Strategy Development

XXX Hospital Project

 Justifications of XXX entry
in to hospital sector
• Widening demand gap

• Government beds per 1000 population 5 ( Colombo)

• Private beds per 1000 population 3 ( Colombo)

• Growth of private sector hospitals

• Average revenue growth 15%

• Sector vision to be the leader in health care business

• Platform to enter other areas in the Healthcare sector

• Favourable impression in the market & among professionals about

Hemas entry to hospital sector
Method of Entry to hospital sector

• Hospital with unique concepts acceptable to local

community
• XXX Equity
• Foreign partner, experienced in hospital management
 Objectives of the XXX hospital
Project
• To established a Multi-specialty hospital in Colombo
district.

• To establish 2-3 satellite hospitals in selected

outstations.

• To support related special projects identified by

Hemas.
 Project model
• Multi-specialty hospital

• Group of hospitals
– Colombo (01) , initially
– Selected Outstations ( 03), later

• Partnership with existing hospitals

– Outsource unavailable facilities
– Reach outstations
 Multi Specialty Hospital
Vs. Single Specialty hospital

• Disease pattern in Sri Lanka

• Direct patient care & Supportive care

• Capital investment

• Hospital utilization

• Attracting doctors & patients

 Group of Hospitals
Vs. single hospital

• Feeding hospitals

• Demand in the Outstations

 Hospital Model

• New concepts to attract doctors & patients

– Use of IT in patient care & administration

– Controlled infrastructure

– High quality of care with minimal waiting time & cost

– Comfortable environment for doctors & patients

– Focused on the largest (60%) middle income group

– Concentrate on the general specialties

– Combination of Medical management & Hotel management

 Three basic models

– According to bed strength

A. Large

B. Medium

C. Small
 Hospital Model A
• Bed strength
– 100
• Cost: Rs. 1000 million
• Multi-specialty General hospital
– Curative, preventive & rehabilitative care
• Services
– General specialties
– No high end,capital intensive services
• Facilities
– Inward & outdoor care
– Special care units
– Diagnostics ,up to CT scanner
Hospital Model B Hospital Model C

• beds -75
• Beds -25
• Project cost :Rs.750 million
• Project cost :Rs.250 million
• Tertiary care facilities
• Inward: 04 General specialties
• Outdoor: all related specialties
• Outdoor: all related specialties

• Diagnostics up to an US
• Diagnostics up to CT scanner
Scanner
 Selection of the location
• People
– Population density
– Household income & Expenditure on health

• Demand gap
– Government hospitals & beds
• Teaching / University hospital
• Availability of Government doctors

– Private sector hospitals

• Availability of land
– Lease basis

Selection of the location.xls

 Selected of areas

• Colombo Central : Krimandala

• Colombo South: Rajagiriya, Malabe
• Colombo North: Gampaha, Kribathgoda,
• Galle : Karapitiya
• Kandy : Municipality area
• Kurunegalla: Omitted after preliminary analysis
 Selection of the land

• Highway & Visibility

• Residential area

• Closer to Government Hospital/ medical faculty

• On a Lease basis 30 years

• Other facilities

• 02 acres
 Search for lands
• Contacts: BOI & Private
• Colombo
– Krimandala Mawata
– Parliament road:
– Kandy road
– Negambo
– High level road

• Kurunegalla
– Suitable private land on a lease basis
– UDA land
• Kandy
– Suitable land of UDA
– Land of Commercial Company
• Galle
- 04 Plots of land available
 Human Resource
• Preferred Doctors
– University staff preferred
– Second line, young doctors
– IT competence
– Part time / Full time staff
– Pros & cons of permanent/part time staff
– Mix of local & foreign doctors ( for back office work)

• Nursing & other staff full time

 Financial Forecast
• Assumptions made

– Model A hospital, with 100 beds

– Utilization pattern
• Ist Year 55%
• 2nd Year 75%
• 3rd Year 90%
– HR.
• Ist Year 90%
• 2nd Year 100%
• 3rd Year 100%
Finacial forecast.xls
Revenue forecast of hospital.xls
 Project cost
a. Capital Cost= SLR 1000 million

Capital Cost % Project Cost in SLR Depreciation Annual

Category cost (Million) contribution

Land 10% 100 30 3.3

Building 60% 600 30 20

Equipment 30% 300 10 40

Total 100 1000 63.3

 Project cost
b. Recurrent cost (SLR Million)

Category % of cost 1st Year 2nd Year 3rd Year

HR 57 51.3 57 57

Gen. Supplies 1.8 1.1 1.5 1.8

Med. Supplies 45 27.5 37.5 45

Diet 9 5.5 7.5 9

Overheads 15.5 9.5 13 15.3

Others 4.5 2.7 4 4.5

TOTAL 100 97.5 105 126

 Revenue Forecast
(SLR Millions)
Category 1st Year 2nd Year 3rd Year Apollo
(100 Beds)
Channeling 6 8 11 -

Room Fees 31 42 56 46

Surgery 99 134 179 332

Laboratory fees 62 84 113 78

Diagnostics 27 37 49 65

Pharmacy 31 42 56 136

Others 8 12 15 255

TOTAL 264 359 479 683

 Financial Forecast
XXX Hospital

Revenue 1st 2nd 3rd Apollo

Year Year Year 90%
Utilization
100 Beds
Revenue 264 359 479 683

Expenditure 160 169 201 292

Gross profit 104 190 278 391

 Project Schedule
 Completion of Project proposal

 Completion of Design

 Agreements

 Initiation of construction

 Equipment installation

 Training & recruitment of staff

 Opening of the hospital

 The Hospital project
• Feasibility
• Development of the concept & strategy
• Medical plan
• Development of the finances
– Development of the project budget
– Operational finances
• Project planning
 Feasibility
1. Demography
2. Epidemiology
3. Health Services
4. Market research
5. Financials