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Thursday, April 19, 2012

RTLS: The Sixth Sense for the Hospital Administrator


- John Tudor
In the times when colossal corporate hospitals and large medical cities are mushrooming up, knowing the real-time location and status of medical equipment, patients and skilled staff resources is critical to overall hospital operational efficiency.
Real time location systems, frequently abbreviated as RTLS, provide inherent characteristics which have both immediate tactical short-term benefits as well as long-term strategic implications for hospital operations. RTLS offers the extraordinary ability to find and manage mobile equipment assets and locate people – in real-time – from any computer or mobile device in the hospital.
Real time location systems provide hospital administrators with actionable information regarding the location, status and movement of equipment and people (hospital staff and patients). With RTLS, hospitals have access not only to the specific locations of equipment and people – but also advanced RTLS search capabilities allowing searching by specific location (floor, area, room) or unique asset identifier (department owner, type, manufacturer, model number, asset control number or EIN). It provides the decision-making intelligence which lets the hospital administrator to decide for buying only the equipment which is needed, decrease rentals, and reduce out-of-service time and missing items.
The detailed asset information and reporting capabilities of RTLS allow further analysis to support a variety of uses, including equipment utilization data to identify inefficiencies that have required excess equipment inventory purchases, specific asset searches by manufacturer or model number for retrieval of equipment subject to recall, understanding of instances where patient safety is compromised when non-sterile instrumentation may be used for patient procedures, and collection of data to optimize equipment placement.RTLS also helps to map the quickest route to the equipment needed during the times of urgency.
The RTLS solution spans the depth and breadth of the hospital enterprise, automating and streamlining many core processes in the healthcare environment. These include:
  • Automatically managing patient flow in clinical units
  • Locating and routing movable medical equipment to ensure their proper cleaning, maintenance, distribution, and security
  • Monitoring and documenting staff members’ compliance with hand hygiene requirements and other infection-containment protocols
  • Monitoring temperature-controlled environments, logging out-of-range events, and documenting corrective actions
  • Managing turnover of inpatient beds by monitoring occupancy, status, and availability
The Apollo Hospital, Chennai was the first one in India to adopt Wi-Fi based RTLS system since 2010 to track patients who are having various tests done as part of their annual check-up, in order to better utilize hospital resources and shorten patient wait times.
This technology needs computers as their platforms which will have the software specially designed to interpret the inputs given by the RTLS to the administrators. Special software can be developed for the same or it can be integrated with the current hospital management information system (HMIS). The information output can also be transmitted on a mobile device like a tablet PC or a cellphone for the administrator on the move.
Although this idea is relevant to large corporate hospitals which are prevailing in the urban populations but if implemented successfully and economically, its usefulness can be taken over to large public sector hospitals as well.
Thus it can be easily summed that advanced RTLS brings an unparalleled level of expertise that helps hospitals react with greater speed, proactively eliminate redundancy, improve patient flow, and deliver an exceptional level of patient care.
 Dr. Vikas Mukhija,
MHA-Hospital (2011-13)

Wednesday, April 18, 2012

Mergers and Acquisitions in Healthcare Industry


                             They Choose. They Bought. They sailed through or failed to?
                                       Mergers and Acquisitions in Healthcare Industry

The baggage of “uncertainty” is looming over the healthcare industry giving rise to “Mergers and Acquisitions (M & As)”. The wrath of financial weakness, increasing competition, inability of consolidation and incompetence of raising funds are a few reasons for the “uncertainty” in the Healthcare industry. Acquisition involves acquiring of all the assets of one company by another while a Merger involves creation of a new entity from assets of two companies. Sometimes acquisitions are labeled "mergers" because "being acquired" carries a negative connotation; a merger suggests mutuality. 
 2012 will be horrendous year for the Pharma companies all over the world as they would be facing a major problem of patent cliff (expiry to legal protection of top selling drugs). Thus, all the top companies will look for acquisitions in the domestic generic market in India which has grown robustly at 15% in FY2011. Examples of horizontal acquisition include the $3.6 billion acquisition of the promoters’ stake in India’s largest drug maker Ranbaxy Laboratories Ltd in 2008 by Japan’s Daiichi Sankyo Co. Also, US drug and nutrition firm Abbott Laboratories paid $3.72 billion to acquire Piramal Healthcare Ltd’s domestic drug formulation business. Similarly smaller Hospitals are facing stiff competition from the private players and corporate honchos. Smaller Hospitals enhance opportunities for consolidation and savings, strengthen their financial assets, improve financial opportunity for investors and venture capitalist, think of diversification and finally think of reform in healthcare when M&A takes place. Examples include Fortis Healthcare acquiring10 hospitals from the Wockhardt for Rs 909 crore. Similar are the cases with Biotechnology firms being acquired or being invested into by Pharma Giants. As also there are diagnostic laboratories being acquired by a Hospital. Examples include Fortis having invested its stakes into SRL labs. These are examples of vertical acquisitions. India being a low cost destination for R n D and with the success of Pharma Companies in getting ANDA Approvals recently, many Pharma Giants and Clinical Research Organisations (CROs) over the world are expanding by investing in Indian Markets through Mergers and Acquisitions.
Are mergers and acquisitions a success or a failure? The answer is that results are mixed. The reasons for failure include the company which was acquired being overpriced due to overestimation of its assets. Examples include Abbott Laboratories paying 9 times the value of the current assets of the Piramal to acquire it. Mergers may also be termed as incompatible marriages when the employees suffer a culture shock by different values, traditions, priorities between the two organizations. Warner Hindustan and Park Davis merger was a cultural failure with Warner Hindustan having values of Task driven and Park Davis more people Driven. But a deal can be successful if it avoids the pitfalls that can undercut an acquisition after the deal closes. The companies need to define the deal clearly to see the deals creating values for the shareholders and also set up a high growth trajectory. 
Healthcare deals can be complex, but when they're done right, an acquisition can help a company   face the headwinds of increasing regulatory hurdles, price pressures and rising competition. The relief from market pressures can be temporary, but a successful M&A strategy buys time for Companies to focus on the real issue: how to kick-start the profit engine again.     
Neeraj Puro           
MHA-HO (2011-2013)                                                

Monday, April 16, 2012

Will Tier-2 cities be the next big destination for corporate hospitals


A report of private equity investors indicates that that two of ten healthcare deals were for non metros earlier. Today the figure has doubled to four. There has been an inflow of healthcare providers from metros and tier I cities to tier II cities over the last two years. Metros have so far received easy attention from investors due to their proximity to investment bankers, accessibility and ease of target. With the metros becoming expensive everyday, a scalable model seems to be more profitable and attractive to corporate healthcare providers. Tier II cities have the plus of cheaper cost of land, support staff etc. The demand for healthcare is high and so is the return on financial investments. Fortis, Manipal and Apollo- the three largest groups are on an expansion drive in tier II and tier III cities with about 33 hospitals in smaller towns.
The target consumer for private Indian hospital sector was so far concentrated to the urban population with a disposable income of minimum INR 5L which resulted in rapid expansion of beds catering to this segment population ultimately causing saturation. With the urban market today becoming highly saturated and competitive, attractive returns are hard to get and thus we are increasingly seeing larger groups opting for varied business models and winning strategies through the tier II markets. There is usually a lag of one- two years for companies to generate the same revenue in a tier II city when compared to a metro. However the demand for healthcare is and opportunity for financial returns is high.
Through Manipal Care and cure, the group has shifted its business focus from preventive care and wellness to playing the role of family physician in tier II cities. It has 11 of its 15 hospitals in tier II cities and is further trying to carve the segment. Apollo had announced in the beginning of the year, their plans to set up 250 Apollo reach hospitals with an investment of Rs 10,000 crore in smaller towns. Fortis Healthcare, that has 20 of its 53 hospitals in tier II towns, launched its specialty clinics, Fortis C-DOC (Center for Diabetes, Obesity, and Cholesterol Disorders) targeted at tier II towns in December 2010.
Getting the economics right through an “asset light model” is preferred. Which means it is viable to treat maximum number of patients and increase capacity utilization to generate maximum per bed revenue than have complex surgeries that increase ALOS. Statistics indicate that an urban hospital which requires an investment of 60-90L per bed has a return of merely 26% on investment in the first 5yrs of its operation. Whereas chains in Tier II and Tier III cities require a limited investment of 50L and provide for a 50% return on investment with a breakeven period of 3-4yrs. The vast difference in the cost of land has a scalable impact on both, the break even stage as well as the profit margins. Like any other service industry, healthcare has become highly competitive in the metros. Thus today larger groups are targeting the “bottom of the pyramid” through the smaller towns.
Niyati Joshi,
MHA(Ho) Batch 2011-13.