration of the culmination of the distance education programmes and the consequent convocation ceremony, every year Symbiosis hosts a National Seminar on Hospital / Health Care Management & Medico Legal Systems at Symbiosis, Pune. Around 1200 doc-tors, lawyers and other health care profession-als from all over India and abroad attend this mega event. This year, the event will be held on 4th & 5th May 2012.Officials of institutional/ corporate hospitals, government officials, NGO’s & representatives of the health care sector also mark their attendance for this event. The National Seminar is preceded by a number of concurrently run, day long workshops which are attended by delegates as an event separate from the main Seminar.Organiser: Symbiosis Centre Of Health CareTel: +91-20-25655023/25667164/20255051E-mail: [email protected] Website: http://www.sihspune.org

InternationalM-Health World @ The Mobile ShowM-Health World brings together key stakehold-ers from the worlds of healthcare and telco’s to inspire, influence and advance m-health business models and strategies. The event will be held on 17 - 18 April 2012. The rapidly

increasing cost of delivering healthcare, the epidemic rise of chronic disease along with an increasing population located in remote areas are resulting in the healthcare industry turning to telco’s and mobile solutions as a vehicle to deliver and distribute key health services.Organiser: Terrapinn Middle East Fz LlcContact : Ansil D’Souza Tel: +971 4 440 2520E-mail: [email protected]: http://www.terrapinn.com/2012/m-health-world/

SE- Asian Healthcare ShowIts More Than A Trade Show ! Visitors will also be treated to series of relevant Seminars and Workshops. The event will ne held from 17 April 2012- 19 April 2012. These sessions take place in the Seminar Rooms and run for the en-tire 3 days. The complete program is found on the website as we get closer to the exhibition date. Some of the previous seminar topics:Cardiopulmonary Resuscitation (CPR) Modern Prosthetic Treatment Medical Gloves - What You Need To KnowOrganiser: ABC ExhibitionsTel: (603) 79 54 65 88E-mail: [email protected]: http://www.abcex.com/

Hospital Build Europe 2012Hospital Build is the only event dedicated to bringing the investors, commissioners, backers and managers of major healthcare building projects together with the suppliers of the best services in planning, design, building, operations, management and refurbishment. The launch event Hospital Build Europe 2011 attracted 58 exhibiting companies and 2000 visitors from more than 50 different countries. It will take place on 24 April 2012 - 26 April 2012.

The event enables its participants to network with global key industry decision makers, and view and sample products and services from leading suppliers operating across Europe. One key highlight of Hospital Build Europe was the congress series.Organiser: EUROFORUM Deutschland SEContact: Aleksandra Kreplin Tel: +49 (0) 2 11/96 86–37 57Website: www.hospitalbuildeurope.com

Happenings

CEOPAGE Rajen Padukone

CEO Manipal Health Enterprises

My Life’s GoalsAim & Ambition: To strive for excellence in service delivery, to ensure complete customer-patient satisfaction and delight.

Vision: To make Manipal Hospitals the most preferred healthcare provider in every location that we operate in.

Social Goal: To provide affordable healthcare to all segments of society without compromising on quality.

Business Goal: To focus on building superior service quality as this will be the driver and differentiator in the business environment.

My Leisure ChoicesFavorite Tourist Spot: My family and I like to visit a new location every holiday and we rarely repeat. I love going to new places for the experience, people, cuisine and culture.

Music I Like: Hindustani Classical Music.

Sports I Love: Tennis and Athletics.

Ask my Taste BudsFavorite Food: I love to try new cuisines. However, my comfort food is Mangalorean cuisine. Fish curry-rice is one of my favorites.

Favorite Drink: Chinese tea.

In Awe of I Admire: Nature in all its majesty and people who live by their principles.

“We need affordable healthcare without

compromise on quality


�1�3�6�2�_�I�n�d�i�a� �E�d�g�e� �A�d

�T�u�e�s�d�a�y�,� �J�a�n�u�a�r�y� �1�7�,� �2�0�1�2� �2�:�2�4�:�4�5� �P�M

march 2012 - funding & taxation

Documents