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AAROHAN 2011 TEAM: LAKSHYA SYNAPSE’S HEALTHCARE CONSULTANTS ALOK DIMRI DEEPAK KR. DHANOTIYA NITIE, MUMBAI 24-Feb-2011 1

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Page 1: Lakshya NITIE Mumbai Final

AAROHAN 2011

TEAM: LAKSHYA

SYNAPSE’S HEALTHCARE CONSULTANTS

ALOK DIMRI

DEEPAK KR. DHANOTIYA

NITIE, MUMBAI

24-Feb-2011

1

Page 2: Lakshya NITIE Mumbai Final

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

Page 3: Lakshya NITIE Mumbai Final

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• 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

Aarohan 2011

Page 4: Lakshya NITIE Mumbai Final

SLIDE 24

Analysis of Surya Pharmaceuticals

Aarohan 2011

Page 5: Lakshya NITIE Mumbai Final

Analysis of Surya Pharmaceuticals 

5

Expanding the capacity of own

plants

Acquisition of Rutanis' Plants

Expanding the capacity of own plants

Aarohan 2011

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.

Page 6: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 7: Lakshya NITIE Mumbai Final

Analysis of Surya Pharmaceuticals 

7

Expanding the capacity of own

plants

Aarohan 2011

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

Page 8: Lakshya NITIE Mumbai Final

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.

Aarohan 2011

Page 9: Lakshya NITIE Mumbai Final

SLIDE 29

Financial Projections of Surya Hospitals

Aarohan 2011

Page 10: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 11: Lakshya NITIE Mumbai Final

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

Aarohan 2011

All amount in Rs. crores

Page 12: Lakshya NITIE Mumbai Final

SLIDE 212

Strategic Analysis of Expansion

Aarohan 2011

Page 13: Lakshya NITIE Mumbai Final

Strategic Analysis of Expansion 

13

Expanding the capacity of own

plants

Aarohan 2011

ExpansionGreenfield

Brownfield

ConsolidationSurya Hospital

Existing competitor

Available options with Surya

For Row R1

For Row R2

For Row R1

For Row R2

Page 14: Lakshya NITIE Mumbai Final

Strategic Analysis of Expansion 

14

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)

Aarohan 2011

Page 15: Lakshya NITIE Mumbai Final

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

---

Aarohan 2011

A- Avoid P-Prefer

Page 16: Lakshya NITIE Mumbai Final

SLIDE 216

Analysis regarding the Probable Location of new Hospitals

Aarohan 2011

Page 17: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 18: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 19: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 20: Lakshya NITIE Mumbai Final

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:

Aarohan 2011

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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

Aarohan 2011

Page 22: Lakshya NITIE Mumbai Final

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.

Aarohan 2011

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SLIDE 223

Comparative Analysis of various Surya Hospitals

Aarohan 2011

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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)

Aarohan 2011

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:

Page 25: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Table showing various inputs & outputs considered In DEADEA

Page 26: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 27: Lakshya NITIE Mumbai Final

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.

Aarohan 2011

Page 28: Lakshya NITIE Mumbai Final

SLIDE 228

Analysis of Individual Hospitals

Aarohan 2011

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.

Page 29: Lakshya NITIE Mumbai Final

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)

Page 30: Lakshya NITIE Mumbai Final

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.

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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.

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SLIDE 232

Recommendations

Aarohan 2011

Page 33: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Strategies to Improve Bed Occupancy

Strategies to improve bed occupancy

Page 34: Lakshya NITIE Mumbai Final

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

Page 35: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 36: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 37: Lakshya NITIE Mumbai Final

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

Aarohan 2011

Page 38: Lakshya NITIE Mumbai Final

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

Aarohan 2011

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Aarohan 2011

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