Hospitals

Comprehensive Pack

1
• Market Size and Growth :3

• Hospital Classification :8

• Challenges and Growth Enablers : 18

• Revenue and Operating Mix : 57

• Business Models : 64

• Use of Emerging Technologies : 73

• Company Analysis : 80

2
 Market Size and Growth

3
 Indian Healthcare delivery market is expected to grow at a CAGR of
14% between 2016-17

HEALTHCARE DELIVERY MARKET

Rs. 9,350
bn

Rs. 4,850
bn

Source: Crisil Research

Note: Healthcare Delivery market does not include the expenditure of
phramaceutical
4
drugs.
Overall healthcare delivery market in fiscal 2017

5
Healthcare delivery industry estimated at Rs 4.8 tn in fiscal 2017
• Based on health indicators for India released by the World Health
Organisation's (WHO) world health statistics survey, CRISIL Research
estimates the size of the Indian healthcare delivery industry at 3 billion
treatments in volume terms and Rs 4.8 trillion in value terms this fiscal.
While the in-patient department (IPD) accounted for 84% of the industry in
value
• terms, the out-patient department (OPD) accounted for the balance. CRISIL
Research defines outpatients as patients who are not required to stay at the
hospital overnight. It includes consultancy, day surgeries, and diagnostics,
and excludes pharmaceuticals purchased from standalone outlets.

6
Healthcare delivery industry to grow at 14% over next 5 years
• CRISIL Research expects the healthcare delivery market to grow at 14%
compound annual growth rate (CAGR) and reach Rs 9.4 trillion by fiscal 2022.
This is owing to the change in age demographics and rising incomes,
improvement in health awareness, conducive government policies, increase in
lifestyle-related ailments, rising penetration of health insurance, and increasing
opportunities from medical tourism, which will propel demand for healthcare
facilities in India.
• We expect expansion plans by major private players to be skewed towards
illnesses related to the IPD. Hence, the share of IPD by value is expected to

7
 Hospital Classification

8
CLASSIFICATION OF HOSPITALS

9
 CLASSIFICATION OF HOSPITALS

Primary care/dispensaries/clinics

•Primary care facilities are mainly outpatient units that offer basic, point-of-

contact medical and preventive healthcare services.

•These units do not have any intensive care units (ICUs) or operation theaters.

• These act as first point of contact in the healthcare system where patients

come for routine health screenings and vaccinations.

•Primary care centers also act as feeders for secondary care/ tertiary hospitals,

where patients are referred to for treating chronic ailments.

10
 CLASSIFICATION OF HOSPITALS

Secondary care

•Secondary care facilities diagnose and treat ailments that cannot be treated in

primary care facilities.

• These act as second point of contact in the healthcare system.

•There are two types of secondary care hospitals - general and specialty care.

11
 CLASSIFICATION OF HOSPITALS

General Secondary care Hospitals

•A general secondary care hospital is the first hospital a patient approaches for
common ailments.
•It typically attracts patients staying within a radius of 30 km.
•The essential medical specialties in general secondary care hospitals include
general surgery, gynecology, pediatrics, ENT, orthopedics and ophthalmology.
• Such a hospital will have one central laboratory, a radiology laboratory and an
emergency care department.
• Generally, secondary care hospitals have 50-100 in-patient beds, a tenth of which
are in the ICU.
•The remaining beds are equally distributed between the general ward, semi-
private rooms and single rooms.
12
 CLASSIFICATION OF HOSPITALS

Specialty secondary care hospitals

•These hospitals are typically located in district centres, treating patients living
within a radius of 100-150 km.
•These hospitals usually have an in-patient bed strength of 100-300, 15 per cent
of which are reserved for critical care units.
•Apart from the medical facilities offered by a general secondary care hospital,
specialty secondary care hospitals treat ailments related to gastroenterology,
cardiology, neurology, dermatology, urology, dentistry and oncology.
•Diagnostic facilities in a specialty secondary care hospital include a radiology
department, a biochemistry laboratory, a haematology laboratory, a
icrobiology laboratory and a blood bank.
•The hospital also has a separate physiotherapy department.
13
 CLASSIFICATION OF HOSPITALS

Tertiary care

Single-specialty tertiary care hospitals

•Tertiary care hospitals provide advanced diagnostic services and treatments.

• A single-specialty tertiary care hospital mainly caters a particular ailment
(such as cardiac ailments, cancers, etc).
•Prominent facilities in India include the Escorts Heart Institute & Research
Centre (New Delhi), Tata Memorial Cancer Hospital (Mumbai), HCG
Oncology (Bengaluru), Sankara Nethralaya (Chennai), National Institute of
Mental Health & Neuro Sciences (NIMHANS, Bengaluru), and Hospital for
Orthopaedics, Sports Medicine, Arthritis and Trauma (HOSMAT, Bengaluru).

14
 CLASSIFICATION OF HOSPITALS

Tertiary care
Multi-specialty tertiary care hospitals
•Multi-specialty tertiary care hospitals offer all medical specialties under one
roof and treat complex cases such as multi-organ failure, high-risk and trauma
cases.
• Most of these hospitals derive a majority of their revenues through referrals.
•Typically, such hospitals are located in state capitals or metropolitan cities and
attract patients staying within a 500 km radius.
• The hospitals have a minimum of 300 in-patient beds, which can go up further.
• About one-fourth of the total beds are reserved for patients in need for critical
care.
•The medical specialties offered include cardio-thoracic surgery, neurosurgery,
nephrology, surgical oncology, neonatology, endocrinology, plastic and cosmetic
surgery, and nuclear medicine.
•Prominent examples of such hospitals include Lilavati Hospital and
Hiranandani Hospital in Mumbai, and NIMS in Hyderabad.

15
 CLASSIFICATION OF HOSPITALS

Tertiary care
Quaternary care

•Quaternary care facilities are similar to tertiary care facilities and focus on

super-specialty surgical procedures (cardiac, neurological and

jointreplacements).

•These facilities also have in-house research departments, unlike tertiary care

hospitals.

16
 CLASSIFICATION BASED ON OWNERSHIP

•Government-owned and managed: Brihanmumbai Municipal Corporation

hospitals, KEM Hospital and the Cooper Hospital (Mumbai), etc.
•Privately-owned and managed: Asian Heart Institute, Apollo Hospitals, Fortis,
etc
•Trust-owned and managed: Lilavati, Hinduja, etc
•Trust-owned but managed by a private party: Apollo Hospitals in Ahmedabad
is owned by a trust but managed by the Apollo Group, etc.
•Owned by a private player and managed by another private player: East Coast
Hospital, Puducherry is managed by Fortis Healthcare, etc.

17
 Challenges and Growth Drivers

18
Key challenges
Health infrastructure in dire need of improvement
• The adequacy of a country's healthcare infrastructure and personnel is a
barometer of its quality of healthcare. This, in turn, can be assessed from bed
density (bed count per 10,000 population) and availability of physicians and
nurses (per
• 10,000 population).
• For India, that's where the concern begins. For a country accounting for nearly a
fifth of the world's population, India's overall bed density stands at 13, with the
situation in rural areas being far worse than urban areas. Not only is there a
• yawning gap between India's bed density and the global median of 27 beds, but
it also lags other developing nations, such as Brazil (22 beds), Malaysia (19
19
Hospital bed density: India vs other countries

20
Hospital bed density: India vs other countries

• The paucity of healthcare personnel compounds the problem. At seven

physicians and 17 nursing personnel per 10,000 population, India trails the
global median of 14 physicians and 29 nursing personnel. Even on this
parameter, India lags behind Brazil (19 physicians, 76 nurses), Malaysia (12
physicians, 33 nurses) and Vietnam (12 physicians).

21
Physicians and Nurses: India vs other countries

22
Potential growth drivers

• Despite lagging behind global benchmarks in healthcare infrastructure, India's

growth drivers are fundamentally strong.
• CRISIL Research believes that a combination of demographic and economic
factors will spur growth in the healthcare delivery market as illustrated below:

23
Growth drivers of the healthcare delivery industry

24
Need for greater health coverage as population and life expectancy
increase
• India's population is expected to grow over 1.43 billion by 2025, from
around 1.21 billion in 2011. At seven beds per 10,000 persons, the number
of beds in India significantly lags the global median of 27 beds. Growth
opportunity for the healthcare delivery market in India, therefore, is
immense.

25
Need for greater health coverage as population and life expectancy
increase

26
Need for greater health coverage as population and life expectancy
increase
• Demand for healthcare delivery services in India will also be augmented by
factors such as increasing life expectancy and declining infant mortality. As of
2011, nearly 8% of the Indian population was of 60 years or more, and it is
expected to surge 12.5% by 2026. However, the availability of a documented
knowledge base concerning the healthcare needs of the elderly (aged 60 years or
more) continues to remain a challenge. Nevertheless, the higher vulnerability of
this age group to health-related issues is an accepted fact. Meanwhile, life
expectancy at birth reflects the overall mortality level of a population. It
summarises mortality pattern that prevails across all age groups in a given year ?

27
Need for greater health coverage as population and life expectancy
increase
• children and adolescents, adults and the elderly. Global life expectancy at birth in
2015 was 71.4 years (73.8 years for females and 69.1 years for males).
• Global average life expectancy increased by five years between 2000 and 2015, the
fastest increase since the 1960s, reversing the decline in expectancy witnessed
during the 1990s due to the AIDS epidemic in Africa, and the collapse of
• Soviet Union in Eastern Europe. The 2000-2015 increase was greatest in the WHO
African Region, where life expectancy increased 9.4 years to 60 years, driven mainly
by improvements in child survival, and expanded access to antiretrovirals
• for treatment of HIV.

28
Need for greater health coverage as population and life expectancy
increase
• In India, life expectancy has increased at a compound annual growth rate (CAGR)
of 0.6% annually over 2000 to 2015 from 62.5 to 68.3 years. The gap in life
expectancy between the sexes was 1.7 years in 2000 which increased to three years
by 2015; women live longer than men all around the world.

29
Trend in life expectancy (at birth) & infant mortality rate: India vs others

30
Trend in life expectancy (at birth) & infant mortality rate: India vs
others
• According to a report on the status of elderly in select Indian states, 2011,
published by the United Nations Population Fund (UNFPA) in November
2012, chronic ailments like arthritis, hypertension, diabetes, asthma and heart
diseases werecommonplace among the elderly with nearly 66% of the
respective population reporting at least one of these.In terms of gender-based
tendencies, while men are more likely to suffer from heart, renal and skin
diseases, women
• showed higher tendencies of contracting arthritis, hypertension and
osteoporosis. We, therefore, believe that with more people being added to this
age group, their demand for healthcare infrastructure will only increase over
the foreseeable future.
31
Break-up of population by age (%)

32
Rising income levels to make quality healthcare services more
affordable
• Even though healthcare is considered a non-discretionary expense,
considering that an estimated 59% of households in India had an annual
income of less than Rs 2 lakh in 2013-14, affordability of quality healthcare
facilities remains a major constraint. Growth in household incomes, and
consequently, disposable incomes, is, therefore, critical to the overall
growth in demand for healthcare delivery services in India. The share of
households in Rs 2-5 lakh per annum income bracket is expected to go up
to 38% in 2017-18, from 28% in 2013-14, thereby providing immense
growth opportunity for the industry.

33
Increasing health awareness to boost hospitalisation rate

• Factors such as increasing urbanisation (migration of population from

rural to urban areas) and rising literacy levels are expected to enhance
awareness on preventive and curative healthcare and in turn, boost
demand for healthcare delivery services. CRISIL Research, therefore,
believes that hospitalisation rate (percentage of people who visit a
hospital when
• unwell) for in-patient treatment will improve with increased urbanisation.

34
Trend: Urban population in India as percentage of total population

35
Trend: Urban population in India as percentage of total population

36
Government policies encouraging healthcare services and awareness
• The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) was announced in
2003 with the objective of correcting regional imbalances in the availability of
affordable/ reliable tertiary healthcare services and to augment facilities for
quality medical education in the country. The scheme has two components:
• 1. Setting up of new AIIMS hospitals (to provide unbiased, affordable and
quality healthcare). Six AIIMS hospitals, one each in Patna (Bihar); Raipur
(Chhattisgarh); Bhopal (Madhya Pradesh); Bhubaneshwar (Odisha); Jodhpur
(Rajasthan)
• and Rishikesh (Uttaranchal), have been setup under the PMSSY scheme.

37
Government policies encouraging healthcare services and awareness
• AIIMS Rae Bareli is under-construction and 11
• more AIIMS have been announced by the Ministry of which five have already
been approved by the cabinet.
• 2. Upgradation of government medical colleges
• The Ministry of AYUSH was also formed on November 9, 2014, to ensure
optimal development and propagation of AYUSH
• systems of healthcare. The Ministry of Health and Family Welfare is also
taking initiatives to eradicate communicable
• diseases such as tuberculosis, leprosy, vector-borne diseases and is actively
promoting programmes to raise awareness to prevent HIV/AIDs.

38
Non-communicable diseases: A silent killer
• As opposed to the decreasing rate in communicable diseases, lifestyle-related
illnesses or non-communicable diseases (NCDs) have been increasing rapidly
in India over the last few years. Statistics show that these illnesses accounted
for nearly 56% of all deaths in India in 2008. CRISIL Research believes that
these illnesses exhibit a tendency to increase in tandem with rising income
levels. The year 2015 witnessed a higher percentage of deaths (64%) due to
NCDs, specially cancer and cardiovascular diseases. WHO projects an
increasing trend in NCDs by 2030, following which CRISIL forecasts demand
for healthcare services associated with lifestyle-related diseases such as cardiac
ailments, cancer and diabetes, to increase.

39
Causes of death in India

40
Growing health insurance penetration to propel demand
• Low health-insurance penetration is one of the major impediments to
growth of the healthcare delivery industry in India, as affordability of
quality healthcare facilities by the lower income groups continues to remain
an issue.
• CRISIL Research believes that while low penetration is a key concern, it also
presents huge opportunity for the growth of healthcare delivery industry in
India. This is evident from the fact that between 2011-12 and 2015-16, the
total number of private sector general insurer's policies in India increased at
a CAGR of nearly 9%. The premium during the same period increased at
nearly 17%.

41
Growing health insurance penetration to propel demand
• Furthermore, with health insurance coverage in India set to increase,
hospitalisation rates are likely to go up. In addition, health check-ups,
which form a mandatory part of health insurance coverage, are also
expected to increase, boosting the demand for a robust healthcare delivery
platform.

42
Growth in insurance premiums and policies

43
Growth in insurance premiums and policies
• As per the Insurance Regulatory and Development Authority (IRDA),
nearly 359 million people have health insurance coverage in India
(asGovernment or government-sponsored schemes like the Central
Government Health Scheme (CGHS); Employee State
• Insurance Scheme (ESIS); Rashtriya Swasthya Bima Yojana (RSBY); Rajiv
Arogyasri (Andhra Pradesh government); Kalaignar (Tamil Nadu
government), etc account for 76% of health insurance coverage provided.
The remaining is through
• commercial insurance providers, both government (Oriental Insurance,
New India Assurance, etc.) and private (ICICI Lombard, Bajaj Allianz, etc.).

44
Number of persons covered under health insurance

45
Medical tourism in India
• With healthcare costs soaring in developed economies, the relatively low
cost of surgery and critical care in India makes it an attractive destination for
medical tourism, especially for patients from South-East Asia and the
Middle East. Yoga, meditation, ayurveda, allopathy and other traditional
methods of treatment are major service offerings that attract medical tourists
from European nations and the Middle East to India. The fact that India
offers advanced medical facilities for critical illnesses such as cardiology,
joint replacement, orthopaedics, ophthalmology, organ transplants and
urology, sharpens its competitive advantage

46
Medical tourism in India
• . Hence, medical tourism is expected to be a growth driver for healthcare
delivery in India. According to the latest data available with the Ministry of
Tourism, of the total foreign tourist arrivals in India, the proportion of
medical tourists has grown from 2.2% (0.11 million
• tourists) in 2009 to 2.4% (0.18 million tourists) in 2014.

47
Medical tourism in India
• . Hence, medical tourism is expected to be a growth driver for healthcare
delivery in India. According to the latest data available with the Ministry of
Tourism, of the total foreign tourist arrivals in India, the proportion of
medical tourists has grown from 2.2% (0.11 million
• tourists) in 2009 to 2.4% (0.18 million tourists) in 2014.

48
Medical tourism in India

49
As per the Ministry of Tourism, Africa, South and West Asia
together account for a majority 92% of all the medical tourists
coming to India.

50
Country-wise cost of ailments

51
Key actionable areas
• While the healthcare delivery sector in India faces several teething issues
currently, it also presents immense opportunities for the players involved.
While on one hand factors like inadequate bed density and insufficient
personnel highlight the gap between the availability of healthcare
infrastructure in India vis-a-vis the global levels, on the other hand, it
reflects the immense potential in store for healthcare delivery players
operating in the country. Potential of the healthcare delivery sector in India
is further augmented with information and communication
technologyenabled services gaining widespread popularity

52
Key actionable areas
• (CRISIL Research expects internet subscriber base to increase from 343
• million in 2015-16 to 967 million in 2020-21; the wireless subscriber base
(mobile phone users) is expected to increase from 322 million in 2015-16 to
939 million in 2020-21). Not only do these technologies increase reach of the
healthcare facilities to the hitherto remote locations, they also help players
achieve better efficiencies. Through this section, CRISIL Research strives to
briefly look into how the healthcare delivery infrastructure scenario is
• expected to pan out over them medium term. The section also highlights
how certain emerging business models and
• technologies will help increase reach and efficiency of this industry.

53
Shortfall in bed capacity: Major opportunity for healthcare delivery
players

• India needs to nearly quadruple its bed capacity (approximately 0.9 million
beds) to reach the global median (almost 2.5 million beds). With the
population growing at almost 1% annually, India is expected to have more
than 1.37 billion people by 2020, thereby highlighting the hug opportunity
for healthcare delivery players in India. Compounding the bed shortfall,
dearth of healthcare personnel (physicians and nursing personnel) continues
to be immense. India had nearly 0.9 million physicians in 2013 and the
physician count needs to be almost doubled to meet the global median.

54
Shortfall in bed capacity: Major opportunity for healthcare delivery
players
• Currently there are only 462 medical colleges (recognised by Medical
Council of India) offering a total of
• nearly 63,985 MBBS seats with less than five doctors (MBBS) per lakh of
population being added annually. The shortage of nursing personnel
(nurses and midwives) is relatively less critical (17 nurses in India vs. 29
globally) than
• in physicians (7 physicians in India vs. 14 globally). As per the latest data
published by Indian Nursing Council, India has nearly 3,06,326 seats (as of
March 31, 2016) offering nursing education (ANM, GNM, BSc, PBBSc, PBDP
and MSc- Nursing).
55
Diversification into different format/areas to increase reach and
efficiency
• Healthcare industry in India is currently experiencing significant innovation
in business models and service delivery
• frameworks. The main objective of these innovations are increasing
efficiencies through optimum resource utilisation and widening its reach.

56
 Revenue and
Operating Mix

57
 Though 3/4th of the volumes of hospitals come from out-patients,
80% of revenues come from in-patients.

VOLUME AND REVENUE MIX

Volume mix

In-patient Out-patient
(25%) (75%)

58
 KEY DRIVERS

• Surgeries and diagnostics

•Surgeries and diagnostics account for the bulk of revenues for most hospitals.
•The share of these verticals in total revenues differs across hospitals,
depending on pricing strategies and the emphasis on different specialties.

• Occupancy levels:
•Given the high fixed costs (equipment, beds and other infrastructure),
occupancy levels need to be commensurate for a hospital to break-even.
• Most large hospitals operate at over 65-70 per cent occupancy levels.
• The following factors can ensure high occupancy levels:
Good brand recognition
Reputed doctors

59
A strong referral network
 KEY DRIVERS

• AVERAGE LENGTH OF STAY

•Large hospitals usually operate at high occupancy levels, but try to keep the
average length of stay (ALOS) short.
•This enables them to record higher utilisation levels and ensure that more
patients are treated at the same time.
Ailment-wise length of stay

60
 KEY DRIVERS

• CONVERSION OF OUT-PATIENTS INTO IN-PATIENTS

•As per industry interactions, the OPD contributes almost one-third of in-

patient volumes in most hospitals.

•This phenomenon is especially evident during the initial years of operations

of a hospital.

• The OPD also acts as a feeder for a hospital's diagnostic/pathology centres

within the hospital premises.

61
 DOCTOR ENGAGEMENT MODEL

• Hospitals generally operate on two models:

•Model I - Under this model, hospitals have 100 per cent doctors on its pay roles

(Resident doctors).

•Model II - Hospitals generally follow a mix of resident and visiting/consulting

doctors. Under Model 2 the consulting or visiting doctors share the revenue

earned by the hospital.

• Large hospitals in the country typically follow Model II.

• Even the mid-sized hospitals in the India (100-400 beds) have visiting doctors

and consultants.
62
 OPERATING METRICS

• BOR (Bed Occupancy Rate)

•APROB ( Average Revenue per Occupied Bed)
• Ailments/Case Mix
For a multi-specialty hospital, this denotes the mix of treatments related to
cardiac, orthopedics, neurology, oncology and ophthalmology.
A higher share of complex treatments in the case mix helps to increase
revenues.
• Surgery/medical mix
 This ratio denotes the number of surgery patients to medical patients.
 Having a higher number of surgical patients means that the average billing
per inpatient is higher.
• Other Revenue Streams
 Proportion of revenues from Diagnostics, Pharmacy, F&B.

63
 Business Models

64
• Expanding in tier-II and III cities through primary and secondary hospitals

• Operation and maintenance contract

• Medicities (one-stop shops)

• Franchise arrangements

• Day care Centers

• End of Life Care Centers

65
LEASE CONTRACTS
•In the hospitals sector, the ownership model has become a costly affair because
of the sharp increase in land prices, especially in metros and tier-I cities, over the
past few years.
• This has compelled private players to look for other models such as lease
contract.
•In a lease contract, the land owner develops the hospital building as per
specifications given by the private player, and then the private player enters into
a long-term lease agreement with the land owner.
For example, Apollo Hospitals has acquired land and a building on lease
from Orient Hospital, Madurai for a period of 60 years.

66
Expanding in tier-II and III cities through primary and secondary hospitals

•Private players are now

foraying into tier-II and III cities
as income levels in these cities
are fast catching up with metros
and tier-I cities.
• This will increase the demand
for quality healthcare services.
• For Example: Apollo
Hospitals expanded into tier-II
cities such as Nellore through
its 'REACH‘ initiative as well as
open a super speciality hospital
in Vizag and Patna.
67
Operation and maintenance contract
•Under an operation and maintenance (O&M) contract model, a large private
player (or a hospital chain) undertakes a contract for managing a standalone
hospital and overseeing functions like marketing, operations, finance and
administration.
•In return, the private player receives a fixed annual management fee and a
share in revenues or profits from the standalone hospital's owners.
•Apollo and Fortis have entered into such contracts to expand their base in
India. For e.g., Fortis has entered into an O&M contract with Cauvery
Hospital in Mysore.
•Apollo has 14 hospitals under the O&M model mostly across the northern
states.
68
Medicities
•Medicities are an integrated Some planned and operational
township of super-specialty medicities
hospitals, diagnostic centers,
medical colleges, R&D, ancillary
and subservient facilities.
•The concept of medicity is based
on models already operating in
countries such as Scotland, the US,
France, Algeria, etc.
•However, the success of a medicity
would depend on its location and
the ability attract more in-patients.
•Due to large land requirements,
health cities are often situated in the
outskirts of a city.

69
 FRANCHISE ARRANGEMENTS

•In this model, the franchisees obtain the premises (owned or leased) and bring in

the capital (both fixed and working) while the franchisor lends the

•brand name to the healthcare facility for a fee.

•The franchisor has to ensure that the service quality is maintained across all

healthcare centres that use its brand name.

•The franchisor may also help the franchisee in training and recruiting staff,

procuring equipment, designing the facility, etc.

•In India, a prominent example is Apollo Hospitals which franchises its primary

clinics.
70
 DAY CARE CENTERS

•The objective of day-care centres is to reduce the need for overnight hospitalisation.
•In this type of setup, a patient is allowed to go home on the same day after being
treated.
•These centres have also given rise to the concept of outpatient surgeries.
•While this model is very popular in the eye care segment, other segments such as
arthroscopic surgery, general surgery and cosmetic surgery have also been using
this as a popular care delivery model.
•The advantage of day-care centre model is that patients can save on bed/room
rentals associated with overnight hospitalisation.
•The healthcare units, on the other hand, can have a streamlined setup with
optimum equipment, staff and infrastructure which helps bring down operational
costs.
71
 End-of-life care centres

•The objective of end-of-life care centres or hospices and palliative care centres is to
provide care and support to patients who are suffering from terminal illness with
life expectancy of six months or less.
•Hospice and palliative care focuses more on pain management and symptom relief
rather than continuing with curative treatment.
•These centres are designed to provide patients a comfortable life during their
remaining days and cover physical, social, emotional, and spiritual aspects apart
from the medical treatment.
•Such type of care can be delivered onsite, where special facilities are set up, in the
hospital premises or at the patient's home.

72
 Use of Emerging
Technologies

73
• ERP

• EHR (Electronic Health Records)

• CDSS (Clinical Decision support Systems)

• Mobile based Applications

• Telemedicine

• Robotic Surgery

74
 ERP
• An ERP system helps hospitals with critical decisions related to patient care
(treatment, diagnosis),materials management, HR, Accounts etc.
EHR
•Electronic heath records (EHR) manage detailed medical profile and history of
patients such as medication and allergies, immunisation status, test results etc
•EHR can store information in various formats -reports, voice, images, graphs etc v
•EHRs can analyze data with respect to a specific ailment, generating customised
reports, setting alarms and remainders and proving diagnostic decision support etc.
• EHRs can also be shared between multiple systems. This feature helps improve
coordination between doctors, save time and prevent redundancy of recreating
medical records.

75
CLINICAL DECISION SUPPORT SYSTEMS
• CDSS is a query based support system.
• It is a software designed to assist doctors in taking decisions pertaining to the
diagnosis and treatment of patients.
•A CDSS is supported by a large database which has detailed information on
ailments with data aspects ranging from symptoms to the diagnosis.
•The database is supported by a set of rules which help generate accurate results
for the query made by the user.
•CDSS databases are open-ended to allow addition of information on newly
discovered diseases, procedure and medications, rectification of erroneous
procedures, and updating of patient information.

76
MOBILE BASED APPLICATIONS
• Healthcare delivery is also seeing an influx of mobile-based applications (mobile
apps) which assist both doctors as well as patients.
•These apps typically provide features such as self-diagnosis, drug references,
hospital/doctor search and appointment assistance, electronic prescriptions etc.
• While certain apps allow doctors to obtain information on drugs, dosage, disease
and condition references and procedures, there are others which allow patients to
locate doctors and fix appointments, do basic self-diagnosis and video
consultations.
•Furthermore, there are apps that help patients save their medical records and
keep them updated regularly.

77
 TELEMEDICINE

• Telemedicine is a technology designed to increase accessibility of healthcare

services from remote locations.
•Telemedicine makes extensive use of information technology to create a connection
between doctors at the main hospital and patient at the remote centre or the
telemedicine centre.
• The doctor analyses the patient through telephonic conversation or video
conferencing.
•The doctor is assisted by a junior doctor or health worker who is physically present
at the telemedicine centre.
• The junior doctors physically examine the patient and convey information to the
doctor.
•The doctor communicates diagnosis and medication based on the inputs provided
by the
78 junior doctors.
 Robotic surgery

•Robot assisted surgeries have been used to conduct general surgeries, bypass
surgeries, colorectal surgeries, gastrointestinal surgery, neurosurgery, orthopaedic
surgeries, etc.
•Robotic surgery or robot-assisted surgeries (RAS) is surgery conducted using a
robotic arm that is controlled electronically using a control pad which may be
located at a local or remote location and is also equipped with high-definition
cameras allowing surgeons to take a closer look at the areas being operated.
•Since RAS can be performed from remote locations, it allows patients to avail
treatment from the desired specialist surgeons across the world without having to
travel.

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 COMPANY ANALYSIS –
APOLLO HOSPITALS

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 Apollo’s key strategies are forward integration , diversification
into different health care delivery services and acquisitions.

BUSINESS SEGMENTS

Apollo

Healthcare Services Pharmacies (43%

(57% of overall of overall
Revenues) Revenues)

• Hospital Revenues
• Health Insurance (Apollo-Munich)
• Retail Health Care AHLL (Apollo
Health Care and Lifestyle)
•Apollo Clinics
•Apollo sugar
• White Dental
• Day Surgery Centers
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 Pharmacy revenues has been growing much faster than the Health
care revenues.

REVENUE GROWTH

HEALTH CARE SERVICES

PHARMACIES

Source: Company, Icicidirect.com Research

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 HEALTH CARE SERVICES: OVERVIEW

•Apollo owns 71 hospitals with a total bed capacity of 10143 beds.

• Of these 71 hospitals,
•43 are owned by the company (including JVs, subsidiaries and associates)
• 8 are managed by the company
• 11 are day care/short surgical stay centres
• 9 are cradles
•The healthcare segment has been divided into three clusters- 1) Chennai,
2) Hyderabad and 3) others that include hospitals in Madurai, Karur,
Karaikudi, Trichy, Mysore, Vizag, Pune, Karimnagar, Bilaspur,
Bhubaneswar, Vanagaram, Nasik, Nellore, Jayanagar, etc.
• In June 2015, the company acquired a 51% stake in Assam Hospitals Ltd,
which runs a 220 bed hospital in Guwahati.
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 Though margins are high in Health care Services , there has been a
decline since 2016.

EBITDA:HEALTH CARE SERVICES

Source: Company, Icicidirect.com Research

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 Though the operational bed count and APROB has been
increasing, occupancy rate has fallen drastically.

PERFORMANCE ON KEY METRICS

Operational Bed Count Occupancy, ARPOB and ALOS

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Source: Company, Edelweiss Research
 Chennai contributes to more than 50% of the company’s Health
care revenues.

HEALTH CARE SERVICES: REGION-WISE REVENUE BREAK-UP

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Source: Company, Edelweiss Research
 Different regions show variations in the key metrics. ARPOB is
low for Hyderabad and other regions compared to Chennai.

REGION-WISE ANALYSIS OF KEY METRICS

Metric Chennai Hyderabad Others

In-patient 74% 82% 86%

Revenues (%)

Out-patient 26% 18% 14%

Revenues (%)

Occupancy % 59% 61% 57%

ARPOB Rs. 42,664 Rs. 32,564 Rs. 20,230

ALOS 3.8 3.7 4.2

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Source: Company, Edelweiss Research
 EBITDA margins are very low for new hospitals compared to the
established ones.

OLD VS NEW HOSPITALS

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Source: Company, Edelweiss Research
 AHLL is yet to turn profitable though revenues has been
increasing.

AHLL : APOLLO HEALTH AND LIFE STYLE

Revenues in Rs. mn

•AHLL include - Apollo Clinics, Apollo sugar, White Dental, Day

Surgery Centers, Apolls Cradle Birthing Centers

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 Though margins are low in pharmacies, revenue per store and the
number of stores has been steadily increasing since 2014.

EBITDA: PHARMACIES

Source: Company, Icicidirect.com Research

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 PHARMACIES: PERFORMANCE ANALYSIS

•The pharmacy business has grown at ~29% CAGR in the last five years on the
back of
• consistent addition of new pharmacies,
•timely closure of non-performing pharmacies and
• increase in average revenue per store from Rs. 63 lakh in FY12 to Rs.1.1
crore in FY16.
• This business has become EBITDA positive as old stores are maturing and
making a contribution.
•Current EBITDA margins are at 4.5% which is expected to improve.

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CURRENT STRATEGIC FOCUS

•to accelerate growth in core business by focus on specialties

•to create high visibility around clinical outcomes

•to increase international business by 2x over next 3 years

•Focus is mainly on consolidating and filling existing capacity.

• Would also explore inorganic growth opportunities.

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 Net profit margin is expected to double between 2017 to 2019 due
to improved performance of new hospitals

FUTURE EBITDA AND NET PROFIT

Source: Company, Icicidirect.com Research

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