Hosmac Pulse - Innovations in Healthcare Infrastructure

Vol. 1 No. 4 December 2010

Innovations in healthcare infrastructure Copper connects life Pg. 5

Saving energy and lives Pg. 5

Editorial Board

Advisory Panel

Table Of Content

Sustainable healthcare design in the Middle East

3

Copper connects life

5

Penetrating radiation

7

Saving energy and more lives

11

A pipe dream made real

15

More with less

17

Pathway to glory

19

Engaging expertise externally

21

Distilling costs alike

23

Be a radiologist!

25

Healthcare made affordable

27

Money matters

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Narendra Karkera narendra.karkera@hosmac.com Isha Khanolkar isha.khanolkar@hosmac.com Smita Sridharan smita.sridharan@hosmac.com Kaustubh Sardesai kaustubh.sardesai@hosmac.com Creative Consultant Amit Pandya mumbai@shapecommu.com Chief Editor Vinay Pagarani vinay.pagarani@hosmacfoundation.org Printed by Kothari Printers, Bangalore kothariprinters@gmail.com

HOSMAC Pulse is an initiative of HOSMAC Foundation. High-quality standards have been maintained while preparing and presenting the information in this periodical. However, no legal responsibility will be accepted by HOSMAC Foundation or HOSMAC India Pvt Ltd for any loss or damage resultant from its contents. The views expressed are solely that of the authors or writers, and do not necessarily represent the views of HOSMAC Foundation or its consultants in relation to any particular projects. No part of this periodical may be reproduced in any form without the written permission of HOSMAC Fooundation — the publisher.

Executive's note

Indian healthcare is on an ascent, and the healthcare infrastructure across the country is on the upswing. India currently holds 0.9 beds per thousand populations as against the recommended WHO standard of 3 beds per thousand populations. To bridge the gap would mean adding a whopping 80,000 beds every year for the next 10 years.

Hospital buildings need a large capex for both building engineering and medical equipment. Public-private partnerships will be a key to growth of healthcare services and that would mean — one would have to network hospitals across the country and develop a referral chain mechanism. This will mean intelligent use of information technology and tele-communication systems leading to larger role for telemedicine based clinical services.

Considering 24x7 operations of hospitals and the fact that most future hospitals will be centrally air-conditioned, there is a dire need to adopt building automation systems and other engineering solutions like high performance glass, gas based air-conditioning systems, solar energy, heat recovery systems, sewage treatment plants etc. to make hospitals more green and energy efficient.

Proper use of information technology can also help us reduce paper usage, and data can be shared across the hospital.

Access control systems, CCTV networks, and advanced fire fighting systems are also becoming essential in hospitals, especially after the terror strike in Mumbai. Pneumatic tube systems which carry blood samples and other small items help reduce manpower traffic to deliver the samples.

Thanks to the galloping growth of health costs and demand, even if the Indian government doubles spending on health to around 2% of GDP till 2020, it may not maintain the current 1:4 ratio of public to private spending on health. The government, corporates, private doctors, NGOs and think-tanks must help create a common vision of affordable, accessible healthcare for all and devise a broad framework to achieve global standards with a local touch.

There is a dire need to adopt building automation systems and other engineering solutions like high performance glass, gas based air-conditioning systems, solar energy, heat recovery systems, sewage treatment plants etc. to make hospitals more green and energy efficient.

Dr. Vivek Desai Managing Director, Hosmac India Pvt. Ltd.

Sustainable healthcare design in the Middle East

Erik Hokanson, Leed Healthcare Designer — Burt Hill, gives a rundown of the integrated planning and designing phase of the Al Mafraq Hospital, UAE.

A state-of-the-art healthcare facility that promotes sustainability and wellness as an integral part of the healing environment is ideal — such as the Al Mafraq Hospital, UAE.

ample natural light. Special VIP floors will provide dignified suites for patients and families requiring special privacy and attention.

Located in the central region of Abu Dhabi, the newly designed hospital is carefully situated on a prominent site directly adjacent to the existing Al Mafraq Hospital. The site offers an opportunity to express the client's desire to have visible and timeless architectural presence set in the midst of the Al Mafraq community. The new hospital complex boasts a striking contemporary architecture defined by four distinctive patient towers and a glass enclosed podium representing ultramodern medical facilities.

The new hospital facility will provide urgent care services with an expanded emergency department and critical care services.

Flexibility is the key component of the facility, allowing for expansion of departments with minimum disruption. In addition to rooftop gardens and the latest energy conservation devices, the entire facility will provide enhanced patient environments and longterm efficiency. The entire medical center complex is designed for sustainability and maximum energy savings.

The 272,000 square meter 750-bed replacement hospital and outpatient clinic will offer an enhanced and comprehensive patient care program extending excellent urgent care and general medical services. Patients and visitors to the hospital will be greeted with a welcoming approach and invited into the naturally lit lobby concourse which offers hotel-like lounging spaces, beside a private and dignified patient reception area.

Wayfinding is incorporated into the design fabric of the building through elegant sculptural elements and water features that orient visitors to the patient towers' elevator lobbies. Easy access to the outpatient clinic is offered from the main hospital lobby through an enclosed pedestrian bridge.

Located to support the privacy and comfort of women and children, a pavilion with a separate entrance was intrinsically planned. A separate tower dedicated for specialist service to mothers and children was also instituted.

Each patient tower will contain no more than 30 single rooms per floor, with each floor having functional nursing stations and patient control centres. Spacious corridors will lead to private and appropriately sized rooms designed for the comfort of the patient and visitors. All rooms will have large windows and 3

Culture Most of the healthcare design programs in the Middle East are led by American standards as they are recognized — the best in the world. It is important so designers can define the spaces and proper environments within a facility, and coordinate with the healthcare staff to best meet their working needs. The aim is to adapt to the culture in this part of the world while integrating innovation and improved practices from other parts of the world.

Family-centred care has been a tradition of the region for centuries and the design of Al Mafraq allows this tradition to continue in a new international setting. The planning and design of healthcare projects in the Middle East must recognize the need to provide appropriate and dignified spaces for the purpose of prayers by both the patient and staff. Further, the separation of males and females must be considered in all aspects of the design including waiting areas, hospital wards and recovery rooms. It is common for large families to accompany patients, which has a direct impact on the kinds of spaces and furniture to be considered in the waiting areas.

The patient room, which is the heart of any healthcare

institution, needs to be generous in size and to allow appropriate caregiver zones unobstructed by the family zones.

The patient room design must recognize numerous users of the room: family, medical staff, and not the least the patient.

Architects and medical planners need to consider these cultural requirements in the early stages of programming and conceptual design.

The use of rapidly renewable and sustainable materials including certified wood products for casework and wood wall paneling, linoleum flooring for corridors, patient rooms and carpet tiles in administrative areas are used throughout the project. Paint systems, sealants and adhesives have been specified to reduce or eliminate volatile organic compound emissions in occupied spaces, where possible.

Sustainable strategies

Landscape and water usage

Al Mafraq Hospital has been designed utilizing sustainable guidelines established in the Estidama and the Pearl Rating System. This system as part of the Abu Dhabi 2030 plan is a checklist of sustainable requirements similar to the Leed rating system. The design process has been a collaborative effort between architects, engineers, the client and Abu Dhabi stakeholders.

The site and landscape strategy for the project incorporates a sustainable planting and design approach through created wadi-scapes which have both ecological and economical advantages. Existing wetlands on site have been retained and new ones created with native marsh grasses. These wadi landforms collect and deliver seasonal drainage water to

Weekly scheduled integrated workshops resulted in establishing key sustainable strategies. These include building orientation, storm water management, water conservation, reduction of annual energy consumption and high-quality indoor air environment to name a few. The building also incorporates sustainable materials and will be sited in a landscape with a substantial component of indigenous desert plantings.

The project has been designed in parallel with the Al Mafraq community master plan and will incorporate public transportation and other amenities to hospital visitors and employees via future connectivity to the new capital district of Abu Dhabi.

The master plan design successfully integrates new urbanist principles, and carefully considers the placement of the hospital, while accommodating complex patterns of circulation necessary for the facility. Moreover, the plan's land use program includes space for a variety of related medical programs. The master plan provides appropriate facilities and pathways to those staff and employees who wish to ride their bicycles to work to reduce the single-occupancy vehicle traffic to the building.

Energy Extreme temperatures exceeding 50 degrees centigrade in summer months result in challenges when designing efficient mechanical cooling systems. Smart decisions can be made early in the design process by understanding a site's prevalent environmental attributes as well as utilization of energy modeling. For the hospital, energy modeling assisted in determining the ideal building orientation, the appropriate building envelope, sun-screening strategy and engineering for efficient MEP systems.

In parallel with the energy modeling, life cycle cost analysis was performed during the design process to evaluate go-no-go with systems vis-Ă -vis the client. The hospital incorporates many energy savings items including roof mounted solar panels, which provide 75% of the total power requirement for heating hot water.

Mechanical cooling systems for the project to utilize a flexible and zoned VAV system where appropriate (90% of building HVAC system) to reduce volume of air supply and fan energy. Further, a heat pipe system for infection control was designed to separate supply and exhaust air streams, which results in 50% energy recovery of exhaust air stream.

Computational Fluid Dynamic (CFD) modeling was utilized in the design process for studying appropriate air flow in burns unit and operating theatres, envelope wind pressure, and smoke management systems.

locations where it can filter back into the water table.

The wadi-scape and preserved wetland areas also help to support and nourish natural habitat for local wildlife to live.

The extensive planting areas which will have significant areas of sand and wadi gravel help to reduce the overall heat island effect. They also reduce the overall water demand while providing an indigenous landscape for the project.

The planting layout and species selection has been designed in tandem with the irrigation system to maximize the available water resource by using technologies such as flow and weather sensors, soil moisture sensors, soil additive to increase water retention in the soil and drip irrigation to ensure maximum water efficiency.

Over 350 cubic meters of treated sewage effluent (TSE) and grey water, which is separated from sewage produced daily from the hospital, will be used to irrigate the landscape and provide all of the required water needs. No potable water is used for irrigation. The site landscape strategy also incorporates the planting of many existing mature native, exotic trees and date palms which will be relocated from the existing hospital site.

The new medical center reflects the future of healthcare. The integration of outpatient and inpatient services provides the highest level of care and achieves economies of operations. Al Mafraq Hospital will offer a new experience to medical staff and patients, as it will set the standard for sustainable modern healing environments in the Middle East.

The author has led the design and management of several award winning healthcare, corporate and higher education projects in the Middle East and United States. He can be contacted at erik.hokanson@burthill.com.

Products and materials Evidence based design was utilized during the design process as a means to measure the impact of all design and material solutions. Every element, from the use of anti-microbial paint to bathroom placement related to slip and fall injuries was studied and analyzed to best arrive at the optimal solution.

4

Copper connects life

Ajit Advani, CEO — International Copper Promotion Council (India), reveals the role of antimicrobial copper touch surfaces, as a supplement to routine cleaning, to improve environmental hygiene in clinical environments.

Time for a new approach In the 1850s, some 50 years before scientists discovered microbes, Florence Nightingale — a pioneer of modern nursing, discovered that her patients recovered much better when the hospital environment was kept clean. She instituted a laundry service, rigorously cleaned all medical and hospital equipment, and had the floors scrubbed for the first time. The results were unbelievable: the death rate of patients suffering from cholera, typhus and dysentery came down from 42% to a mere 2%.

The laboratory research performed under EPA-approved protocols demonstrated that copper alloy surfaces kill more than 99.9% of several bacteria known to be human pathogens within two hours. The organisms tested were: • Staphylococcus Aureus • Enterobacter Aerogenes

More than 150 years later, however, despite enormous advances in the field of microbiology and infection control, hospitalacquired infections still continue to plague the patients and hospitals at alarming levels.

• Escherichia Coli O157:H7

Antimicrobial Copper

MRSA is one of the most virulent strains of antibiotic-resistant bacteria and a common cause of hospital-acquired infections.

Scientific research and historic facts confirm that copper and its alloys, brass and bronze, are naturally antimicrobial materials. They work as dinfectants restraining the growth of harmful bacteria, which has also been recognized by the U.S. Environmental Protection Agency (EPA).

EPA registration 275 copper alloys, including brass and bronze, have been registered with the EPA as antimicrobial materials that kill bacteria. The registration acknowledges claims that copper, brass and bronze are capable of killing harmful, potentially deadly bacteria. Copper is the first solid surface material to

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receive this type of EPA registration, which is supported by extensive antimicrobial efficacy testing.

• Pseudomonas Aeruginosa and • Methicillin-resistant Staphylococcus Aureus (MRSA)

Historic evidence Before anyone recognized that microorganisms existed, the Egyptians, Greeks, Romans and Aztecs used copper compounds for good hygiene and to treat disease. Egyptians used copper to sterilize drinking water and wounds. Hippocrates treated open wounds and skin irritations with copper. The Romans catalogued numerous medicinal uses of copper for various diseases. The Aztecs treated sore throats with copper, while people in Persia and India applied copper to treat boils, eye infections and venereal ulcers.

Not all hospital-acquired infections are preventable. However, in the UK, infection control teams recognize that a 15% reduction could be achieved through a series of infection control measures, including improved hygiene. This could also lead to savings of approximately 150 million pounds a year.

Copper touch surfaces Many of the commonly used materials in healthcare facilities such as stainless steel have proven to have comparatively little or no adverse effect on harmful bacteria.

Replacing frequently touched surfaces with copper or highcopper alloys such as brass and bronze, which are naturally antimicrobial, can be an effective infection control measure.

Such a measure can complement other infection control practices such as frequent hand washing, patient screening and isolation, and improved cleaning.

Frequently touched surfaces in hospitals that can be made from copper or copper alloys include: • Door handles • Push plates • Light switches • Bed rails • Grab rails • Intravenous (IV) stands • Dressing trolleys • Dispensers (alcohol gel, paper towel, soap) • Faucets Touch surfaces: Source of infections

• Sinks

In healthcare facilities, surfaces in proximity to patients are of the most concern. 80% of infectious diseases are spread by touch. A hand contaminated with the influenza ‘A’ virus will contaminate the next seven surfaces that are touched.

• Counter and table tops These touch surfaces are all potential reservoirs of harmful microbes. Reducing the number of live germs on these surfaces can possibly control the spread of MRSA and other sources of hospital-acquired infections.

Conclusion The use of copper alloys for frequently touched surfaces as a supplement to existing standard infection prevention measures, such as hand-washing and disinfection regimens, have far-reaching implications. Potential applications with the frquently touched surfaces in hospitals can help reduce the presence of disease-causing bacteria in hospitals.

The International Copper Promotion Council India (ICPCI) is the Indian centre of the International Copper Association Limited that promotes the beneficial usage of copper for safety, health, environment and energy savings by guiding policies, strategies and funding of international initiatives and promotional activities. To know more, please visit www.copperindia.org and www.antimicrobialcopper.com.

6

Penetrating radiation

Dr. Bhavin Jankharia, Director — Radiology Services — Piramal Diagnostics, suggests how operational efficiencies in radiology management systems can be effectuated.

Dr. Narottam Puri (centre) with Dr. Abdul Kalam Azad (left)

Given the large capital expenditures required to run radiology departments, it is surprising to note that more effort and thought have not gone into figuring out how to run these more efficiently in our country. It is best to start by differentiating between standalone and hospital based centres.

Hospital based Their main aim is to provide exceptional service to existing clinical facilities. They have to be well-equipped with state-ofthe-equipment within reason and above average radiologists, capable of working in sync with clinical colleagues.

A good radiology department functions as an integral part of the hospital, providing a “value add” that goes beyond the profit and loss account (P & L), by empowering the physician or surgeon to improve clinical deliverables and thus increase patient flow to the hospital. It stands to reason therefore that a hospital radiology department should have all the modalities to begin with, and not follow the step-wise, graded growth that many mid-sized hospitals do.

Outsourcing of radiology departments to private entities whose only focus will be the P & L is also an extremely debatable issue, not just for private hospitals but also for government ones.

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Standalone and outsourced hospital based departments Their primary objective is to provide service while also making a profit for the promoters.

The aims of the two groups are therefore completely different and while they share some commonalities; they also present different challenges. Where not mentioned below, the issues discussed will be common to both types of setup.

Issues a. Procurement b. Capital expenditure (Capex) management c. Information technology (IT) d. Tracking a good monthly income statement (MIS) e. Sales and marketing f. Referrals and revenue sharing g. Material cost control h. Human resources (HR) challenges i. Managing repairs and annual maintenance contracts (AMCs) and comprehensive maintenance contracts (CMCs)

j. Regulatory compliance k. Quality monitoring and audits A. Procurement The choice of machine in more ways than one impacts future operations. If the machine is not up to the mark, it will not do well and this will impact the top line. If it is too expensive, while sales may be good, the return on investment (ROI) and profit before tax (PBT) will be affected. In both situations, eventually there will be a tendency to cut corners. Hence, it is imperative that the pre-purchase technical and financial analyses be perfect.

Myths i. It is best to go with one single vendor to get a great “package� deal. ii. A radiologist is not required in the decision-making process.

During procurement, some issues that are often left out and impact future operational efficiencies include: i. Laser printers ii. Workstations iii. Pressure injectors iv. Training for radiologists and technologists v. Proper understanding of CMCs/AMCs and warranties vi. Optional packages B. Capex Management Among other issues, the way CMCs are handled can affect operations. If a CMC is capitalized at the time of purchase, it will enhance the P & L and PBT, but reduce the ROI. More importantly, there is a sales tax savings of 12.4% per year at this point in time that directly goes to the bottom line.

C. IT Systems i. Radiology Information Systems (RIS) These should capture patient information, provide proper

billing facilities, allow recovery of outstandings, integrate with the inventory so that material usage can be captured and be part of a CRM system that allows patient tracking, especially for screening tests (mammography and bone density) and repeat studies such as for multiple sclerosis, oncology, etc. ii. Workstations and advanced processing An understanding of workstation needs can reduce capital and operational costs without compromising on quality. For instance, using Osirix based IMAC workstations instead of vendor-based products. iii. PACS and teleradiology These should allow image transfer to all locations within the radiology departments, outside the department within all relevant hospital facilities and to a central server for teleradiology and similar applications, depending on need.

D. Tracking a good MIS Robust IT systems allow all revenues and expenses to be tracked meticulously, thus helping track costs. There should be a strong focus on tracking gross sales, net sales (gross sales patient discounts) and all other expenses as percentages of net sales. This will give an estimate of EBITDA before corporate or central allocations and then net profit as well.

For standalone centres, each modality should be treated as a separate profit-centre to understand what works and what doesn't.

E. Sales and marketing This can be done with the help of various methods: i. Brochures and pamphlets ii. Newsletters iii. Loyalty cards and a robust CRM iv. Sales and marketing personnel v. Advertising vi. Google AdWords

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vii. Generation of publicity

This is obvious. Good people make all the difference.

Depending on the circumstances, all or some of these may help.

A robust team can add value by enhancing patient throughput.

Ultimately though, it must be understood that the radiologist and his/her report are the cornerstone of a good radiology department/centre, interaction with patients and referring

iv. Compensation This should follow reasonable standards such as the total compensation of the entire radiology team should not exceed 18% of net sales, assuming a reasonable flow of patients. Similar standards exist for the rest of the staff. Compensation should include performance and statutory incentives to motivate staff across all levels.

I. Repairs, CMCs and AMCs These can be significant costs (up to 20% of net sales) and should be adequately managed. CMCs are the best option for busy centres, since the onus of uptime delivery is entirely on the vendor company.

J. Regulatory Compliance These are a must, both from the perspective of following the “law of the land” and for obtaining accreditations such as NABH for radiology. These include: i. Shop and establishment licenses ii. Atomic Energy Regulatory Board (AERB) clearance for all xray based and radiation based equipment

doctors on a daily, ongoing basis is the best marketing tool. The use of short messaging service (SMS) and emails helps reports get out faster, allowing more robust communication and better efficiency.

F. Referrals and revenue sharing While the ethics of this can be debated endlessly, it is a reality.

To maintain a reasonable ROI and PBT, it is necessary to restrict referrals and revenue sharing to less than 20% of net sales. In a hospital department, this should be 0%. It is up to the hospital administration to crack the whip and ensure that no radiology work leaves the hospital premises, whether it be OPD or indoor.

If work has to go out due to non-availability of certain machines and modalities, then it should only be to those centres or departments that are accredited by the hospital. All such appointments should be routed through the hospital's radiology department to ensure quality and accountability.

G. Material Control Material cost tracking and control should be obsessive. For example, in a full-service department, exclusive of a PET/CT (positron emission tomography/computed tomography), the material cost inclusive of stationery, CDs, films and contrast should not exceed 12% of net sales.

A part of this involves auditing waste. In the pre-digital era, film wastage as a result of improper technique was quite significant. In the digital era, this has been virtually eliminated.

iii. PC-PNDT (Pre-conception and prenatal sex determination act) compliance, which is both a one-time and an ongoing process, for all USG machines H. Quality audits and compliance There should be an in-house, automatic method of tracking the quality of reports, the turnaround time for reports, the availability of emergency services and the quality of emergency and teleradiology based reports, etc.

There are many ways to do this. Example, one parameter that can be tracked is turnaround time (TAT), which can vary from 30 minutes in emergency situations to 24 hours for non-emergency cases. One method of speeding up TAT is to use automated transcription software, such as ‘Dragon Naturally Speaking’ from Nuance that allows instantaneous transcription on the computer.

Final words Having a multi-functional facility manager to oversee each facet of the centre/department in conjunction with other functional heads (biomedical, finance, supply chain) makes a significant difference and allows radiologists and technologists to focus on their clinical work, without having to worry about other day-to-day administrative issues. This facility manager may be a receptionist with extensive experience, a nurse or a technologist, who is willing to shoulder additional responsibility and is given adequate gap training.

As shown above, a radiology department, whether standalone or within a hospital, is a complex animal that needs a significant amount of attention if it has to be run efficiently.

H. HR Challenges These involve recruitment, retention, training and compensation. Good HR strategies go a long way in maintaining an efficient department/centre. i. Training This involves front-desk training, behavioral training for the rest of the staff as well as technical training. Just ensuring that everyone is properly attired can make a big difference. ii. Retention This is important. Though the adage “no one is indispensable” is an oft-quoted “corporate mantra”, it is just not true. Good human assets, from ward-boys to radiologists, make a significant difference. Figuring out ways to motivate and retain key talent is a must. iii. Recruitment 9

The author is also the Editor-in-Chief of the ‘Indian Journal of Radiology and Imaging’. He can be contacted at bhavin@jankharia.com.

Saving energy and lives

Michael Sullivan, Vice President — Healthcare Solutions — Schneider Electric, discusses how implementing energy efficient solutions in a new hospital can reduce operating costs and significantly improve financial performance, while also helping to fund technological advancements, and improve the patient experience.

By its very nature, healthcare delivery is an energy-intensive business. When energy is such an in-demand and precious commodity as it is in India, it's imperative for hospitals of the future to consider “green” energy management as a critical component of their infrastructures.

Many think that the cost of building an energy efficient hospital will erode profitability, but a green hospital can actually increase bottom line revenues, with a return on investment by often less than one year. At the same time, hospitals designed and built with energy efficiencies have a positive impact on patient care and the environment, which in India supports the

Bureau of Energy Efficiency's 2001 Energy Conservation Act and its work to reduce energy consumption by using efficiency and conservation measures.

Energy usage in existing hospitals When considering building a green hospital, it's helpful to understand how a typical existing hospital uses energy and how it affects overall profitability.

In reviewing power and fuel expenses of 46 for-profit hospitals in India over a four-year period, DSCL Energy Services found that energy expenditures were 3 to 8 percent of a hospital's total expenses and 15 to 20 percent of its operating and maintenance costs.1 The amount of energy used by hospitals is expected to increase dramatically over the next five years due to more sophisticated systems and technologies, as well as more demanding international standards, so these percentages most likely will increase as well.

For an existing hospital with 250 beds, inefficient design, integration and monitoring of energy can lead to an estimated INR 130 crore to 190 crore in lost revenue over the course of a 30year period.

If these hospitals were to implement energy-saving measures, they could reduce energy usage by 15 to 46 percent, according

1 Energy Efficiency in Hospitals – Best Practice Guide. USAID/India, ECO-III Project, Bureau of Energy Efficiency, India, February, 2009 2

Energy Management in Healthcare Facilities. ICF International, British High Commission, Bureau of Energy Efficiency, March, 2009; “HOSMAC India propagates energy efficiency in hospitals,” HOSMAC.com, July 2009 3 Energy Efficiency Projects Ensure Healthy Financial Performance in Healthcare Facilities, Schneider Electric, October 2010

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to energy audits by India's Bureau of Energy Efficiency and HOSMAC research.2 A 30-percent savings in energy costs has the potential to improve profitability by up to 1 percent, with savings of nearly INR 6.4 crore.3 The Highest Areas of Energy Consumption Consumption of energy varies throughout a hospital, but there are several areas that typically consume the most.

As noted in the graph here, a survey of five different hospitals in India found that HVAC (heating, ventilation, and airconditioning) and lighting applications comprise approximately 75 percent of the electricity consumption, with HVAC usage ranging from 30 to 65 percent, and lighting — 30 to 40 percent.4 Immediate payback on Green investments When compared to India's existing healthcare facilities, it's easy to see how the construction of green hospitals can improve energy efficiency dramatically, while at the same time provide better patient care and improved profitability.

Infact, Nandini Shah, Manager of Architectural Services for HOSMAC Projects, identifies in a projects’ info article that when energy conservation measures are adopted and coupled with enabling architectural design to harness natural light and ventilation, it's possible to reduce energy by 10 percent, with potential savings of up to INR 80 crore every year. This is equivalent to the capital expenditures of a 150-bed tertiary care hospital.5 Schneider Electric has found that when additional energy efficiency measures are taken on top of what Ms. Shah recommends, energy usage can be reduced by as much as 30 percent.

While green buildings require an additional financial investment upfront, it is small in comparison to the long term revenue realized from the energy conservation benefits, as Shah points out above. For instance, additional meters and software for electrical and control systems would, approximately, require an additional 5 percent in funding. A return on this investment could be realized within as early as six months of a hospital opening its doors.

Start Green planning early Typically, a new construction project will start off with subcontractors bidding independently on their own area of expertise. After the bids are in and construction begins, it may seem prudent to add some energy efficiencies, but at this point, it is often too late in the process to efficiently bring disparate technologies together without an expensive redesign.

A holistic approach to measuring energy provides a hospital with the means to build an intelligent energy management system that accurately measures, controls and manages energy throughout its entire infrastructure. This kind of system empowers hospitals to quickly and efficiently respond to realtime alarms for energy usage that falls outside pre-determined set points, while identifying potential cost-saving opportunities on a continual basis.

The cornerstone of the intelligent energy management system is often called an “energy dashboard,” which has a customizable and easy-to-use interface that monitors, collects, and analyzes energy usage data through graphic displays, trend logs, alarm logs, control programs and schedules for the entire hospital facility.

Hospitals can view energy usage by building section, time, day, or any other number of variables, including sub-meter tracking, environmental performance, financial performance, utility

In order to realize significant cost savings, it's imperative to make a commitment to go green early on, well before a design for a hospital is even conceptualized. At this pre-design stage, upfront planning of an intelligent infrastructure can occur through the design of a common architecture with smart, enabling technology that spans numerous domains, such as power, data management, building automation and management, and security.

Measure and control One example of how upfront planning delivers savings — is the use of multiple meters for energy tracking. A traditional hospital would typically use one meter, whereas an energy efficient hospital uses a series of sub-meters placed in each location where energy is used, allowing for more precise measurement and monitoring of water, air, gas, electricity, and steam.

4 Graph data based on information gathered from Energy

Efficiency in Hospitals – Best Practice Guide 5“Green Hospitals Improve Efficiencies,”

HOSMAC.com, January 2010

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performance, maintenance scheduling and asset optimization.

Intelligent decisions can be made as to how to improve energy efficiency on a real-time, ongoing basis. In addition, built-in algorithms identify potential areas of waste and present energy savings opportunities, allowing for quick alterations of usage, with results that are low-risk to patient care, while creating the greatest financial return on the hospital's investment.

Identifying areas of high potential savings Energy efficiency solutions provide hospitals with built-in controls to help them regulate the highest areas of energy use, such as HVAC and lighting.

For instance, hospitals pay usage charges for electricity, as well as a demand fee on top of that, which is established by peak levels of energy usage. A maximum demand report generated from an energy dashboard identifies the peak periods, allowing for adjustments that can reduce the demand fees and generate significant savings over time.

Other opportunities for energy efficiency that can be considered include: • Advanced and integrated control techniques that regulate all building systems can help a hospital save 5 to 20 percent annually on HVAC and lighting costs.

• By installing variable speed drives for air-conditioning pumps and fans, a hospital can reduce motor speeds and optimize fan and pump runtime. A 20-percent motor speed reduction could deliver a 50 percent energy savings.

• Integrated lighting control systems with low-consumption lighting can offer up to a 30-percent savings on energy.

• Energy efficiency measures for operating theatre can reduce the air change rate based on operating theatre occupancy, with potential for as much as 25 percent savings.

• In a hospital datacenter, in-row cooling devices for servers could save 30 percent on energy.

The savings noted above are based on measures taken by existing hospitals. When these steps are integrated early into the design of a new hospital, the savings potential is even greater, as new hospitals continually meter, monitor, and control their usage through an intelligent energy management solution.

A model Green hospital As a global leader in energy management, Schneider Electric has helped both existing and new hospitals around the world improve their bottom line by reducing energy costs, as described in this paper.

Schneider Electric is currently delivering solutions to a hospital in Australia, which hopes to be the country's first Five-Star Green hospital. Due to open in 2011, this hospital will minimize water and energy consumption as well as greenhouse gas emissions.

Schneider Electric's solutions for the hospital include building automation and security, medium and low voltage electrical distribution, metering, lighting systems and power management.

Hospitals like this are improving the overall patient journey, with reductions in patient recovery time, reduced risk of infection, and overall improved patient satisfaction. And it's these kinds of hospitals that India needs today — ones that use energy intelligently and efficiently, while still providing profitable bottom line results and better healthcare.

The author offers 23 years of experience including, helping hospitals and healthcare facilities improve their financial performance, patient safety, and environment of care. He began his career in the IT and automation businesses and can be reached at michael.sullivan@us.schneider-electric.com.

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A pipe dream made real

With inputs from Jitendar Sharma, Dr. Shakti Gupta, Head — Department of Hospital Administration & Medical Superintendent — All India Institute of Medical Sciences, Delhi, delineates the increasing applicability of Pneumatic Chute Systems in hospitals.

The meaning of the word ‘chute’ is as dynamic as is its growing application. Chute means to convey, deposit, go, send, or to descend. In most common applications, it is a long tube or slide in which things are dropped or slid down to a lower place.

Pneumatic, on the other hand, means driven by air pressure.

Thus a Pneumatic Chute System essentially is a system of transport which is driven by air pressure. Though engineering techniques could be applied to fix various regulators to the movement, an ideal chute system is one which can operate with least number of resources or consumables.

The main advantages of a Pneumatic chute transport system include: i. Rapidity of movement — as nothing disrupts the flow ii. Safety in transport — as interaction with external agents is impossible iii. Reliability of movement direction — as movement is towards a fixed location iv. Saving on manpower needed for carrying items v. Reduction in turnaround time It is interesting to see that the three characteristics mentioned above, have special relevance to the items most commonly transported within a hospital setting. Pneumatic Chute Systems thus enjoy being one of the technologies capable of harnessing the heavy load of transport of sensitive items within a hospital facility.

Laboratory samples, blood samples, drugs, injection vials, saline bags, disposables, reports etc. can be safely and speedily moved from one station to another. For instance in the transport of samples from Emergency department to the Laboratory, from Operation Theatre to Emergency, from hospital stores to OT and viseversa.

There is practically no limit on the number of stations that can be connected or the distance that it may need to cover. With the PCS system installed in the hospital, critical patients and attending staff shall no more wait for staff to run over from place to place to perform errands and carry supplies.

How PCS works?

The System is driven by an air compressor, which is installed in a

central place and generates air pressure to transport items. The control station is equipped with a computer system in which the chute system software is loaded. This system contains the digital control with records and data of all transfers.

The other unit of PCS is the “diverter” units. This unit receives the items, takes the air pressure from the compressor and signals from the computer as inputs, and ‘diverts’ the items into the desired location. Thus, when the sending station i.e. the place from which an item has been dispatched comes to the diverter, depending upon the destination station number punched at the sending station, appropriate signals are sent to the diverter, which in turn shoots the items in the desired location. The receiving station is equipped with a similar shoot and items are received on a platform.

It is important to note that though the system gives “to & fro” service, every receiving station or sending station has only one chute panel. The items are sent in fibre jar with corks inside to keep the items safe and intact. Thus transfer takes place within a matter of seconds.

The running cost of the chute system is considerably low, and consists of mainly the electrical consumption and the maintenance contract charges for the system. Though the initial investment could be high, it justifies the savings incurred on the salaries of staff used for transport of items and also the opportunity cost of the time saved in the item transport.

Design based classification Chutes are grouped as per their design under the following heads: i. Single entry chutes which have a single entry point. ii. Multi-entry chutes are those that are modular single chutes.

When an assembly of chute lines is planned in different floors, the height of each chute equals to the height of the floor difference connecting the two chutes.

Chutes could be placed either inside or outside the building depending upon the area being covered and the number of service stations attached.

Pneumatic Chute Systems could be used at a number of places in a hospital setting, more so when the set-up caters to a larger number of beds, and when the hospital building has a

15

perceivable vertical height and the human resource is limited.

Functionally, the PCS can be used in a hospital for following purposes: Pneumatic Chute for Laboratory samples: This transports laboratory samples from the phlebotomist cabin to a designated place in the laboratory. The results are communicated usually using a computerized hospital information system which brings the values online attached to the patient’s unique bar-coded identification number. In the absence of such a system, reports in hard copies could be sent either conventionally or via the chute system.

Transportation of blood and blood components: It is a common perception that the staff of blood banks remain occupied with the blood banking activities, whereas that of the clinical departments with patient treatment activities. Though in the absence of a pneumatic chute system, the onus of collecting the blood units from the blood bank remain with the clinical staff, pneumatic chute system does this transactional operation without a continuous human resource attachment and yet, the delivery is made in a protective way at a predecided recipient area.

Knowing the excellent features of the PCS technology, it is important to have the following considerations: It is necessary to have appropriate cleaning and disinfection of the Pneumatic Chute Systems. Use of mild disinfecting agents and Air Scavenging Systems can be extended for this purpose.

Popularity of this technology should be increased by exhibitions on hospital technology and by providing training to the hospital staff.

In India, there is no formal certification of the PCS by any standardizing agency. However, being a product with high potential of use in public sensitive places like hospitals, it would be appropriate to get the available products standardized for quality, specifications and design.

Making the chute systems fire resistant would make it safer and more acceptable for use in patient and staff evacuation scenarios.

Using robotics to clean chute system would be another area needing exploration.

The Pneumatic Chute Technology needs to be explored,

The linen and laundry system demands heavy workforce due to its sheer quantum of work. Here, instead of precision in function like in the laboratory or blood bank, the PCS works like a heavy transporter of goods. Thus, need for mobile transport machinery and manpower is reduced, hazards of handling soiled linen are minimized, and timeliness and work efficiency is maximized.

Transport of medical and surgical stores from the central drug stores to the substores at consumption centres like the wards, emergency units, OTs and ICUs. The main advantages being — safety during the transport of items and promptness in delivery without any potential chances of en-route thefts.

Centralized Sterile Supply Department (CSSD) finds the application of PCS for transporting the sterile as well as receiving the unsterile items from the theatres. It is important to note that a PCS does not alter the status of sterile items, thus making it a safe pathway for transfer of items.

Bio-medical waste transport using PCS has gained good popularity. The challenges of training all the staff towards safe handling of bio-medical waste are well-recognized. Further, the reliability of materials used for packing waste and the chances of potential spillage during transport hover around the planning of waste disposal pathways. Even the disposal zone or dirty utility corridor of Operation Theatres is being speedily replaced with PCS which comes up as a space saving and relatively risk-free methodology.

Some improvisations

examined and extended for use in healthcare institutions to prompt uninterrupted, faster and accurate care delivery, and reducing the overstretched workload on healthcare workers.

The author has over 25 years of distinguished academic and healthcare management experience, and has authored five books in the specialty of Hospital Administration. He can be reached at shakti810505@gmail.com.

Technology has brought the integration of alarm systems with the PCS which makes it more prompt. Alarms can be used to initiate the process of transfer by placing a call reminder to the sender and/or recipient. The receiving of any new item at a receiving station also triggers an alarm to the receiver.

Ambience and internal environment control is an essential feature which enables the preservation of blood samples, medications and sterility of packs and instrument kits. The temperature and humidity inside the chute is controlled so that items due not get altered in quality, physical and/or chemical properties when in transit.

PCS can also be deployed as an emergency evacuation strategy in case of disasters or accidents. The design of such human evacuation specific chutes is different in terms of protective layers and landing. Some companies in the western countries are installing chute systems that can evacuate at the rate of 25 persons per minute. This provides solution for rapid evacuation of patient and healthcare staff in the quickest possible time.

Challenges and ways to harness PCS technology 16

More with less

Anil Joseph, Country Director — Ortho Clinical Diagnostics — Johnson & Johnson, unravels Lean thinking and designing for a slick hospital laboratory and more.

Take a look around your lab. You'll see countless opportunities to better organize your supplies and put equipment within easier reach. But which changes would be cosmetic and which would make a meaningful difference? Other situations seem to defy solution, such as orders piling up in your receiving area, an endless stream of STAT requests, and a constant reliance on overtime.

The good news is that there is a proven methodology to effectively address these issues — systematic ways to determine which changes are readily achievable and will streamline your workflow, eliminate waste, and let you deliver better value.

That proven methodology is Lean. Lean is doing more and more with less and less. It is a methodical approach to eliminating wasted effort and lost revenue in your lab.

At any size, at any level, clinical laboratories can reduce expenses and enhance revenue with ValuMetrix® Services. To achieve permanent solutions, we work closely with both management and laboratory staff to maintain and institutionalize improvements and redesign. These efforts also include training, mentoring and certification of personnel. More importantly, Lean implementation produces improvements in the quality and operational efficacy of clinical laboratories and transfusion services and blood donor centers.

The underlying Lean principle — to create flow and terminate waste in all its forms — is logical and readily understandable.

The ValuMetrix process sets out to eradicate waste, to simplify and to standardize. Laboratory layouts have often evolved instead of being designed for purpose. A laboratory might maintain the highest standards of clinical excellence, but a process can be verifiable yet still flawed from a Lean perspective. If there is over-reliance on memory and vigilance to do the work right, then the work required to maintain those high standards will be more stressful — and probably more costly than it need be.

Every change made as part of the ValuMetrix process is supported by data from your own laboratory. The various Process Excellence tools that are routinely employed include: • Lean review of processes, products and information flow • Voice of the Customer (VOC) • Visual Control Management • Process Mapping • Value Stream Mapping • Workcell Utilization Maps

Review and analysis of value added and non-value added 17

activities from the data collected can help identify improvement opportunities. Most of the recommendations have a significant financial impact. Others, while not assigned a dollar amount, offered substantial value in terms of quality of patient care.

Case Study — Hospital Lab For 14 weeks — from July to early October 2006 — a Lean team devoted 100% of its time to a lean implementation process. This was an in-depth redesign of lab processes. After initial lean training, the team's analysis of the current situation found the existing lab layout and processes drove wasted motion and delayed turnaround times. The team designed a new lab layout, focused on reducing systemic waste. The team also introduced standard work, 5S, and visual management in multiple areas, and implemented a visual kanban system for organizing and reordering supplies.

Most hospital laboratories are designed in a departmental layout, even if the lab is a single open room. This is an historical artifact, which dates from the time when academic specialties such as chemistry and urinalysis were located in different

layout considered the flow of products (specimens), operators (technicians and lab assistants), information, and material (replenishment of test reagents and other consumable supplies). Department boundaries were broken down, creating a single U-shaped cell with different automated instruments next to the specimen receiving department to encourage single-piece flow of specimens.

With the new layout, specimen travel distance for chemistry tests was reduced by 54%, from 146 to 67' (44.5-20.4 m). With the lean system, hematology techs' walking distance per hour was estimated to decrease by more than half. As in a manufacturing implementation, the lab's lean efforts and new layout set free significant space. When lean was first implemented in October 2006, the percentage of lab test results available on doctors' charts by 7 am was 62%. Between November 2006 and January 2007, that amount increased to 85% and was sustained at 82% for March 2007.

Lean is not a “project” that ends after an initial timeframe. It requires long term commitment and management support. The hospital's leadership is now looking at bringing the lean approach to other areas, such as the lab's Microbiology area, and other departments, such as the pharmacy and surgical instrument sterilization. They join a growing number of hospitals that are implementing lean, and understand that it is more than just a toolkit, a cost-cutting method or a project.

The author has had over a decade of professional experience, including exposure to some of the best systems & practices in the world. He can be reached at ajospeh@its.jnj.com.

rooms or floors. As hospitals created unified clinical laboratories, managers continued to organize the layout by departments, even though most technologists were generalists. As testing became more automated, many laboratories still adhered to the “one machine, one tech” approach. Even with “walkaway” instruments, technicians often stood and watched an instrument, “just in case.” Physical separation of departments made it difficult for lab employees to communicate or assist each other when workloads in one department were high.

The lab layout didn't consider the flow of specimens, such as tubes of blood. Chemistry, a high-volume testing area, was in the back, far from the point where specimens arrived. A straight path from receiving to testing was blocked by a large supply storage cabinet. The newly created lean “core lab” 18

Pathway to glory

Hussain Varawalla, Mentor — Design Services — Hosmac, lights up yet another vital aspect of hospital infrastructure — the circulation routes.

‘Circulation’ is defined by the Merriam-Webster's Collegiate dictionary as “orderly movement through a circuit; especially the movement of blood through the vessels of the body influenced by the pumping action of the heart.”

So we have our medical analogy, though a hospital is often compared to a small city, I've never heard or read a comparison to the human body. We do, however speak of the ‘pulse’ of a city, and it's ‘major arteries’. But we are wandering; let us get back on track.

In the above definition, ‘orderly movement through a circuit,’ the word we should pick up and focus on is ‘orderly’. It implies purpose, and purpose implies design. We are going to talk about the importance of the design of circulation in a healthcare facility.

Hospitals, like the small cities they are likened to, contain main circulation routes often described as hospital streets. The way in which — different parts of the hospital are assembled, as a coherent whole but with the parts differentiated, make for analogies with urban design; the way in which traffic moves, and the routes that are taken by mechanical and electrical services are fundamental generators of the plan.

In a vertically stacked hospital, which could also be called a functionally stratified hospital, almost always the inpatient areas are placed on the upper floors, to allow for a more pleasant, naturally lit environment. The planning grid for the hospital is determined by the layout of these inpatient floors.

Another important planning feature, the vertical circulation core, is also to some extent located within the building by the layout of the inpatient floors. Usually, in vertically organized hospitals we design “from the top down”, that is, we design the inpatient floors first. What we actually do is during the layout of the inpatient floors, we provisionally decide on a position for the vertical circulation core and other staircases that may be required, many a times by the local building codes. This location, however, is to be checked for its design impact on the lower floors containing the diagnostic/therapeutic/ interventional departments.

The pattern of circulation conceptualized for the hospital under design will be considerably impacted by the location(s) of the vertical circulation core(s).

It's something like all roads leading to Rome(s). The vertical circulation core is the centre, the focus of all the major circulation paths of the hospital. An attempt can be made through design to minimize vertical transportation by siting (for example) all surgical beds, operating theatres and the intensive care unit on the same floor. This design approach may be used as a justification to reduce the number of elevators, or the width of the staircases, but in no way does this mean that the core can be located more casually by the designer.

Avoidance of dependence on lifts is particularly important in places where maintenance and availability of spare parts is unreliable; long waits for lifts are a major cause of inefficiency and frustration to hospital users — more of a problem, the taller the building is.

It is important that patients, visitors and staff are enabled to orient themselves while moving through the hospital by providing windows in corridors to enable them to look out and to allow natural light in, important in alleviating the tedium of long corridors. If the site enables them, courtyards are also an excellent means to this end.

As such there is no easily available prescription for the way the circulation pattern of a healthcare facility should be. The qualities it should possess, however, I will try to enumerate: It should have conceptual clarity. By this I mean it should be designed with purpose, and should not be the leftover space or squeezed into the gaps between other areas. Geometry can be a recourse, but it should work with other planning imperatives. Junctions should be uniquely treated to avoid confusion over which corner of the hexagon (for example) you have reached.

It should not be boring. Try to make walking from one place to another interesting, modulate those corridors, color them

19

differently, and hang artwork along the way. Niches, outside views, courtyards, all these will help.

It should enable wayfinding. In combination with well-designed signage and maybe supergraphics, people should be able to find their way to their destination with ease. Color-coding for floors or departments is sometimes used.

They should be wide enough to handle anticipated traffic.

Stretcher traffic needs 8'-0” width of corridor for easy movement (turning). 7'-0” will work, but use 8'-0” if you can.

Corridors between Operation Theatres make sense even with 10'-0” width.

When planning for the area occupied by this circulation space (corridors) in the architectural space plan, it can be provided for as a percentage of the department area (usable, built-up area). This percentage will vary depending on the department and may also vary if the architect has any special feature in mind for that department, which is not explicitly provided for in the room-by-room area statement (such as semi-covered, landscaped waiting). The percentage can vary from 35% for an Operation Theatre Suite (with 8'-0” corridors) to 20-25% for the administration department.

On the inpatient floors or even in the outpatient department, these corridors can be modulated by recessing pairs of doors that occur at regular intervals, and using an accent color in the niche so created. This helps relieve the boredom of walking through long, uninteresting corridors.

Very frequently, the major circulation paths through the hospital are laid out even before the tentative space allocation for the hospital departments is done. Thus, the importance of conceptualizing these paths in a way that they contribute to the concept and functional layout of the hospital is not to be underestimated, the exercise should not be done casually.

The manner in which the healthcare architect conceptualizes the working (and therefore layout) of certain hospital departments, notably the Operation Theater Suite and the Radiology & Imaging Sciences Department will determine the circulation pattern through that department, and hence affect the layout of circulation paths in contiguous areas of the hospital.

There may be a lot of stuff parked along the sides, despite instructions to OT staff on the contrary.They should be indirectly lit. Patients on stretchers get to look at the ceilings.

The sign put up by the traffic police at the end of Marine Drive in Mumbai says, “Drive carefully. Hospital ceilings are boring.”

While not advocating rash driving, we would advocate making the ceilings interesting.

Some of the hospitals currently existing in India have been provided with ramps in addition to the usual elevators and stairs. Power cuts are realities that have to be considered. But consider putting some (two) of the elevators on a generator, if this helps in avoiding the ramp, which is wasteful of space and difficult to use, as the gradient is often excessive. With an acceptable gradient, the length becomes excessive, considering that the lower floors of hospitals are considerably higher than those of the usual non-hospital building.

Habitually, we healthcare architects find that in the areas below the footprint of the inpatient tower in the podium, we end up using the same corridors that we used in the inpatient floors. (At least I find myself doing this quite often. There must be a good reason for this, I hope there is!)

Defining major circulation paths through the proposed and future buildings is a design decision that will considerably impact the form, layout and thus the eventual functioning of the healthcare facility being designed. Do it thoughtfully and with conceptual clarity.

The author has had 20 years of rich experience in healthcare design building, and has worked with Reliance Healthcare Ventures Ltd. He can be reached at hussain.varawalla@hosmac.com.

20

Engaging experts externally

Dr. Sujit Chatterjee, CEO - Dr. L.H. Hiranandani Hospital, unveils organized outsourcing models in corporate hospitals.

One of the major reasons for, the most powerful man in the world, President Barack Obama of the United States to visit India was the issue about outsourcing! It is a reality and is a USD 60 billion industry in India, and from all counts it seems to be growing. According to Dunn & Bradstreet, outsourcing has become USD 4 trillion a year business, world wide.

While we keep speaking and writing about the US, the truism is that outsourcing in healthcare too is a reality in India. This 60 billion dollar pie has affected businesses across industry and healthcare is no exception. Outsourcing potentially enables businesses to reduce costs, and concentrate on core competencies. Thereby, essentially, transferring non-core business processes to others, allowing those who are competent in their fields to ensure services are provided, effectively and professionally.

Outsourcing is basically classified into strategic outsourcing, where a number of functions are outsourced, such as security, catering, insurance, housekeeping, laundry, so on and so forth.

Whereas functional outsource involves a single function. There is also departmental outsourcing such as a particular department of radiology or engineering.

Pursuant to the foregoing, organizations that are interested in outsourcing are often curious to know about the advantages and disadvantages of such a process. It is but natural that outsourcing some of the functions which had to be traditionally in-house within the hospital could be an area of concern, and till the organization is fully aware of the pros and cons, would desist from jumping headlong to outsource a particular 21

function, department or a making policy for strategic outsourcing.

Our hospital after having extensively studied outsourcing from the hospitality sector took it on itself to lead in the field of outsourcing strategically in healthcare. The departments that were outsourced at the outset at Dr. L.H. Hiranandani Hospital were security, housekeeping, patients' services (in transporting patients from one department to another), catering and laundry.

Having learnt from the above, this hospital is now even engaged in functional and departmental outsourcing. The benefits of strategic outsourcing include: i. A non-core activity is given to another, and this gives the organization more time to concentrate on core business. ii. It increases the efficiency and also the productivity in the non-core business areas as professionals were hired to do that work without hospital staff having to understand the nitty-gritty and put the processes in place. iii. It helps to streamline operations, manpower issues are offset as the outsourced organization is wholly responsible to provide the same. iv. It gives the organization the flexibility to increase manpower in short notice if it is required. v. The outsourced organization invests in latest technology for carrying out their professional tasks which also saves time for the hospital as no further research is needed to perform

these tasks to perfection. vi. The hospital processes for cleaning or housekeeping, etc are run efficiently and the turnover time is also less. vii. It has helped the organization to understand the cash flow as well as plan in advance the cash flow required for all these functions. viii. It is my perception that the hospital got a competitive edge and was able to maintain standards of cleanliness.

While the above is the sunny side up, there is a sunny side down and that is: i. The outsourced partners must share the ethos of the organization and that requires multiple levels of meetings and also the hospital's participation in their training programme.

depreciation which impacts healthcare costs and these are transmitted to the patients. Rising costs have impacted health insurances in particular and everybody in healthcare is aware of the stand off between the insurance sector and the healthcare sector.

To offset some costs this hospital had thought in terms of another departmental outsource and that was radiology. A suitable partner was identified and taken on board and this helped the hospital reduce the cost of high ticket items as CT Scanners, MRI machines, so on and so forth and at the same time the partner's land and infrastructure costs were reduced. The costs to the patients were competitive and the cost advantage was transmitted to the patient. Thus it was a winning situation

ii. There may bee discrepancy in salary & benefits between the full-time employees paid by the organization and the outsourced organizations. iii. As a principal employer it is also the hospital's responsibility to ensure that the outsourced organizations have met all the statutory requirements of their employees. iv. The hospital has to depend on the outsourced organization's probity that it has screened all the employees before employing them within the hospital. v. It is a challenging task to keep the outsourced organization focused on the customer and ensure that the ultimate experience is not blemished by the outsourced employees performance and behavior. vi. There can be several disadvantages in outsourcing, such as renewing of contracts, lack of communication, misunderstanding of the contract, delay in services that impact customer decisions and poor quality of service or even worse and inconsistent quality which would create an impression that the hospital is either very good or very bad.

The experience in departmental outsourcing in this hospital has been with the engineering department and before it was outsourced the organizations were explained the hospital's energy utilization policy, energy discipline, concept of daylight harvesting and the organization's desire to support the Government and return power to the national grid or utilize less power that the allotted quota. For this the hospital has been very successful and has utilized 25% less power than the allotted quota. The hospital continues today with the departmental outsource.

Healthcare today in this country is cost intensive and these comes from the facts that there are newer diagnostic tools as well as therapeutic that come at a phenomenal cost. Also in healthcare there is the obsolescence which is rapid and

for both the providers as well as the patient.

The future if outsourcing is bright. It is a industry that is here to stay. In a highly competitive business environment companies need to stick to their core competencies and go for strategic, departmental or functional outsourcing to reduce their costs and become very effective in their services to their customers.

Outsourcing requires an essential business skill. Thus the success of the business will depend on managing outsourcing relationships.

While newer business models in healthcare need to be explored to contain healthcare costs, outsourcing may be a effective modality to be considered for all future projects, be it strategic, departmental or even functional.

The author had led the Hiranandani Group to be the first Public Private Partnership in healthcare with the Navi Mumbai Municipal Corporation. He can be reached at sujit.chatterjee@hiranandanihospital.org.

22

Distilling costs alike

Narendra Karkera, Director — Hosmac, explains the changing paradigms of healthcare and how cost can be revised in the current scenario.

The competitive market Today, the world is fiercely competitive, and India is no exception to it. For a healthcare facility, there is an immense pressure to reduce tariffs to attract more customers.

Healthcare organizations are beginning to relook at their expense structure and reduce costs wherever possible. A lot of emphasis is put on finding out the underutilizations and inefficiencies within the organization.

Market The health industry views itself as the “Seller's Market” with an ability to command over price. However, this is no longer the case today. With competition mushrooming in the form of new facilities opening up every other day, the customer has easy access to healthcare to both — ultra-modern facilities and existing facilities at increased service levels. Each new facility wants to prove itself unique and patient-friendly to attract more customers. It has to invest in marketing to make itself visible in the face of existing brand names. Hence to control expenditures and recover investment, every new facility is cost conscious.

Health insurance Easy availability of affordable health insurance has helped the Indian population to move towards getting health cover and even cashless hospitalization. This has also created demand for more healthcare facilities but this advantage comes with a rider — the medical insurance companies demand high quality service from the healthcare facilities at lower tariffs.

Essentially, all insurance companies should categorize healthcare facilities into categories A, B and C with respect to tariff, location and quality. If a healthcare provider wants to qualify for grade A, then it should qualify as per the standards laid down by the insurance companies. This should help make improve insurance companies profitable. Also if hospitals are categorized, a healthcare service provider categorized as B or C 23

is incentivized to upgrade his facility to Category A for higher potential revenues.

Quality The measures of Quality are based on objective criteria like materials used, service levels, patient satisfaction etc. It is a common belief that high quality comes at a high cost. This belief is erroneous. Skillful purchase negotiation can reduce costs of procuring even the highest quality materials. Better quality means faster recovery and less length of stay, more turnover, and hence more revenue, more utilization, more efficiency and less cost. Improvement in process and service delivery always leads to a low cost as a result of avoiding unwanted processes and better utilization of man, machine and materials.

Increasing patient satisfaction increases demand and reduces overheads. Hence quality does not cost, the lack of quality does.

Overheads The need of the hour is to sensitize the employees about the wastage of material and identification of unnecessary processes. This leads to better utilization and efficiency of manpower. Multitasking and regular training of personnel, both clinical and non-clinical should be an organizational practice.

An important observation is that much effort is spent in monitoring the overheads of the revenue generating departments while the non-revenue generating processes are ignored. Equal focus should be given to support-service departments as they also tend to increase cost due to underutilization and inefficiency. It is observed that if the cost goes up in certain cost centres, it is pushed onto the patient by way of an increase in tariff rather than relooking into the costing, and finding reasons for the increase and taking corrective actions thereof.

Need of the hour Healthcare providers must relook at their costing and find out

areas where cost reduction is possible to maintain their profitability without increasing tariff. This can be done by process re-engineering and accepting the most modern method of costing i.e. Activity Based Costing (ABC).

One of the benefits of adopting ABC is that non-revenue generating departments are given equal importance, while performing the costing exercise.

Activity Based Costing ABC can be used under following situations; i. When the overheads are high ii. When services are diverse and complex iii. When cost of errors is high iv. When competition is stiff The above points are acutely relevant today. A set-up needs to control its overheads and not pass it on to the patients.

Inefficiency and underutilization on the part of the institution are not the patients' problems, and passing this cost to the patients is unethical.

ABC could help in finding the true cost of the service, hence it results in accurate costing, focused approach to hospital overheads, caters to both internal and external customers: external customers by the way of tariff rates and internal customers by the way of interdepartmental charges. Usually in conventional costing, the service centre overheads are either apportioned or allotted to the revenue centres, and revenue centres add their cost and margin to arrive at a tariff rate.

Under ABC no overheads are passed on but actual billing is done by service centre to the revenue centre for the service taken, hence there is an internal tariff of service centres. The tariff of service centre charges can be compared with the market and should be competitive. This process would make all cost of the revenue centre direct except its own departmental cost.

Further advantages of ABC a) Equal importance to service centres as the revenue centre Today, we give more importance to only the revenue centre.

But under ABC, even a service centre would get equal importance since it too would generate billing. b) Activities of the service centre are monitored continuously Under ABC, service centre charges would be compared with the market prices. Hence, service centres would have to keep their cost under control. c) Underutilization and inefficiency of both — revenue and service centre are highlighted Due to continuous cost monitoring, all costs due to incompetencies are automatically checked and corrective measures can be immediately taken. d) Self-discipline in both revenue and service centres Monitoring would also bring in self-discipline since accounting responsibility would be in place.

In short, each cost centre shall work like a strategic business unit and would be seen as a profit centre, whereby reducing the burden of the hospital administrator in monitoring the day-today operations.

Hindrances Whenever a costing exercise is conducted, one encounters resistance from the department heads because such exercise can reveal their department’s fallacies. Besides, no employee in the operational area would like to volunteer for this exercise since it may only bring out the deficiencies of a department. A good deal of convincing needs to be done to make them feel that it is in their own interest to make this exercise successful.

On the other hand, the accounting staff in the organization may not like to take up ABC because they may view it as additional

work. In some cases, the existent accounting staff may not be experienced to conduct ABC, and may require some external specialist to undertake it. It is difficult to get trained staff or experts for doing such an exercise. This operation can best be undertaken by only a hospital that is fully computerized.

Manually, ABC is an onerous task.

ABC simplified Activity based costing has become a priority for all hospitals: for their survival and future growth. Before starting this exercise, business process re-engineering must be instituted, and all kinds of incompetencies from the organization must be expelled. Thereafter, the various cost centres in the organization must be spell out in utmost detail; a cost centre can be a single man or a single machine. Once having determined the cost centre, the activities of these cost centres: manpower cost, material cost and other overhead cost for each activity charged to the revenue centre must be detected.

A defined margin is added to the cost and a tariff rate is arrived at. The difference between the conventional method of costing and the ABC method is that under conventional method, service centre costs are apportioned or allocated to the revenue centre irrespective of usage of service, whereas in ABC, cost is charged to the revenue centre based on the usage of the service. Hidden underutilization, inefficiency, wastage etc of service is uncovered and curtailed — making all service centres more realistic in charging the revenue centre. Charges of service centre can be compared with the market rates and made competitive.

Derivation In activity based costing, the cost is charged to the revenue centre based on the type and time of service availed from the service centres. Therefore, these charges by service centres become variable costs since they are fees for the respective services. This would result in making all costs variable except the revenue centre's own departmental expenses.

What is further suggested is to add a defined margin on the cost of the service centre and arrive at a tariff for all the services of the service centre, this would then result in making all service centres generating their own notional revenue, and would be seen as a revenue centre. By this method, all the centres would become profit centres. Above all, a cost conscious culture should be developed by the top management to implement and enforce the paradigm shift in costing.

The author has served the finance and administration departments in various leading healthcare organizations for over 37 years. He can be reached at narendra.karkera@hosmac.com.

24

Be a radiologist!

Rajeev Pradhan guides healthcare aspirants and professionals to play a more intrinsic role in the healthcare industry. they do not harm the human body.

But what do we do once we obtain this image? To a layman, a CT scan might seem like just a blurred black and white photo. It is the job of the radiologist to effectively interpret this image and detect the abnormality in it, thus paving the way for a successful treatment regime. There are two roles a person can play in this event — that of a radiologist or of a radiology technician who carries out the actual procedure using the appropriate equipment.

Academically speaking The first step to becoming a radiologist is to acquire a degree in medicine (MBBS) — which takes approximately five and a half years. After which a student needs to take an entrance examination for post-graduation. There are entrance tests conducted at the state-level such as PGM-CET for admission to medical postgraduate courses such as MD/MS/Diploma (in Maharashtra); at the national-level such as the All India PG Medical and Dental (AIPGMEE); or those conducted separately by deemed universities. Depending on the rank thus obtained, a student can then choose the further course of action.

An MD in Radiodiagnosis is the preferred option for those obtaining a good rank, the duration of which is three years.

During these three years of resident-ship, students receive a stipend as per their post. Another path taken by many is to get a diploma, either a DMRD (Diploma in Medical Radiodiagnosis) or DMRE (Diploma in Radiology and Electrology), both of which are of a two-year duration and can be pursued simultaneously with an MD. A diplomate of National Board Degree in Radiology is also an option that students can pursue. Sneha Zanje, a DNB student, currently doing her residentship with Lilavati Hospital explains, “Post MBBS, one can work as a resident in a hospital with the Xray, CT scan or other department for three years. At the end of which, they have to submit a thesis, upon which a degree is

Ever wanted to get your hands on one of those spy glasses with vision that could penetrate the human skin and see right through to the bones, the kind we see in the movies?

Well, even if you don't exactly get them at a neighbourhood store, the idea of expanding the number of things we can see with our eyes with the help of technology has long been a pursuit of scientists. Once W.C. Roentgen discovered the mysterious phenomena of X-rays in 1895, it became possible for us to look beyond the naked eye and make an accurate diagnosis of a plethora of medical conditions.

Over the years as technology progressed, so did the need for trained professionals who could properly utilize this technology and aid in the diagnosis and treatment of the patient.

Most of us at some point of time have either broken a bone or had a surgical procedure performed. The first step in any medical consultation after studying the background history is to accurately diagnose the underlying condition. There are various tools which help us in this step, principal of these being the images taken using different medical equipment. From simple X-rays, imaging tools have today been extended to CT scans, MRI and PET which use the principles of physics for penetrating the human skin by applying low levels of radiation such that 25

awarded to them. This degree like an MD allows them to practice anywhere in India.”

Dr. Arjun Kalyanpur, MD — CEO — Teleradiology Solutions, adds, “While one may practice radiology with a DMRD, career prospects can be improved by obtaining a DNB or a MD degree.

Also, for academic (teaching) positions, a DNB or MD is typically a mandatory requirement.”

Abundant avenues Dr. Girish Burde, MD, DMRD while explaining about the various avenues in radiology states that, “Radiology is a diverse field, as apart from reading X-rays, CT scans, MRI, PET scans; interventional radiology plays a huge role too. In interventional radiology, using sophisticated equipment for image guidance, minimally invasive surgical procedures are carried out. For example, the introduction of stents to treat embolisms (or blockages) in an artery, in any part of the body or even in the case of tumors and aneurysms, a radiologist plays the defining role. The noninvasive nature of most of these procedures contributes to its cost effectiveness, ultimately benefiting the patient.”

Another avenue for aspiring radiology students to explore is the Diploma in Medical X-Ray Technician (DMXT) or a Bachelor of Science in Medical Imaging Technology — both of which can be taken up after passing class 12 examinations with physics, chemistry and biology as the principle subjects. These courses essentially help a student take up work as a technician who handles the actual process of X-Rays or CT scans. Admission to such courses is subject to individual college requirements.

for medical imaging services or work in large hospitals.

Radiology rewards Radiology is considered as an elite option for post-graduation after a medical degree. Stable working hours and relatively less stressful conditions coupled with attractive remuneration, even for freshers, makes radiology a much sought after career choice.

Dr. Kalyanpur further emphasizes this fact, “There is a serious shortage of radiologists in the country and hence radiologists are in great demand to meet the growing healthcare needs of the country today. It is a rapidly evolving, dynamic and exciting branch of medicine on which all other clinical specialties depend.”

Dr. Burde seconds this opinion as he states, “Radiology is a challenging field as you are not restricted to any one certain part of the body.”

Thus, if you are looking for a dynamic career which combines medicine and technology and tests your knowledge and analytical skills to the fullest, radiology is definitely right for you.

The author can be reached at rajeev.pradhan@hosmac.com.

Apart from these, radiology professionals can also branch out into teleradiology — a field fast gaining popularity. It is a form of outsourcing, where X-ray images or such are sent from different countries (such as underdeveloped regions of our own country) to radiologists elsewhere that can analyze them.

“This is the future of radiology, given that it allows images to be transported to the radiologist and interpreted from anywhere.

It allows high quality diagnostics to be delivered to the underprivileged in remote parts of the country,” elaborates Dr. Kalyanpur. With experience, one can even run their own setup 26

Healthcare made affordable

Dr. S.K. Saran, Director — Medical Services — Yashoda Medicare & Research, puts together an interesting analysis of the present-day healthcare industry with suggestions to develop affordable healthcare for all.

Healthcare systems across the world are constantly working towards providing equal access to healthcare facilities at low costs without compromising on quality. The challenges are enormous and the remedies — limited, coupled with economic, social and political implications. One way to reduce healthcare costs is to reduce higher spends on medication and treatment, which calls for emphasis on preventive healthcare mechanisms.

People's ability to pay for healthcare is not determined only by treatment costs, but by a series of other socio-economic factors. One of these is the role of payment modalities. The current pricing policies may need to be relooked at for alternative methods.

Hospital pricing policies often leave patients confused and exasperated. Industry analysts say pricing justification is gaining importance as consumers become more involved in paying for their own healthcare. With the number of health insurance providers growing, hospitals are being called upon more frequently to explain and defend their pricing methodologies.

The Constitution of India incorporates provisions guaranteeing everyone's right to the highest attainable standard of physical and mental health. Article 21 of the Constitution guarantees protection of life and personal liberty to every citizen. The Supreme Court has held that the right to live with human dignity, enshrined in Article 21, derives from the directive principles of state policy and therefore includes protection of health. Further, it has also been held that the right to health is integral to the right to life and the government has a constitutional obligation to provide health facilities.

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While the Government has laid the policies and planned the constitutional rights judiciously, it has failed to execute it suitably. The socio-economic determinant of the current scenario has resulted in the inclusion of the “aam admi” as initiated by our Honourable Prime Minister of India Dr. Manmohan Singh in the form of financial inclusion. However, it is inclusion and provision of basic infrastructure, sanitation, education, and potable water, which can result in “affordable healthcare for all.”

India's healthcare expenditure is around 6 per cent of its GDP (USD 13 per capita) which in comparison to developed countries is way behind in terms of absolute numbers. The abysmal state of availability of qualified resources and healthcare infrastructure can be judged by that current data which shows the doctor and nurse patient ratio is 0.6 and .08 per 1000 people, respectively; while the bed ratio is 1.5 per 1000 people.

A comparison with the world ratio where averages are 1.2 doctors and 2.6 nurses and 4 beds per 1000 people shows a need for improvement. There are more than 15000 hospitals of which two-thirds are public owned. Of 1.1 Million hospital beds available, 40 per cent are privately owned. The private sector accounts for approximately 80 per cent of healthcare expenditure. Of the remaining 20 per cent, more than threefourth is funded by respective state governments. Today, the Indian Healthcare Sector is valued at approximately USD 34 billion.

Unequal power relationships interact across four main dimensions — economic, political, social and cultural, and at different levels including individual, household, group,

community, country and global. It results in a continuum of inclusion/exclusion characterized by unequal access to resources, capabilities and rights, which leads to health inequities. Factors that can help in “affordable healthcare for all” could be such as the following.

Need for primary healthcare centres The Government has set up limited tertiary hospitals such as AIIMS, which hasn't had the desired geographical reach. The PPP model (Public Private Partnership) initiated by the State Government with help from few financial institutions is generating a positive response and could give a boost to the affordability of healthcare services.

The foundation of India's health policy was laid by the Bhore Commission Report in 1946. The report established primary healthcare as the foundation for the national healthcare system, and developed the first patterns for primary healthcare facilities and health personnel in the public sector.

Therefore, a hospital system that accounts for a quarter of the market must do more than manage the care of the patients, “it must guarantee an adequate supply of primary healthcare centres everywhere in the community and ensure appropriate access to emergency care.”

Minimal access surgery, day care and home care treatment Minimal access surgery not only helps in making the duration of the surgery shorter but also in early recovery of the patient; thus resulting in a shorter stay and cost reduction. Similarly, day care treatment reduces cost. Nursing, pharmacy and therapies with potential for home based treatment like phototherapy can be provided to reduce cost by delivering treatment at home.

Insurance Schemes Medical insurance could play a big role in reducing healthcare spends among the urban populace and sustainable schemes using public-private partnership can bring smiles to the rural poor.

Private health insurance has played a major role in reviving the health industry after globalization, yet it covers a little more than 1 per cent of the total population. Private healthcare providers have already made substantial inroads in this area and set up facilities both in India and abroad.

In terms of market penetration and affordability, most diagnostic centres and healthcare providers are restricted to a few cities and urban areas at a cost which only a few can afford.

Cost is an important factor to consider especially for low income families and health insurance companies can play a

vital role in this regard.

One can reduce the risk of low cost health insurance plans by taking only the right coverage that you will need and will protect you when emergencies arise. State-level insurance schemes have been launched and gained well-deserved popularity among economically deprived classes. The initiative by the Karnataka government to bring in ‘Yashaswini’ and Andhra Pradesh for ‘Arogyashree’ are perfect examples of Public-Private partnership. It has benefitted millions of people at a minimal annual cost (Rs. 30-60) who were earlier deprived of world-class healthcare due to non-availability of insurance.

Due to the unceasing increase of health insurance costs, more families are finding it difficult to find low cost health insurance plans. Considering the huge positive externality from a healthy society, it definitely calls for government intervention. The Government should ensure that the benefits of its intervention should largely flow to the patients through reduced prices rather than to the hospital owners alone. The government can help through targeted incentives that can reduce the cost of insurance of such facilities by up to 30%.

R&D Research and Development has aided the development of

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Conclusion The time is right for India to learn from the best practices available across the world to customize, adopt and implement for its own betterment before it fails to deliver the fundamental public right of good health. Dr. Kalam envisages a strong and developed India by year 2020 and so do I. “The country's 'vision 2020' should include delivery of affordable healthcare system even to the rural poor, apart from making available the best healthcare system.”

–Former President Dr. A.P.J. Abdul Kalam

The author is a retired Group Captain, an MBBS, CIBM (IIMA) and a certified Lead Auditor ISO 9001:2000. He can be reached at drsksaran@yashodamedicare.com.

innovative devices, diagnostics, medicines and vaccines to bring in safe and effective healthcare delivery mechanisms at affordable costs. This could be furthered by bringing together researchers from both public and private sectors, largely working in India. Integrating and streamlining primary, secondary and tertiary services could make healthcare affordable to a large section of people.

Green healthcare Hospitals strive to provide an optimum healthcare experience and a more sustainable environment, especially one that contributes to quality patient care, revenue generation and regulatory compliance. As a result, hospitals are adopting Green Healthcare Practices by creating conducive environments for patient well-being, delivery of energy saving programmes, technology innovation and preventive services maintenance for optimum hospital performance.

Medical Tourism India has emerged as a destination for quality healthcare at affordable costs to patients traveling from the west. Long waiting lists, non-availability of expert medical care and high cost of treatment in their home country have forced many to travel to India for medical treatment giving impetus to ‘Medical Tourism’. Every year, millions of patients from around the globe flock to some of the finest medical tourism destinations in order to receive five-star treatment at unbelievable prices. Indian medical tourism was estimated at USD 350 million in 2006 and has the potential to grow into a USD 2 billion industry by 2012.

The private healthcare sector caters to this niche segment and renders world-class affordable healthcare to patients using state-of-the-art technologies at a fee which is 10-15 times lower than anywhere in the world. These hospitals could help fill the gap by volunteering or regulatory methods to provide treatment to the needy in emergencies.

IT for health Affordable and qualitative healthcare can be brought by integrating technology, and innovations in healthcare policies and infrastructure. Though the Government has taken initiatives such as creating a framework of IT infrastructure for health in collaboration with private healthcare providers, establishing National Knowledge Commission (NKC), liberalization of insurance sector and so on, the desired results are yet to be realized. Electronic Medical Records Systems in every doctor's office and clinic will ensure inter-operability of systems and facility, aiding the use of clinical decision aids.

Telemedicine has proven itself as an excellent tool to help in provision of affordable healthcare and all healthcare organizations should be encouraged to use it.

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References: · Indian journal of Medical Ethics (Health & Law) Issues Med Ethics.2003 OctDec;11(4) · Centre for Development & Human Rights (c) 2003 CDHR · Statistics source: Asian Hospital & Healthcare Management · The Next Wave of Corporate medicine- How we all might benefit: David M Cutler PhD: NEJM Aug 5th 2009

Money matters

Smita Sridharan, Principal Consultant — Consultancy Services — Hosmac, exemplifies the essence of financial modeling in healthcare analysis.

Financial modeling is the process of estimating and predicting the performance of a project, venture or any other investment.

It allows one to evaluate an investment in terms of its capacity, scalability, feasibility and viability. It helps in analyzing business risks and challenges, and ultimately helps in evaluating the correctness of an investment vis-à-vis other opportunities that may be available.

The healthcare industry is peculiar due to its critical social impact, heavy initial capital infusion, high operating costs and long gestation period. Hence, it is critical for all stakeholders to evaluate the potential risks and ensure its mitigation. A business model to identify the future prospects on the investment and eventually understand the appropriateness of the investment is imperative for this industry. Hence, a financial model helps to arrive at the estimated costs of the project and analyze the stake holder's capacity to fund the project or helps in arriving at various funding mechanisms other than the promoter's contribution.

The financial model for a healthcare venture throws light on various pertinent issues, some of which are mentioned below.

Speciality mix Although not a financial indicator, this forms the very basis of any healthcare financial model/venture. The speciality mix including the facility, service and bed mix portrays, in a nutshell, the whole gamut of services that the healthcare venture will provide. It is important to understand the mix well because the nature of speciality drives the capex and revenue streams.

For instance, oncology as a speciality is a high capital investment and results show in a longer gestation period, whereas ophthalmology is easy on the initial capex with higher returns vis-à-vis its initial capex. Hence based on a thorough market survey, epidemiology and socio-economic condition of a given area, the speciality mix is derived, which drives the financial model and the investment.

Capital expenditure It is observed that the capital expenditure in a hospital/healthcare venture is considerably high. The allocation towards building infrastructure costs and medical technology is the highest, when compared to other cost heads.

The total built-up area allocated per bed, in essence, drives the building infrastructure costs, and the speciality mix drives

the medical technology estimates, since speciality specific equipment are estimated.

Operational Parameters The revenues and expenditures are estimated based on the speciality mix, area and technology specific volume, tariffs and cost assumptions. For example, income productivities, manpower estimations, salary patterns, overhead expenses such as power, water, utilities, etc. It helps in understanding the capacity of the venture to generate returns over a period of time.

Once the above parameters are estimated, the financial model is then subjected to various scenarios, risks and case-based sensitivities to understand the volatility and vulnerability of the model to real-time changes and factors. These sensitivities can be changes in the speciality mix or level of technology or different revenue streams or differential schemes on expenses, etc. Similar to a simulation exercise, the financial model then helps in carrying out the analysis of the complexities of the project, evaluate capacity utilizations to find out the optimal capacity under varying industry demand-supply scenarios and similar other cases.

The financial model presents a fair idea to a potential investor on the investment performance in a set period of time in the future.

Considering the complexities of the healthcare industry, financial modeling helps in making informed decisions on investments, gauging the industry performance given a particular set of assumptions and gives a view on the effect that the internal and external environment would have on a proposed project/venture.

In conclusion, it is safe to say that financial modeling is the only way in assessing the feasibility and viability of a healthcare project. At a later stage, it aids to compare the real operational parameters with those estimated in the model to understand deviations and find out the causes/reasons. In turn, it enables the organization to be better equipped to handle and do away with inconsistencies. In the long run, it sustains the provision of an effective and efficient healthcare delivery system for all.

The author has worked on more than 100 healthcare projects in the last six years. She can be reached at smita.sridharan@hosmac.com.

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