Case Study on "Fortis Healthcare Care: Company Analysis"

Case Study 12 pages (3026 words) Sources: 6

[EXCERPT] . . . .

Fortis Healthcare

History, expansion and development of Fortis limited

Fortis Healthcare Limited has been one of the largest healthcare companies operating in India having 28 hospitals, heart command centers, and satellite centers with a total capacity for 3,300 beds. Apart from that, these hospitals also have multi-surgery facilities along with tertiary and quaternary healthcare services available. They are capable of providing heart care, neurosciences, renal care, oncology, orthopedics, gastroenterology and maternity care. Using advanced technology they are certainly providing top quality care to their valued clients (Herzlinger, 2008).

Fortis healthcare limited was commenced by two brother named Mr. Shivinder Mohan Singh and Mr. Malvinder Mohan Singh back in 1996. Their commercial operation began back in 2001 when they started the Fortis Heart Institute as well as multi-specialty hospital. Till 2010, they were running at least fourteen hospitals in totality in multiple cities of India namely New Delhi, Noida, Mumbai, Mohali, Kota, Jaipur, Faridabad, Amritsar, Chennai, Raipur and some other cities. Apart from that this hospital has its share in some hospitals in India for instance Khyber Medical Institute, Srinagar and their aim is to deliver the quality care in underprivileged areas. It also has a stake in Fortis Clinique Darne in Mauritius. Fortis healthcare plans to make its presence in India felt by instituting 6000 beds in 40 hospitals till 2012 (Herzlinger, 2008).

2: Identifying the company's strong points and weak points

1: Strong points

Specialty chain: The primary aim of Fortis is to develop a hospital with international standards. Mohali is their leading hospital which specializes in heart care apart from being a multi-specialty hospital. It has world class approved health care delivery systems. It has affiliation with Partner Healthcare Systems Inc., USA. Fortis Healthcare Limited is now home to one of the biggest heart programs in the world with 6,000 surgeries, 5,000 angioplasties as well as 14,000 angiographies yearly. This certainly sets up the benchmark for other Indian hospitals to follow. They are buying hospital overseas as well. Fortis Healthcare Limited has a reputation which precedes itself (Herzlinger, 2008).

High capital: Funding is adequate and tons of capital is present given by the Fortis financial muscle. It is buying many hospitals in India and overseas which enables them to compete with foreign markets (Herzlinger, 2008).

HR management: Fortis Healthcare Limited is able to hire the most experienced of doctors for instance, Dr. Ashok Raj Gopal who is a name himself in heart surgery along with Dr. A.K. Singh who is the best neuron surgeon in India (Herzlinger, 2008).

Quality: They have a strict quality control procedure which is internationally recognized. In a matter of only five years, Fortis Hospital Limited was in top two Indian hospitals providing these services (Herzlinger, 2008):

Total knee replacement

Cardiac operations

Hip replacement

Neuro sciences

They have a strict adherence to international hospital and clinical standards and protocols. This entails ICU management, emergency care, operation theatre and patient handling. Their services are the best from arrival to departure of a patient in any Indian hospital (Herzlinger, 2008).

Fortis Hospital Limited is making use of latest technology and spreading the word by Twitter, Facebook and YouTube for the time being. It's a new idea and working for them too. With Facebook, they inspire customers with their achievements and accomplishments. Fortis healthcare limited is building a brand here. Apart from that, some hospitals haven't started similar tactics yet (Herzlinger, 2008).

Fortis's weak points

Structure: Its corporate framework and structure is too complex. It's susceptible to mismanagement and eventual collapse is certainly not far in sight in the non-presence of a leadership (Herzlinger, 2008).

High investment: Fortis is quite vulnerable to high capital intensity, long periods of project completion, the uselessness of its super quality care in the absence of technology equipment, and not being to run new hospitals and managing them well as anticipated (Herzlinger, 2008).

In the current scenario, there are three court cases fought in the courts of India on Fortis's acquisition. There is a court case on Vasant Kunj and Jeevan Mala hospitals, which resist Fortis's right to run them. If a decision is against the Fortis group, they will take a serious dent with respect to national and international reputation (Herzlinger, 2008).

High Costs: Fortis Hospital Limited has constant costs and high operating leverage. Its profits depend on the number of beds consumed and occupancy throughout. In case otherwise, then Fortis Hospital Limited will feel the financial strain as it collapses under its capital efficiency (Herzlinger, 2008).

Being focused: Fortis Healthcare Limited is interested in high-end quality care in majority of its centers. That's why they have made mammoth investments in the high tech medical equipment (Herzlinger, 2008).

With the altering use of technology, the previous equipment is certainly rendered useless, whilst making new investments in new equipment. In the long run, costs start piling up and it can hamper a company's profit and cash flows. It can hinder various investment plans. With importing more high-end equipment, currency variations can hinder earnings as well. Merging with local hospital is a key feature of Fortis healthcare Limited. But its facilities and acquired hospital facilities aren't the same obviously. Then, it takes time to bring them up higher standard as Fortis's own hospitals. Thus, it takes more capital and cash reserves to improve such deplorable hospitals (Herzlinger, 2008).

3: The environs of the hospital

Political / legal environs

The government and private industries have a huge role to play in India's healthcare. The average public expenditure on health is least in comparison to other third world countries. The healthcare industry is spearheaded by the private sector for now. The government of India is very friendly and open invites foreign investments with its foreign policies so favorable for offshore investors. Apart from that there are tax incentives on offer too. Thus, it aims to supply new medicines and drugs whilst expanding their healthcare industry with better services and medical equipment. Telemedicine is the largest healthcare project around the world as it focuses on revolutionizing the healthcare services by information technology. Apart from that, government is busy in inviting foreign and private investment firms (Meenakshi, 2011).

The healthcare system has to be modernized and revolutionized for the greater good. The aim is to provide basic amenities and facilities to the rural and slum population of India. It has certain programs being run as of yet such as national health mission and minimum program (Meenakshi, 2011).

The government of India plays a pivotal role in revolutionizing the healthcare industry by keeping it higher in its agenda. The government of India is doing wonders in bring more foreign aid to India for outsourcing purposes. The government of India would be able to setup more hospital throughout India. Due to these reasons, the healthcare system of India is poised to rise within a period of five to ten years (Meenakshi, 2011).

Economic environs

The healthcare expenses are paid by the top earning individuals in India. The private patients spearhead in this case, whilst the tertiary care treatments are pricey. The top thirty three percent of earners account for 75% of the net private expenditure on healthcare in India back in 2004. The rich families paid at least $580 per operation on healthcare facilities. That is three times higher than average American $191. According to the financial year of 2010, the middle income and rich income people are growing slowly. They will form 49% of the population as compared to 33% of the population back in 2004. A survey was conducted by NCAER, which reports that with higher education the expenditure on healthcare also rises (Dhawan, 2007).

There are particular investment opportunities for private companies. The Indian government supports such investment opportunities as it boosts their economy and the healthcare infrastructure of India on the whole. By far, India's health industry still needs to move up in the ranks by leaps and bounds. India still lags behind China's present bed ratio of 1000 beds, a milestone it can't reach in the next ten years. India needs a huge investment for allotting 920,000 beds which requires an investment of $49 billion (Dhawan, 2007).

4. SWOT Analysis

The strengths and weaknesses have already been discussed in section 2. Here in this section, we discuss the opportunities and threats facing Fortis Ltd. (Herzlinger, 2008).

Opportunities and threats: Market is ripe

Medical tourism has been gaining ground in India during the recent years. The reason is India's low cost benefit and new healthcare industry. For medical treatment, at least 180,000 patients arrived from overseas alone in 2004. The medical tourism market in India grew by $33 million in 2004. By the end of 2012, it's anticipated to become a $22 billion market. India has been attending patients from various countries these days hailing from African boundaries (Connell, 2011).

Such medical facilities aren't available in African countries in such low cost conditions. Thus India is the new market with respect to low cost medical treatment. New Delhi is the prime location cardiac operations while… READ MORE

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