We have published a report on changing “healthcare landscape in India” with a specific focus on Jaipur. Our key findings from this report are how healthcare industry evolved in India and Jaipur, what are the implication for healthcare players, what are the key growth drivers for India and Jaipur's healthcare industry.

1. Changing healthcare landscape
A case of Jaipur city in India
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2. Contents
A Overview of Indian Healthcare Market
B Jaipur - From Pink City to Medi-city?
C Implications for healthcare providers
2

3. Healthcare delivery market accounts for fifty percent of the total Healthcare
sector in India
Size of healthcare market in India, $ billion, percent
100% = US $30 billion
15% • Indian healthcare industry, which comprises
of hospitals and allied sectors, is projected
to grow 23 per cent per annum to touch US
10% $ 77 billion by 2012.
50%
• The sector has registered a growth of 9.3
per cent between 2000-2009, comparable
to the growth rate of other emerging
25% economies such as China, Brazil and
Mexico.
Healthcare delivery Pharma
Diagnostic Insurance & Medical equipment
Source: Enam, 2007
3

4. Healthcare market can be segmented into four major categories
Key segments of Healthcare market
Key feature Financing Major players
• Mainly at the grass root level
Primary • Minimal involvement of • Majority of it financed
private players in this through Govt. spending
segment
• Primarily includes nursing
homes and recovery rooms
• Majority of it financed
Secondary • Investment in such centres to through Govt. spending
reduce ALOS of tertiary care
centres.
• Higher equipment costs and
Tertiary - fixed staff costs result in • Major projects driven
Multi- higher gestation periods through large private
speciality • More margins and higher players
volumes
• Low gestation periods
Tertiary - Super • Can follow a strategy to • Major projects driven
initially start off as multi through large private
speciality speciality and move towards players
super speciality
Note: ALOS - Average Length of Stay
Source: Enam, Kanvic research
4

5. Indian healthcare market is evolving to provide cure for complex diseases and
high quality of services
Type of healthcare providers
High
Health City
Quality of Services
Super speciality
Multi-speciality
hospitals
Community
hospitals
Local
nursing
homes
Low
Low Complexity of disease High
Source: ibef
5

6. Favourable demographics and improving income levels are driving the growth
of healthcare market
Drivers of healthcare growth in India
Increasing
preference for
private
treatment
Availability of
quality healthcare
In India, private
healthcare accounts for
Improving nearly 80 % of the
country’s total healthcare
income levels
expenditure.
India has 0.5
million doctors, 0.9
Population growth million nurses and
Favourable about 1 million
and increased
demographics disposable incomes beds.
are expected to
result in better
healthcare
awareness and
higher expenditure
India’s growing
on healthcare
population is
augmenting the
growth of healthcare
delivery market
Source: Kanvic research
6

7. Increasing healthcare spend and growth in inpatients will further drive the
growth
Share of average household consumption, Rs. Revenue from outpatients and inpatients, Rs.
‘000, % billion
100% = 60 82 140 248
4 7 9
3 13
1 5
11 2 6
3 9 2312
4 CAGR
2 17 10.9%
6
19
14
8 20
5 3 9
12 3 CAGR
11 11.6% 1268
6 12
3
56 5 10
5 637 1329
42
34
903
25
617
1995 2005E 2010F 2015F 2006 2011E 2016E
Food, beverages & tobacco Apparel
OPD IPD
Housing & Utilities Household product
Personal product Transportation
Communication Education
Healthcare
Note: Figures are rounded to the nearest integer and may not add up to 100. OPD- Outpatient, IPD- Inpatient
Source: MGI, Crisil, NSSO
7

8. Contents
A Overview of Indian Healthcare Market
B Jaipur - From Pink City to Medicity ?
C Implications for healthcare providers
8

9. Jaipur’s healthcare market has evolved over the years
Evolution of healthcare market in Jaipur
SMS Medical college Soni hospital Institute based 100 bedded Tagore Narayana
is set up by the starts hospitals are set up hospital begins its Hrudayalaya, a leading
Government operations with after privatisation of operations Cardiac care hospital
20 beds medical education in in India, opens in
the state Jaipur
1971 2004 2007
1947 1986 2000s 2006 2010
First private hospital S K Soni Hospital Fortis Escorts, the first
Santokba Durlabhji begins operations with corporate hospital in
Memorial Hospital super specialities in Jaipur, opens its doors
(SDMH), run by a cardiology, cancer, to the public
trust, is inaugurated nephrology and
neurosurgery
Source: Kanvic research
9

10. Healthcare market in Jaipur is growing based on sustainable growth drivers
Growth drivers of healthcare in Jaipur
1 Government initiatives
and policies to promote
healthcare
5 2
State capital and major Major players in
city in Rajasthan, the healthcare sector
eighth largest state in Healthcare expanding into Tier II
India by population growth drivers and Tier III cities in India
for Jaipur
3
4 Tourism driven economy Proximity to
creating a demand for Delhi NCR region
medical tourism
Note: NCR- National Capital Region
Source: Kanvic research
10

11. Hospitals in Jaipur are going for quality accreditation
Jaipur Hospitals going for NABH accreditation
Hospital Status of Application
Fortis Hospital Got Accreditation
Apex Hospital In process
Monilek Hospital Documents received
In process
SDMH
Documents received
BMCHRC
Tagore Hospital In process
S.K. Soni Hospital In process
Note: NABH is a constituent board of Quality Council of India was set up in 2005 to establish and operate accreditation programme for healthcare
organizations in India. NABH has standards specific to the Indian healthcare setting, major aspects being the assurance of uniform access,
assessment, care of patients and protection of patient’s rights.
Source: NABH
11

12. However, there are some hospitals where doctor to patient ratio is not
adequate
Distribution of doctors and patients for hospitals in Jaipur
110
82.5
Number of doctors
55
Coping zones
27.5
0
0 3750 7500 11250 15000
Number of patients
Note: The list of hospitals is not exhaustive
Source: Kanvic research
12

13. New hospitals will increase supply of beds in the market
Proposed new hospitals in Jaipur
Proposed
Hospital Speciality No. of beds investment (Rs.
Crores)
Reliance Medicare Super Speciality 800 200
Bombay Hospital Multi Speciality 650 150
Dr. Rakesh Keedawat Hospital Multi Speciality 100 27
International Oncology cancer Hospital Super Speciality 100 54
Sea Rock Hospital - 200 50
Eternal Heart Hospital Super Speciality 150 60
Artemis Hospital Super Speciality NA NA
B M Birla Heart Research Centre - NA 300
Ojjus Medicare - 850 NA
Source: Press clippings, Kanvic research
13

14. While the demand for healthcare services will still be more than supply in near
future, the market space may become ‘crowded’ for top end hospitals
Demand supply situation in Jaipur, number of beds
2,540
2,700
11,240
6,000
Existing Proposed Gap in Total
supply addition demand Demand
and supply for beds1
Note: 1
Demand for beds is based on WHO standard of 35 beds for a population of 10,000.
Source: Kanvic research
14

15. Contents
A Overview of Indian Healthcare Market
B Jaipur - From Pink City to Medi-city?
C Implications for healthcare providers
15

16. Healthcare providers will need to look at five major factors in the changed
scenario
Key factors for healthcare providers
1 Healthcare economics will become
important
Hospitals will increasingly use
5
mass media to reach out to their New business models will 2
markets emerge
Key factors for
healthcare
providers
4 Quality of non-clinical services will
have considerable influence on Private Equity will help finance 3
patient satisfaction growth of hospitals
Source: Kanvic
16

17. 1
With increasing competition, a clear focus and strategy will lead to favourable
economics for hospitals
Economics of a healthcare provider Rentals
• Location
• Facilities
Diagnostics
• Type of
investigation
Inpatient
Consumables
• Disease type
Consultancy • Doctor’s reputation
Revenue • Hospital brand
• Disease type
Consultancy • Doctor’s reputation
Outpatient
• Hospital brand
• Type of
Diagnostics investigation
EBIDTA
margin%
Consumables
• Doctor’s profile
Costs Personnel • Full time vs.
consultation
payment
SG&A
Note: EBIDTA- Earnings before Interest Depreciation Tax and Amortisation; SG&A - Sales, General and Administration
Source: Enam, Kanvic analysis
Diagnostics
17

18. 1
Awareness of EBIDTA and cash break even will help hospitals in better
planning
Revenue and EBIDTA margin build up of Fortis Escorts, Jaipur, Rs. Mn, percent
191
Break even 174
167
155 21
20 20 19
141 17
102 106
90
83 0
73 -2
59 -6
-23
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
EBIDTA margin Revenues
Source: Morgan Stanley, Company reports
18

19. 2 New business models are emerging in healthcare delivery
Emerging business models in healthcare delivery
• Single speciality hospitals (SSHs) provide care in one major
speciality where they can offer end to end services. They are a
relatively new and rapidly growing segment in India.
• The margins in SSH are high as they are mostly surgery
driven. A SSH also needs less manpower, equipment, and
infrastructure.
1. Single Speciality
Hospital
• Maternity care is receiving a much-needed fillip with corporate
hospitals launching dedicated standalone birthing centres.
Although Apollo's Cradle and Fortis Healthcare's La Femme
may be the known names for maternity care, they are not the
only ones interested in cashing in on this emerging market.
• New boutique hospitals catering to mother and child care are
coming up in Goa and Southern India.
• Day care hospital model is attracting healthcare players in
India. In day-care hospitals, patients are not required to stay
overnight. They are provided healthcare services and
discharged the same day.
• Recently, Nova Medical Centers has launched day care hospital
2. Day Care Hospital chain based on similar models in the UK and USA. The
company plans to set up 25 such hospitals across the country
with an investment of Rs. 10 Crore per hospital.
• This model can bring down the cost of treatment for patients
as a result of reduced investment in building and land.
19

20. 2
Hospitals are also combining hospitality and retail to generate new revenue
streams
Emerging business models in healthcare delivery
• Large hospital chains are now turning into 'hospotels' -- a
3. Hospotels
concept that combines the services of a hospital and a hotel.
Already, Indraprastha Apollo Hospital has roped in fast food
major Nathu's, Max Healthcare has a Cafe Coffee Day outlet.
• Clinical activities are not the only source of income. For
instance, the business of Cradle also come from retail stores
that offer services for kids (baby clothes and kids' toys, apart
Retail Store in
4. Hospital
from baby accessories, foods and hygiene products), for
mothers (maternity wear), visitors (cards, gifts, books,
magazines and confectionary), a well-stocked 24-hour
pharmacy and a café for visitors.
• Considering the huge investment needed for establishing the
necessary healthcare infrastructure in the country,
franchising is emerging as a viable option for hospitals to
5.
expand to newer geographic areas.
Franchisee Model
• Apollo Hospitals is one among the pioneers to have sought
franchisee model for its clinics. Apollo Hospitals unveiled
'Cradle,' a boutique hospital dedicated to woman healthcare
through franchisee route.
20

21. 3 Healthcare sector has attracted the attention of Private Equity
PE investment in healthcare sector in India, $ Mn
• Private equity and Venture capital are
554 taking interest in Healthcare industry.
They are becoming increasingly
interested in regional hospitals. For
example, Jaipur based Soni Group of
Hospitals has attracted PE funding and
403
385 is planning to expand into different
367
regions.
290
• Two more hospitals in Jaipur-
Narayana Hrudayalaya and Eternal
Heart Hospital have attracted interest
of PE firms.
121
• On a national level, Fortis la Femme is
a JV with Sunrise Group while Spring
Healthcare has made an investment in
2005 2006 2007 2008 2009 2010 Oyster and Pearl Hospital.
Source: VCCedge, Kanvic research
21

22. 4
Non clinical factors are contributing significantly in creating a hospital’s brand
image
Distribution of clinical and non-clinical
processes in a hospital
1 Reception
Reception services play an important
role in patient satisfaction. While not
as important as clinic services, they
can create a negative perception
even if the clinical services are
excellent.
35%
2 Care from doctors and nurses
65% Care from doctors and nurses is a
key factor in determining
satisfaction level of patient.
Clinical Non clinical 3 Infrastructure
Quality of Infrastructure is also a
major non clinical aspect in
assessing a hospital’s image.
Source: Kanvic research
22

23. 5 Hospitals can use mass media for a number of functions
Key functions of mass media for hospitals
Communicate core value
Create distinct identity in
Reach out to larger markets patient’s mind
Use of Mass
Inform about products and
media
Educate customers services
Review existing services Launch a new hospital
23

24. 5 The inclination to use mass media by hospitals has increased in recent years
Examples of mass media use by hospitals
Moolchand Hospital has been successfully advertising
Radio
their Emergency services on radio. Fortis has been
talking about the Maternity services at Fortis La Femme.
The use of print media is very common in hospital
sector in the form of brochures, leaflets, pamphlets for
Print disseminating information. Hospitals have been
increasingly using newspapers to communicate about
their services to the target population.
Wockhardt Hospitals, India's leading hospital chain
Out of launched India's first "Interactive Occupational Health
Home Screening Campaign" for employees across all industries
(OOH) in the country.
Technology based marketing includes increased contact
Internet with patients (former, existing and future) via email,
marketing newsletters and online forums.
24

25. About Kanvic
Kanvic is a management consulting firm helping businesses develop winning strategies, drive profitable growth and achieve
operational excellence to reap long lasting rewards in fast growing Indian economy. We work with C-level executives to develop
innovative solutions for business challenges of 21st century India by bringing in leading edge management thinking informed by
in-depth research and sound analysis.
Contact
Jaipur Bangalore London
Deepak Sharma Ravindra Beleyur Bharat Vagadia
M: +91 99283 77800 M: +91 94481 46963 M: +44 7711 898089
E: deepak@kanvic.com E: ravi@kanvic.com E: bharat@kanvic.com
www.kanvic.com