CASE STUDY PRESENTATION

ON VERTICAL MERGERS

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' In the early 1990¶s US hospitals & hospital systems

began hungrily acquiring primary care physician
practices, ($ )-!& *$(!#%.' %/ )#%/0
)1$ ( *%#!#) $($$%')

'  hich results huge damage in terms of net avg. loss

of $80,000/physician, that adds up to more than $ 1
mn in total losses
  !)-%%& #

' The damage can be mitigated in the present &

avoided in the future, by selecting appropriate
Segmentation & Sound Channel Management
Strategies
' Hospitals should acknowledge the role of specialist
' Importance of excellent services should be the top
priority of Hospitals
' Hospitals can increase the no. of patients referred to
them & turn this challenge into opportunity
 )*!#%')(%!'/#! *$2#!$
 !*$($ %

' %)3
)# ( # )*!#%') 2$)#! %#/ # %.!'!#0
( %((!'!%#/ *0)!!%)
2 Doctors & Patients were not familiar with specialist
2 Patients were unwilling to travel
2 Higher Payer incentives was paid by Unaffiliated
Hospitals to the physician & better policies
2 Hospital suffered from shortages of critical
technologies (eg: CAT Scanner) thus causing long
wait.
#/43

' %)3
)*!#%')%/*#/5/( *)%#!
2 Traditionally, physicians ran their own businesses
2 Doctor¶s initially were paid for each patient they saw
2 After joining Affiliated hospital Doctor¶s got Lump
sum Amount.
2 Hence Physicians were paid assured monthly
income, regardless of their performance
2 Therefore Productivity Hampered by 152 0% in yrs
2 Doctors got complacent due to all of the above.
#/43

' %)36
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($ |$! %$0%$*0)!!%)
2 Physicians generated very little income
2 Margin was much higher for the hospitals when the
patient came through Specialist as compared to
Primary care physicians
2 Actually more of the hospitals income derived from
the referrals by specialist (i.e. 75% income)
2 Informed & Assertive Patients directly met Specialist
 â%1#''7

' Overestimated Physicians performance

' Ownership of Physicians created an additional
economic burden
' Underestimated Specialist performance
' Required Strategy for acknowledge both the role of
specialists & Physicians
 Segmentation of Channel Intermediaries

' Physicians & Specialists should be segmented

according to their current & potential economic
contribution
' 1$$#
 ! #$!.1#!
 Operating Profit + Patients Referrals
' |##!%'
 ! #$!.1#!
 Ability to increase the no. of referrals + ability to
compete with other physicians & hospitals
 **$%)#&
$5 # |%#!# %)
-! ($$%')
2 Limited ability to refer more
patients
2 Constraints imposed by
regional health plans
2 General surgery Practices in
Rural area
#%#!
2 Good ability to generate
referral base
Cardiothoracic2surgery practice
in large Urban area
2 Enlarge the referral bases

%-%#!$
$)#$1#1$$'%#!)!* Increase
2 Minimal contribution
2 Limited ability to generate percentage
referrals
2 Small, non urban practice of referrals
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 Corporate Strategy.

' Corporate Tie Ups

' Empanelled by Leading Super Specialist

' Insurance Company Tie-Ups e.g. Med Insurance Cover

' ISO 9001 : 2009 Certification

' World Accreditation

 Latest Super Specialty Centre Needs:2

' Chemotheraphy centres for Cardio Patients

' Advance Cath Labs for Angioplasty and Angiography
' Orthopedic Labs
' Neurology Labs
' Diagnostic Centre
:2 MRI Machine
:2 CT Scan
:2 Pathology
' Dedicated ICU
 Other Services

' Ancillary Services Corporate Social Responsibility

:2 Cafeteria :2 Tie up for Ex2Servicemen

:2
ook Shop :2 Services for

:2 id Zone Underprivileged

:2 Prayer Room

:2 In House Pharmacy

:2 Nutrionist Services CSR

 1$1&&)#!

' World Class Health Centre ' Across the World Marketing

' Integrated Work System ' Personal Touch

' Finest Physicians to be hired ' Standardization of Service

' Best Specialist to be on panel ' Dedicated ICU

' Compassionate Patient Care ' Helicopter Services for Heart

Patients eg: Asian Heart Hospital
' State of Art Facility
' Dedicated Full Time Specialist
' 1:1 Nurse Service
could be a help. eg: Kokilaben
Hospital
  *%$!).#5/!%8)*
%'#%$9!#)

*'' %'#%$ U$#!) %'#%$

' 15,000 Beds ' 7,000 Beds

' Top line 2026.47 Crores ' Top line 329.52 Crores
' Bottom Line 130.03 Crores ' Bottom Line 26.65 Crores
' LTP: Rs. 421 ' LTP: Rs. 163
' 52 week ' 52 week
High: Rs. 849 High: Rs. 187
Low: Rs. 408 Low: Rs. 92
' Also into Consulting and ' Acquired Wockhard and
Pharmacy Singapore Parkway Hospital
 Top Hospitals In Mumbai

' Leelavati
andra ' Hinduja Mahim

' Nanavati Vile Parle ' Cooper Juhu

' Tata Memorial Parel '
reach Candy

' EM Parel '
ombay Hospital

' Fortis  ockhard Mulund ' Asian Heart Hospital

andra
' Jaslok Hospital Haji Ali
2:Thank You:2