1. OPERATIONS• Competitive Analysis• Benchmarking financial Analysis• Supply chain Analysis• Future Scope and recommendations

2. OPERATIONS

Product and services

Fortis Healthcare (India) is engaged in providing the latest in internationally recognised medical care to patients with a variety of ailments and medical conditions. Their Network consists of Super Speciality Hospital Hubs that concentrate on one or more specialities. These hospitals are interconnected to a larger network of multi speciality hospitals that ensures patient access to expert care for any speciality. This unique network architecture provides expert care to their patients and a level of confidence in receiving the latest medicine has to offer.Corporate ServicesHealthy employees contribute to a healthy business! The healthcare delivery services in their top hospitals are specially designed to suit employee needs. All patient records are accessible at all their hospitals across India so that employees can access healthcare services at the centre most convenient to them, choosing from a wide network of their group hospitals.Fortis offers a wide range of products and services to suit the company's needs.1. OPD Services - Fortis network of top hospitals in North India offer special packages to corporate employees and their dependants on the OPD facilities listed below:

• Doctor consultations• Pathological investigations

• Radiological diagnostics such as X-Rays, CT Scan, MRI, Ultrasound, Mammography

• Non-invasive cardiology like ECG, Echo, TMT, Holter etc.• Neurology investigations such as EEG, EMG etc.• Physiotherapy

2. In-patient Admissions (IPD-related services) - Employees of empanelled

corporates are given special offers on all multi- specialty procedures/surgeries and on room rent.* 3. Ambulance Facility - This facility can be availed of in times of emergency. Dependants of members may also be eligible for these facilities. 4. Health Awareness Lectures/ Workshops – Awareness workshops and sessions are organized by eminent faculty members on diverse topics at various hospital units as well as the Corporate premises with the intention of promoting a sense of well-being and fitness among corporate personnel.5. Executive Health Checkups6. Health Check Camps7. Blood Donation Camps *conditions apply List of Empanelled InstitutionsThe Fortis Group is empanelled with a number of top corporates and multinational companies (MNCs), Public Sector Units (PSUs), Government Bodies/ Institutions, Ministries under the Government of India, Insurance Companies and Third Party Administrators (TPAs). Many of these clients have chosen Fortis has their preferred healthcare provider. The employees of these empanelled clients are given special offers on Preventive Health Check- up programmes, multi-specialty procedures/surgeries and medical management services. This facility can be availed of in times of emergency wherever and whenever needed. All dependants of employees at the empanelled organization may also be eligible for these facilities

Fortis Operational Management and StructureThe Fortis hospital network was based on a “hub and spoke” model with multispecialty “spoke” hospitals providing comprehensive health care services and “hub” hospitals with sub specialty services in one or more areas. This model helped Fortis provide comprehensive health care services from within its own network to a large geographical area. To make optimal use of the intra-network referral model, the number of patients referred for surgeries from within the network versus those who came from outside were constantly monitored. Fortis’ hospital services prices were among the highest in India. Fortis justified thehigher prices by noting its large investments in infrastructure, equipment, nursing facilities, and prominent doctors with high salaries. The price of procedures at subspecialty hospitals was higher than the “spoke” hospitals. Fortis bundled services at hospitals as “Packages,” a single charge for a range of services associated with a diagnosis, including examinations, common tests, room charges and procedure costs.

Fortis refined many hospital protocols imported from the west for the Indian market. For example, a typical Indian patient checked in accompanied by three to four attendants and this number sometimes grew to 10 to 20 for patients from rural backgrounds. Fortis ensured that the higher number of patient attendants was factored in hospital design and workflows. It also accommodated cultural practices which varied dramatically across the country. The hospitals provisioned for prayer rooms for different communities at different sites. Fortis’ Human Resource PoliciesFortis considered the recruitment and retention of highly skilled doctors, nurses and other personnel its top priority. The staff at hospitals operated and managed by Fortis was compensated by the respective hospital owners. At its owned hospitals, Fortis hired reputed physicians at above-market salaries to access the patient roster and increase the company’s standing in the industry. Cultural fit was also used as selection criterion in the interview process. All specialists and most general practitioners were compensated on a salary plus incentive basis. They worked across the network hospitals, depending on demand. The physicians who practiced exclusively within the Fortis network earned a guaranteed income and had predictable working hours. They could also provide better continuum of care to patients, and had more time for resource development and research. Although Fortis paid more in salary costs during the initial years, it hoped to lower personnel costs in the future as physicians’ practices expanded. Fortis outsourced housekeeping, security, grounds maintenance and various other medical support services. In most cases, Fortis replaced the physician-led management of acquired hospitals with professional managers. This practice sometimes disturbed the power structure within the hospitals, creating friction between physicians and managers. A senior cardiologist at the recently acquired Escorts heart hospital remarked, “Fortis’ management is generating ill-will amongst the physicians, some of whom are the best in the country. They overrule the decisions of senior surgeons and introduce policies without consulting the physicians.” To address such concerns, the Human Resources departments of Fortis group hospitals focused on balancing business requirements with the motivational concerns of the physicians. Compensation of physicians varied significantly, depending on seniority, specialty, reputation and demand for their services. Fortis had developed a formula to calculate the variable component of salary, which factored success rate of various procedures, patient referrals, and rapport with patients, administrative responsibilities and publications. Though Fortis encouraged physicians to conduct research, it had not developed a clear model to compensate for the time. The physicians in non-core specialty areas, such as dentistry and ophthalmology, and in multi-specialty practices, were permitted to maintain their own separate private practices and to consult at other hospitals. They were compensated on a fee-for-service or revenuesharing basis.

Fortis’ salaries were considerably higher than the national average. The salaries of the most senior consultants ranged from US$100,000 to US$600,000. In comparison the salaries for a physician trained in internal medicine in an average Indian hospital were in the range of US$10,000–US$15,000 post residency and for specialists with fellowship training in medical sub-specialties in the range of US$12,000–US$20,000. The hospitals expected the high-paying physicians to generate revenues to justify their pay packages. Marketing and BrandingUnder the guiding hand of Ranbaxy, Fortis understood the importance of creating a specific and strong brand identity. Fortis hoped that its message of quality would help overcome the controversy between private primary care practices in the community and hospitals around kickbacks for referrals. The patient referral system in India was similar to other countries and relied on referrals from the family doctor to specialists or directly to a hospital if the patientsneeded a procedure. Patients frequently conferred with friends, family members and other doctors before they chose a hospital. Those who were Internet savvy read about their condition and identified the best physicians and hospitals. To aid in physician retention, Fortis conducted Continuing Medical Education (CME) programs. It reimbursed the physicians for any participation fees but did notcompensate them for the time spent on non-clinical activities. In 2006, Fortis physicians participated in over 400 CMEs. CompetitionThe major competitors of Fortis were the for-profit hospitals in North India, including the nationwide chain of Apollo hospitals, and regional operators like Max Healthcare. Fortis also competed with hospitals owned by government agencies or nonprofit trusts, such as the Post Graduate Institute, All Indian Institute of Medical Sciences, and hospitals affiliated with medical schools. As Fortis expanded into the rest of India, it expected to face competition from established local players. A large number of private hospital groups from Singapore, United States and Australia were also planning hospitals in India. With a growing demand for health care services by local Indian population, most market participants felt that there was enough room for growth by addressing the domestic market. To build a national brand, the hospitals jointly created the “Indian Health Care Federation” whose agenda was to establish national benchmarks by sharing clinical outcomes information among all the member hospitals.

Competitive Analysis:

Corporate Strategy The corporate strategy of the Fortis is based on steady expansion in the new markets. It has adopted a strategy of market development where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy; Fortis has adopted the strategy of Mergers

And Acquisitions which are explained below: Mergers and Acquisitions According to Wall Street Journal, Fortis Healthcare was in process of buying 10 hospitals in India, for 9.09 billion rupees ($187 million). And this move was a part of overall strategy of Fortis healthcare to expand rapidly in the hospital chain sector. These acquisitions will get Fortis to mark of 38 hospitals with capacity of 52,000 beds across India. In addition to this 10 additional hospitals were added after the Wockhardt’s deal. International Partnership Fortis Healthcare is affiliated with some of the world’s best in the fields of infrastructure, technology, and medical treatments to deliver world class healthcare services in the region. It continuously strives to provide the hassle-free healthcare services to patients from all over the world. In order to make treatments seamless, over the years Fortis Healthcare has developed alliance with the top-notch global service providers in the fields of

healthcare, insurance, medical tourism, travel, and other sectors. Which include likes of, Aetna, Bupa, Cigna,GMCserviceetc. The alliance with international partners ensures seamless healthcare coverage for members patients while living, studying or travelling throughout India and in the Asia-pacific region. Thus ensuring a larger network of hospital will be there to support its customer base. The alliance with the service provider facilitates timely access to world-class healthcare 17 services, medical expertise, and other healthcare related services. This is how Fortis meets its quality service goals.

Benchmarking financial Analysis

NO DATA FOUND FOR THIS SEGMENT!!!!!I would appreciate if any1 could help me with this.

Supply chain Analysis

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Future Scope and recommendations:

Future prospectus evaluation: Fortis is relatively new entrant in healthcare industry. However, in addition to hospital business, they have also entered into retail pharmacy business and also entering into old age home business. Over a five period of time, the growth in the

super specialty hospital business are likely to stagnant therefore, it will be like a cash cow of BCG matrix. The cash generated thru’ cash cow will be used for developing old age home which is relatively new and high growth product (Star in BCG matrix). The hospitals which are not able to generate cash (even though other hospitals are growing) will be like problem child and it would be better to sold those hospitals and invest in Star. Being a relatively new player, there is no dog in their portfolio. The details of various phases on life cycle of product and BCG matrix are show below:

Recommendations:

•

More Focus required on Organic Growth

• Too much focus on specialty

• Market extension in tire 2 and 3 cities

• Smaller Hospitals

More Recommendations & Suggestions:Some Suggestions for improving the position of the Fortis hospitals

1. The general perception that large hospitals, with high bed-occupancy rate, are profitable, is misleading. Global experience shows that hospital with more than 250 beds don‟t do well. Many Indian hospitals are following the US healthcare industry, by decreasing the average length of stay of patients and increasing patient turnover. US research shows that 80% of the revenues form a patient comes in the first 72 hours post- admission. Hospitals generate a lot of revenues from General Inspection, because the patient turnover is very high. A large percent of revenues come from specialized services like operations and surgeries. It is because of these reasons that many corporates are planning for a small 100 beds specialized hospitals, which caters to specific diseases like cardiac, cosmetic surgery, neurology etc. Research shows that there exist a lot of space for super-specialized hospitals with 100-150 beds, which generate revenues equivalent to large 500 bed general hospital. Typically large hospitals with approximately 500 bed capacity takes about 9-10 years to break even whereas super-specialty hospitals with about 100 beds take about 6-7 years to break even. Therefore, going in for super-speciality hospitals

seems to be a more viable option today.

2. Hospitals could also generate revenues from medicines if they are supplying them in-house. Some hospitals make it mandatory for the patients to buy medicines from the hospital‟s chemist shop. A margin of 15-20 % can be charged for such medicinal supplies. Though many hospitals run by Trusts do not earn this way, but new entrants or corporates for whom private healthcare sector is a direct extension of their line of business ( eg. Pharma companies), can generate good returns from medicine supply.

3. Health Plan packages can be provided by hospitals to family and corporate. For example Family Health Plan Services (FHP), a subsidiary of Apollo Hospitals does health management of employees of its clients. With a wide net work of Hospitals and Healthcare providers countrywide, and a tie -up with General Insurance Corporation of India, FHP offers a range of services to employees and dependants, such as Preventive Healthcare, Corporate Counseling, welfare Programmes, Claims Administration, Patient-care Coordination and so on. So FHP's healthcare packages, optimize the benefits while keeping the cost under control.

4. Apart from preventive healthcare, stress management programs could be provided. For example „Effective Stress Management Programme‟ offered by Wockhardt Hospital. This programme provides a medical perspective of stress and is conducted by a medical professional. The programme includes a series of one-to-one sessions, with a clinical Psychologist highlighting the factors responsible for inducing stress, and the methodologies, which can be adopted to cope with this phenomenon practically.

5. Hospitals can become integrated healthcare systems i.e. when medicines, food services, laundry and linen etc will become "purchased" services. These third-party operations will increase the profit margins.

6. Mergers could be used for synergy of skills - i.e. to help the merged organisations benefit from one another's individual strengths by applying them across the board. It also helps them to make joint investments in branding or information technology and also to react effectively to the changed market forces. Alternatively hospitals can go in for Group Purchases, as in USA. The buying power of large GPOs in USA like Premier, VHA / UHC and AmeriNet gives them the clout to exert price pressure on suppliers, particularly for products in lower demand. And as GPOs have consolidated, manufacturers have offered bigger discounts to hang on to their contracts. So there exists a lot of supply management opportunity, which will affect spending productivity.

OPERATIONS (IT CAN BE CONSIDERED AS AN EXAMPLE)

Fortis Hospital Mohali

Fortis Hospital, Mohali has three sub-facilities on one campus: (i) a super-specialty cardiac center quipped to provide advanced cardiac treatments for all forms of heart disease (ii) a general multi-speciality hospital and (iii) the Fortis Inn Rehabilitation Centre designed to provide “step-down” care to outstation patients. It currently has 9 operating theatres and 215 beds and has capacity for up to 300 beds. Fortis Hospital, Mohali together with FHL’s satellite centre contributed 84% of the Company’s total operating income for the financial year 2007-08. The hospital has recorded an overall growth of 12%, achieving operating revenue of Rs. 133.01 crores as against Rs. 118.75 crores in the previous year.

Multi-specialties like Obstetrics and Gynecology were well established during the year. 1018 Cardiac Surgeries (CTVs), 1353 Angioplasties (PTCAs) and 3172 Angiographies (CAGs) were conducted during the year.

Fortis Hospital, Amritsar

Fortis Hospital, Amritsar is a multi-speciality facility with 37 beds. It serves as a “spoke” hospital for Fortis Hospital, Mohali and has a tele-link connecting it to that hospital. The facility is currently equipped

with 2 operating theatres, endoscopic suite, a labour room, a nursery and a 24-hour emergency room. It is also supported by a fully equipped intensive care unit with ventilators. Fortis Hospital, Amritsar contributed 2.57% of the Company’s total operating income for the financial year 2007-08.

SUBSIDIARIES

As on 31st

March, 2008, your Company had four direct subsidiaries viz. Escorts Heart Institute And Research Centre Limited, International Hospital Limited, Fortis Hospotel Limited (erstwhile Oscar Bio-Tech

Private Limited) and Hiranandani Healthcare Private Limited and four step down subsidiaries viz. Escorts Hospital And Research Centre Limited, Escorts Heart And Super Speciality Hospital Limited, Escorts Heart Centre Limited and Escorts Heart And Super Speciality Institute Limited.

A Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies is attached to the accounts. In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, the audited accounts of the subsidiary companies are not attached to this Annual Report. However, the

consolidated accounts prepared in accordance with Accounting Standard 21 of the Institute of Chartered Accountants of India presented in this Annual Report includes the financial information of subsidiary companies.

The copy of the annual report of the subsidiary companies will be made available to shareholders on request and will be kept for inspection by any shareholder at the registered office and corporate office of your company and its subsidiary companies.