kovai medical center hospital ltd Management discussions

AN ECONOMIC OVERVIEW

India rebounded with renewed vigor - from a 6.6% GDP contraction in FY21 to an 8.9% GDP growth in FY22 - progress that has demonstrated Indias inherent resilience and determined efforts to get back to winning ways despite the second wave that threatened to derail progress once again.

The Governments push for inoculation and the mass vaccination drives across the Indian landmass helped allay fears which provided the much-needed impetus to private consumption. Also, increased capital expenditure from government on infrastructure and defense boosted the fortunes for India Inc. As a result, 19 of 22 High Frequency Economic Indicators were higher than the pre-COVID-19 levels.

Industrial India reported a healthy double-digit growth over the previous year. The services sectors grew by more than 8% while the agriculture segment improved from 3.6% in FY21 to 3.9% in FY22.

This progress assisted the nation in garnering higher tax collections. It crossed Rs 27 lakh crore in FY22 which was higher than the budget estimates by about Rs 5 lakh crore and around 34% more than what the government collected in FY21.

The close of FY22 was not as expected owing to heightened geo-political tensions which is expected to cast a shadow on Indias economic prospects for FY23. In keeping with these realities, the Reserve Bank of India has suggested that Indias GDP would grow by about 7.2% in FY23 (a slight downward revision from its earlier estimate of 7.8%).

COVID-19 AND ITS IMPACT ON ECONOMY

COVID - 19 cost to the world: The IMF described coronavirus as the worst crisis since the Great Depression, and said the pandemic would leave deep and enduring scars caused by job losses, weaker investment and children being deprived of education. According to the reality, the estimated hit to the global economy from COVID-19 in 2020 would total $28 trillion in lost output. Further, it expects that the COVID-19 pandemic will cost the global economy $12.5 trillion through 2024.

The pandemic triggered a health and fiscal response unprecedented in terms of speed and magnitude. At a global scale, the fiscal support reached nearly $16 trillion (around 15% of global GDP) in 2020. However, the capacity of countries to implement such measures varied significantly. As a result, the impact of the pandemic varied widely between advanced, developing and emerging economies.

COVID-19 AND HEALTHCARE INFRASTRUCTURE

The COVID-19 pandemic has exposed the vulnerabilities of healthcare systems and its profound implication on health, economic progress, trust in governments, and social cohesion. Across the globe, this health crisis called for a timely response by Governments and policymakers.

The pandemic created the acute shortage of healthcare infrastructure across the world. Developed economies, considered to be leaders in healthcare, remained in a state of shock with the surge of patients every day. Developing economies and underdeveloped nations had no option but to endure their fate painfully and patiently.

COVID-19 affected the frontline workers in the healthcare sector more than anybody else. About 20-30% of the healthcare professionals were affected by the pandemic and there were several deaths reported.

The pandemic has stressed on the pressing need to augment capacities and capability of the healthcare sector across the world.

After the second wave, there has been a foundational shift in the healthcare fraternity where consumers are getting increasingly involved in healthcare decision-making. There is rapid adoption of virtual health and digital innovations.

Telemedicine including e-healthcare, e-pharma and tele monitoring suddenly became the new alternative of formal healthcare service. Companies started delivering medicine and other healthcare services to your doorstep.

COVID-19 IMPACT ON INDIA

India too had to bear the brunt of the pandemic, especially during the second wave, which particularly highlighted the inadequacy of Indias fragile healthcare infrastructure and services.

The healthcare system was put to test with the surge of COVID-19. On May 7, 2021, India reported 4.14 lakh Covid-19 cases - the highest number of cases recorded in a single day during the second wave. An overwhelmed health infrastructure was left grappling with shortage of oxygen supply, manpower, drugs and hospital beds.

The efficiency and capabilities of scale and outreach displayed by technology-driven out-of-hospital healthcare services was well acknowledged and supported by authorities as well as medical industry stakeholders including institutional healthcare providers. The private sector healthcare startups responded to the pandemic by significantly allocating their resources to build infrastructure and support for quarantine, isolation and remote treatment of the pandemic patients.

The pandemic-induced concerns led to the dip in foot fall in the hospitals. Caregivers focused on doorstep diagnostic and delivery of non-COVID-19 care for chronic illnesses etc. Due to the government advisory, the outpatient department services in most hospitals across India remained affected. E-consultations became the new norm.

But India as a nation gradually overcame the challenge with both government and non-governmental support augmenting healthcare facilities, diagnostic and research facilities, and tracking services, to minimise the loss of human life.

This crisis, gave a clear message - It emphasized the need for a detailed look at the preparedness of Indias healthcare sector and mandated immediate investments to bolster Indias healthcare sector.

Vaccination drive started by Government of India started on January 16, 2021 in 3,006 centers across the country. Most corporates, MSME enterprises, NGOs and gate-community complexes organised large-scale vaccination drives which accelerated vaccination across the nation.

A year into the inoculation drive, India managed to administer more than 1.56 billion doses of vaccine. An estimated 880 million (93% of adult population) people received their first dose of vaccination and about 660 million (70% of the adult population) got fully vaccinated. As of June 16, 2022, the number of COVID-19 vaccination doses administered reached a record 195 crore. It is a great achievement for India.

According to the latest report on currency and finance released by the Reserve Bank of India, "The Indian economy could take more than a decade to overcome the losses caused by Covid-19 disruptions". The report has also projected that India lost more than a whopping Rs 50 lakh crore in output in the last three years.

In the aftermath of the pandemic: The Government has planned to up health spending to 3% of GDP by 2022 (Indias public expenditure on healthcare was at 2.1% of GDP in 2021-22). The healthcare sector is witnessing aggressive capability building.

Existing hospitals are expanding their services by investing in new technology platforms. Additionally, they are installing next-generation tools for diagnosis, entering into tie-ups with insurance companies, expanding their infrastructure geographically - all with the objective to providing world class medical care at affordable cost.

With the drive of digitalisation, there are more emphasis now on making the healthcare sector more digital. With government initiatives like Ayushman Bharat and National Digital Health Mission, India is working towards an entirely digitalised healthcare system. India also aims to invest heavily in product innovation that has the potential to revolutionize healthcare industry.

Government thrust to healthcare

The Cabinet has approved the scheme, "India Covid-19 Emergency Response and Health Systems Preparedness Package - Phase-II" (ECRP-Phase-II) on 8.07.2021 for an amount of Rs 23,123 crores. This Scheme is aimed at preventing, detecting and responding to the continuing threat posed by COVID-19 as well as for strengthening national health systems for preparedness in similar health emergencies in India.

The Fifteenth Finance Commission has recommended grants aggregating to Rs 70, 051 Crores, over the period of five years (2021-2026) through local governments, for strengthening healthcare system at the primary health care level.

(Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1744358)

INDIAS HEALTHCARE SECTOR

The best thing about living in the 21^st century has to be the rapid rate of change in every sector of society. Healthcare in India, in particular, has witnessed a significant amount of evolution. Right from advanced biomedical tools to unimaginable surgeries performed by robots, the healthcare industry in India is at its historical peak. Moreover, the Indian healthcare system has created some of the finest medical surgeons and tools in the industry.

Healthcare is one of the largest sectors both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, pharma, medical tourism, health insurance and medical equipment. The hospital industry in India accounts for a total of 80 per cent of the healthcare market and the expansion of private players in Tier 2 and Tier 3 locations, beyond metropolitan cities, offers an attractive investment opportunity. The hospital industry is expected to reach $132 bn by 2023 growing at a CAGR of 16-17%.

The sector is seeing an expansion drive in terms of adoption of new technologies, investment in cutting-edge diagnostic equipment, tie-ups with insurance companies, expansion to the new geographies and much more.

Indias healthcare delivery system has two major parts public and private. The public healthcare system (primarily a state subject in India) has limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides the majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros and Tier-I and Tier-II cities.

Healthcare in India has seen quite a number of government-sponsored schemes, some of which have been pathbreaking in nature, aiming to provide good quality healthcare services to the poorest of the population.

The Indian government has displayed a clear inclination to augment Indias competitiveness in the global market as a healthcare hub. Foreign Direct Investment (FDI) is permitted up to 100% in the hospital sector under the automatic route (Non-resident investor or the Indian company does not require approval from the Government of India for Investment).

India is also a popular destination for medical tourists owing to the availability of good quality healthcare at its private institutions at a low-cost.

A noteworthy mention goes to the incredible amount of research that has happened in recent years. Owing to this research-oriented approach in 21^st century healthcare in India, the quality of treatment and outpatient care has shot up in a positive direction.

EMERGING HEALTHCARE BUSINESS MODELS

Lease contracts: In the hospital sector, the ownership model has become costly because of the sharp increase in land prices, especially in metros and tier 1 cities, over the past few years. This has compelled private players to look for alternative models such as lease contract.

O&M contracts: Under this model, a large private player undertakes a contract for managing a standalone hospital and overseeing functions such as marketing, operations, finance, and administration. In return, the private player receives a fixed annual management fee and share in revenue or profits

Medicity: Medicity is an integrated township of super-speciality hospitals, diagnostic centres, medical colleges, research and development (R&D), ancillary, and supporting facilities. The concept of Medicity is based on models already operating in countries such as Scotland, the US, France, and Algeria. In India we have Medanta (Gurgaon), Narayana Hrudayalaya (Bengaluru), and Chettinad Health City (Chennai).

Expansion into Tier 2 and Tier 3 cities: Private players are now foraying into tier 2 and 3 cities as income levels in these cities are fast catching up with those in metros and Tier I cities, and these regions hold a big share of unmet healthcare demand. Some of the major hospital chains are also expanding into these regions at different price formats, thereby creating a continuum of care, with provision of higher super specialty services in Metros / Tier 1 locations

On-demand On-site health: It is a healthcare technology service that connects patients with nearby doctors on call for 24 hours a day, deliver high quality care in the comfort of patients home, office, hotel or anywhere else with the help of a smartphone. In this model, only physicians are available for all, but the user like any other on-demand mainstream services cannot choose the doctor.

TECHNOLOGIES THAT ARE CHANGING HEALTHCARE DELIVERY

Electronic Health Records (EHR): As the name suggests this solution is designed to manage detailed medical profile and history of patients such as medication and allergies, immunisation status, laboratory test results, and radiology images in diverse formats. Further, EHRs have the capability of analysing data with respect to a specific ailment, generating customised reports, setting alarms and remainders, providing diagnostic decision support, etc. EHRs can be shared between multiple systems allowing doctors from various specialties and hospitals to share the same set of patient data.

Artificial Intelligence (AI) and Block chain: AI in healthcare is a broad term used to describe Machine Learning (ML) algorithms and other cognitive technologies in medical environment. In a nutshell, it mimics human cognition in medical setting to analyse and act on medical data to improve patients health outcome. Healthcare establishments like hospitals are looking at opportunities to deploy AI or/and Block chain in improving their operating efficiency.

Data Mining and knowledge-based analysis: Data is the new gold, especially in todays day and age where petabytes of data are generated every day in the country. This is particularly helpful in the healthcare space where the history of the patient, his present condition (from data generated in radiology & diagnostics) can be cumulated together to get a complete idea which can facilitate in better decision making and predict a better outcome in terms of patients health.

Radiology information system (RIS): RIS is a tool that allows managing digital copies of medical imagery on a network which is used by doctors to access this data from multiple locations. It is connected to medical equipment which generate diagnosis results in the form of images and graphs. The RIS directly captures result and feeds them to EHRs, central databases or remote databases.

Mobile-based application: Healthcare delivery is also seeing an influx of mobile-based applications (mobile apps) to assist doctors as well as patients. These apps provide features such as self-diagnosis, drug references, hospital/doctor search, appointment assistance, electronic prescriptions, etc. Furthermore, there are apps that help patients to save their medical records and keep them updated regularly, monitor patients health, give access to healthcare facilities, help in easy payments, can access their home healthcare device and much more.

Telemedicine: Telemedicine is a technology designed to improve accessibility of healthcare services from remote locations. Telemedicine connects doctors at the main hospital and patients at remote locations or telemedicine centres. The doctor analyses the patient through telephonic conversation or video conferencing. Telemedicine or Telehealth is now in great demand because - a) it saves time to go to hospital which is both time consuming and for patients it is troublesome as well, b) saves lot of hospitalization money, c) no fear of infections, d) small diagnostic services or medicines could be at your doorstep.

Wearables and sensors: Growing healthcare awareness has resulted in people, especially millennials and Gen-Z, adopting wearables and sensors that keep a track of the vitals of the user. Wearables and sensors also have data about the users historical health records and sends out alerts in case of any irregularities. This kind of technology is also used for patient condition monitoring and therapy delivery, etc. These devices are particularly useful in respiratory monitoring, monitoring of blood glucose and cardiac diseases, geriatric care, neonatal care, etc. According to the recent data from the International Data Corporations (IDC) India Monthly Wearable Device Tracker, Indias wristwear market (inclusive of wrist band and watches) grew by a healthy 141.3% year-over-year (YoY) in 2021, ending the year with 14.4 million unit shipments.

Optimism for the Indian healthcare sector

The Indian healthcare delivery industry is expected to register a healthy growth of 15-17% CAGR between fiscals 2021 and 2025. This optimism is based on important drivers namely 1) Pent up demand coming back onto the system 2) Strong Fundamentals 3) Increasing affordability and 4) Government programmes.

DRIVERS OF GROWTH

Growing population

India and China accounted for nearly 37% of the worlds population in 2015 - The World Urbanization Prospects: The 2018 Revision by the United Nations. This report projects Indias population to increase at 1% CAGR to 1.5 billion by 2030, making it the worlds most populous country. (Source: Report by CRISIL)

Increasing urbanisation

Urban Indians are increasing fast. The urban population which was at about 31% of Indias total population in 2010 is projected to be 40% by 2030. India added about 100 million urban populations between 2000 and 2020 - it is expected to add another 120 million urban populations between 2020 and 2030. The growth in urbanisation will benefit private healthcare spends.

Growing senior-citizen community

Not just in India, people everywhere in the world are living longer. Indias demographic profile is changing owing to improving life expectancy. As of 2011, nearly 8% of the Indian population was of 60 years or more; this number is expected to be about 12.5% by 2026. The ageing population will require increasingly higher healthcare services. Notable points are the pace of population ageing is much faster than in the past and by 2050, 80% of these old people will be living in low and middle-income countries.

Growing Non-communicable diseases

Lifestyle-related illnesses or non-communicable diseases (NCDs) have been growing exponentially in India over the past decade. While the world will need nearly $30 trillion by 2030 for NCD treatments as per the World Economic Forum, Indias burden of this colossal loss will be a huge $5.4 trillion. According to WHO statistics, 41 million of 55 million global deaths in 2019 were due to NCDs, 47% of premature deaths before 70 is due to NCDs. Each year 15 million people die because of NCD between the age of 30 and 69.

Diabetology: As per Indian Council of Medical Research (ICMR) data, India has the second largest adult diabetes population in the world and the last three decades saw a 150% jump in the number of adult diabetes patients. Increasing sedentary lifestyles, unhealthy diets, obesity are some of the major reasons for this increase. However, according to ICMR, what was more alarming is the lowering of the age group for type 2 diabetes which is now in 25-34 years.

Cardiology: Cardiovascular diseases (CVD) is one of the leading causes all the deaths in India and it is estimated that about 25% of all deaths is caused by some kind of CVDs. According to a study conducted in 2021, prevalence of diagnosed CVD is 29.4% among the adults aged 45 or above. In India, out of about 10.5 million deaths happen annually, CVD led to 20.3% of those deaths in men and 16.9% of all deaths among women. Some of the primary reasons of CVDs are high cholesterol, obesity, physical inactivity and diabetes.

Growing health insurance penetration

Health insurance coverage has significantly increased from 17% in fiscal 2012 to 37% in fiscal 2020. 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). With health insurance coverage in India set to increase, hospitalisation rates are likely to go up. In addition, health check-ups, which form a mandatory part of health insurance coverage, are also expected to increase, boosting demand for a robust healthcare delivery platform.

Union Finance Ministry data suggests in 2020-21 Rs 58,572 crore was collected as insurance premium whereas Rs 73,330 collected during the next financial year. While 70% of the people are either eligible or protected by some health insurance scheme, 30% of the people, who primarily work in unorganised sector are still out there without any protection. Governments at the Center and State have introduced path-breaking insurance schemes that provide access to underprivileged masses in India.

PMJAY: Ayushman Bharat PMJAY or Pradhan Mantri Jana Arogya Yojana is the worlds largest health insurance scheme funded by the Government of India. It provides an annual Rs 5 lakh cover to a family for secondary and tertiary care hospitalisation across enlisted public and private hospitals. Over 10.74 crore poor families will be benefited from it. In 2021-22, PMJAY was allocated Rs 6,400 crore, double the money spent in 2019-20.

NK48: Accident victims in Tamil Nadu will be given free treatment for 2 days under their Tamil Nadu Governments NK48 scheme. This scheme is not just for the natives, but it extended to the visitors from outside the state as well. Total insurance cover will be upto Rs 1 lakh and 81 life-saving procedures are included. Government empanelled 609 hospitals and allocated Rs 50 Crores for it.

INDIAS HEALTHCARE INDUSTRY - CHALLENGES, OPPORTUNITIES AND THREATS Challenges

• Indian healthcare sector has grown at a healthy double-digit rate. But there is a significant challenge - access to quality and affordable healthcare persist in large parts of the country.

o India has less than 1 physician per 1,000 population - well behind its peer countries.

o India needs an additional 3.6 million hospital beds to reach the recommended capacity.

o In India, the out-of-pocket expenditure on health is 62.4% as against the world average of 18.2%.

• It will take considerable effort for India to bridge the yawning gap.

• In spite of the presence of a vast number of schemes for the economically disadvantaged population, ineffective public healthcare and insurance models have rendered this herculean effort marginal at best.

• Furthermore, extended hospital wait times, the perception that public health care in India is of poor quality, and significant labour and infrastructure shortages are all systemic impediments to access.

• Lack of infrastructure specially in semi-urban and rural areas poses a significant challenge as more than half of India resides in these pin codes.

Opportunities

• Growing health awareness creates demand for quality medical care. Because of the internet and other popular methods of mass media, medical information is widespread. This creates knowledge about different medical needs and conditions.

• Growing numbers of geriatric population and multiplying incidence of lifestyle ailments across ages and cultures is increasing need for more hospitals.

• Hospitals with very good infrastructure are rare in rural and semi-urban areas. Most big groups are focusing on building infrastructure in tier II cities.

• Medical Tourism is one of the most sought after services among people of many foreign countries who want to visit India. This reality is growing the opportunity to create additional world-class health infrastructure

• The Governments increasing thrust on strengthening healthcare infrastructure through investment inducing policies is widening opportunities in India.

Threats

• Regulatory Changes and regulatory scrutiny. Healthcare Industry continues to evolve with this threat

• Cybersecurity: Medical devices and greater requirement to keep Medical records attracts the attention of malicious hackers. A robust system for cybersecurity in healthcare could prevent data theft and loss of information.

ABOUT KMCH

Kovai Medical Center and Hospital Limited (KMCH) was incorporated under The Companies Act, 1956 and started its commercial operation in June 1990, with a capacity of 200 Bed Hospital in the outskirts of Coimbatore.

Nurtured with Indian hospitality and a western mind set, KMCH has grown into a 2,250 bed multi-locational, multi-disciplinary Super specialty hospital, the best and most trusted in Southern India.

Over its more than three-decade journey, the hospital has serviced urban and rural patients from Western Tamil Nadu and parts of Kerala. The Main Center and the Medical College General Hospital is located very proximate to the city airport.

The cornerstones of KMCH legacy are its unstinting focus on clinical excellence, affordable costs, adoption of technology and academics.

INFRASTRUCTURE AND FACILITIES

KMCH is one of the few hospitals in India, that has, over the years invested in, and efficiently leveraged cutting-edge technology to facilitate best-in-class healthcare delivery.

The organization embraced the rapid advancement in Medical Equipment worldwide and introduced several technology innovations in India. This has enabled KMCH to pioneer several unique techniques in India which include 1) Steroid free "Kidney Transplantation" and 2) GDC coiling and clipping for "Brain Aneurysms" which has saved lives and improved patients comfort without any complication.

KMCH Main Center has 24 operation theatres and several modern equipment including the state of the art "Robotic Surgical System" of the "da Vinci. Si", Varian Trilogy Linear Accelerator, the worlds most advanced PET CT scan, 3Tesla MRI, 3^rd Generation Dual Source CT Scanner (latest in technology), Endo Bronchial Ultrasound (EBUS), Extra Corporeal Membrane Oxygenation (ECMO) Machines, 4D ultrasound scanner, Bi plane Cath lab, Cardiac Electro Physiology Lab, Bone Mineral Densitometer, Digital Mammography, Various Laser Equipment, Ultramodern Video endoscope operating neuro microscope, Computer assisted navigation for Hip & Knee replacements, ESWL for the removal of urinary stones.

In addition to housing some of the worlds most sophisticated equipment, KMCH also boast of exceptional patient care owing to its highly skilled and globally acclaimed team. The hospital has over 300 internationally renowned fulltime clinicians and over 350 postgraduate medical professionals assisting them. With more than 4,500 Technicians, paramedical, patient care and administrative staff the hospital delivers a complete care to the patients. This has facilitated KMCH in fostering a Patient Centric culture - all its systems, people, process are geared towards delivering total care to the patients.

The team at KMCH has successfully accomplished Super Specialty procedures like Deep Brain Stimulation, Bilateral Hip & Knee replacement, Kidney Transplant, Liver Transplant, Heart and Lung Transplant, Bone Marrow Transplant, Valve replacement, and advanced spine surgeries - In fact, such surgeries are performed frequently at this medical institution.

KMCH continues to be a leader in transplant surgeries which include kidney, liver, pancreas, bone marrow and cardiac transplants - vindicating the effectiveness of an extraordinarily curated and executed transplant program. More recently, KMCH commenced The Center for Advanced Lung Diseases and Transplantation with the induction of senior pulmonologists.

As a responsible corporate citizen, KMCHs passion for a healthy India has enabled it to extend its healthcare services far beyond pure business. KMCH opened a free Paediatric Oncology Ward in KMCH Medical College General Hospital, to cater to the needs of children with cancer, who cannot afford appropriate therapy. These children with potentially treatable cancers, would be treated in this unit, completely free of cost. It has both in-patient and day care services for kids.

The hospital is actively involved in preventive health care too, through its health check-up programs, which are fairly popular in this region with various institutions and corporates subscribing to such health check-up schemes.

OPERATIONAL EXCELLENCE

Healthcare

KMCH continues to lead at the forefront of cancer care with multiple initiatives in Breast Cancer, Head & Neck Cancer, Paediatric Oncology, Haemato-oncology and upgraded Mammogram and PET scan.

Our continued focus and development of our dedicated breast clinic has made it one of Indias Best Breast Care centers in India. An advanced 3D Mammography system from Hologic, a world leader in mammography equipment, has recently been installed at KMCH and is extremely accurate and fast, enabling us to get 3-dimensional mammography done in four seconds with the highest resolution. Timely detection through screening even without any symptoms can save a lot of lives. KMCH pledged free mammography facility for all woman police personnel of Coimbatore and in this regard performed 115 Mammograms in a day, which is the most done by any hospital in the country.

Another exceptional feat was that KMCH became the first hospital in western Tamil Nadu to perform HLA-matched sibling peripheral blood stem cell transplantation on a 5-month boy for Primary hemophagocytic lympho-histiocytosis.

KMCH has continues to be a source of Cardiology excellence. In FY 22, KMCH has added two new Cath Labs to its campus. KMCH become the first center in Tamil Nadu and one of the first ten in India to start Cryoablation procedures. We live in a time, when Atrial fibrillation (AF) in Cardiac care has emerged as a serious health risk. Cryoablation is the most advanced and safe treatment for complex cardiac arrhythmias. KMCH has brought this most advanced technology to Tamil Nadu and making AF ablation safer and more successful. The hospital provides critical care to over 1000 patients a year with top-notch medical infrastructure and an excellent team of specialist doctors and medical staff.

KMCH is currently in the process of creating a dedicated Structural heart clinic capable of outstanding work such as the cases outlined below. A 70-year-old woman came to the emergency with a massive heart attack and low BP. She had a rupture in heart muscle, a rare complication of heart attack and the result is immediate death. Urgent open heart surgery was performed by the structural heart team despite all odds and being high risk due to uncontrolled sugar, obesity and poor coronary vessels. Never was such a giant rupture treated with such large ASD devices in this situation. This was the first reported case of successful closure of giant left ventricular (LV) pseudo aneurysm with a 40 mm ASD device.

Another big achievement was that, KMCH Doctors performed a rare emergency keyhole surgery to save the life of a 65-year-old man. Trans catheter Valve replacement is a relatively new procedure for replacing heart valves without open heart surgery. But changing an implanted valve is more complex and very high risk. This procedure requires detailed planning and the patient had to be immediately put on a ventilator.

Medical education

KMCH Medical College admitted its third batch of students amidst the pandemic. Third batch joined in March 2022 due to delayed holding of NEET. All the seats have been filled up without any vacancy true to KMCH traditions. It was dream come true for all KMCH members as a 750-bed new integrated KMCH Medical College General Hospital was opened in the campus of the Medical College on October 24, 2021. Empowered with a dedicated team of healthcare professionals including doctors, nurses and paramedics, the infrastructure includes 750 general beds including 50 ICU beds, 30 emergency beds and 16 operation theatres with state-of-the-art medical equipment like CT scan, MRI, Cathlab, Ultra Sound and Digital X-Ray etc. The Medical College General Hospital offers 24x7 healthcare services to public.

AWARDS, ACHIEVEMENTS

The Hospital continues to receive several accolades, all of which goes on to say that KMCH not only takes care of its patients to the best of its abilities, but also is a role model in the industry. Notable among the many awards won by KMCH is the "Best Green Hospital 2022" and "Best Hospital to Work for 2022", from Association of Healthcare Providers of India (AHPI).

DISCUSSION ON FINANCIAL AND OPERATIONAL PERFORMANCE

Below detailed table presents summaries of Financial Results of Operations for the Year ended 31 March 2021 and 2022. The Company operates on two segments - Healthcare Services and Education Services.

		(Rs in lakhs)
Particulars	2021-22	2020-21
Operating Income	90,599.66	69,036.18
Other Income	1,182.54	1,185.35
Total Income	91,782.20	70,221.53
Medicines & Hospital Consumables	25,627.38	19,355.40
Employee Benefit Expense	15,076.07	11,866.77
Finance Costs	4,323.01	3,130.86
Depreciation & Amortisation Expense	8,542.82	6,802.51
Other Expenses	24,145.09	18,492.37
		(Rs in lakhs)
Particulars	2021-22	2020-21
Total Expenses	77,714.37	59,647.91
Profit Before Taxation (PBT)	14,067.83	10,573.62
Provision for Taxation	3,641.77	2,805.08
Profit After Taxation	10,426.06	7,768.54
Add: Other Comprehensive Income	(166.75)	127.61
Total Comprehensive Income for the year	10,259.31	7,896.15

REVENUES

Total Operating Revenue grew 31.23% from Rs 69,036.18 Lakhs in FY21 to Rs 90,599.66 Lakhs in FY 22.

Healthcare Services : Inpatient Revenues grew by 32.07% from Rs 48,766.89 Lakhs in FY 21 to Rs 64,404.12 Lakhs in FY22 and Outpatient Revenue grew by 29.28% from Rs 17,986.44 Lakhs in FY 21 to Rs 23,252.09 Lakhs in FY 22. Increase in Revenues is due to compensated increase in COVID-19 Revenues and restoration of Surgeries and Patient Volumes to pre-COVID 19 levels.

Education Services : This is the third year of reporting on Education Services consequent to the commencement of KMCH Institute of Health Sciences & Research (KMCH Medical College). Revenues under this segment increased from Rs 2,060.38 Lakhs in FY 21 to Rs 2,458.54 Lakhs in FY 22.

Below table shows the key drivers of revenues for the periods presented Year ended 31 March 2022

Particulars	2021-22	2020-21	Increase/ (Decrease)	% Increase/ (Decrease)
Inpatients (Nos.)	72,395	54,586	17,809	32.63
Inpatients Revenue (Rs in lakhs)	64,404.12	48,766.89	15,637.23	32.07
Outpatients (Nos.)	8,14,689	5,88,626	2,26,063	38.41
Outpatients Revenue (Rs in lakhs)	23,252.09	17,986.44	5,265.65	29.28
KMCH IHSR (No. of Students)	450	300	150	50.00
AHS Courses (No. of Students)	756	729	27	3.70
Income from Educational Institutions (Rs in lakhs)	2,458.54	2,060.38	398.16	19.32
Other Operating Income (Rs in lakhs)	484.92	222.47	262.45	117.97
Total	90,599.67	69,036.18	21,563.49	31.24

• KMCH IHSR - KMCH Institute of Health Sciences and Research

• AHS - Allied Health Sciences Courses

Particulars	2021-22	2020-21
Bed Capacity at the end of the Period (In Nos.)	1,854	1,629
Operating Beds at the end of the Period (In Nos.)	1,715	1,525
Inpatient (In Nos.)	72,395	54,586
Outpatient - New & Review (In Nos.)	8,14,689	5,88,626
Bed Occupancy Rate	48.66%	40.61%
Average Length of Stay (In Days)	4.21	4.14
Average Revenue per occupied bed (in Rs )	21,144	21,574

EXPENSES

MEDICINES AND HOSPITAL CONSUMABLES

During the year ended FY 22, Cost of Medicines and Hospital Consumables increased from Rs 19,355.40 Lakhs in FY 21 to Rs 25,627.38 Lakhs in FY 22. Increase is primarily due to increase in Surgeries consequent to second wave of COVID-19.

EMPLOYEE BENEFITS EXPENSE

Employee Benefit Expenses increased from Rs 11,866.77 Lakhs in FY 21 to Rs 15,076.07 Lakhs in FY 22. Increase is due to enhanced employee strength subsequent to reduction during pandemic time.

FINANCE COSTS

Finance Costs increased from Rs 3,130.86 Lakhs in FY 21 to Rs 4,323.01 Lakhs in FY 22, an increase of Rs 1,192.15 Lakhs. This increase in Finance Costs is due to additional capitalization of Medical College Assets which was hitherto categorized under Capital Work in Progress.

DEPRECIATION AND AMORTIZATION EXPENSE

Depreciation and Amortization Expenses has increased from Rs 6,802.51 Lakhs in FY 21 to Rs 8,542.82 Lakhs in FY 22, an increase of Rs 1,740.31 Lakhs. Increase is due to capitalization of Medical College Infrastructure and change in useful life of certain Property, Plant and Equipment. Additional Medical Equipment bought during the year is another reason for increase in Depreciation Expense.

OTHER EXPENSES

Table below summarizes the Operating and Other Administrative Expenses for the year ended 31 March 2022

	Year ended 31.03.2022		Year ended 31.03.2021		Increase/ (Decrease)	% Increase/ (Decrease)
Particulars	(Rs in lakhs)	% of Revenue	(Rs in lakhs)	% of Revenue
Stores, Dietary, Power & Fuel	3,296.41	3.64	2,312.87	3.35	983.54	42.52
Professional & Consultancy Fees	13,053.21	14.41	10,434.08	15.11	2,619.13	25.10
Hospital Upkeep Expenses	1,849.17	2.04	1,292.99	1.87	556.18	43.02
Marketing & Advertising	443.20	0.49	210.49	0.30	232.71	110.56
Repairs & Maintenance	1,903.42	2.10	1,558.17	2.26	345.25	22.16
Rent	51.49	0.06	168.38	0.24	(116.89)	(69.42)
Other Administrative Expenses	3,548.19	3.92	2,515.39	3.64	1,032.80	41.06
Total	24,145.09	26.65	18,492.37	20.41	5,652.72	30.57

KEY FINANCIAL RATIOS

Key Financial Ratios are detailed in Note No. 56 of Notes to Financial Statements LIQUIDITY

Primary Sources of Funds are Cash Flows generated from Operations as well as Long Term Borrowings, if required. It is expected that internally generated Cash Flows and our proposed drawdown from sanctioned debt will be adequate to service existing debt, fund internal growth and deploy funds for all Capital Expenditure.

RISK MANAGEMENT

In a rapidly changing business environment with dynamic customer requirements, business risks are constantly evolving. As a result, there is significant variation in the emerging risks landscape across businesses. On account of multi-fold increase in scale and the expanded area of operations, your company gets exposed to a wide range of both internal and external risks and uncertainties.

These internal and external factors may affect achievement of the companys objectives - whether they are strategic, operational or financial. Risk managements objective is to assure that uncertainty does not deflect the Companys progress from its envisioned business goals.

The Company Risk Management approach is towards striking a balance between managing risks and capitalising opportunities. Its response to identified risks includes acceptance, avoidance, transfer and mitigation. Greater focus is given towards ring-fencing the organisation from major risks that are likely to have a lasting impact on the Company profitability and sustainability.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the health care sectors objectives, projections, estimates, expectations and predictions contain "forward looking statements" within the meaning of applicable laws and regulations. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. Actual results might differ materially from those either expressed or implied.