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Managing Organizations

Project Presentation

Wockhardt Hospitals Group, India(A subsidiary of Wockhardt Ltd.)

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Industry Overview

Source: Rediff Business, IBEF, News Article

Industry HighlightsIndustry Highlights

Estimated to 50% of total Healthcare market in 2008

Key Growth Driverso Demand for quality healthcareo Changing disease profileo Rising urban disposable incomeo Increase in medical insurance

penetrationo Increase in Government healthcare

spending

Key Challengeso Significant capital requirementso Shortage of medical professionals

o Surging Medical tourism segment

Estimated to 50% of total Healthcare market in 2008

Key Growth Driverso Demand for quality healthcareo Changing disease profileo Rising urban disposable incomeo Increase in medical insurance

penetrationo Increase in Government healthcare

spending

Key Challengeso Significant capital requirementso Shortage of medical professionals

o Surging Medical tourism segment

Indian Hospital industry is estimated to be USD 25Bn in 2008, witnessing rising participation from private sector players as opposed to the traditionally government owned hospitals

US $ Bn

CAGR

14%

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Wockhardt - Overview

• Global Pharmaceutical (veterinary & human), Biotech & Healthcare services company

• Market capitalisation of over US$ 1 Bn; Annual turnover of US$ 650 Mo 65% revenues from US and EU

• In India - among Top 10 Pharma companies; Top 25 Biotech and Top 3 Hospital Chains

• Headquartered in Mumbai in India; Operates 12 super speciality hospitals

Group OverviewGroup Overview

Wockhardt Bannerghatta

Hospital

Wockhardt Bannerghatta

Hospital

• Set up in 2007 as a multi disciplinary super specialty hospital

• 400-bed centre focused on providing critical medical and surgical care

• 5 major centres of excellence - Cardiac, Orthopaedics, Neurosciences, Minimal Access Surgery and Women & Child Services

• 450-500 footfalls per day

• Also cater to Medical Tourism customers

Source: Wockhardt Website, Prowess Pharmaceutical Industry Statistics, Interviews with Bannerghatta Unit Admin Head

Wockhardt is a leading player in hospitals industry in India, operating 12 super speciality centers mostly in the Southern half

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Key Environmental Factors Affecting Wockhardt

Source: Interviews with Bannerghatta Unit Admin Head, News Articles

Large number of factors make the environment for Wockhardt complex

Shortage of medical experts

Shifting Disease Profile

Wockhardt Hospitals

Increasing Accreditation requirement

Economic Condition

Technology

Financial Resources

High Competition

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Key Characteristics of Environment

Source: Team Analysis

The uncertainty in Wockhardt’s environment has profound implications on their structure and processes

Moderately Uncertain

Environment

High Complexity

Moderate Stability

• Heavily competitive- Apollo Healthcare, Fortis Healthcare, Vijaya Hospitals etc.

• Heavily regulated by medical, governmental and legal agencies

• Interaction with a large number of patients• Large disease pool

• Demand for health care moderately stable, except in case of epidemics

• Technology obsolescence not too rapid

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Key Manifestations of Environment in Structure

Source: Team Analysis, Interviews with HR Manager

Barring a few departments which require quicker response, Wockhardt has largely tried to formalize and specialize its internal departments, structured in a hierarchical fashion

Large number of Clinical departments

High formalization of support functions

High degree of specialization

Hierarchical structure

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Non Clinical Functions – Roles and Responsibilities

Source: Team Analysis, Interview with HR Manager

Finance • Accounts, Payroll, Purchases (including Pharmacy), Recovery

Operation• Coordinate Operative care and Customer Care, New Technology Induction

HR• Recruitment, Training, Performance Management, Employee Engagement, Grievance Redressal

Domestic Marketing

• Local branding, Catchment area communication through brochures, Online Marketing

Training • Conduct regular and need based training

IT • HIS Maintenance, System Control, Information Flow

Quality • Accreditation, Auditing, General Housekeeping

International Marketing

• Handle marketing for Medical Tourism, Building alliances with Federal Governments, Surgical Tele-consulting

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Organizational Structure –Clinical Functions

Source: Interviews with HR Manager and Admin Head

Internally the clinical functions are segregated based on expertise, similar to a divisional structure

• 340 nurses across 4 units in Bangalore

• 191 consultants in Bangalore

Center Medical Head

PharmacyHODsNursing Superintendent

Ward Managers

Senior Nurses

Junior Nurses

Senior Consultants

Junior Consultants

InternsTechnicians

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Clinical Functions – Key Observations

Source: Team Analysis, Interviews with HODs and Nursing Staff

Nursing

• Shuffle across multiple wards

• Minimal discretion exercised by nurses (largely follow doctor’s direction)

• Flexible timing and skills

• High attrition

• Ward Manager at each level; supervising multiple wardso Coordinate with housekeeping, nursing and pharmacy

• 4 broad categories of wardso Multi Bed (3 Beds)o Twin Deluxe(2 Beds)o Private (Single Bed)o Royal (Royal Suite)

Ward Structure

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Normal versus Emergency healthcare

Normal healthcare Emergency healthcare

Loosely Mechanical approach Fluid with heavy reciprocal interdependence

Monolithic team responds Greater collaboration, task force response

Process oriented, planned beforehand Ad hoc planning

Low speed of response Rapid response

Precedents available Unprecedented

Hierarchical response- Junior doctor hands over to senior doctor

Senior leadership responds immediately

Routine encounter Rarer

Emergency healthcare necessitates Ad-hoc planning, rapid response, reciprocal interdependence and senior consultant involvement.

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Information Linkages

Source: Interview with Admin Head and IT Manager

Vertical Information Linkages

HierarchicalReferrals

• Junior doctors consult senior doctors

• Nurses consult senior nurses and doctors

• Hospital Information Systems• Flow streamlining

Horizontal Information Linkages

Rules and Plans

Vertical IT Systems

• Standard operating procedures in non clinical departments

• No rules and procedures in clinical departments

IT Systems

• Extensive database of doctors, consultants and nurses listing responsibilities and experience

Full Time Integrators

• Appear only at medical, corporate and administration departments

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Culture Analysis at Wockhardt

• New employee Induction program• Apron handover at the Linen room

• Employee of the Month award• Nurse of the Month• Star Performer of the Month• Wall of Fame

• Team outings• Cultural festivities during festivals• Informal get-togethers

Wockhardt could do with more rites of integration

Rites of Passage

Rites of Integration

Rites of Enhancement

• Identification to particular non-clinical department very strong

• Clinical departments- friction between senior and junior doctors

Sub-culture spawning

Degree of openness

• Professed culture “open-doors”• Team work across echelons• Team work across departments• Professed benefits in internal and

external adaptability

Claims questionable. Evident distrust with respect to finance and HR departments

The culture at Wockhardt is in general strong and healthy, except for minor discord

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Strategy – Focused Differentiation

Source: Team Analysis

LOW COST LEADERSHI

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DIFFERENTIATION

FOCUSSED LOW COST LEADERSHI

P

FOCUSSED DIFFERENTIA

TION: WOCKHARDT

BR

OA

DN

AR

RO

W

LOW COST

UNIQUENESS

COMPETITIVE ADVANTAGE

CO

MP

ETIT

IVE S

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PE

• Multi Specialty Hospital Heart Care Brain and Spine Bone and Joints Minimal Invasive Surgery Women Care

• JCI Accreditation

• Partnership with Harvard Medical International

• High end customized surgeries

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Marketing Strategy

Source: Team Analysis and wockhardt website

Target Customers

Domestic Customers

• Focus on Rich and upper middle class• Tie ups with referral hospitals and nursing homes in

primary and secondary sectors• Tie ups with associate hospitals in secondary sectors• Information centres • Pamphlets, news and print media.• Free health check up camps, Wockhardt Diabetes Day etc.

• Tie ups with government in Africa and developing countries• Target non insured patients in developed countries• Online marketing• Case study publications

Corporates

International Patients

• Medical services on campuses• Events showcasing break throughs in healthcare adopted

by Wockhardt• Pre employment check ups• Free health check up camps

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Quality Control Strategy

Source: Team analysis

Training• Need based and regular training

• Soft skills training

Performance Management

• Half- yearly performance review

• Performance based compensation

• Target setting by Supervisor

• 360 degree feedback from doctors, nurses, patients

Wockhardt uses two levers – training and performance management – to maintain quality

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Information Systems and Knowledge Managament

Source: Team Analysis, Interview with Admin Head

Wockhardt extensively uses robust IT systems for hospital management. Knowledge is more of tacit and shared following a ‘Personalization Strategy’

IT Systems

• Use customized Hospital Information Systems developed by Wiproo Centralized Billing and Automated Alerts making processes fastero Data Warehousing and Data Processing functionality

• Data line Analysis

• Online Appointment with Doctors

• “Give me a quote” facility

• Informal sharing largely through one-on-one conversations

• Trainings and Seminars

• CME (Continual Medical Education) – every week

• Case Studies

Knowledge Management

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Decision Making

High Level of Delegation – responsibilities given to junior reporting doctors

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Hands on Experience in values – Leads to intuitive decision making

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Doctors mostly have to follow Bounded Rationality Model

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Given the very natures of work, Wockhardt largely follows fluid decision making processes, with sufficiently decentralized authority in clinical units

18

Wockhardt – Fortis Deal

Source: Business week

Hospital Buy Deal

• 24th August 2009 : Fortis Healthcare, acquired 10 hospitals from Wockhardt for Rs 909 crores

• 2 in Mumbai, 3 in Kolkata and 5 in Bengaluru, including the Bannerghatta Road hospital  

• 10 hospitals comprise 85% of the company’s revenue and more than 70% of the total number of beds

• CEO Vishal Bali, along with 12 other senior members of the Wockhardt Hospital management team shift to Fortis

Reasons

• Proposed Rs 800-crore IPO collapsed in 2008 • To reduce Debt burden of Wockhardt group's flagship firm, Wockhardt• Liabilities of Rs.14,414 million in 2008 – greater than expected cash flows• Debt restructuring to reschedule loans of about Rs 3,700 crore• Fortis will gain a lot –market presence and profitability