I

Introduction to healthcare industry

• The third largest growing sector in India.
• Healthcare sector accounts for 5.2% of the
GDP.
• The healthcare sector is projected to grow to
nearly 1,80,000 crores by year 2012 and a
compounded annual growth rate (CAGR) of
15-17 percent for at least the next 7-10 years.
• Expected to employ 9 million people by 2012.
 Cont….
• Indian healthcare industry is dominated by the
private sector, globally healthcare is provided
through a largely government-funded public system.
• Demographics changes, improving income levels,
changing life-styles and rising insurance penetration
will result in increased spending on healthcare.
• Accessible, reliable and affordable healthcare
continues to be a challenge.
• Opportunity in healthcare being significantly
leveraged by private healthcare providers.
Healthcare sector-favorable
industry dynamics
 Segments
• The sector comprises hospital and allied sectors
that include:
(a) Medical care providers that includes
physicians, specialist clinics, nursing homes and
hospitals
(b) Diagnostic service centers and pathology
laboratories
(c) Medical equipment manufacturers
(d) Contract research organizations and
pharmaceutical manufacturers
(e) Third party support service providers
 Market size
• The US$ 50 billion-a-year health care industry has
grown rapidly and is now the third-largest service-
sector employer in the country, providing jobs to about
4.5 million people directly or indirectly.

• The Indian healthcare sectors will double its size to US$

100 billion by 2015.

• By 2020, the Indian healthcare industry is estimated to

be worth US$ 275.6 billion. Currently, 8 per cent of
India’s GDP is spent on healthcare. India needs to
spend at least US$ 80 billion more in the next five years
to meet targets.
Growth rates
Cont….
 KEY PLAYERS

• The Apollo Group of Hospitals

• Manipal hospital

• Max India

• Escorts

• Fortis hospital

• Government agencies or non-profit trusts like Post Graduate

Institute and All India Institute of Medical Sciences.

• Private hospitals from Singapore, United States and

Australia.
 INTRODUCTION TO FORTIS
o Fortis Healthcare Ltd one of the leading private healthcare companies
in India
o The company has a network of 28 Hospitals, Satellite Centers and Heart
Command Centers with capacity of 3300 beds
o These include multi-specialty hospitals as well as super-specialty
centers
o Target of pan India presence with bed strength of 6000 through 40
hospitals by the year 2012.
oCRISIL Research Report on Fortis
oThe research firm has maintained a fundamental grade of 4/5,
valuation grade of 4/5 on the company and assigned the fair value
of Rs 185 per share in its August 26, 2011 report.
 Cont….
• Vision
"To create a world-class integrated healthcare
delivery system in India, entailing the finest medical
skills combined with compassionate patient care"
• Mission
Having finest talents in medicine, delivery of highest
quality of healthcare and benchmarked to
International standards.
• Goals
Market dominance and Quality excellence
Value chain analysis of fortis
 Competitors analysis

High
service

Low
service Public Health Centre Private nursing homes
(Govt)

Low pricing High pricing

 Customers key buying factors

• Brand value

• Status symbol

• Quality consciousness

• Availability

• Price

• Service
 Entry Barriers
• The Indian Government neither has the
financial strength nor the appetite for large
scale investment in the Healthcare sector.
• Foreign players such as Singapore General
Hospital, Pacific Healthcare Holdings,
Singapore and Parkway Group Healthcare PTE
Ltd, Singapore are also expected to set up
base in India to capitalize on the vast
opportunity in this sector.
 Suppliers Analysis
• A Fortis Healthcare group Company shall comply with
agreements and conditions of engagement with suppliers, in
letter and spirit.
• Employees are expected to ensure that the interests of the
company are maintained in terms of quality of products,
services and competitiveness of prices and terms offered by
suppliers.
• Employees shall ensure that the company’s interests are
never compromised in dealing with suppliers and will not
accept gifts, other than those of a commemorative nature, or
any gratuity, payments, commissions or benefits in kind from
suppliers.
Corporate Structure
Fortis Noida
 Marketing Aspects
• The patient referral system i.e. referrals from the
family doctor to specialists or directly to a hospital if
the patients needed 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.
Products & Brands
 Cont…..
• Hospital Hubs
• OPD Services
• In-patient Admissions (IPD-related services)
• Ambulance Facility
• Health Awareness Lectures/ Workshops
• Executive Health Checkups
• Health Check Camps
 SWOT Analysis
• Fortis’s Strengths
– Specialty Chain
– Brand Image
– High Capital
– HR Management
– Quality
– IT assistance
• Fortis’s weaknesses
– Complicated Corporate Structure
– High Investment
– Too Much Focused Approach
– High Costs
– Acquisitions
• Fortis Opportunities
– Healthcare industry is the world's largest industry
with total revenues of approx US$ 2.8 Trillion
(2005).

– Medical Tourism in India will be one of the major

sources for foreign exchange
• Fortis Threats
– Poor public infrastructure.
– Inflation.
– Medico legal jurisdictions.
– Country specific restrictions
Driving efficiencies
Segmenting, Targeting and
Positioning
 Operations management
• The 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 the
• higher 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.
 Cont….
• 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 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.
 Competitive Analysis
• Corporate Strategy
-Differentiation
-Advertising thru’ social networking sites
-Better utilization of resources
• Strategy of Mergers
– Mergers and Acquisitions
• S L Raheja hospital, Modi hospital-operator fortis healthcare
• Clinique Darne-Mauritius- operator fortis healthcare- stake
acquired 29%
• RM hospital – Bangalore –operator fortis healthcare- stake
acquired >67%
• Guiding hand of Ranbaxy
– International Partnership
Key differentiators
Approach of Fortis
Fortis Strategy
FINANCIAL ANALYSIS
 Cont….
• Evaluation by external entities
• Financial audits are conducted every year by external auditors
• ISO 9001:2000 certified by International Certification Services
Limited
 Future Scope and recommendations
• Future prospectus evaluation
• Hospitals
– Star
• Old age home
– Question Mark
• Pharmacy
– Question Mark
 Contd.
• Smaller Hospitals
• Revenues from Pharma Companies
• Health Plan package facilities
• stress management programs facilities
• Approach towards integrated healthcare
systems
• Mergers
Thank You