ECONOMIC OVERVIEW & OUTLOOK Global Economy
The weakening of the impact of the pandemic and the steady increase in vaccination coverage proved to be a catalyst for global resumption of trade and the economic activity. As a result, the global economy grew at an estimated 5.9% in CY2021 registering the strongest growth rate in decades. However, supply disruptions continued into the subsequent year while a resurgence in COVID cases in certain geographies, challenges in China and the outbreak of the Russia-Ukraine War have set back the momentum of the global recovery.
Recognizing these challenges, the IMF reduced its projection for global growth in CY2022 from 4.4% to 3.6%, nearly a full percentage point below the earlier projection from October 2021. Global growth is expected to grow at 3.6% in CY2023 as well, indicating a mechanical pickup after current drags on growth dissipate in the second half of 2022. The forecast is conditional on adverse health outcomes declining to low levels in most countries by end of 2022, assuming vaccination rates improve worldwide, and therapies become more effective.
As per the 2nd Advance Estimates, India is likely clock a GDP growth of 8.9% in FY22. The International Monetary Fund (IMF), in its latest World Economic Outlook (WEO) report, has lowered its forecast for Indias FY23 gross domestic product growth to 8.2% from 9%, saying that higher commodity prices will weigh on private consumption and investment. This was one of the steepest cuts in growth estimates for emerging economies compared to the IMFs January WEO forecasts. Although the IMFs growth forecast for India for the current financial year has been cut sharply, it remains significantly higher than local projections. The Reserve Bank of India (RBI), for instance, has pegged the GDP growth for FY23 at 7.2%.
GENERAL OVERVIEW ON INDIAS HEALTHCARE SERVICE LANDSCAPE
Citizens of developing countries, in general, have lower access to health services than those in developed countries. A comparison of the basic health indicators clearly indicate that developed nations of the world, fare far better on healthcare provision and utilization, when compared to the developing nations. Developing nations which have not been able to similarly invest in healthcare infrastructure are characterized by lower human development. Like most developing countries, India inherited a limited healthcare infrastructure which was inadequate to meet the demands of a large and diverse population.
Today, the primary challenge for the country is the improvement of the overall access to healthcare across sectors, both in terms of reach and affordability, and the assurance that the healthcare needs of the vulnerable and under-privileged sections of society are addressed. Additionally, coping with modern diseases, public health challenges, disease surveillance and rising input costs, are some of the other key challenges for the healthcare industry. The recent COVID-19 pandemic caused immense disruption and brought to the forefront the importance of health from an economic standpoint. It has revealed the need to devote resources for prevention of future epidemics and to manage such crises without excessive economic disruption.
The healthcare sector in India has been one of the more significant contributors to economic growth and prosperity, with regard to both employment and revenue. The various demographic changes such as the increase in demand for modern healthcare facilities, rise in awareness about diseases, health consciousness among people, increase in per capita income, changing lifestyle, transition in disease profile, etc., have immensely contributed towards the growth of the healthcare service sector in India. It is also important to note that over the years, the Indian healthcare sector has changed from a largely informal sector to a more formal one and has also moved towards corporatization. The system has grown significantly and through the leverage of medical technology, has garnered many achievements in the treatment and modalities of cure for many diseases.
The country is successfully offering best-in-class healthcare treatment services at a fraction of the cost in other major markets around the globe. The reduced cost of life-saving drugs and medical devices, the evolved pharmaceutical industry, world-class specialty hospitals in Tier 1 and Tier 2 cities coupled with a large pool of well-trained medical professionals, are other factors that have contributed immensely to the growth of the sector.
Public healthcare facilities in India have been unable to scale adequately to serve the needs of the large population. Ensuring equitable healthcare access for the underserved has been another challenge. Additionally, several public healthcare facilities are understaffed, poorly equipped in terms of basic infrastructure and equipment, and are in need of enhanced quality standards and protocols. This unmet opportunity combined with strong fundamentals has largely led to the private sector taking center stage in the healthcare landscape.
Today, the healthcare sector in India offers a potent mix of opportunities and challenges. The significant gap between ‘required and ‘actual healthcare infrastructure has driven considerable investment over the years into assets like hospitals and other facilities. Healthcare in India today provides corporations with a unique opportunity for innovation, differentiation, and profits; it has become a preferred sector for strategic and financial investments.
Government Initiatives are supporting the growth of the Healthcare Sector
Over the years, the Indian Government has been taking necessary initiatives to ensure delivery of quality healthcare services to all at affordable costs. In fact, the Countrys healthcare sector is strongly supported by the Indian Government which has been undertaking commendable work to develop India as a global healthcare hub. The multitude of initiatives to drive the growth of the healthcare sector in the country has been yielding positive results. These initiatives have gone a long way in not only improving overall healthcare access for the general population but have also enhanced the quality of healthcare in the country. The Government has also undertaken various initiatives like Ayushman Bharat and National Digital Mission to increase the coverage of healthcare services. The Ayushman Bharat scheme aims to comprehensively strengthen the healthcare system, right from primary to tertiary care. The National Digital Health Mission (NDHM) aims to create a management mechanism to process digital health data and facilitate its seamless exchange; develop registries of public and private facilities, health service providers, laboratories, and pharmacies; and support clinical decision making, as well as offer services like telemedicine. NDHM has the potential to make the health system more evidence based, transparent and efficient.
Additionally, the digitization push by the Government is expected to not only enable patients to share their health profiles with providers for treatment and monitoring purposes, but also access accurate information about the credentials and pricing of services offered by various health facilities, providers, and diagnostic laboratories.
Key Announcements for the Sector:
National Digital Health Ecosystem: An open platform for the National Digital Health Ecosystem will be rolled out. It will consist of digital registries of health providers and health facilities, unique health identity and universal access to health facilities
National Tele Mental Health program: The pandemic has accentuated mental health problems in people of all ages. To better the access to quality mental health counselling and care services, a National Tele Mental Health program will be launched. This will include a network of 23 tele mental health centres of excellence with NIMHANS being the nodal centre and IIIT Bangalore providing technology support
Market Size of Indian Healthcare Sector
Today, the Indian healthcare sector is growing at a significant pace owing to its strengthening coverage, services and increasing expenditure by the public and private sectors. The Indian healthcare sector, which stood at a size of USD 110 billion in 2016, is expected to reach a size of over USD 372 billion by 2022, registering a CAGR of 22.52%. Industry experts believe that there is immense scope for enhancing healthcare services penetration in India, thus presenting ample opportunity for the development of the healthcare industry. The e-health market size is estimated to reach a level of US$ 10.6 billion by 2025.
The Indian healthcare sector is one of the most knowledgeable and professional sectors in the world. Also, healthcare providers in India are renowned for being efficient and cost effective, thanks to the presence of expert doctors and specialists, and well-equipped diagnostic and nursing services. There is immense scope for enhancing healthcare services penetration in India and ample opportunity for the development of the healthcare sector as a whole.
The Healthcare Service Delivery Landscape in India
The Healthcare sector in India broadly includes Hospitals, Pharmaceutical Companies & Standalone Pharmacies, Diagnostic Services, Medical Equipment and Supplies, Medical Insurance, Telemedicine Companies, Medical Tourism and Retail Healthcare.
Scope to Increase Indias Per Capita Healthcare Expenditure
Rising income, easier access to high-quality healthcare facilities and greater awareness of personal health and hygiene are some of the factors which have led to an increase in the countrys per capita healthcare expenditure. A greater penetration of health insurance has aided the rise in healthcare spending, a trend likely to intensify in the coming decade. Today, economic prosperity is driving the improvement in affordability for generic drugs in the_market.
Indian Healthcare –
Growing Investment Opportunities
Today, the shortage in the healthcare workforce especially in the semi-urban, rural and remote areas has resulted in limited access to healthcare facilities for a vast section of the population. Due to extensive smartphone penetration in India and growing internet penetration, Telemedicine and e-Health are being regarded as potential solutions for addressing this lack of access. Tele-consultations enabled by telemedicine could save lives and avoid travel related costs. Tele-radiology is also an emerging area with several foreign hospitals now active in this space.
Various evolving technological developments like Artificial Intelligence, Internet of Things, Wearables and other mobile technologies have the potential to improve outcomes for people suffering from multiple co-morbid conditions. This is due to the possibility of remote monitoring of health status and delivery of virtual care services through smartphones and artificial intelligence data solutions.
Rising Per Capita Income and Widening of Income Inequalities
Due to increasing affordability, consumers are demanding and willing to pay for superior healthcare services. However, even as India continues to develop, the country is witnessing a widening of income inequalities. Low per capita income, minimal expenditure on healthcare, inadequate number of doctors coupled with muted insurance penetration in rural areas, account for wide disparity in healthcare offerings between urban and rural areas. Also, the inequality is becoming increasingly apparent even within the same city. People from the different socio-economic groups fall into unique baskets typi_ed by varying healthcare needs. Each of these presents a market in terms of the addressable value proposition.
The enhanced affordability in a segment of the population, due to rising income levels, supports the need for quality medical care at a relatively higher price. Growth in household incomes, and consequently, disposable incomes, is therefore critical to the overall growth in the demand for healthcare delivery services in India.
Changing Demographic Trends:
While Indias population appears to be young, there is a growing elderly population of 60 and older. The rise in this segments population, coupled with higher life expectancy, is yet another point in favour of high-quality healthcare. As a result, socio-demographic aspects in the country are expected to boost the growth for healthcare services in the future.
Transition in Disease Profile
India has witnessed an extensive change in the overall disease profile of its population. The share of death for communicable, maternal, neonatal, and nutritional diseases decreased to 27.5% in 2016 from 53.6% in 1990 and that of Non Communicable Diseases increased to 61.8% in 2016 from 37.9% in 1990. This shift in the disease profile has led to an additional need for healthcare services in the country. Non communicable diseases tend to be of long duration, increasing the need for sustained healthcare services.
Due to increased urbanization, the incidence of lifestyle diseases is anticipated to increase faster than any other segment. Within the lifestyle space, cancer is one of the fastest growing ailments. The prevalence of cancer in India is projected to increase from an estimated 3.9 million cases in 2015 to 7.1 million cases by 2020, according to an Ernst & Young report.
The Increasing Role of Technology in Healthcare Delivery
Over the last decade, the health and medical industries have undergone significant transformations. This has been made possible by medical advancements and technological progress. The medical field can innovate treatments, data collection, symptoms and disease and cure research, and human aid by utilizing technology. People now have easy access to medicine largely owing to advances in technology.
Many hospitals in India have identified that investing in technology is a pathway to success. Aggressive investments in supportive technology and operative techniques have helped hospitals deliver better clinical outcomes and eased their patient care. The timely adoption of advanced technologies has enabled the availability of and supported advancements in robotic surgeries, radiation surgery, radio therapies, cyber knife options, image guided radiation therapy, transplant support systems, and advanced neuro and spinal treatments.
New health technologies such as wearable tech, telemedicine, genomics, virtual reality (VR), robotics and artificial intelligence (AI) continue to transform Indias healthcare landscape. India, like many other markets, is on the verge of a "digital health" revolution, with a large number of healthcare companies beginning to adopt digital technologies spanning patient engagement, physician engagement, field force effectiveness, R&D efficiency, and supply chain management.
After the pandemic, the healthcare industry is facing a severe shortage of doctors, nurses, and other healthcare workers on a global scale. To overcome this shortage, several reforms have been proposed by countries across the world. Technology is evolving and taking over almost every organization on this planet, and the healthcare industry is no exception.
Scaling Up of Medical Value Travelv (MVT)
The Indian healthcare industry has grown exponentially by addressing the multibillion-dollar medical value travel opportunity. India has emerged as one of the most preferred destinations for patients across the globe in seeking medical assistance. This can be attributed to its diverse culture and astounding monuments that have attracted patients from across the globe. These patients come to India for their treatments and also explore these tourist spots across the nation. Healthcare costs in India are extremely competitive compared to those in developed countries and other Asian countries. This is especially for expensive and delicate surgeries like cardiac bypass, solid organ transplants, joint replacements, dental services, cosmetic surgery and bariatric surgery. The cost of travel and accommodation is also low as compared to developed nations. India also attracts medical tourists from other developing nations due to lack of advanced medical facilities in many of these countries.
According to the Medical Tourism Index 2020-21, India ranks 10th out of the top 46 countries in the world. Despite the severe impact of the COVID-19 pandemic on the tourism and hospitality industries, the medical tourism sector is estimated to be worth US$ 5-6 billion by 2020.
Cost Advantage - India Compares Favorably With Regional Peers
|Source: CRISIL, FICCI, JCI|
Over the years, The Indian Government has played a pivotal role in paving the way for these international patients to enter the country and avail their desired medical treatments. It has implemented a number of policies, including the introduction of an e-Medical visa, multiple entry visas, and longer stays as needed for treatment. Furthermore, the Indian government has been actively requiring wellness centers and Medical Value Travel (MVT) facilitators to be accredited. These initiatives have contributed significantly to Indias image as a preferred destination for medical tourists.
Rising Investments in the Indian Healthcare Space
The Indian healthcare sector is one of the fastest growing sectors with high contribution not only in terms of revenue, but also employment. It includes hospitals, medical devices, health insurance, telemedicine, clinical trials, medical tourism, and medical equipment. Infusion of long-term capital in the healthcare space goes a long way in strengthening the healthcare infrastructure of the country. Demand growth, cost advantages and policy support are some of the factors that have been playing a very important role in attracting FDI in the healthcare sector.
When it came to prioritizing resources, healthcare in India was always given lesser importance, but with the outbreak of the COVID-19 pandemic, India realized the disadvantage it had put itself in by not prioritizing healthcare.
The Indian healthcare industry has piqued the interest of leading global Private Equity firms and Venture Capitalists over the last few years. The strong support of PE funding has fueled the growth of multi-specialty and single-specialty hospitals in India. Many multinational corporations have attempted to expand their presence by forming partnerships and making investments.
According to the Department of Industrial Policy and Promotion (DIPP), the hospital and diagnostics sector has attracted FDI of $6.8 Bn from April 2000 to June 2020.
Strong Brand Positioning
Indraprastha Apollo Hospitals (the Hospital) has pioneered and preserved a strong leadership position in the Indian healthcare industry. The Hospital is strongly recognized as one of Indias leading integrated healthcare provider. This position reflects the companys unwavering focus on consumer needs and safety. It is steadfast in preserving its position as a leader by embracing innovative cutting-edge technology and clinical protocols. Over the years, the Companys reputation has grown exponentially, and it continues to attract a large number of patients, highly skilled clinicians, and staff.
Professional Management Team and Proficient Clinical Talent
The Hospitals compelling brand image and highly professional working environment continues to attract and retain top clinical and professional talent from India and across the globe. The doctors and medical staff are not only highly qualified, but also have comprehensive experience in their respective fields. The Hospitals efficient clinical and non-clinical staff is well trained to assist in providing its patients the best clinical outcomes possible. The senior management team has created a strong eco-system that enables and motivates staff to provide superior care. The doctors have an enviable track record of success when it comes to performing critical surgeries or medical procedures. Their domain expertise is highly regarded and recognized by patients all over the world. Because of their expertise in the field of medicine, many specialists continue to receive numerous accolades and awards at various healthcare forums.
Integrated Medical Offerings
The Hospital has made significant steps to ensure access to quality care which is not strictly limited to a hospital setting, but which is also available outside of it or in a post hospitalization scenario. Currently, the Hospitals broad spectrum of service offerings successfully encompasses the entire value chain of healthcare service offerings. The Hospital has been able to provide differentiated services through different entities, which together constitute a fully integrated healthcare ecosystem. It is important to note that each of these healthcare offerings has its own identity and asserts its own special expertise.
Extensive Technological Expertise
Since its inception, the Hospital has placed strong emphasis on continuous improvement and the adoption of newer technology. The Company has always been on the cutting edge of allocating funds to adopt the best-in-class medical technology available. The Hospital has been able to therefore provide patients with the best treatment options possible.
Furthermore, with the view of providing its patients easy access to the hospitals services, the Company has developed an integrated online platform called ‘Ask Apollo, which allows patients to book doctor appointments and schedule online consultations for basic medical needs. The hospitals recently launched Apollo 24/7, an advanced app that offers virtual doctor consultations, integrated medical records and prescriptions, and the ability to fill prescriptions through Apollo Pharmacy.
Heavy Regulatory Requirements
The establishment of a hospital necessitates a plethora of licenses and approvals, which frequently act as a barrier for private players seeking to expand their operations. Aside from licensing and approvals, the government is currently regulating prices of drugs and consumables. It must be understood that the value of output delivered by the sector is not simply the sum of input values. The sum total of services has intrinsic value that must be considered.
From a regulatory standpoint, there are numerous requirements that can be burdensome when compared to global norms such as single window clearance. A better understanding between regulatory authorities and healthcare providers is required. It is critical to recognize that private healthcare service providers cannot be compared to other businesses. Healthcare service providers must be viewed in light of the significant contribution they make to the overall well-being of the community.
Capital Intensive Industry
Healthcare remains an industry that necessitates constant capital infusion. The fundamental requirements for running a medical facility, such as land, construction costs for specialised interiors, medical equipment, and manpower, are scarce and costly to obtain. The industrys high capital requirements make it difficult to enter or expand operations. Furthermore, the upkeep and improvement of medical treatment technologies necessitates a significant ongoing expenditure. After a company has managed the initial capital expenditure required to open a facility, the task of balancing day-to-day expenses with competitive healthcare prices becomes difficult. As a result, the basic cost of establishing and operating a hospital is quite high, raising break-even points and stretching viability.
With a diverse and growing population, Indias need for quality healthcare services is critical. Even in markets that are relatively close, the requirements differ. Each micro-market has its own set of circumstances, including differences in demographics, disease profiles, customer attitudes, seasonal variations, price sensitivity, and so on. Hospitals in two different cities in the same state, and even within the same city, operate under different operating conditions with varying parameters. This necessitates greater customization and monitoring.
In the face of these complexities, significant management oversight is required to maintain clinical standards, balanced case mix, ensure adequate volumes, and upgrade technology on a regular basis.
Shortage of Skilled Medical Professionals
The healthcare services sector employs a large number of people. The calibre of doctors and other healthcare professionals is critical to the businesss success and efficiency. India is a country with abundant workforce given the sheer size of its population. However, for the vast majority of this population, there is a significant gap in the provision of relevant education, as well as a scarcity of competent training institutes for appropriate workforce skilling. As a result, skilled workers are in short supply, including doctors, nurses, and paramedical staff such as lab technicians, radiographers, and therapists. Both in India and abroad, skilled professionals in the healthcare sector have exciting opportunities. Intense competition among urban healthcare providers has resulted in unsustainable increases in remuneration for qualified staff. The scarcity of skilled professionals makes it difficult to start and run a profitable healthcare institution in India.
OPPORTUNITIES Increased Digitization of Healthcare Solutions
Digital technology continues to play a critical role in enabling the masses in India gain access to healthcare. Continuous digitization and the introduction of newer technologies such as telehealth have already broken-down barriers and have established patient-centric healthcare systems. Patients have started to book appointments and choose basic medical needs from the comfort of their own homes which has been driven by this advancement in technology. Doctors can access patient records at their _ngertips and provide consultations with ease thanks to digital technologies and telemedicine. In recent decades, technological advancements have opened up new avenues for lowering distribution costs and increasing healthcare penetration. Such solutions will be most successful in extending connectivity to rural and remote areas and providing first-rate care, thereby eliminating the need for patients to travel long distances to urban health centers.
Changing Consumer Preferences and Delivery Formats
The general perception is that a certain segment of patients find the general hospitals setting to be intimidating and they respond better in a more relaxed atmosphere. For non-critical ailments, patients today prefer visiting single specialty centers and other healthcare delivery formats. To meet this demand, healthcare providers have started to offer a variety of options such as short-stay centers, single-specialty centers, neighborhood clinics, and home services. These alternative healthcare delivery formats are economically viable and appealing because they require relatively lesser capital investment, tend to achieve a faster breakeven, and provide a better return profile. When compared to larger multi-specialty hospitals, some of these new formats have demonstrated greater specialization and the ability to create significant value.
Preventive Health and Wellness
There has been a significant increase in health awareness among the people of this country. People are becoming more aware of the importance of healthy living and are making significant efforts to adopt a healthy lifestyle. They understand the significance of detecting a disease at an early stage and preventing it from progressing to a critical stage. This increased awareness has resulted in a promising opportunity in the areas of preventive health and wellness, which includes preventive health checks, diet and nutrition, exercise, and well-being.
Medical Value Travel
Medical Value Travel (MVT) is a multibillion-dollar industry that is estimated to grow further driven by the numerous benefits it provides to patients. Indias position as a preferred medical tourism destination has been bolstered as it has world-class hospitals, equipped with cutting-edge technology, skilled medical professionals, and relatively lower treatment costs. Indian hospitals can provide superior services at a lower cost. The assurance of quality healthcare facilities and cost-effectiveness are the two main factors that have drawn millions of patients from all over the world to India for medical treatment. The Governments proactive measures, such as approving the issuance of e-medical visas, have also contributed to the growth of Medical Value Travel in the country.
Favourable Demographic Profile
While India continues to have a favourable demographic quotient due to its relatively young population, it also has a large number of elderly citizens in absolute terms. As a result, Indian healthcare providers have an opportunity to meet the healthcare expectations of the young while also meeting the increasing healthcare needs of the elderly. Along with this, the country is seeing a significant increase in disposable income among a variety of groups, including a growing middle class that can afford to pay for quality healthcare. These changing demographics present service providers with an exciting opportunity.
High Cost of Resources
Healthcare service providers are required to deliver better return ratios to their shareholders who have invested substantial capital in the company. The key element to enable these return ratios is efficient cost control and finding ways to improve realisations. Input costs in healthcare, on the other hand, have risen significantly and are expected to rise further in the future as a result of increased competition.
Land, qualified medical personnel, and equipment are resources that are finite in nature and are constantly in high demand. Furthermore, healthcare providers must continuously improve and adopt newer technologies which raises the overall healthcare cost. Furthermore, the governments push for price reductions through regulation runs the risk of putting hospital finances at risk. The constraint of incurring higher costs results in long gestation periods and low returns on investment.
Highly Competitive Industry
The level of competition among both unorganised and organised players continues to remain high. Many entrepreneurs and business houses have entered the healthcare business as a result of the growing demand for healthcare services. Private and foreign investors are increasingly interested in this sector. They plan to invest and venture into the various segments of the healthcare industry that are available. Most of these newer players are offering services at lower prices than those of established players, increasing the level of competition. In some metros, there are even pockets of overcapacity, and rising competition may force competitors to adopt unfair practices in order to survive, sti_ing the growth and profitability of other players. Every market participant, whether in the organised or unorganised sector, aspires to be the market leader.
Scarcity of Skilled Manpower
In India, there is a severe shortage of skilled healthcare personnel. On these measures, India lags behind other countries, including other developing nations like Brazil, with only 8 physicians and 21 nurses per 10,000 people. The shortage of doctors, nurses, and paramedics will result in prohibitive costs and derail the delivery of healthcare services unless immediate steps are taken to increase the number of doctors, nurses, and paramedics.
Changing Government Regulations
The Indian government has taken a number of positive initiatives in recent years, including the National Health Protection Scheme (NHPS) and the Pradhan Mantri Jan Arogya Yojana (PMJAY), which have benefited the Indian healthcare sector. However, because hospitals are exempt from GST, hospitals were unable to use input GST credit on output services, which had a negative impact on health care service delivery costs and operating margins.
COMPANY OVERVIEW Excellence in Operations
The Hospital offers international standard medical care, delivering several multi specialties under one roof. The hospital offers world class treatment at an affordable cost, focusing on specific areas where it can optimize efforts and values. Transplants, cardiology, oncology, neurology and orthopedic with higher revenue prospects are some of the key specialties.
Apart from these specialties, the hospital has been able to deliver outstanding clinical outcomes in some critical cases and emergencies.
Clinical Excellence is the cornerstone upon which the hospitals healthcare operations are built. Over the years, the hospital has consistently strived to deliver the highest standards of clinical outcomes in a variety of specialties and compares itself to leading institutions with the best clinical performance in the world in their respective specialties, while establishing internal standards to match or exceed this performance.
The hospitals persistent focus on Clinical Excellence has allowed it to continuously assess the quality of care provided to its patients and objectively measure the consistency and success of its healthcare delivery services. It has contributed significantly to the groups illustrious track record, allowing it to achieve high success rates even in the most difficult surgeries, such as transplants, cardiac care, and oncology.
Training and Continuing Medical Education
The hospitals encourages all of its medical professionals and other employees to participate in ongoing medical education and skill development. In order to improve patient care, the Company ensures that professionals and staff are up to date on the latest medical techniques and procedures. Knowledge sharing and the expansion of medical knowledge and literature repositories have been made possible thanks to collaborations with some of the most prestigious institutes.
The hospital has received accreditations from the Joint Commission International, USA, for meeting international healthcare quality standards for patient care and management. JCI is the worlds premier accreditation body for patient safety and provision of quality healthcare.
Strategic Focus Areas
The Company continues to focus on growth while aiming at improving operating efficiency and clinical outcomes simultaneously. The aim is to achieve this through:
Enhancing emphasis on Centers of Excellence
The hospital places utmost emphaisis on nurturing and enabling growth of its Centers of Excellence (COEs) which focus on specialties such as Cardiac Sciences, Neurosciences, Orthopedics, Oncology, Transplants, Emergency, Critical Care, and Preventive Health. Each of these COEs will be comprehensively built under the supervision of dedicated Service Line Managers through Clinical Differentiation, Protocols, Outcomes and Benchmarks, Market Share, Talent, Academics, and Research. Putting a premium on COEs will result in a better case mix and, as a result, a higher margin profile. As occupancy levels improve to optimal levels, such case mix changes and improvements will ensure that top-line growth and revenue quality are fully protected.
Enhancing capital efficiency and optimization of asset utilization in mature facilities
The Company places utmost focus on stabilizing and compressing time-to-maturity at new facilities. To ensure a superior specialisation mix, specialist consultants have been recruited at Apollo Hospitals COEs, and to maintain its competitive advantage and increase capital efficiency, the Company continues to develop leaner operations management strategies. A comprehensive asset turnover strategy is being implemented.
The Company has always emphasised wellness and recognised the importance of comprehensive preventive health programmes in keeping citizens healthy. The organisation was the first in the country to implement the Master Health Check Program and to advocate for tax breaks for health-care costs. As the country continues to be plagued by Non-communicable Diseases (NCDs), the majority of which are preventable or easily detectable, controlled, or cured through early-stage screening, this critical programme is a cornerstone of the organizations strategy for the next decade.
Assured Pricing Plans
Assured pricing plans were introduced to address the ongoing disparity between the cost and pricing of surgical procedures. The intrinsic value of the delivered service takes precedence over individual inputs in this policy. Assured Pricing Plans have been implemented for a wide range of surgical procedures. These plans give patients and their families complete peace of mind, as well as in facilitating better marketplace conversations about treatment costs with General Practitioners and Nursing Homes.
A close collaboration of private and public partners is required to realize the vision of universal healthcare for all citizens. Today, private players are incentivized to invest and manage operations through Public-Private Partnerships (PPPs). PPPs will assist in bringing in the resources the government needs to make healthcare available, as well as create a sustainable long-term model. It can improve the healthcare system by pooling in the expertise and finances of the private sector with the access and subsidies of the public sector. PPP models in healthcare have proven to be very effective because they leverage each partners unique strengths.
Medical Value Travel
Medical Value Travel is gaining strategic importance due to its abilitytogenerateemployment,encourageculturalexchanges, improve the countrys positioning by projecting_‘soft power, and earn foreign exchange. Patients across the globe seek better quality and affordable health care options, availability of the latest medical technologies and accreditations, facilitation around hospitality services and minimal waiting time. India has been able to successfully emerge as one of the most affordable and best providers of healthcare among all medical tourism destinations. The_country has been ranked in the top three destinations in Asia along with Thailand and Singapore, and the hospital continues to have a phenomenal track record of providing better clinical outcomes at a fraction of the international costs.
Infection Control and Environment
The Infection Prevention and Control Program forms an integral part of our organization for many years now. Reducing the preventable part of health care associated infections (HCAI) is central to our program. Our healthcare indices at 0.79, 0.91 and 0.87 per 1000 device days for central-line associated bloodstream infections (CLABSI), ventilator associated pneumonia (VAP) and catheter associated urinary tract infections (CAUTI), respectively, are comparable to the best centers internationally and have been made possible through the implementation of ‘bundles.
Antimicrobial Stewardship Program, aiming towards judicious use of antimicrobials, continues to form a major focus for the Infection Prevention and Control Program. Periodic review and update of antimicrobial guidelines is carried out by the Committee. Strict vigilance of highly restricted antimicrobials is followed and these cannot be issued without clearance from Infection Control. Syndromic molecular array panels being carried out at the Department of Microbiology aid in rapid identification of resistance genes which help towards timely initiation of appropriate antimicrobials or de-escalation of antimicrobials, if so indicated by the results. Newer antimicrobials lacking scientific rationale are not allowed to form a part of our hospital formulary.
As a part of the ‘Antimicrobial Awareness Week in keeping with the ‘Go Blue Campaign - World Health Organization, a dedicated ‘Antimicrobials Awareness Station was created on 24 November 2021 so as to disseminate awareness not just amongst our healthcare workers but also to emphasize to the attendants and visitors upon avoiding indiscriminate household use of antibiotics. Our academic activities continued further into an online CME with the theme: ‘Pause, Think and Prescribe Antimicrobials Rationally under the aegis of Hospital Infection Society - India. Staff safety remains paramount to our Infection Control Program. Reinforcement of basic infection control precautions, hand-hygiene, mask etiquette, respiratory etiquette along with safe use of PPE is carried out through mock-drills and hospital-wide training programs so as to remain in preparedness for any infectious disease epidemic. Our Infection Control Program continues to strive for the safety of the patients, healthcare workers, patients attendants and visitors alike.
Awards and Accolades
The Hospital received a number of awards and accolades during the year. Some of them are as under: -
|Award||Category / Project Awarded|
|THE WEEK||Best Multispecialty Hospital in Delhi|
|AHPI||Best Covid Management|
|AHPI||Patient Friendly Hospital|
|Apollo Hospital Awards–Share your story||Minimizing medication errors due to sound-alike-look-alike drugs|
|Apollo Hospital Awards–Apollo||Holistic Approach to Efficient|
|Innovation & Quality Award 2021||Point of Care Testing (POCT) Management|
RISKS AND CONCERNS
Given the increase in operations, our organization is exposed to a wider range of risks and uncertainties. These internal and external factors may affect the attainment of the organizations objectives – whether strategic, operational or financial. Indraprastha Apollo Hospitals operates in a business environment that is characterized by increasing competition and market unpredictability. It is exposed to a number of risks in the ordinary course of business. This is inevitable, as there can be no entrepreneurial activity without the acceptance of risks and associated profit opportunities. At Indraprastha Apollo Hospitals, we identify business sustainability risks and opportunities on an ongoing basis and integrate these into our existing risk management framework. We have adopted certain processes which continuously enhance risk awareness and promote a culture of risk management.
The Board of Directors has constituted a Risk Management Committee of Directors to ensure that internal financial controls are in place. The Risk Management Committee identifies, assesses, prioritizes, manages, monitors and communicates suitable measures to manage such risks. The status of major risks faced by the Company and measures taken to address and minimize such risks are being reported on a quarterly basis to the Board of Directors. The risks that may adversely impact the functioning of the Company include, but are not limited to: -
Competitive intensity and new entrants to the market
Pace of obsolescence of technology and treatment methods utilized by us
Infiationary pressures and other factors affecting demand
Increasing costs of wages, materials, transport & storage
Labour shortages and attrition of key staff including medical professionals
Complaints before the Consumer Courts filed by patients or their relatives against the hospital and the Consultant Doctors for medical negligence.
On a Public Interest Litigation (PIL) regarding free treatment in the hospital, the Honble Delhi High Court vide its order dated 22nd September, 2009, has held that free treatment provided by the hospital shall be inclusive of medicines and consumables. The company has filed a Special Leave Petition before the Honble Supreme Court challenging the order of the Honble Delhi High Court. The Honble Supreme Court of India has admitted the Special Leave Petition and has passed an interim order on 30th November, 2009. In pursuance of the interim order, the Company has been providing free treatment to the patients referred by the Govt. of NCT of Delhi and has been charging only for medicines & medical consumables.
Increasing pricing pressure from insurance companies, e.g., requests for discounts on rack rates, medication etc., will have an adverse impact on margins & revenues.
The unprecedented COVID-19 pandemic has resulted in major revenue impact for the hospital. This is due to various factors such as sharp drop in OPD revenues, elective surgeries, consultations and international patients. If this trend continues, there will be losses and severe impact on cash flows.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Indraprastha Apollo Hospital is committed to maintaining high standards of internal controls throughout its operations. An adequate and synchronized Internal Controls framework deploys a well-designed robust system which allows optimal use and protection of assets, facilitates accurate and timely compilation of financial statements and management reports. Additionally, it also ensures compliance with statutory laws, regulations and company policies.
While no system can provide absolute assurance against material loss or financial misstatement, the robust internal control systems which are reviewed periodically provide reasonable assurance that all company assets are safeguarded and protected. The Internal Controls system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The system is designed to ensure that all transactions are evaluated, authorized, recorded and reported accurately. The framework strictly adheres to various procedures, laws, rules and statutes. In addition to this, extensive budgetary control reviews form the mechanism for timely review of actual performance with forecasts.
Such internal control procedures are further augmented by an extensive programme of internal and external audits and periodic review by the management.
At Indraprastha Apollo Hospital, the management is responsible for assessing business risks in all aspects of its operations and for implementing effective and efficient processes and controls whilst ensuring compliance with internal and external rules and regulations. While reviewing our internal controls, sufficient regard is given to the risks to which the business is exposed, the likelihood of such risks occurring, and the costs of protecting against them.
Discussion on Financial Performance and Results of Operations
The total income increased from Rs. 614.06 crore in FY2021 to Rs. 891.28 crore in FY2022.
The following table shows the key drivers of our revenues for the periods presented:
Year Ended March 31, 2022
|Particulars||31.03.2022||31.03.2021||Increase (Decrease)||% Increase (Decrease)|
|Revenues per patient ()||1,76,452||1,55,475||20,977||13%|
|Average length of stay (days)||3.55||3.59||-||-|
|Revenue per bed day ()||49,761||43,312||6,449||15%|
Salaries and Benefits
Our salaries and benefits expense of Rs. 197.71 crore during FY2021 increased by 9% to Rs. 214.68 crore in FY2022.
Year Ended March 31, 2022
|Particulars||31.03.2022||% of Rev- enue||31.03.2021||% of Rev- enue||In- crease (De- crease)||% In- crease (De- crease)|
|Salaries, wages and benefits||214.68||24%||197.71||32%||16.97||9%|
|No. of employees||2662||2783|
Professional Fees paid to doctors
Professional fees paid to doctors Rs. 135.01 crore during FY2021 increased by 55% to Rs. 209.52 crore in FY2022.
The following table summarizes our operating and administrative expenses for the periods presented
Year Ended March 31, 2022
|Particulars||31.03.2022||% of Rev- enue||31.03.2021||% of Rev- enue||In- crease (De- crease)||% In- crease (De- crease)|
|Repairs and mainte- nance||18.23||2%||14.16||2%||4.07||29%|
|Rents and leases||1.86||0%||2.01||0%||-0.15||-7%|
|Marketing and advertising||53.35||6%||26.44||4%||26.91||102%|
|Legal and professional fees||4.54||1%||3.21||1%||1.33||41%|
|Rates & taxes||4.24||0%||3.44||1%||0.80||23%|
|Provision for doubtful debts & Bad debts written off||3.05||0%||2.57||0%||0.48||19%|
|Power & Fuel||20.56||2%||17.18||3%||3.38||20%|
|Other ad- ministrative expenses||25.91||3%||19.20||3%||6.71||35%|
Provision for Income Taxes
The provision for taxes during the year ended March 31, 2022 is Rs. 20.45 crore compared to Rs. 1.96 crore in the previous year ended March 31, 2021.
|KEY FINANCIAL RATIOS|
|FY 2021-||FY 2020-|
|Current Ratio||Total Current||Total Current|
|Ratio (in times) Debt Service||Total Debt Earnings available for debt service||Equity||NA||NA|
|Coverage Ratio (in times)||Debt Service||NA||NA|
|Return on Equity Ratio (in %)||Net profit after taxes||Average Total Equity||18%||2%|
|Inventory turnover ratio||Cost of goods sold or sales||Average inventory||18.55||10.94|
|Turnover Ratio (in times)||Net credit sales||Average Trade Receivables||8.73||4.70|
|Turnover Ratio (in times)||Net credit purchases||Average Trade Payables||6.64||3.84|
|Net Capital Turnover Ratio (in times)||Revenue from operations||Average working capital||19.86||44.78|
|Net Profit Ratio (in %)||Profit for the year||Revenue from operations Capital||6%||1%|
|Return on Capital Employed (in %)||Profit before tax and finance cost||Employed = Net worth + deferred tax liabilities Average||23%||4%|
|Return on Investment (in %)||Income generated from invested funds||invested funds in treasury investments||NA||NA|
Reason for change in ratios
The ratios for the Financial year 2020-21 were impacted due to the outbreak of Covid-19 pandemic and consequent impact on companys revenue, profits and cash flows.
Values define a company. Indraprastha Apollo has always been a family, working together, crossing hurdles together, and notching up victories together. The Companys core values hold and unite the people for a common purpose. They exemplify what is fundamentally the Apollo culture which is what makes Apollo one of the leading healthcare providers in the world.
"The people that work in Apollo Hospitals form the very nucleus of the Group and their actions contribute to the Groups journey of touching a billion lives"
Indraprastha Apollo Hospital which has always given utmost importance to excellence and innovation in the field of healthcare continues to place its focus on its most valued resource, its employees. The institution has always understood the importance of having a highly skilled workforce, which is pro_ciently trained to provide the highest standard of care.
In addition to the high level of skills, commitment and professionalism of its people, Indraprastha Apollo Hospital strongly believes that proper management of human resources is extremely critical in providing high quality healthcare. The Company has therefore built an effective Human Resources department which supports the business in achieving sustainable and responsible growth. Indraprastha Apollo Hospitals has always strived hard in developing its workforce and building the right capabilities in the organization. It continues to focus on progressive employee relations policies, creating an inclusive work culture and building a strong talent pipeline. The Human Resources function contributes to the success of Indraprastha Apollo Hospital and its employees through leadership, service and excellence in human resource management. The Human Resources department at Indraprastha Apollo Hospitals has been playing an important role in creating a conducive work environment for its employees and supports them throughout their employment life cycle.
The total number of employees in the Company as on 31st March, 2022 was 2662 as against 2783 employees in the previous year. The Company has also engaged contractors for various support services in the Hospital and they have deployed 994 workers as against 923 workers in the previous year. Besides the above, there are Consultant Doctors who work on a ‘Fee for Service basis.
Together, these diverse employees bring their experience, culture and commitment to the work they do every day to improve the health of patients. Cultural integration of the workforce has always been a key focus area and the organizations learning initiatives are designed around assimilation and development of individual and team competencies to create a patient centric culture. Every employee of the Indraprastha Apollo Hospitals family embraces the Apollo Hospitals Groups "Tender Loving Care" philosophy in dealing with patients and is committed to the Group Vision - "To Touch a Billion Lives."
"Excellence, Expertise and Empathy are the three words that define our culture."
Investment in continuous learning is an integral component of the HR system which empowers employees to be well-prepared for providing superior patient care. Programs related to Talent Attraction, Talent Development and Talent Management continue to be institutionalized for delivering outstanding patient experience. Training has been extensively used as a potent tool to engage and energize talent. Commitment and competence of employees are key drivers of overall organizational performance and thus every endeavor is made to strengthen organizational culture and retain the best talent.
REWARDS AND RECOGNITION
Rewards and Recognition is an integral part of the Organizations culture which believes that a satisfied individual contributes more. Consistent efforts are taken by the Company to recognize and reward employees for their contributions.
Some of the statements in this Management Discussion and Analysis that describe the Companys objectives, projections, estimates, expectations and predictions may contain certain ‘forward looking statements which are within the meaning of applicable laws and regulations. These statements and forecasts involve risks and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a variety of factors that may cause real events or trends to vary significantly from those reflected or implied by these forward-looking statements and predictions. Important developments that could impact Companys performance include increased material costs, technology developments, significant changes in the political and economic environment, tax laws and labor relations.
For and on behalf of the Board
Place: New Delhi
Date : 8th August, 2022
Gold/NCD/NBFC/Insurance and NPS
Gold/NCD/NBFC/Insurance and NPS