Demand Forecasting of Hospitals in India

DEMAND
FORECASTING OF
HOSPITALS IN
INDIA

GROUP MEMBERS :
VARUN THAMBA. (F11120)
DIVYANSHI GUPTA. (F11121)
SYED IBRAHIM. (F11122)
AROKIA MANOJ KUMAR. (F10002)

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Contents
Introduction -3

Nature and Scope of a Hospital -5

History of Hospitals -6

Modern Hospital -7

Classification of hospitals -8

Types of Hospitals - 10

Types of Management - 11

SWOT Analysis of a hospital - 12

Indian Healthcare Sector - 13

Market Drivers of Health Care Sector - 14

Market Trends - 15

Regulatory Framework - 16

Accreditation Schemes - 19

BUDGET 2008-09 - 20

Reform Measures and Policy Initiatives - 22

Market size of Hospital sector - 24

Key Players in the Healthcare Segment - 25

Demand analysis for no of people admitted in hospital - 29

Demand Analysis for Number of consultations offered - 31

Conclusion - 33

Demand Forecasting | Hospital in India

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Acknowledgement

We would like to take this opportunity to thank Prof. I Thyagarajan, who has been an
immense source of knowledge for us. He has guided us and made us aware of not only
the concepts in the field of economics but also knowledge common and essential for us to
become successful and efficient future managers. With this report, we hope to have if not
completely, but marginally to begin with, portray our understanding of his teachings and
apply the concepts that we have learnt to real world industries.


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Introduction
Concept of Health Care Since health is influenced by a number of factors such as
adequate food, housing, basic sanitation, healthy lifestyles, protection against
environmental hazards and communicable diseases, the frontiers of health extend beyond
the narrow limits of medical care. It is thus clear that “health care” implies more than “
medical care”. It embraces a multitude of “services provided to individuals or
communities by agents of the health services or professions, for the purpose of
promoting, maintaining, monitoring, or restoring health.” Levels of health care It is
customary to describe health care at 3 levels primary, secondary, and tertiary care levels.

1. Primary care level. It is the first level of contact of individuals, the family and
community with the national health system, where “primary health care” is provided. In
the Indian context, the primary health care is provided by the complex of primary health
centres and their subordinates through the agencies of multipurpose health workers,
village health guides and trained dais.

2. Secondary care level. The next higher level of care is the secondary health care
level. At this level more complex problems are dealt with. In India, this kind of care is
generally provided in district hospitals and community health centres which also serve as
the first referral level.

3. Tertiary care level. The tertiary level is a more specialized level than secondary
care level and requires specific facilities and attention of highly specialized health
workers. This care is provided by the regional or central level institutions, e.g. Medical
College Hospitals, All India Institutes, Regional Hospitals, Specialized Hospitals and
other Apex institutions.

In the past three decades or so, India has made rapid strides in social, political and
economic fields. Unfortunately, however, hospital administration has lagged far behind.
Even the most sophisticated and the so-called modern hospitals in India continue to be
governed by the stereotyped system of hospital administration, viz. Appointing the
senior-most doctor as the Medical Superintendent. He is entrusted with the responsibility
of the entire administration of the hospital, irrespective of whether or not he has
undergone any formal training in hospital administration. Times have changed and
specialization has become the order of the day. It is, therefore, imperative to have
separate specialists for general administrative and personnel functions in hospitals.
Secondly, with the tremendous expansion in health services, it has become essential to
have specialists in the field of hospital administration, so that maximum efficiency can be
achieved at minimum cost.

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Nature and Scope of a Hospital
Healthy human being make a healthy society, however society has its share of
unhealthy beings, illness, disease and invalidity. As civilization advanced from the
individual to the family, from family to tribe, and finally to the organized community,
society acknowledged a common responsibility towards the sick. Today hospital means
an institution in which sick or injured persons are treated. A hospital is different from a
dispensary – a hospital being primarily an institution where in-patients are received and
treated while the main purpose of a dispensary is distribution of medicine and
administration of outdoor relief.


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History of Hospitals
The institution that we know today as the hospital is a phenomenon of the
twentieth century. The early institutions from which it developed bore little resemblance
to that important part of community life, which we call the hospital. In its earliest form
the hospital was aimed at care of the poor and lodging was the primary function of the
early hospital. The record shows the earliest hospital in Paris to have been founded about
600 A.D., and St. Bartholomew‟s in London dates from the year 1123. The first hospitals
in the New World were built by the Spanish in Mexico City (1524) and the French in
Canada. There was a general tendency to lump together the physically handicapped, the
sick, the socially unwanted and the pauper. Special inoculation hospitals were built
during the smallpox epidemics to care for persons being so treated, but these died out
when this form of treatment was superseded by vaccination. Indian Scenario: The history
of Indian medicine and surgery dates back to the earliest of ages. In India, hospitals have
existed from ancient times. Even in the 6th century B.C. during the time of Buddha, there
were a number of hospitals to look after the crippled and the poor. The outstanding
hospitals in India at that time were those built by King Ashoka. Charaka and Sushrutha
of ancient India were famous physicians. Medicine based on the Indian system was
taught in the universities of Taxila and Nalanda, which probably contributed to the
advances in Arabic medicine. The decline of Indian medicine started with the invasion of
foreigners in the 10th century A.D., which was a period of unrest. The invaders brought
with them their own physicians called hakims. The use of allopathic system of medicine
commenced in the 16th century with the arrival of European missionaries in South India.
It was during the British rule that there was once again progress in the building of
hospitals. The first hospital in India was probably built in Goa, as mentioned in Fryer‟s
Travels. The first hospital in Madras was opened in 1664; the establishment of a hospital
in Bombay was under discussion in 1670 but apparently it was not actually taken up till
1676; the earliest hospital in Calcutta was built in 1707-1708 and in Delhi, in 1874.
During the 17th and 18th centuries, there was a slow but steady progress in the growth of
the modern system of medical practice in India and the indigenous system was pushed to
the background. Organized medical training was started in the 19th century. The first
medical school was started in Calcutta, followed by one in Madras. In the beginning both
the modern system and the Ayurvedic system were taught. The medical school in
Calcutta was converted into a college in 1835.


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Modern Hospital:
A comprehensive definition of a hospital highlighting all the essential services
provided by a modern hospital can be as follows: A modern hospital is an institution
which possesses adequate accommodation and well qualified and experienced personnel
to provide services of curative, restorative, and preventive character of the highest quality
possible to all people regardless of race, color, creed, or economic status; which conducts
educational and training programmes for the personnel particularly required for
efficacious medical care and hospital service; which conducts research assisting the
advancements of medical service and hospital service and which conducts programmes in
health education. Modern hospitals are open 24 hours a day. Their personnel render
services for the cure and comfort of patients. In the operation theatre, skilled surgeons
perform life-saving surgery. In the nursery, new-borns receive the tender care of trained
nurses. In the laboratory, expert technicians conduct urine, stool, and blood tests vital to
the battle against disease. In the kitchen, cooks and dieticians prepare balanced meals
that contribute to the patient‟s speedy recovery. A hospital aims at the speedy recovery of
patients. That is why its rooms are equipped with air-conditioners, call-bells and other
devices. Several hospitals have libraries, which provide books for them. The telephone
keeps the sick in touch with their friends and relatives. In most of the hospitals today,
patients have newspaper and barber services in their rooms. To save the precious time of
the medical staff, secondary duties like explaining the diagnosis and line of treatment to
the patients and their attendants are entrusted to another section of the staff called
medical assistants. In hospitals, therefore, the endeavor is to provide the best possible
facilities to the patients within the hospital‟s resources.


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Classification of Hospitals
Hospital have been classified in many ways. The most commonly accepted
criteria of the modern hospitals are (a) length of stay of patients (long-term or short-
term), (b) clinical basis, and (c) ownership control basis.

Classification according to Ownership/Control

On the basis of ownership or control, hospitals can be divided into four categories,
namely public hospitals, voluntary hospitals, private nursing homes, and corporate
hospitals.

Public Hospitals:

Public hospitals are those run by the Central Government, state governments or
local bodies on non-commercial lines. These hospitals may be general hospitals or
specialized hospitals or both. General hospitals are those which provide treatment for
common diseases, whereas specialized hospitals provided treatment for specific diseases
like infectious diseases, cancer, eye diseases, psychiatric ailments, etc.

Voluntary Hospitals:

Voluntary hospitals are those which are established and incorporated under the
Societies Registration Act, 1860 or Public Trust Act, 1882 or any other appropriate Act
of the Central or state government. They are run with public or private funds on a non-
commercial basis. A board of trustees, usually comprising prominent members of the
community and retired high officials of the government, manages such hospitals. The
board appoints an administrator and a Medical Director to run such voluntary hospitals.
The main source of their revenue are public and private donations, and grants from the
Central Government and state governments and from philanthropic organizations, both
national and international. Thus, voluntary hospitals run on a „non profit, no loss‟ basis.

Private nursing homes:

Private nursing homes are generally owned by an individual doctor or a group of
doctors. These nursing homes are run on a commercial basis. Naturally, the ordinary

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citizen cannot usually afford to get medical treatment there, however, these nursing
homes are becoming more and more popular due to the shortage of government and
voluntary hospitals. Secondly, wealthy patients who do not want to get treatment at
public hospitals due to long queues of patients and the shortage of medical as well as
nursing staff leading to lack of medical and nursing care.

Corporate hospitals: The latest concept is of corporate hospitals, which are public
limited companies, formed under the Companies Act. They are normally run on
commercial basis. They can be either general or specialized or both.

Classification according to Length of Stay of Patients:

A patient stays for a short-term in a hospital for treatment of diseases such as
pneumonitis, appendicitis, gastroenteritis, etc. A patient may stay for a long term in a
hospital for treatment such as tuberculosis, cancer, schizophrenia, etc. Therefore a
hospital may fall either under the category of long-term or short-term according to the
disease and treatment provided.

Classification according to Clinical Basis

A clinical classification of hospitals is another basis for classification of hospitals.
Some hospitals are licensed as general hospitals while others as specialized hospitals. In
a general hospital, patients are treated for all kinds of diseases such as typhoid, fever, etc.
But in specialized hospital, patients are treated only for those diseases for which that
hospital has been set up, such as heart diseases, tuberculosis, cancer, ophthalmic diseases
etc.

Classification according to the Government

The Directory of Hospitals in India-1988 lists the various types of hospitals and
the types of management.


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Types of Hospitals
(i) General hospital: All establishments permanently staffed by at least two or more
medical officers, which can offer inpatient accommodation and provide medical and
nursing care for more than one category of medical discipline (e.g. General medicine,
surgery, obstetrics).

(ii) Rural hospital: Hospitals located in rural areas (classified by the Registrar General of
India) permanently staffed by at least one or more physicians, which offer in-patient
accommodation and provide medical and nursing care for more than one category of
medical discipline.

(iii) Specialized hospital: Hospitals providing medical and nursing care primarily for only
one discipline or a specific disease/affection of one system.

(iv) Medical college hospital: A hospital to which a college is attached for
medical/dental education.

(v) Isolation hospital: This is a hospital for the care of persons suffering from
communicable diseases requiring isolation of the patients.


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Types of Management
1. Central Government/Government of India: All hospitals administered by the
Government of India, e.g. Hospitals run by the railways, military/defense, public sector
undertakings etc.

2. State Government: All hospitals administered by the state/UT government
authorities and public sector undertakings operated by the states/uts, including the police,
jail, canal departments etc.

3. Local Bodies: All hospitals administered by local bodies, e.g. Municipal
corporation, municipality, panchayat etc.

4. Private: All private hospitals owned by an individual or by a private organization.

5. Autonomous Body: All hospitals established under a special Act of
Parliament/state legislation and funded by the central/state government/UT, e.g. NIMS,
Hyderabad, SVIMS, Tirupathi, AIIMS, Delhi, PGI, Chandigarh, etc.

6. Voluntary Organization: All hospitals operated by a voluntary body/a
trust/charitable society registered or recognized by the appropriate authority under
central/state government laws. This includes hospitals run by missionary bodies and
cooperatives.


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SWOT Analysis of a hospital
STRENGTHS

 Quality Service at Affordable Cost
 Vast supply of qualified doctors
 Strong presence in advanced healthcare e.g. Cardiovascular, organ
 Transplants – high success rate in operations
 International Reputation of hospitals and Doctors
 High confidence level in Indian doctors
 Diversity of tourism destinations and Experiences

WEAKNESS

 No strong government support /initiative to promote medical tourism
 Low Coordination between the various players in the industry– airline operators,
hotels and hospitals
 Customer Perception as an unhygienic country
 No proper accreditation and regulation system for hospitals
 Lack of uniform pricing policies across hospitals

OPPORTUNITY

 Increased demand for healthcare
 Services from countries with aging population (U.S, U.K)
 Fast-paced lifestyle increases demand for wellness tourism and alternative cures
Shortage of supply in National Health
 Systems in countries like U.K, Canada Reduced/competitive cost of international
travel
 Demand from countries with underdeveloped healthcare facilities
 Demand for retirement homes for elderly people especially Japanese

THREATS

 Strong competition from countries like Thailand, Malaysia, Singapore
 Lack of international accreditation – a major inhibitor
 Under-investment in health infrastructure
 Lack of proper insurance policies for this sector


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Indian Healthcare Sector
The healthcare industry includes medical care providers, physicians, specialist
clinics, nursing homes, hospitals, medical diagnostic centers and pathology
laboratories.In terms of revenue and employment, healthcare is one of India‟s largest
service-sector industries. During the 1990s, Indian healthcare grew at a compound annual
rate of 16%. Today the total value of the sector is more than $34 billion. This translates to
$34 per capita, or roughly 6% of GDP. By 2012, India‟s healthcare sector is projected to
grow to nearly $40 billion. The Indian healthcare sector constitutes of the following:
 Medical care providers: physicians, specialist clinics, nursing homes and
 Hospitals
 Diagnostic service centers and pathology laboratories;
 Medical equipment manufacturers;
 Contract research organizations (CRO's), pharmaceutical manufacturers;
 Third party support service providers (catering, laundry).
Hospitals serve an important function in India's healthcare system. They provide
in-patient and out-patient services and also support the training of health workers and
research. Indian hospitals can be broadly classified as public hospitals, private and not-
for-profit hospitals. Corporate hospital chains that provide tertiary healthcare services in
large towns and cities have also been established. The public healthcare system consists
of healthcare facilities run by the central and state government which provide services
free of cost or at subsidized rates to low income group in rural and urban areas.
Healthcare spending in India accounts for over 5 per cent of the country's GDP. Out of
this, the public spending in percentage is around 1 per cent of GDP. The presence of
public health care is not only weak but also under-utilized and inefficient. Meanwhile,
private sector is quite dominant in the healthcare sector. Around 80 percent of total
spending on healthcare in India comes from the private sector. Inadequate public
investment in health infrastructure has given an opportunity to private hospitals to capture
a larger share of the market. In addition the demand for hospital services has been
increasing due to the rise in lifestyle related diseases. Initially the government imposed
high custom duty on imported medical equipment making it difficult for private
entrepreneurs to set up hospitals. But in post liberalization the duties have come down
and some life saving medicines and equipments can be imported duty free. Moreover, the
introduction of product patents in India is expected to boost the industry by encouraging
multinational companies to launch specialized life -saving drugs.


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Market Drivers of Health Care Sector:
 Rising Health awareness;
 Shift to lifestyle related diseases;
 Increasing government expenditure on health care sector;
 Health insurance sector is also on the rise;
 Private sector companies are growing fast in terms of owning and managing
hospitals;
 Growth in medical tourism;
 Cost effective surgical services. According to report, the cost of surgery in India is
just about 10% of that in USA;
 Gradual corporatization of the Healthcare sector.


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Market Trends:
India's healthcare sector has been growing rapidly and estimated to be worth US$
40 billion by 2012. Revenues from the healthcare sector account for 5.2 per cent of the
GDP, making it the third largest growth segment in India. The Indian healthcare market is
currently estimated at US$ 34.2 billion. The market has grown from US$ 22.8 billion in
the year 2005, at a CAGR of 16% and is expected to grow to US$ 50.2 billion and US$
78.6 billion by 2011 and 2016 respectively. Healthcare delivery and pharmaceuticals
account for nearly 75% of the total healthcare market. India has only 0.7 beds per 1,000
people, far below the global average of 2.6. India needs to add 2 million beds to the
existing 1.1 million by 2027, and requires immediate investments of $82 billion to make
up for its infrastructure deficit. The country needs $50 billion annually for the next 20
years to meet the healthcare needs of its rapidly expanding population. The Indian
healthcare industry is poised to grow at a compounded annual growth rate of 15 per cent.
Nearly 90 per cent of this growth will come from the private sector. Further, private
hospitals in the country are expected to rake in $35.9 billion (Rs 147,154.1 crore) in 2012
compared to $15.5 billion (Rs 63,534.5 crore) in 2006.

Funds in the Indian healthcare sector have been largely private. The private sector
provides 60 per cent of all outpatient care in India and as much as 40 per cent of all in-
patient care. It is estimated that nearly 70 per cent of all hospitals and 40 per cent of
hospital beds in the country are in the private sector.
The Indian health insurance business is fast growing at 50 per cent and is
Projected to grow to US$ 5.75 billion by 2010. Investments into the medical and surgical
instruments segment amount to US$ 115.29 million over the period August 1991 to April
2007. A recent study has predicted 15-20 per cent growth for the Indian medical
equipment market and estimated market size to be about US$ 5 billion by 2012. India has
the fastest growing healthcare IT market in Asia, with an expected growth rate of 22 per
cent, followed closely by China and Vietnam. In fact, the Indian healthcare technology
market is poised to be worth more than US$ 254 million by 2012. In 2006, imports of
medical equipment and supplies were valued at US$1,125.8 million, an increase of 21.7%
over 2005. The healthcare sector attracted US$ 379 million in 2007 which is 6.8 percent
of the total p rivate equity (PE) investment of US$ 5.93 billion.


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Regulatory Framework:
Ministry of Health and Family Welfare (mohfw): The Union Ministry of Health
and Family Welfare (mohfw) is responsible for implementation of national programmes,
sponsored schemes and technical assistance relating to the Indian healthcare industry.
The following departments come under the Ministry:

I) Department of Health: It looks after the following activities:
 Health related activities, including various immunization campaigns;
 Control over various health bodies including National Aids Control
Organization (NACO), National Health Programme, Medical Education & Training, and
International Cooperation in relation to health;
 Administers the Hospital Services Consultancy Corporation

Ii) Department of Family & Welfare: This department offers the following
Services:
 Maternal and Child Health Services; Information, Education and
Communication;
 Rural Health Services, Non-Governmental Organisations and Technical
Operations.
 Policy Formulation, Statistics, Planning, Autonomous Bodies and Subordinate
Offices;
 Supply of Contraceptives; International Assistance for Family Welfare and
Urban Health Services;
 Administration and Finance for the Departments of Health, Family Welfare

Iii) Department of AYUSH: This department undertakes the following
Activities:
 Upgrade the educational standards in the Indian Systems of Medicines and
Homoeopathy colleges in the country;
 Strengthen existing research institutions and ensure a time-bound research
programme on identified diseases for which these systems have an effective
treatment;


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 Draw up schemes for promotion, cultivation and regeneration of medicinal
plants used in these systems;
 Evolve Pharmacopoeial standards for Indian Systems of Medicine and
Homoeopathy drugs

Autonomous Institutions conducting Research and Development:
The following autonomous institutions under the Ministry of Health and Family
Welfare conduct research in various specific areas:
 Indian Council of Medical Research (ICMR)
 Indian Medical Association (IMA)
 Central Drug Research Institute (CDRI)

National Programmes and Schemes:

National Rural Health Mission: This mission was launched in April 2005 by the
Government of India to fulfill the Government‟s commitment to meet people‟s
aspirations for better health and access to healthcare services. NRHM‟s goals include the
training of 250,000 women volunteers designated as Accredited Social Health Activists
(ashas) over the next three years across 18 states with weak rural health infrastructure.
National Health Policy-2002: The National Health Policy 2002 focuses on the need for
enhanced funding and organizational restructuring of the national public health initiatives
in order to facilitate more equitable access to health facilities. The follo wing are the
other areas of its focus:
 Gradual convergence of health under a single field administration and
emphasis on implementation of programmes through local selfgovernment
institutions;
 Identification of specific programmes targeted at women‟s health and
strengthening of food and drug administration, in terms of both laboratory
facilities and technical expertise;
 Focus on those diseases that are principally contributing to the disease burden -
TB, Malaria and Blindness from the category of historical diseases and
HIV/AIDS from the category of newly emerging diseases;
 Greater contribution from the Central Budget for the delivery of public health
services at the state level.


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Other National Health Programmes:
 National Vector Borne Disease Control Programme (NVBDCP)
 National Filaria Control Programme
 National Leprosy Eradication Programme
 Revised National TB Control Programme
 National Programme for Control of Blindness
 National Iodine Deficiency Disorders Control Programme
 National Mental Health Programme
 National Aids Control Programme
 National Cancer Control Programme
 Universal Immuization Programme
 National Programme for Prevention and Control of Deafness
 Pilot Programme on Prevention and Control of Diabetes, CVD and Stroke
 National Tobacco Control Programme


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Accreditation Schemes:
Quality Council of India:
In India, QCI (Quality Council of India) operates the national accreditation
structure and obtains international recognition for its accreditation schemes in order to
guarantee quality healthcare to all. QCI was set up in 1997 as an autonomous body by the
Government of India jointly with the India industry to establish and operate the National
Accreditation Structure for conformity assessment bodies.
National Accreditation Board for Hospitals & Healthcare Providers (NABH):
This is a constituent board of Quality Council of India, set up by the Ministry of
Health to establish and operate the accreditation programme for healthcare organizations
in India. NABH has standards specific to the Indian healthcare setting, major aspects
being the assurance of uniform access, assessment, care of patients and protection of
patient‟s rights.
The following are some of the NABH accredited hospitals in India:
 B.M.Birla Heart Research Centre, Kolkata
 MIMS Hospital, Calicut
 Max Super- Speciality Hospital, New Delhi
 Max Devki Devi Heart and Vascular Institute, New Delhi
 Kerala Institute of Medical Sciences, Thiruvananthapuram
 Moolchand Hospital, New Delhi
 Fortis Hospital, Noida, Jaipur and Mohali
 Manipal Hospital, Bangalore
 Escorts Heart Institute & Research Centre, New Delhi

International Accreditation Body Present in India:
Joint Commission International (JCI): JCI is the largest accreditor of health care
Organizations in the United States which surveys nearly 20,000 health care programs
through a voluntary accreditation process. The following are some of

The JCI Accreditated Organizations in India:
 Indraprastha Apollo Hospital, Delhi
 Apollo Hospital, Bangalore, Chennai, Hyderabad
 Asian Heart Institute, Mumbai
 Shroff Eye Hospital, Mumbai
 Wockhardt Hospital, Mumbai and Bangalore
 Fortis Healthcare, Mohali

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BUDGET 2008-09:
The following initiatives were taken for the healthcare industry:
 Rs.16, 534 crore allocated for the healthcare sector marking an increase of 15%
over 2007-08.
 National Rural Health Mission (NRHM): 462,000 Associated Social Health
Activitists have been trained, 177,924 villages have sanitation committees
functional and 323 district Hospitals have been taken up for upgradation.
Allocation to NRHM has been increased to Rs. 12,050 crore.
 HIV/AIDS: The National Aids Control Programme provided Rs.993 crore.
 Polio: Drive to eradicate polio continues with revised strategy and focus on the
high risk districts in Uttar Pradesh and Bihar. Rs. 1,042 crore allocated in
2008-09.
 A five year tax holiday to hospitals located in any place outside the urban
agglomerations especially in tier-2 and tier-3 towns.
 A reduction in excise duty from 16 per cent to 8 per cent.
 Amounts spent on Research and Development eligible for a 125 per cent
weighted deduction.
 A reduction in customs duty from 10 to 5 per cent and a total exemption of
excise duty on certain specified life -saving drugs and bulk drugs.

FDI Policy:
100% FDI is permitted for hospitals and all health-related services under the
automatic route.
Other Government Initiatives:
 The government encourages foreign / private investment in the healthcare
sector.
 It defines and enforces minimum quality standards for healthcare facilities.
 It stimulates the growth of private, social and community insurance.
 The National Health Policy, 2002, makes it clear that government policy
supports medical tourism. The policy encourages the supply of services to
patients of foreign origin on payment. The rendering of such services on
payment in foreign exchange is treated as 'deemed exports' and is made eligible
for all fiscal incentives extended to export earnings.
 A new category of visa "Medical Visa" ('M'-Visa) has been introduced which
can be given for a specific purpose to foreign tourists coming into India.

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 In order to allay suspicions regarding the quality of care in a developing
country, Indian corporate hospitals are getting certified by international
accreditation schemes.
 The government has identified healthcare as a priority section and hence have
taken some measures to promote one of its most important segment

“Medical Device Market”. The conditions for exporting to India have significantly
improved since the economic reforms started in the middle of the nineties. Import license
requirements have been cancelled, majorityowned subsidiaries are possible, and
dividends can be paid out abroad.

Some other measures are:
I) Reduction in import duty on medical equipment from 25 per cent to 5 per cent.
Ii) Depreciation limit on such equipment rose to 40 per cent from 25 per cent, to
encourage medical equipment imports.
Iii) Customs duty reduced to 8 per cent from 16 per cent for medical, surgical, dental and
veterinary furniture.
Iv) Customs duty on as many as 24 medical equipments, which include X-ray,
goniometry and teletherapy stimulator machines, has been reduced to 5 per cent.


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Reform Measures and Policy Initiatives
Reforms done during 2010-2011:

 Large number of medical and paramedical staff has been taken on contract to
augment thehuman resources. During the year 2009-10, about 2475 MBBS
doctors, 160 specialists, 7136anms, 2847 staff nurses, 2368 AYUSH doctors
and 2184 AYUSH paramedics were appointed.
 Mobile Medical Units increased to 363 districts in 2009-10 from 310 in 2008-
09 to providediagnostic and outpatient care closer to hamlets and villages in
remote areas.
 About 50,000 Village Health and Sanitation Committees (vhscs) set up.
 Under National Programme for Control of Blindness, number of cataract
operation performedhave registered a significant increase from about 22 lakh
operations in 2007-08 to 59 Lakhcataract operations in 2009-10.

In terms of systems improvements the NRHM targets were

 Upgrade all phcs into 24x7 phcs by the year 2010.
 Upgrading all Community Health Centres to Indian Public Health Standards.
 Increase utilization of first referral units from bed occupancy by referred cases
of less than20 per cent to over 75 per cent.
 Engaging 4,00,000 female Accredited Social Health Activists (ashas).

Goals for 2011-2012

 To raise public spending on health from 0.9 per cent of GDP to 2-3 per cent of
GDP, within proved arrangement for community financing and risk pooling.
 Reducing Maternal Mortality Ratio (MMR) to 1 per 1,000 live births.
 Reducing Infant Mortality Rate (IMR) to 28 per 1,000 live births.
 Reducing Total Fertility Rate (TFR) to 2.1.
 Providing clean drinking water for all by 2009 and ensuring no slip-backs.
 Reducing malnutrition among children in the age group 0–3 year to half its
present level.
 Reducing anaemia among women and girls by 50 per cent.


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 Raising the sex ratio in the age group 0–6 years to 935 by 2011–12, and to 950
by 2016–17.
 Malaria Mortality Reduction Rate: 50 per cent up to 2010, additional 10 per
cent by 2012.
 Kala Azar Mortality Reduction Rate: 100 per cent by 2010 and sustaining
elimination until2012.
 Filaria / Microfilaria Reduction Rate: 70 per cent by 2010, 80 per cent by 2012
and eliminationby 2015.
 Dengue Mortality Reduction Rate: 50 per cent by 2010 and sustaining at that
level until 2012.
 Cataract operations: Increaseto 46 lakhs by 2012.
 Leprosy Prevalence Rate: Reduce from 1.8 per 10,000 in 2005 to less that 1 per
10,000thereafter.
 Tuberculosis DOTS series: Maintain 85 per cent cure rate through entire
mission period andalso sustain planned case detection rate.

National Health Programmes

 National Vector Borne Disease Control Programme (NVBDCP)
 School Health Programme
 Operational Guidelines / Financial Guidelines
 Prevention & Control of Non Communicable Diseases
 Pilot Programme on Prevention and Control of Diabetes, CVD and Stroke
 National Programme for Prevention and Control of Deafness Universal
Immuization Programme
 National Cancer Control Programme
 National Aids Control Programme
 National Mental Health Programme
 National Iodine Deficiency Disorders Control Programme
 National Programme for Control of Blindness
 Revised National TB Control Programme
 National Leprosy Eradication Programme
 National Filaria Control Programme
 National Tobacco Control Program


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Market size of Hospital sector:
Hospital industry is an important component of the value chain in Indian
Healthcare. Industry rendering services and recognized as healthcare delivery segment of
the Healthcare industry, which is growing at an annual rate of 14%. The size of the
Indian Healthcare industry is estimated at Rs. 1,717 billion in 2007. It is estimated to
grow by 2012 to Rs. 3,163 billion at 13% CAGR. The private sector accounts for nearly
80% of The healthcare market, while public expenditure accounts for 20%. The country
had 15,393 (2005) hospitals, which had 8.75 lakh hospital beds. According to the WHO
Report, India needs to add 80,000 hospital beds each year for the next five years to meet
The demands of its growing population. Newfound prosperity of many Indian
households is spurring demand for high-quality medical care, transforming the healthcare
delivery Sector into a profitable industry. Medial tourism is changing the face of
traditional Healthcare industry in India. India‟s excellence in the field of modern
medicine and its Ancient methods of physical and spiritual wellbeing make it the most
favourable Destination for good health and peaceful living. India‟s cost advantage and
explosive Growth of private hospitals, equipped with latest technology and skilled
healthcare Professionals has made it a preferred destination for medical tourism.
According to Ministry of Commerce and Industry, Indian medical tourism that was
valued at US$350 Million in 2006, is estimated to grow into a US$2 billion industry by
2012.


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Key Players in the Healthcare Segment:
The government's share in the healthcare delivery market is 20 percent while 80
percent is with the private sector. Private players have made significant investments in
setting up state-of-the-art private hospitals in cities like Mumbai, New Delhi, Chennai
and Hyderabad. The following are the major domestic

Private healthcare providers in India:

Apollo Hospitals:
Apollo Hospitals has emerged as the single largest private hospital group in South
Asia. It operates hospitals, dispensaries, clinics and laboratories. It manages a network of
approximately 41 specialty hospitals and clinics with a bed capacity of over 9,000 across
the country and abroad. It has tied up with insurers like BUPA (UK), Vanbreda
(Belgium) and Mondial (France) to direct inflow of foreign patients to India. It has a joint
venture with Singaporebased Parkway Group Healthcare PTE Ltd. It has tied up with
Indian Oil Corporation (IOC) to set up its pharmacies at the latter‟s petrol stations.

The Escorts Group:
This has a presence in specialized cardiac treatment and multi-specialty care
hospitals providing a whole gamut of specialized medical services. Escorts operates ten
hospitals across India. The group is also reputed for tertiary care services such as

26 | P a g e

neurology, neurosurgery, plastic surgery and urology. Escorts Heart Institute and
Research Centre (EHIRC) has a 325 bed tertiary care institute, with 9 operation theatres,
5 cath labs, 2 heart command centres and world class facilities. It has carried out over
80,000 angiographies and 43,000 cardiac surgeries over the past fifteen years – which is a
world record.

Fortis Healthcare:
This is a company founded by the promoters of the Indian pharmaceutical major,
Ranbaxy Laboratories, started operations in 2001. It has approximately 12 hospitals with
1,900 beds.It has operations across North India in the cities of Delhi, Noida, Mohali,
Amritsar, Faridabad, Raipur and Srinagar. It has a joint venture with Real Estate player
DLF to set up hospitals across the country with an investment of about US$ 1.5 billion

Max Healthcare:
This is a fully owned subsidiary of the highly diversified Max Group, with a chain
of clinics and hospitals with a bed capacity of 1200. On an average, Max Healthcare
treats 30,000 patients every month, with 200 new patients visiting the facilities every day.
It has collaborated with Singapore General Hospital in the areas of medical practices,
nursing, paramedical research and training .

Wockhardt:
This is among India‟s leading pharmaceutical and healthcare companies. Since
inception in 1989, the Wockhardt Hospital & Heart Institute has become a renowned
tertiary level heart centre providing cardiac care to patients of all age groups. It is the first
recognized hospital in South Asia on the worldwide panel of Blue Cross blue Shield, the
largest provider of health insurance in USA. It has approximately 10 hospitals with 1,500
beds. It has entered into Public-Private Partnership with the Government of Gujarat to
manage the 275-bed Palanpur Civil General Hospital in Gujarat.

Manipal Health Systems:
Its chain consists of approximately 9 primary centres at 7 rural locations, 8
secondary hospitals at urban and semi-urban locations and 3 tertiary hospitals at urban
and semi-urban locations. It has a joint venture with Pantaloon Retail for comprehensive
retail healthcare foray. Arvind Eye Hospital: This hospital in South India is the single
largest provider of eye surgery in the world. In 1998, its hospitals saw 1.2 million
outpatients and performed 183,000 cataract surgeries. It costs Arvind about US$ 10 to
conduct a cataract operation. It costs hospitals in the United States about US$ 1,650 to
perform the same operation.


27 | P a g e

Foreign collaboration in the Indian Healthcare sector:
Since liberalization in 1991, a growing number of Indian companies have formed
Alliances with foreign firms. The following are some of such alliances:
 Wockhardt collaborated with Harvard Medical International Inc. USA
 Fortis Healthcare collaborated with Partners Healthcare System, USA
 Birla Heart & Research Centre collaborated with Cleveland Clinic Foundation,
USA
 Max Healthcare and Singapore General Hospital (SGH) have entered into
collaboration for medical practice, research, training and education in
healthcare services.
 Apollo-Gleneagles Hospitals Ltd. Is a 50:50 joint venture between Apollo
Hospitals Ltd and Parkway Group of Singapore. The joint venture is also
looking at business opportunities overseas in West Asia and North Africa.
 Apollo Hospitals has also entered into a partnership with Yemen‟s Hayel
Saeed Anam Group to provide advisory services to the latter‟s hospital project.

Foreign players in India:

 The US-based Atlas Medical Software, which specializes in developing
software solutions for the healthcare industry, has set up its operations in India.
 Bayer Diagnostics, one of the largest diagnostic businesses in the world.
 GE-BEL, a joint venture between General Electricals and Bharat
Electronics Limited is the only manufacturer of X-ray and CT tubes in South
Asia.
 UK-based Isoft Group plc (isoft), one of the world‟s leading suppliers of
application systems for hospitals and healthcare organizations.
 Phillip sells about US$ 43-49 million worth of medical systems in India.
 The US-based healthcare products major, Proton Health Care is making an
entry into India with its range of digital health monitoring devices.
 Siemens is a leading manufacturer of medical equipment with a market share
of more than 30 per cent in India.
 Wipro GE Medical Systems, a joint venture between GE Medical Systems
and Wipro Corporation, is India‟s largest medical systems sales and service
provider


28 | P a g e

Private Equity players in healthcare:
The following PE firms have evinced interest in healthcare (hospitals, diagnostic
sector and medical equipment):
 Carlyle
 Fidelity International
 UK-based CDC Group
 Blackstone
 IDFC
 HSBC
 JP Morgan Private Equity Fund
 American International Group Inc (AIG)
 Evolvence India Life Sciences Fund
 George Soros's fund Quantum
 Blue Ridge
 ICICI Venture
 Global Healthcare Investments and Solutions
 Bluewater International Investment
 Lightspeed Advisory
 Ajay Piramal Group
 Groupe Limagrain
 Singularity Ventures
 Eplanet Ventures
 Daninvest
 Barings Private Equity Partners India
 Reliance Life Sciences


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Demand analysis for no of people admitted in hospital:
Statistical Data from Ministry of Health & Family welfare :

Year No of people admitted in Hospital ( in million)
2006-2007 1.11
2007-2008 1.14
2008-2009 1.18
2009-2010 1.24
2010-2011 1.37

Calculation of Demand Analysis:
Year (Taking Base Y x^2 x*y
Year 2009-2010)
X
2006 – 2007 -2 1.11 4 -2.22

2007 – 2008 -1 1.14 1 -1.14

2008 – 2009 0 1.18 0 0
2009 – 2010 1 1.24 1 1.24

2010 - 2011 2 1.37 4 2.74
The Demand for the Preceding years: y=a+bx

where, a=∑y/n

b=∑(x*y)/∑(x^2)

a= 6.04/5= 1.208; b= 0.62/10= 0.062

Using ,y=a+bx

For 2011-2012, y=1.208+0.062(4)=1.456

For 2012-2013, y=1.208+0.062(5)=1.518

For 2013-2014, y=1.208+0.062(6)=1.580

For 2014-2015, y=1.208+0.062(7)=1.642


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For 2015-2016, y=1.208+0.062(8)=1.704

Demand Forecasted:

2011- 2012- 2013- 2014- 2015-
Years 2012 2013 2014 2015 2016
Demand For bed in
millions 1.456 1.518 1.58 1.642 1.704


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Demand Analysis for Number of consultations offered:
Statistical Data from Ministry of Health & Family welfare :

Year No of consultations offered ( in million)
2006-2007 7.89
2007-2008 7.99
2008-2009 8.23
2009-2010 8.76
2010-2011 9.26

Calculation of Demand Analysis:

Year (Taking Base Y x^2 x*y
Year 2009-
2010)
X
2006 – 2007 -2 7.89 4 -31.56
2007 – 2008 -1 7.99 1 -7.99
2008 – 2009 0 8.23 0 0
2009 – 2010 1 8.76 1 8.76
2010 - 2011 2 9.26 4 37.04

The Demand for the Preceding years: y=a+bx

where, a=∑y/n

b=∑(x*y)/∑(x^2)

a= 42.13/5= 8.426; b= 6.25/10= 0.625

Using ,y=a+bx

For 2011-2012, y=8.426+0.625 (4) =21.065

For 2012-2013, y=8.426+0.625 (5)=26.330

For 2013-2014, y=8.426+0.625 (6)=31.597

For 2014-2015, y=8.426+0.625 (7)=36.860

32 | P a g e

For 2015-2016, y=8.426+0.625 (8)=42.130

Demand Forecasted:

2011- 2012- 2013- 2014- 2015-
Years 2012 2013 2014 2015 2016
Demand for
consultations to be
offered ( in million) 21.065 26.330 31.597 36.860 42.130


33 | P a g e

Conclusion:
As we can see from the demand curves, it is evident that there is a clear increase in the
number of patients approaching hospitals for health care. As the reach of hospitals
becomes greater, even the rural market is getting tapped and thus the demand shows a
bullish growth path over the years.
This trend is expected to continue for the next few years, given the spending capacity of
the Indian customer and the increased awareness level in the health care sector.
With companies also insisting on health checkups and tests before giving employees the
final joining letter is another major factor which has seen the numbers going up
drastically.
Also the fact that health care is affordable in India compared to most of the developed
countries brings in visitors from these countries under the umbrella of medical tourism.
This is also a major contributor to the overall income of the health care industry and this
is only set to increase with more and more hospital chains coming up with offers and
plans to woo the customers.


Demand Forecasting of Hospitals in India

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