family care hospitals ltd share price Management discussions


SECTION I THE INDIAN HEALTHCARE ENVIRONMENT

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian healthcare industry has been growing at a CAGR of ~22% since CY16 (according to the Niti Aayog and IBEF) and is expected to reach USD 372 billion in CY22. While the Government’s spending on healthcare remains low, there has been considerable progress made in the last few years, especially since CY20, when the COVID-19 pandemic hit the entire world.

After various events that unfolded due to COVID-19 pandemic, the Government of India has become more cognizant and is focussing on building a resilient and sustainable healthcare ecosystem. In line with this, the allocation of funds to the Department of Health and Family Welfare was increased by more than 100% to Rs. 5,632 crore for FY22-23. Even the budget under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY) has more than doubled to Rs. 6,412 crore.

The diagnostics market in India, which has been valued at Rs. 710-730 billion in FY 20-21 is projected to grow at a CAGR of 14-16% over FY21-23 to Rs. 980 billion. The industry is expected to see sustainable growth on the back of:

Higher life expectancy

Ageing population (50-55% of the population is expected to be above 45 years of age in the coming census)

Increasing health consciousness and disposable incomes Improved customer convenience with increasing home-testing Greater awareness and interest in preventive diagnostics

Ever-expanding specialized test menu

The market is highly fragmented, with almost half of it being catered by unorganised standalone centres, while hospital-based diagnostics centres account for 37%. Organized diagnostic chains such as Scandent Imaging Limited account for 17% of the total market. Of this 17%, the split between regional chains is 11% and national chains is 6%.

However, since the onset of COVID-19 pandemic, there has been a shift in the industry, with standalone centres increasingly losing market share to organized chains. With their superior quality of services, stronger infrastructure and certifications, people have been placing their trust in such well-known, organized chains.

Diagnostics is the first step to treating diseases and is essential throughout the process, starting from detection of the disease to prognosis and determination of treatment regime to post-treatment monitoring of the patients. The COVID-19 pandemic has forced people to become more aware of their health and well-being. As a result, diagnostics has seen higher volumes on account of COVID testing since 2020. However, with the decreasing instances of caseloads, there has been some deceleration in COVID testing, but non-COVID testing has seen a strong resurgence. Given people’s greater focus on health expected to sustain going forward, non-COVID testing will see volumes exceed those of the pre-COVID era. Urban centres, which are part of organized chains are expected to benefit the most from this change in the approach of masses.

The way patients interact with healthcare brands is evolving constantly with new developments and technological advancements. This rate of change was enhanced during the pandemic, with major changes taking place in how diagnostic tests are carried out. The B2C model is the most preferred model and is attractive to diagnostic players too.

However, it requires substantial investment in brand building and sustainability. In the B2C segment, samples are collected either through direct patient walk-ins into their clinical labs and patient collection centres or through home collections. The quality of service, in tandem with the quality of diagnostics is of utmost importance. The Company during the year has ensured the highest standards of testing and unparalleled service to patients. The integration of technology into the business model has been seamless and provides patients with the best quality diagnostics from the comforts of their homes and at the tip of their fingers. Home collections also picked up during the year, especially during the second wave.

The B2B model has also been leveraged to enter newer geographies and non-core markets. It allows for rapid increase in volumes through samples collected from hospitals, nursing homes and other such establishments. The Company has been partnering with many such establishments in various geographies for years and the investments made towards this have ensured smooth operations with high quality, which is the premise of the brand.

Diagnostics has become an even more integral part of healthcare in the Indian context and the scope of growth, especially for organized, branded players is huge. Many factors such as the country’s changing demographics, increasing health awareness, rising incomes, development and evolution of tests and services, increasing Government support and the large and well-trained talent pool will continue to drive growth in the coming years. Scandent Imaging Limited will remain at the forefront of this wave, being one of the premier brands in the country.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

While challenges exist, the industry has innumerable opportunities to flourish in the coming years.

Commitment of Government: Commitment of the Government is at a high to improve the situation. Various incentives are being passed by the Government to increase domestic productions of devices and equipment (recent manufacturing initiatives of Ventilators and PPE are clear indicators), for setting up of laboratories and diagnostics, facilities for medical education and others.

Human Resources: Large population engenders massive domestic demand for healthcare services. Also India’s twin demographic pattern of growth in the number of young and old people, presents an opportunity to serve the healthcare expectations of the young while attending to the increasing healthcare requirements of the elderly. Low cost qualified manpower potentially makes it possible to provide treatment to overseas patients at very competitive prices.

Pharma and Drugs: Increasing domestic focus on generics. There exists high demand for drugs for both communicable and non-communicable diseases and India is favored country for clinical trials due to its established advantages. Retailing and ecommerce provide better growth opportunities for organzed players.

Twin Disease Burden: The rise of non-communicable diseases, and their contribution to the country’s disease burden presents an important opportunity to Hospitals. Lifestyle diseases such as cardiac ailments, diabetes and hypertension, cancer and orthopaedic ailments will drive the need for curative care. The burden of communicable and infectious diseases will also continue to be an area of focus in light of the recent pandemic.

Medical Education: Medical profession being viewed as valuable, common shows preference to engaging in it. Low doctor to patient ratio also presents considerable scope for employment.

Preventive Health and Wellness: Health awareness is on an increased trajectory across. More people are aware about the status of their health and are willing to invest time, money and efforts for improving it thus preventing critical illness. This awareness has led to a great opportunity in the areas of preventive health and wellness, including preventive health checks, diet and nutrition, exercise and well-being.

THREATS

Rising Costs: Input costs in healthcare are rising. Minimum wage revisions are underway in several categories of manpower; real estate continues to inflate; and import cost of equipment and consumables are high consequent to increase in INR / USD rate. Increased competition has also meant that compensation expectations for skilled manpower will go up.

Human Resources: Shortage of skilled manpower is an acute problem in this sector. Unless immediate steps are taken to increase the number of doctors, nurses and paramedical personnel, the shortage will lead to prohibitive costs and derail the industry in general.

Regulatory interventions: The intrinsic value of a service is more than just the cost of inputs. Any attempt to regulate the prices of healthcare inputs without providing for the comprehensive costs of providing quality services, will compromise the quality of care.

Medical Education: Brain Drain and inability to retain quality faculty will have a lasting impact on the quality of several medical colleges is a major challenge. There exists poor coordination between medical education and government health departments.

RISK AND CONCERNS

Risks are an unavoidable and integral part of any enterprise. Efficient management of business risks is a key factor that determines growth, profitability and at times, even survival. In the last few years, the healthcare industry in India has been witnessing increased consolidation even among the larger players. Further, Government intervention, by way of an active regulatory regime, be it in terms of price control or capping of margins on medicines and implants has been stepped up. State and Central Healthcare coverage schemes are also impacting industry margins.

At Family Care Hospitals, we continue to strive for a focused approach on risk identification, management and mitigation. We are documenting operational risks and concerns at the unit level as well as the strategic and financial risks at the enterprise level in the form of a robust risk register. The aim is to improve responsibility accounting and bring the right stakeholders to focus on appropriate risk mitigation and monitoring measures at various levels within the organisation

OUTLOOK ON HEALTHCARE SECTOR

The COVID pandemic has exposed the inadequacy of the Indian healthcare sector, for both public as well as private organisations. It has showcased the requirement to significantly strengthen the sector to withstand such pandemics in the future. The Government would have to substantially improve upon its funding for healthcare infrastructure. Shortage of manpower in the sector needs to be addressed in an efficient manner which should also target the healthcare related vocational trainings. Given the existing high prevalence of non-communicable diseases and chronic ailments such as cardiovascular diseases, diabetes, respiratory ailments, mental health and neurological disorders, oncology related disorders, and musculoskeletal and urological disorders; the demand for preventive health care is expected to grow. Proliferation of life style diseases is already high in select states such as Punjab, Tamil Nadu, Kerala, Andhra Pradesh and Karnataka (Source: India: Health of the Nation’s States, The India State-Level Disease Burden Initiative: Disease Burden Trends in the States of India 1990 to 2016). In addition to the above, the pandemic is also expected to result in the shifting of healthcare focus from curative care to preventive care, bringing about changes in hygiene and social etiquettes and further adding to the demand for preventive healthcare.

Given the acute shortages of medical resources witnessed during the pandemic; opportunities for large private healthcare organisations to provide consultancy to smaller and medium scale hospitals and healthcare providers in tier II cities could also emerge. Expertise and experience of large private healthcare players enabling smaller healthcare providers to ramp up facilities in terms of ICU’s, ventilators and the like and respond to sudden epidemics in smaller cities could help mitigate the impact of such outbreaks to a considerable extent. Advance tieups and JVs between healthcare providers keeping overall feasibility in mind appear to be clear opportunities which could be explored.

Healthcare delivery is expected to witness a significant transition going forward with an emphasis on technology, digitisation and information systems. Virtual consultations by healthcare professionals could become the mainstream care delivery model post-pandemic. Home healthcare services have picked up during the last one year and expected to continue to gain traction given the current environment. In the diagnostics space, preventive care and the wellbeing testing segment is expected to grow at a higher pace compared to the industry growth rate. Integrated health tracking mobile applications, government initiatives, and online services such as booking appointment online for preventive healthcare check-ups, obtaining reports online, home collection of samples will further augment future growth in this industry.

While all these pose a challenge in the short to medium term, over the longer term these would result in a more robust and structured healthcare environment in terms of quality, affordability and accessibility

OUTLOOK AND ROLE OF THE HEALTHCARE INDUSTRY IN THE COVID-19 PANDEMIC

The year gone by has witnessed perhaps the worst global healthcare crisis in over a decade. The unexpected outbreak of COVID-19 has severely impacted countries across both the developed and the developing world and has challenged healthcare systems at a never seen before scale. The loss of human lives and the suffering of people have been overwhelming and deeply saddening. Lockdowns being witnessed in country after country and travel bans to break the chain of transmission of the virus impacted economies and industries forcing further economic hardships and turmoil. The pandemics rapid spread and the limited understanding of the virus and its various strains has altered the ways of both social and personal interactions as well as revised professional working styles. Governments across the globe and their respective healthcare systems have worked in tandem with healthcare institutions such as the World Health Organisation (WHO) to mitigate this unfortunate human calamity.

Our country too has borne the brunt of the pandemic in FY 2020-21 and witnessed a second wave in early FY 2021-22 that has had a far worse impact in terms of COVID cases and resultant deaths. The pandemic in India, has seen ~29.4 Million patients being infected with the virus, the second largest number after the United States and ~3.9 Lakhs deaths (Source : Government : Arogya Setu App, data as on June 30, 2021).

While challenges in healthcare infrastructure and lack of medical resources have been a severe constraint in controlling the pandemic, our healthcare institutions both public and private have acted on a war footing to scale up infrastructure across the healthcare value chain be it in terms of beds, isolation centers, medical equipment, medicines or testing capabilities. Clinicians, nurses and paramedics have and continue to work dedicatedly to ensure the best available care for COVID patients.

Some of the key measures undertaken to mitigate the pandemic were as follows:

• Ensuring accessibility and availability of beds and medical resources for COVID patients by the government and the private healthcare industry.

• Effective checks and regulations for making the treatment and related tests for COVID more affordable.

• Roll out of safety and isolation protocols, medical treatment nuances and infrastructure regulations in order to provide a standard set of practices governing COVID related matters.

• Leveraging information technology enablers such as mobile and COVID related apps, online test reporting and websites for information dissemination.

• New avenues to provide healthcare services in a faster and efficient manner such as mobile testing vans, home collection of samples, home healthcare and drive thru testing centers. In the aftermath of the second wave seen in early FY 2021-22, the government and healthcare institutions in the country have scaled up their resource capabilities to be better prepared for the future were such a crisis to happen again. At the same time collective efforts are underway to accelerate the manufacturing of vaccines and ensuring that vaccination programs cover the entire population of the country as quickly as possible. This would go a long way in helping people see a relatively lesser impact due to COVID and protect lives and livelihood. As of June 22, 2021, 289 million doses of COVID vaccines have been administered across the country (Source: WHO India Situation Report, COVID 19 dated June 23, 2021) and both government and private healthcare setups are further being scaled up to increase coverage. The government has earmarked a significant investment outlay for vaccination and allied resources required to mitigate the pandemic.

A. Snapshot of The Indian Healthcare and Hospital Industry

India’s healthcare sector is one of the largest sectors both in terms of revenue as well as employment. Healthcare comprises hospitals, medical devices, pharmaceutical, clinical trials, telemedicine, medical tourism, health insurance and diagnostics. The size of the overall Indian Healthcare market was estimated at US$ 265 Billion in 2020. The hospital and the diagnostics segment forms a relatively large portion of the overall healthcare market and is estimated to contribute approximately 40-45% share in the overall healthcare market segment. Both the hospital and the diagnostics segment are highly fragmented with a majority of facilities being in the unorganised segment and only handful of hospital and diagnostics players forming the organised market. The Government i.e. public healthcare system comprises secondary and tertiary care hospitals in key cities and primary healthcare centres (PHCs) in rural areas. The private sector provides secondary, tertiary and quaternary care hospital facilities with a major concentration in metros, tier I and tier II cities. The hospital industry in India is also characterised by an unequitable balance between public and private hospital infrastructure in select major cities like New Delhi wherein public infrastructure outweighs private healthcare availability (Source: CDDEP - Centre for Disease Dynamics Economics and Policy); also providing a further potential for private healthcare to expand and grow in such locations.

(i) Characteristics of the Industry

• Growing health awareness and changing attitude towards preventive healthcare

• Low cost and better value driven outcomes driving the country’s medical tourism segment.

• Rising income levels and a higher per capita income resulting in increasing affordability and

• demand for quality healthcare services

• The pandemic catalyzing long-term changes in attitudes towards personal health and hygiene, health insurance, fitness and nutrition.

• The relative lack of public healthcare infrastructure offering tertiary and quaternary healthcare services in a majority of states in the country as compared to private healthcare.

(ii) Government Initiatives

The Government of India has been taking a holistic approach to Health and is focusing on strengthening three areas: Preventive, Curative, and Wellbeing. Select key initiatives taken by the government to promote Indian Healthcare industry are as under.

a. Lunch of the PM AtmaNirbhar Swasth Bharat Yojana, with an outlay of about 64,180 Crores over 6 years. This will enable developing capacities of primary, secondary, and tertiary care health systems, strengthen existing national institutions, and create new healthcare institutions. This will be in addition to the National Health Mission. b. To strengthen nutritional content, delivery, outreach, and outcome, the government plans to merge the Supplementary Nutrition Programme and the Poshan Abhiyan and launch the Mission Poshan 2.0. An intensified strategy to be adopted to improve nutritional outcomes across 112 Aspirational Districts. c. Plans to increase the number of research and COVID-19 RT-PCR labs to strengthen COVID-19 testing services. d. Providing an amount of Rs. 35,000 Crores for COVID-19 vaccination program for FY 2021-22. state-levels. The Aarogya Setu mobile app which assisted in mapping, contact tracing and self-assessment was widely used throughout the country.

Key Trends being observed in the Hospital business

a) Hospital recovery likely to be gradual

• While Q1 faced the maximum impact on occupancy, hospitals witnessed higher occupancy in Q2 & Q3 of FY 2020-21 with the ramp up primarily due to higher occupancy in COVID beds. A slow recovery was also observed in Non COVID bed occupancy which gained traction towards end Q3 and in Q4.

• FY 2021-22, non-COVID occupancy declined once again in early Q1 of FY 2021-22 with a significant rise in COVID occupancy. From mid-May FY 2021-22, early and encouraging signs of declining COVID cases are being seen; traction is also being witnessed in non-COVID occupancy. With the same trend expected to continue, hospital occupancy could reach normal levels in the short to medium term.

b) Emerging Trends in the hospital and diagnostics space

Home healthcare and Teleconsultations:

• Home healthcare is likely to witness significant traction mainly driven by the geriatric population. Many private healthcare players are partnering with home healthcare firms or setting up a separate vertical to cater to this segment.

• Most of the hospitals encouraged teleconsultations and even launched digital platforms to provide various healthcare services (telemedicine, digital test reports, etc) which can be offered through the virtual medium.

• Diagnostic players increased their focus on the home collection segment

Patient and Staff Safety

• Various initiatives have been taken to ensure the patient and staff safety such as screening at entry, separate patient flow as well as setting up a separate wing for COVID patients, altering the visiting hours, etc

• Rapid recovery protocols have been formed as most patients prefer home care overstaying at the hospital

• New Medical Protocals have been setup for surgical procedures

• Mandatory COVID tests for patients who will be undergoing any surgical procedure.

B. Indian Diagnostic Industry

Diagnosis is the first step to disease management. Globally ~80% of physician diagnoses are a result of laboratory tests. There are mainly 3 types of tests - (1) Routine tests, Common Tests like sugar, Cholesterol, HIV, pap, pregnancy, etc; (2) Clinical lab tests to monitor diseases and drug treatments and (3) Specialty tests: Genetics, immunology, oncology, endocrinology and other critical segments.

Market for diagnostic services has been growing in India over the past couple of years at a rate of approx. 15-20% and is estimated at ~ US$ 9 Billion in market size (Rs 675 Billion) (Source: Edelweiss Research). Pathology accounted for nearly 80% of the market while Radiology accounted for the remaining 20%. Future growth is likely to be driven by improving healthcare facilities, medical diagnostic and pathological laboratories, private-public projects and enhanced penetration of the health insurance sector.

Impact of COVID-19 on the diagnostic Industry

Though COVID-19 had a significant impact initially on the diagnostics sector with a steep fall in patient volumes, private labs ramped up COVID testing capacities and increased their focus on home collection services. With the gradual opening up of the economy along with new initiatives such as mobile testing vans and drive through sites / centers for conducting routine tests as well as COVID tests; a faster recovery was witnessed in the second half of the fiscal.

At present, almost all major organised players have witnessed a sharp rise in their revenues and profitability, benefiting from increased demand for COVID-19 testing as well as other tests related to COVID-19. The non-COVID business has achieved near normalcy and incrementally COVID tests contributed over 25%-30% of revenue during the year. Anticipating more workload in quarters to come, more COVID testing facilities are being created all over the country, to meet the demand that may rise due to prolonged pandemic. COVID-19 has demonstrated how important it is to have access to fast, reliable tests. Technology-led diagnostics, home collection, on-line reports and the like shall play a critical role to improve customer experience. There is also a requirement to adopt a more analytical approach towards gathering health data to monitor public health and establish trends which can be made possible through digital means and advanced technologies like machine learning and Artificial Intelligence (AI).

RETAIL PHARMACY SECTOR

The Indian Retail Pharmacy sector has been witnessing healthy growth over the past few years due to an increasing consumer base and rising healthcare expenditure. Most industry experts anticipate that the Indian pharmacy market will be a bright spot for the Healthcare sector over the next decade. In the entire healthcare delivery value chain, retail pharmacy is one of the most fragmented sub-segments. The Indian Retail pharmacy market has been registering healthy growth largely on account of rising demand for OTC drugs and private label products fuelled by extensive advertisement by various organizations. There is an estimated total of 8,50,000 retail pharmacies (chemists) in India out of which 8,45,000 falls under the unorganized category. The number of branded organized pharmacy stores is less than 6,000 and constitute <5% of the total market size

Organized Retail Pharmacy refers to trading activities undertaken by licensed retailers which include corporate backed hypermarkets, retail chains and privately owned large retail businesses. Key players in this sector are also venturing into the market with either wholly owned pharmacies or through franchises and are also scaling up by setting up several service touch points in cities across India. They are changing the face of the pharmacy sector by bridging service gaps. The Organized retail pharmacy market size has been growing at an average of 22-25%. Industry reports expect the growth to be between 20-22% over the coming decade. Analysts expect investments in excess of USD 1 bn over the next few years in this sector.

ONLINE PHARMACY AND PATHOLOGY

The COVID crisis has provided a significant boost to the adoption of digital healthcare, especially for e-pharmacies. e-pharmacies account for 3% share of India’s pharma market and are likely to account for 10-12% share in the next 10 years. The number of households using e pharmacy platforms rose substantially from ~3.5 million pre-COVID levels in FY20 to ~9 million in May’20.

The online pharmacy market in India is at a very nascent stage as compared to the other developed economies. With consumers using technology to bridge the service quality gap, digital pharmacies are gaining popularity in Tier I and Tier II cities, as they are banking on scale and better distribution networks. Eventually, the online mechanism is bound to spread to Tier III and Tier IV cities also, which will help generate higher revenues for the sector. Additionally, these online pharmacies are also slowly gaining attention in the e-commerce industry space, both by the Government and consumers, with its impressive growing market penetration rate.

The convenience provided to customers through online booking, home collection of samples, and online reporting are the driving factors behind diagnostic services. The success of this model lies in the simple fact that it reduces the common man’s burden of travelling for any kind of diagnostic service. This convenience has helped in tapping significant opportunities for entities with a strong network and high-tech lab. Thus, increasing the revenue turnaround time by reporting a quick result.

The coming years will feature higher incidence of online enabled delivery of healthcare services, with high amenability for diagnostics as well. Companies like DLPL will benefit from sustained investments in core technology platforms, owned Apps and online branding. Partnerships with third party aggregators and backing capacity build-up in home collection will give the organised industry a further advantage.

GROWING HEALTH INSURANCE MARKET

Health insurance encourages demand for healthcare services as the insured pays a premium for the policy which is reimbursed by the insurer in case he/she has to undergo treatment on account of illness, sickness or disease. The insurance, to an extent covers the health expenses of an individual and reduces his/her burden of healthcare costs. Therefore, an increase in health insurance market will drive up demand for healthcare services. In India, out-of-pocket (OOP) expenditure on health accounted for nearly 63% of total health expenditure as of 2018; the highest among many other countries. Nearly 25% of the rural population and 18% of the urban population is dependent on borrowings for funding their healthcare expenditure. Also, nearly 68% of the rural population and 75% of the urban population use their household savings on healthcare related expenditure. Health expenditure contributes to nearly 3.6% and 2.9% of rural and urban poverty, respectively and annually, an estimated 60 to 80 million people fall into poverty due to healthcare-related expenditure. However, Pradhan Mantri Jan Arogya Yojana (PMJAY), is expected to easen healthcare affordability and reduce healthcare expenditure to some degree, especially for the deprived population. Low health-insurance penetration is one of the major impediments to the growth of the healthcare delivery industry in India, as affordability of quality healthcare facilities by the lower income groups remains an issue. Health insurance coverage has increased from 17% in fiscal 2012 to 36% in fiscal 2020.

Out-of-pocket healthcare spend as percentage of total healthcare expenditure

As per the Insurance Regulatory and Development Authority (IRDA), nearly 499 million people have health insurance coverage in India (as of fiscal 2020), as against 288 million (in fiscal 2015), but despite this robust growth, the penetration in fiscal 2020 stood at only 36%. The growing incidence of disease coupled with low Government funding has led to an increase in the financial burden for healthcare among the general public. Against a backdrop of rising healthcare costs, this glaringly underscores the crying necessity for larger health coverage for the populace. The market for health insurance is definitely on the rise.

INDIA’S HEALTHCARE INDUSTRY CHALLENGES, OPPORTUNITIES AND THREATS CHALLENGES

Despite the growth in Indian Healthcare, the industry has got its plethora of challenges.

Buildings and Infrastructure: A skewed distribution of healthcare infrastructure, poor maintenance of its existing facilities and lack of faith in some of the locally manufactured equipment.

Human Resources: Acute Shortage of Manpower at most levels in the healthcare industry. Absence of a uniform and effective HR policy and inadequate HR database. Long term retention of qualified healthcare staff in Tier 2 & Tier 3 locations. Intense competitiveness amongst Hospitals in all Tier cities has let to unsustainable increase in remuneration for qualifies personnel. This is definitely a show stopper for ensuring growth in this sector.

Pharma and Drugs: Difficult to co-ordinate and regulate the pharma sector, since it is controlled by multiple government departments. Further with increased regulations in prices of drugs and consumables it is important to ensure that healthcare providers are able to remain financially sustainable in the long term.

Heterogeneous Markets: Need for proper healthcare services in India are defined by the unique characteristics of local markets demographics, disease profile, customer attitudes, seasonal variations, price sensitivity and others. Even hospitals in two different locations in the same state will operate under different set of parameters. Due to complications, involved significant management time is required in sustaining clinical standards, balancing case mix, ensuring adequate volumes and upgrading technology regularly.

Medical Education: Regional imbalances in Medical Colleges and questionable quality of several medical colleges are a major challenge. There exists poor coordination between medical education and government health departments.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

REVENUE

The Company’s revenue from operations increased from Rs. 3537 lakh in 2020-21 to Rs. 4237.85 in 2021-22 registering growth of 19.81%. The profit after tax for the year increased to Rs. 519.88 Lakhs as compared to Rs. 407.41 Lakhs in the previous year which is incomparable.

Family Care Hospitals extremely humbled and delighted to share that both our hospitals had been declared as Covid hospitals and tertiary care/ support is being provided to all critical and non-critical Covid patient today at our facilities. Family Care Hospitals is also accelerating its efforts towards vaccination at both onsite and offsite locations including doing corporate tie ups and arrangements with residential condominiums and colonies.

The Company has undertaken a series of measures to create the COVID necessary infrastructure for the safety of all its patient and staff including being amongst the first to establish Flu clinics for screening and management of patients. The Company, to safeguard its employees and to provide assistance in the case of any unfortunate incident in the line of duty, also increased the insurance cover for all its frontline workers both for life and medical insurance coverage. Family Care Hospitals ensured that medical protocols and up-to-date new treatment and tests in COVID related aspects were quickly rolled out across its network. Safety guidelines for staff and patients, work from home measures and the like were also initiated to ensure a smooth and safe patient and hospital workflow environment.

A) Family Care Hospitals Healthcare

Family Care Hospitals healthcare verticals of the Company primarily comprise hospitals, diagnostics and day care specialty facilities. Currently, the Company has one hospital in Mira Road (Mira Bhayender Municipal Corporation). The Company network comprises an aggregate of 100 beds as of March 31, 2022.

(i) Business Strategy

While having successfully navigated the challenges in FY 2021-22, as the organisation enters into FY 2022-23, its focus would be on building back topline by undertaking several revenue growth initiatives including building upcountry market, enhancing engagement with key corporate clients, further strengthening its community connect in neighborhood areas, optimally leveraging its digital marketing to expand to a larger market and gaining international business with an emphasis on building direct business.

The Company plans to new hospital setups, expand existing set-up, include newer business verticals and geographies in FY 2022-23, The focus on cost transformation will continue with our endeavor being to retain and carry forward the efficiencies we brought about in the cost structure during COVID-19. Efforts are also underway to rationalise drugs and consumables cost, bring in efficiencies in capex process and optimise indirect spend.

Focus would be on a combination of new generation e-commerce related businesses, partnering and venturing into digital sales origination, support and partnerships based surgery execution services in the Mumbai Metropolitan Region.

Taking forward our portfolio strategy, we will continue to invest in our high performing facilities and at the same time put all efforts to transform and turn-around a few under-performing but high potential facilities.

Medical Strategy and Operations

The organization constantly strives towards adopting a patient centric approach in all aspects of healthcare service delivery with stringent medical processes and protocols which are instrumental in achieving high standards in patient care and superior clinical outcomes. Our systems-based approach is continuously monitored, evaluated, and improved upon, enabling greater transparency and clinical success.

Contactless Delivery of Services

To further enhance the safety of our staff and patients, Family Care Hospitals Hospital, screening of patients, attendants and hospital staff entering the hospital. The robot used facial and speech recognition for screening visitors for COVID-19 symptoms i.e. fever, cough and cold. Basis the success or failure of the screening test, the person is able to enter hospital premises or is directed to the Flu clinic for further examination. This limits human interactions leading to a significant reduction in transmission of the virus.

Family Care Hospitals Vaccination Plan

In anticipation and preparedness for the COVID-19 vaccine in India, the Family Care Hospitals Vaccination Plan (based on the MoHFW, COVID-19 Vaccine Operational Guidelines) were released in January 2021. Focus areas included: Infrastructure, Workflow, Logistics, for preventing misuse of Vaccines.

Training on COVID medical protocols

MSOG led the extensive training / awareness programs on each aspect of COVID management protocols set by the Government of India. Additional best practices were researched and adopted at across all hospitals. Leveraging various digital learning platforms curated & contextualised digital solutions, virtual / online training programs addressing the emerging skill requirements such as working remotely, tele sales, handling calls during COVID-19, enhancing productivity & professional skills were deployed.

In collaboration with Family Care Hospitals Mental Health Department, self-care strategies & managing stress virtual training programs were conducted for frontline health care workers a cross Family Care Hospitals, reinforced by self-care micro learning modules and online courses.

Cost Optimisation:

HR led a voluntary salary reduction scheme which was subscribed by senior members of all employee groups especially clinicians and senior executives.

While the above COVID related activities were being managed, the other HR initiatives continued in a slightly scaled down manner. Hiring of critical resources, working on ongoing critical projects like Project Fusion, manpower, norms, productivity, benchmarks, HR functional audit, wage code impact analysis were some of the key things undertaken during last year. To strengthen culture of performance, the Balance Score Card framework has been deployed across units, translating in better integration of qualitative aspects in addition to financial parameters as organisation strategic intent.

As on March 31, 2022, the Company had a total employee base in the hospitals & the diagnostics business of approximately 116 employees.

NABH Accreditation for Mira Road Family Care Hospitals Facility

During the year, Family Care Hospitals, Mira Road was recognized to be a NABH accredited facility with it now being amongst the best process practice organizations in the healthcare sector and amongst the less than 1000 such hospitals in a large nation like India.

Internal Control Systems and their Adequacy

The internal control system has been designed to commensurate with the nature of business, size and complexity of operations and is monitored by the management to provide reasonable assurance on the achievement of objectives, effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.

The Company has institutionalised a robust process and internal control system commensurate with its size and operations.

The internal control framework is supplemented with an internal audit program that provides an independent view of the efficacy and effectiveness of the process and control environment and through its observations provides an input to the management to support continuous improvement program. The internal audit program is managed by an Internal Audit function directly reporting to the Audit Committee of the Board.