lakshya nitie mumbai final
TRANSCRIPT
AAROHAN 2011
TEAM: LAKSHYA
SYNAPSE’S HEALTHCARE CONSULTANTS
ALOK DIMRI
DEEPAK KR. DHANOTIYA
NITIE, MUMBAI
24-Feb-2011
1
Strategic Data Analysis
Recommendations
2
The case is about strategic and operational concerns for Surya Healthcare
• Acquisition vs. capacity expansion• Expansion vs. collaboration• Network design strategies• Increasing Profitability
Aarohan 2011
3
• Analysis of Surya Pharmaceuticals• Financial Projections for Surya Hospitals• Analysis of Expansion Plans• Analysis regarding the location of new plant• Comparative Analysis of various existing Surya Hospitals
Strategic Data Analysis
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SLIDE 24
Analysis of Surya Pharmaceuticals
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Analysis of Surya Pharmaceuticals
5
Expanding the capacity of own
plants
Acquisition of Rutanis' Plants
Expanding the capacity of own plants
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Analysis of Surya Pharmaceuticals
The criterion should not be based only on investment terms but certain non-monetary criterion should also be taken into account while making a judgment.
Analysis of Surya Pharmaceuticals
6
Expanding the capacity of own
plants
Pharmacy Fixed investment
Legal aspects
Short term gains
Long term gains
Future Strategic ExpansionSustainabi
lity riskCapacity Location Investmen
t
Acquisition
•545 Crores•In cash•One time
Critical -Tax benefit
Competitive strength
-Easy capacity
expansion
-Location constraint
-Low future
investment
-High
Increasing capacity •282 Crores -No legal
concern
Gradual investmen
t
Operational
ease
-Capacity Constraint
-No location
constraints
-High future
investment
-Low
Table comparing the relative performance of both the options for Surya Pharmaceuticals
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Analysis of Surya Pharmaceuticals
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Expanding the capacity of own
plants
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Global demand increase from
05-10
US Europe Asia Middle East
Maunomycin 4.7 % 20 % 17 % 20 %
Moxomycin 100 % 15 % 20 % NA
Global Demand and expansion plan
Analysis of Surya Pharmaceuticals
8
Acquisition of Rutanis' Plants Expanding the
capacity of own plants
From all this comparative analysis, we propose the strategy of
expanding the capacity of existing plants keeping in mind the
financial, legal, strategic constraints, long & short term
advantages and their strategic locations.
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SLIDE 29
Financial Projections of Surya Hospitals
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Financial Projection Of Surya Hospitals For The Year Ending March 2011
10
Expanding the capacity of own
plants
Cash flow analysis Forecasted
10-Jun Mar-11 Mar-10 Mar-09 Mar-08Fixed assets 3661.68 4955.743597 3212.87 1994.32 1353.07
Increase in assets 448.81 1742.873597 1218.55 641.25 -
% increase in assets 13.96913 54.24662674 61.10103 47.39223 -
Current assets 1231.96 1678.375604 979.13 368.25 345.65
Increase in assets 252.83 699.2456042 610.88 22.6 -
% increase in assets 25.8219 86.21285536 165.8873 6.538406 -
Total assets 4893.64 6634.119201 4192 2362.57 1698.72
Increase in assets 701.64 2442.119201 1829.43 663.85 -
% increase in assets 16.7376 58.25666032 77.4339 39.07942 -
Income 774 3217.796655 2367 1591 1292.3
Increase in income -1593 850.7966554 776 298.7 -
% increase in income -67.3004 35.9440919 48.77436 23.11383 -
Expenditure 753.15 2947.35638 2205.2 1449.7 1258.47
Increase in expenditure -1452.05 742.1563802 755.5 191.23 -
% increase in expenditure -65.8466 33.65483313 52.11423 15.19544 -
PBDIT 21.84 434.9513908 162.84 141.9 33.83
Increase in PBDIT -141 272.1113908 20.94 108.07 -
% increase in PBDIT -86.5881 167.1035316 14.75687 319.4502 -
Forecasted values for the FY ending March 2011
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Need for
expansion
Current
assets
Cash To be raised
1742
409.18
979.13
1200Long Term Loans
Raising
Capital through
Share
Market
Financial Snapshot of the company
Financial Projection Of Surya Hospitals For The Year Ending March 2011
11
Company is going to invest a total of Rs 812.17 Crore in next three financial years
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All amount in Rs. crores
SLIDE 212
Strategic Analysis of Expansion
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Strategic Analysis of Expansion
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Expanding the capacity of own
plants
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ExpansionGreenfield
Brownfield
ConsolidationSurya Hospital
Existing competitor
Available options with Surya
For Row R1
For Row R2
For Row R1
For Row R2
Strategic Analysis of Expansion
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Expanding the capacity of own
plants
Health care Investment Ease of setting
Strategic Independenc
y
Long term sustainability
Service level increase
Market penetration
ExpandGreenfield
A A P P --- ---P P A A P ---
BrownfieldP P A A --- ---A A P P A ---
Collaborate
Surya P P P P A AP P A A P ---
Other competitor in parallel services
A A A A P P
A A P P A ---
Health careHigh Patient concentratio
n
High Private/Publi
c market share
Competition High
Infrastructural availability
Low
Private hospital
charges High---
Row R1 :Strategic long term factors (Qualitative)
Row R2 :Market force analysis (Quantitative)
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Strategic Analysis of Expansion
15
Expanding the capacity of own
plants
Row R1 :Strategic long term factors
Row R2 :Market force analysis
This has been explained by following snapshot of the table.
Health care Investment Ease of setting
Strategic Independen
cy
Long term sustainabilit
y
Service level
increase
Market penetration
Expand GreenfieldA A P P --- ---P P A A P ---
Health care
High Patient
concentration
High Private/Public market
share
Competition High
Infrastructural
availability Low
Private hospital charges
High
---
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A- Avoid P-Prefer
SLIDE 216
Analysis regarding the Probable Location of new Hospitals
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SLIDE 2Analysis regarding the Probable Location of new
Hospitals17
Primary Care Secondary Care
Tertiary Care
North Hope Chain, Singhania,
Mellow
Mellow Hope Chain, Singhania,
Mellow
East Hope Chain Hope Chain, Surya
West Hope Chain Singhania Hope Chain, Surya
South Gentle Touch, Earnest
Gentle Touch, Earnest
Gentle Touch, Surya, EarnestSo, Surya Group should concentrate on Eastern and Western part of India for all
the three categories and Northern Part of India for Secondary Care category.
Matrix showing the region wise presence of different hospitals
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SLIDE 2Analysis regarding the Probable Location of new Hospitals18
Comparison of states based on Average Hospital Charge per unit Inpatient Day by Public
& Private Hospitals:
State Public Private Ratio
Himachal
Pradesh4 51 62.75
Uttar Pradesh 28 140 5
Orissa 4 115 28.75
Madhya
Pradesh11 154 14
Gujarat 13 251 19.3
Maharashtra 26 269 10.34
Tamilnadu 16 297 18.56
Kerala 40 203 5.1
All India 24 201 8.4
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SLIDE 2Analysis regarding the Probable Location of new Hospitals19
Himac
hal P
rade
sh
Orissa
Gujar
at
Tam
ilnad
u
Madhy
a Pr
ades
h
Mahar
asht
ra
All In
dia
Keral
a
Uttar P
rade
sh0
10
20
30
40
50
60
7062.75
28.75
19.3 18.5614
10.34 8.45.1 5
Ratio of Average Hospital Charge per unit Inpatient Day by Public & Private Hospitals
Ra
tio
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SLIDE 2Analysis regarding the Probable Location of new Hospitals20
State Public Private Ratio
Gujarat 45 55 1.2
Maharashtra 36 64 1.78
North East 77 23 .30
Punjab 34.5 65.5 1.9
Orissa 89 11 .123
Madhya
Pradesh63 37 .59
Himachal
Pradesh93 7 .07
All India 50 50 1
Comparing the ratio of Distribution of Inpatients between Private and Public Hospitals:
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SLIDE 2Analysis regarding the Probable Location of new Hospitals21
Punj
ab
Mahar
asht
ra
Gujar
at
All In
dia
Madhy
a Pr
ades
h
North
Eas
t
Orissa
Himac
hal P
rade
sh0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2 1.91.78
1.2
1
0.59
0.3
0.123 0.07
Ratio of Distribution of Inpatients between Private and Public Hospitals
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SLIDE 2Analysis regarding the Probable Location of new Hospitals22
Based on these two analyses for the states whose data has been provided, Surya can consider expansion of its operations in the states of Gujarat, Maharashtra, North East, Punjab & Orissa. The decision on primary, secondary or tertiary type should be taken as described in previous section.
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SLIDE 223
Comparative Analysis of various Surya Hospitals
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SLIDE 2Comparative Analysis of various Surya Hospitals24
Inputs Outputs
Number of Beds Inpatient Income (Rs. Crores)
Average length of stay Outpatient Income (Rs. Crores)
No. of personnel Income per bed (Rs. Crores)
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Comparative Analysis of various Surya Hospitals
• Data Envelopment Analysis (DEA) as a tool for the analysis
• Various input and output parameters selected for the analysis are:
SLIDE 2Comparative Analysis of various Surya Hospitals
DEA
25
Inputs OutputsDMUs
No. of Beds
Length of Stay
Personnel
Inpatient Income
(Rs. Crores)
Outpatient
Income(Rs.
Crores)
Income per bed
(Rs. Crores)
Bandra 92 4.4 758 398.7 14.5 4.3
Bangalore 1
600 4.4 262 181.3 21.7 0.9
Bangalore 2
567 4.9 549 113.2 50.7 1.7
Nagpur 140 4.7 118 127.2 5.5 3.2
Hyderabad 1
130 4.5 221 171.1 0.7 1.3
Hyderabad 2
50 4.6 89 44.7 5.4 0.9
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Table showing various inputs & outputs considered In DEADEA
SLIDE 2Comparative Analysis of various Surya Hospitals26
Decision making Units
BandraBangalor
e 1Bangalor
e 2Nagpur
Hyderabad 1
Hyderabad 2
Bandra 0.99 0.42 0.22 1 1 0.67
Bangalore 1
1 1 0.41 1 1 0.41
Bangalore 2
0.99 0.75 1 1 0.68 0.99
Nagpur 1 0.42 0.22 1 1 0.67
Hyderabad 1
1 0.42 0.22 1 1 0.67
Hyderabad 2
1 0.60 0.72 1 0.77 1
Overall Efficiency
5.99 3.64 2.81 6 5.46 4.44
Table showing the overall efficiency scores of various Surya Decision Making Units
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SLIDE 2Comparative Analysis of various Surya Hospitals27
• According to the column sum maximization, Nagpur is having the highest score of 6 out of 6 and is considered to be the best performing DMU among the existing DMU’s.
DE Analysis shows that Greenfield Hospital, Bandra and Brownfield Hospital, Nagpur can be taken as benchmarks for the other DMU’s.
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SLIDE 228
Analysis of Individual Hospitals
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Facts and assumptions as per case:
•Standard average length of stay is 4 days.
•Mid size hospitals (141-220 beds) have
highest profitability.
•Highest margin is attained in multi
specialty hospitals although revenue
follows the reverse trend.
•Note: For “*” –Refer DEA analysis.
SLIDE 2Analysis of Individual Hospitals 29
Surya Hospital, Bandra, Mumbai
Features:
• High efficiency as compared to others.* • High average income per bed (4.3) & average length of stay (4.4).• Low average occupancy rate. (75% in 2010)• Specialty in cardiac care.
Suggestions:
•Implementation of strategies for improving bed occupancy rate.•Improve networking & increase the no. of referral points. •Implement strategies suggested for increasing outpatient income. •Expand in other specialties by Brownfield expansion.
Surya Heart Hospital, Nagpur
Features:
•Most efficient hospital. *•High average occupancy rate (96%) & average length of stay (4.7).•Low outpatient income (5.5).•Specializes only in cardiac care.
Suggestions:
•Try to increase the specialty cares.•Should try to increase the efficiency of other hospitals of the group. •Implement strategies to reduce length of stay and occupancy. (Appendix)
SLIDE 2Analysis of Individual Hospitals 30
Surya Hospital, Indira Nagar, Bangalore
Features:
• Poor performance relative to other hospitals. * • Very high average length of stay.• Low average income per bed.• Multi specialty hospital.
Suggestions:•Implement strategies to improve hospital profitability. •High concentration required on average length of stay.
Surya Hospital,Cunningham Road, Bangalore
Features:
•Good no. of specialties.•Lower efficiency as compared to others. *•Low Inpatient income, average occupancy rate (89%) & average income per bed•Higher average length of stay (4.9).
Suggestions:•Implementation of strategies for improving hospital productivity, bed occupancy rate & outpatient income. (Appendix)•Improve networking & increase the no. of referral points.
Both Greenfield Hospitals in Bangalore can collaborate with each other. By this, they will become multi specialty referral centers for each other.
SLIDE 2Analysis of Individual Hospitals 31
Surya Hospital, Banjara Hills, Hyderabad
Features:• Very low avg. occupancy rate (39%) & outpatient income (0.7).•High average length of stay (4.5).•Low average income per bed (1.3).•Specialization only in cardiac care.
Suggestions:•Implement strategies to improve hospital occupancy and outpatient income. (Appendix)•Develop specialization in other specialties.
Surya Hospital, LB Nagar, Hyderabad
Features:
•Very low average occupancy rate (31%) and low income per bed (0.9).•High average length of stay (4.6)•Low outpatient income (5.4).
Suggestions:•Implement strategies for improving hospital profitability and occupancy rate.
Both Brownfield Hospitals in Hyderabad can also consolidate and try to develop a multi specialty center. Their consolidation is a strategic move to tackle the tough competition of southern India in a unified way.
SLIDE 232
Recommendations
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SLIDE 2Strategies to Improve Bed Occupancy 33
Hospital Three months ended June
30, 2010
Fiscal Year ended March 31,
2010Surya Hospital, Bandra,
Mumbai 74% 75%
Surya Hospital, Cunningham Road, Bangalore 50% 46%
Surya Hospital, Indira Nagar, Bangalore 89% 89%
Surya Heart Hospital, Nagpur 88% 96%
Surya Hospital, Banjara Hills, Hyderabad 42% 39%
Surya Hospital, LB Nagar, Hyderabad 34% 31%
Table showing the average bed occupancy of various hospitals
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Strategies to Improve Bed Occupancy
Strategies to improve bed occupancy
SLIDE 234
Plan of stay including expected date of discharge should be given to every patient
Development of a key worker role
Standardized length of stay for each condition
Closer working with intermediate care services
Weekly discharge planning meeting of wards
Empowering staff to improve the ways of working
Implementing ‘productive ward’ practices
Strategies to improve bed occupancy
Aarohan 2011 Strategies to Improve Bed Occupancy
SLIDE 2Strategies to Improve Hospital Profitability35
Strategies to Improve Hospital Profitability
Improving Hospital
Profitability
Data Analysis
Vendor Management
Efficient Utilization of
Operating facilities
Physician Involvement
Outsourcing of certain
activitiesHiring profitable hospitalists
Adding profitable
service lines
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SLIDE 2Strategies to Improve Outpatient Services36
Strategies to Improve Outpatient Services
Improving Outpatient
services
Marketing Strategies
Collaboration with physians
Providing quality service
Physician productivity
Improving productivity
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SLIDE 2Strategies to Improve Hospital Productivity37
Strategies to Improve Hospital Productivity Improving Productivity
Benchmarking of workload
Staff Scheduling
Automated nursing & patient scheduling systems
Materials Management
Work Flow Analysis
Scheduling of ancillary tests
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References
Introduction to Data Envelopment Analysis & its Uses, William W.
Cooper, Lawrence M. Seiford, Kaoru Tone, 2006, Springer Science +
Business Media, Inc.
www.beckershospitalreview.com
http://findarticles.com
http://www.allbusiness.com
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