SMEDA Private Hospital

Pre-Feasibility Study

PRIVATE HOSPITAL

Small and Medium Enterprise Development Authority Government of Pakistan www.smeda.org.pk

HEAD OFFICE th

6 Floor LDA Plaza Egerton Road, Lahore Tel (042)111 111 456, Fax: 36304926-7 [email protected]

REGIONAL OFFICE

REGIONAL OFFICE

REGIONAL OFFICE

REGIONAL OFFICE

PUNJAB

SINDH

KHYBER PAKTUNKHWA

BALOCHISTAN

8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111 111 456, Fax: (042) 36370474 [email protected]

5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 [email protected]

Ground Floor State Life Building The Mall, Peshawar. Tel: (091)111 111 456, 9213046-7 Fax: (091) 286908 [email protected]

Bungalow No. 15-A Chamn Housing Scheme Airport Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 [email protected]

April, 2012


Private Hospital

DISCLAIMER The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form.

DOCUMENT CONTROL Document No.

PREF-53

Revision

3

Prepared by

SMEDA-Punjab

Issued by

Library Officer

Issue Date

March, 2004

Revision Date

April, 2012

2 PREF-53/Apr, 2012/Rev 3


Private Hospital

1

EXECUTIVE SUMMARY................................................................................................................. 1

2

PROJECT PROFILE ......................................................................................................................... 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7

3

SECTOR & INDUSTRY ANALYSIS ............................................................................................... 3 3.1 3.2 3.3 3.4

4

MACHINERY AND EQUIPMENT REQUIREMENT .................................................................................. 7 MOTOR VEHICLES............................................................................................................................10

LAND & BUILDING REQUIREMENT .........................................................................................10 6.1 6.2 6.3 6.4

7

MARKET POTENTIAL......................................................................................................................... 6 NATIONAL MEDICAL AND HEALTH ESTABLISHMENTS...................................................................... 6 TARGET CUSTOMERS ........................................................................................................................ 7 DEPARTMENTS .................................................................................................................................. 7

MACHINERY DETAILS................................................................................................................... 7 5.1 5.2

6

HEALTH CARE DELIVERY ................................................................................................................. 3 PHYSICAL TARGETS AND ACHIEVEMENTS DURING 2010-11 ............................................................. 4 HEALTH AND NUTRITION EXPENDITURES ......................................................................................... 5 REGULATIONS................................................................................................................................... 6

MARKET INFORMATION .............................................................................................................. 6 4.1 4.2 4.3 4.4

5

OPPORTUNITY RATIONALE ............................................................................................................... 2 PROJECT BRIEF ................................................................................................................................. 2 PROJECT CAPACITY AND RATIONALE ............................................................................................... 2 PROJECT INVESTMENT ...................................................................................................................... 2 PROPOSED LOCATION ....................................................................................................................... 3 KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS ................................................................. 3 THREATS FOR THE BUSINESS ............................................................................................................ 3

TOTAL LAND REQUIREMENT ...........................................................................................................10 SUITABLE LOCATIONS .....................................................................................................................11 COVERED AREA REQUIREMENT .......................................................................................................11 UTILITIES REQUIREMENT .................................................................................................................13

HUMAN RESOURCE REQUIREMENT .......................................................................................13 7.1 HUMAN RESOURCE REQUIREMENTS ................................................................................................13 7.1.1 Consultants ............................................................................................................................13

8

FINANCIAL ANALYSIS..................................................................................................................15 8.1 8.2 8.3

9

FINANCIAL ANALYSIS..................................................................................................................17 9.1 9.2 9.3

10

INITIAL PROJECT COSTS ...................................................................................................................15 ESTIMATED TIME FOR PROJECT COMPLETION..................................................................................16 PROJECT RETURNS ...........................................................................................................................16

PROJECTED INCOME STATEMENT.....................................................................................................17 PROJECTED CASH FLOW STATEMENT ..............................................................................................18 PROJECTED BALANCE SHEET ...........................................................................................................19

KEY ASSUMPTIONS .......................................................................................................................20



1

Private Hospital

EXECUTIVE SUMMARY

Population of Pakistan has been increasing with the greater percentage. It has become very difficult for the Government to provide health facilities to large number of population. This arise a strong need of private hospitals with modern technology and better infrastructure. This pre feasibility study provides guidelines for setting up a private hospital. The total project cost is estimated at Rs. 95.578 million including a capital cost & working capital of Rs. 87.104 million and Rs. 8.474 million respectively. Projected IRR, NPV and Payback period for the proposed project are 36.39%, Rs. 99.544 million and 3.86 years respectively. The project is having capacity of 25 private rooms, 10 beds for general ward, 10 beds for labor ward, 5 bed for ICU/CCU, and 10 beds for emergency. The project is proposed in the main location of the city in densely populated areas. Government is also very much keen about the health services. Government allocation for health sector has decreased almost 47% compared to last year. During the year 2010-11, the total expenditure on health is estimated at Rs. 42 billion, of which Rs. 19 billion allocated for development expenditure and Rs. 23 billion for current expenditure. Pakistan has availability of well trained and skilled human resource in this sector which is the key area and plays a major role in the success and popularity of private hospitals. The Consultants are the main reason for good patient base of the hospital. If the hospital has renowned consultants, it would bring many patients, who will not only be the source for consultation fee but will also be using both the outdoor and the indoor facilities of the hospital thereby increasing the revenues for the hospital. This will also create an image and reputation of the hospital in the eyes of general public. This document has complete details of setting up private hospital.



2 2.1

Private Hospital

PROJECT PROFILE Opportunity Rationale

Growing number of patients and lack of maintained infrastructure has put tremendous pressure on public sector hospitals. This has resulted in a rising demand for health services in the private sector. Moreover, introduction of latest technology, hygienic environment and professional staff attitude at private sector hospitals has also contributed to the popularity of the hospitals in private sector. In addition to this, increasing trend of medical diagnosis through sophisticated scientific medical tests has increased the need of high capital investment in the hospital sector. Investors in the private sector can therefore exploit this opportunity and provide latest and dependable diagnostic services on round the clock basis, which is not available in the public sector hospitals. Hospital is a capital-intensive project. Once the required infrastructure is developed, the management focus should shift to maintain its repute, provide quality services and engage reputed consultants to attract patients. Considering the current market structure, the key success factor for a successful hospital is the provision of modernized consultancy and diagnostics services in multidisciplinary areas. Constrained public sector health system, growing population, introduction of new and modern medical technologies and increased healthcare awareness in the country provides a better business opportunity for the private sector to invest in the health care services. 2.2

Pro ject Brief

The proposed project is for setting up a private hospital. This hospital would be a general hospital catering both, indoor and outdoor patients. The hospital indoor facilities include emergency, ICU/CCU, Rooms, General Ward, Labor Ward with a fully functional operation theatre capable of conducting major types of surgeries. The outdoor facilities would include a diagnostic clinic consisting of a complete medical laboratory and a radiology department. 2.3

Pro ject Capacity and Rationale

The proposed capacity of this hospital is given in the table below: Table 2-1: Proposed Capacity Emergency ICU / CCU Rooms (25 Nos) General Ward Labor Ward 2.4

10 Beds 5 Beds 25 Beds 10 Beds 10 Beds

Pro ject Investment

Total project cost for setting up a Private Hospital is estimated at Rs 95.578 million.



2.5

Private Hospital

Proposed Location

Large public sector hospitals are concentrated in major cities of the country. Therefore, it is suggested that new hospital should be opened up either in smaller cities, peripheral areas or in those areas of the larger cities where there is little presence of existing medical facilities. May be close to new emerging residential areas and main markets etc. 2.6

Key Success Factors / / Practical Tips f or Success

Availability of reputed consultants plays a major role in the success and popularity of private hospitals. It is suggested that consultants from a wide range of specialties should be attracted for the hospital. The key success factor in this business is the availability of renowned consultants in the hospital. The consultants are the main reason for good patient base of the hospital. If the hospital has renowned consultants, it would bring many patients, who will not only be the source for consultation fee but will also be using both the outdoor and the indoor facilities of the hospital thereby increasing the revenues for the hospital. This will also create an image and reputation of the hospital in the eyes of general public. Availability of trained and professional Paramedical Staff. High standard patient care and hygienic environment for the patients, trained nurses and courteous para-medical staff. Modern and reliable diagnostic services which would include a fully equipped Radiology Department consisting of X-Ray, ECG and Ultra Sound Equipment and a dependable Medical Laboratory for routine medical examinations. A well equipped Operation Theatre capable of conducting major surgeries. Reasonable and competitive fees, positioned against competitors fees. Each city and each area within a city has different demographic characteristics. This means that every area has its own set of medical problems. For example, in those areas where there is a large concentration of industries, environmental pollution related diseases and industrial emergencies would be more prevalent. It is therefore suggested that a careful market analysis of the surrounding population should be carried out before determining the services to be provided in the hospital. 2.7

Threats f or the Business

One of the major threats to the business is a high turnover rate of medical, paramedical staff and the consultants. To retain the consultants and other medical staff, salary package and other benefits / facilities should be competitive.

3 3.1

SECTOR & INDUSTRY ANALYSIS Health Care Delivery

While Pakistan enjoys a vast network of healthcare facilities, coverage, accessibility, cost and quality of health care remain critical issues. An effective fight has been launched in prevention and control of both communicable and non communicable diseases in order to have an impact in the scenario of double burden of diseases in the country. The health care system in Pakistan comprises the public as well as private health facilities. In the public sector, districts have been given power for developing their own strategies, programmes and interventions based on their local needs. In the private sector, the range 3 PREF-53/Apr, 2012/Rev 3


Private Hospital

of health care facilities includes accredited hospitals and clinics, medical practitioners, homeopaths and hakeems. In addition, non ‐governmental organizations (NGOs) and Pakistan’s corporate sector are also active in the health and social sector, the latter under their Corporate and Social Responsibility (CSR) mandate. They have been successful to a large extent in raising the level of awareness of positive health behavior among the people. However, the health care system as a whole needs to be strengthened further at all levels. The details of available human resource are given in the Table below: 1

Table 3-1: Available Human Resource 1 2008-09 133,984 9,013 65,387 1,310 18,101 1,575

Registered Doctors Registered Dentists Registered Nurses Population Per Doctor Population Per Dentist Population Per Nurse 3.2

2009-10 139,555 9,822 69,313 1,183 16,914 1,592

2010-11 144,901 10,508 73,244 1,222 16,854 1,701

2

Physical Targets and Achievements during 2010-11 2

Targets for the health sector during 2010-11 included establishment of 15 Rural Health Centers (RHC), 40 Basic Health Units (BHUs) and up gradation of 45 existing RHCs and 900 BHUs. The manpower target included the addition of 5000 new doctors, 450 dentists, 3500 Nurses, 5500 paramedics and 500 traditional birth attendants. Under the preventive program, about 8.5 million children were targeted to be Immunized and 25 million packets of ORS were to be distributed during 2010-11. Till date 4500 HIV positive cases have been reported to the National and Provincial AIDS Control Programs. It includes 3050 full blown AIDS cases. Around 1030 are receiving free treatment through 12 AIDS Treatment Centers. Total numbers of TB cases reported are 62,321. Whereas the absolute number of cases is 209,714 up to the third quarter of 2010 and the treatment success rate remained 91 percent. The percentage of TB case-detection rate is 81 percent and cure rate is 74 percent. Physical targets, achievements for 2010-11 are given in the table below.

1 2

Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #143) Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #143) 4

PREF-53/Apr, 2012/Rev 3


Private Hospital

3

Table 3-2: Physical Targets and Achievements during 2010-113 Sub Sector

A. Rural Health Program i. New Basic Health Units (BHUs) ii. New Rural Health Centres (RHCs) iii. Up gradation of existing RHCs iv. Up gradation of existing BHUs B. Beds in Hospitals/RHCs/BHUs C. Health Manpower Development i. Doctors ii. Dentists iii. Nurses iv. Paramedics v. Training of TBAs vi. Training of LHWs D. Preventive Program i. Immunization (Million Nos) ii. Oral Re hydration Salt (ORS) (Million Packets) 3.3

Targets (No) 2010-11

Estimated Achievements (No)

Achievements (%)

40

35

87

15

13

86

45

40

88

900

850

94

4500

4300

95

5,000 450 3,500 5500 500 100,000

4,500 400 3,200 5000 450 96,000

90 80 90 90 90 96

8.5 25

8 24

94 96

Health and Nutrition Expenditures

During the year 2010-11, the total expenditure on health is estimated at Rs. 42 billion, of which Rs. 19 billion allocated for development expenditure and Rs. 23 billion for current expenditure. These figures show decrease of 47% over the last year and work out to be 0.23% of GDP. It may be pointed out that as a result of improvement in fiscal front; the government has been allocating relatively more resources to health sector.

3

Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #144) 5



Private Hospital

4

Table 3-3: Expenditure detail (Rs. billions)4 Fiscal Year 2010-11 2009-10 2008-09 2007-08 2006-07 3.4

Total Expenditure 42 79 74 60 50

Development Current Expenditure Expenditure 19 23 38 41 33 41.10 27.22 32.67 20 30

Change (%) -47 7 23 20 25

As %of GDP 0.23 0.54 0.56 0.57 0.57

Regulations

The doctors working in the hospital should be registered with the Pakistan Medical and Dental Council (PMDC). Prior sanction/approval from the government through Pakistan Atomic Energy Commission (PAEC) is required in case of the equipment being installed in the hospital such as X Ray machines, as they emit radiation and has to be sanctioned / approved.

4

MARKET INFORMATION

4.1

Market Potential

From 1981 to 2011, the estimated population of Pakistan has grown from 85 million to 170 million making Pakistan the seventh most populous country in the world. This growth rate of population has posed tremendous challenge to the existing infrastructure for basic facilities in the country. Growing population, increasing industrialization, resultant high level of environmental pollution, and increased healthcare awareness has specially stretched the existing public health care system in the country. This has given rise to high demand of private sector health care facilities to compliment its public sector counterpart. 4.2

5

National Medical and Health Establishments 5

Total number of hospitals and other health center detail is given in below table: Table 4-1: Health Establishment in Pakistan

Year

Hospitals

Dispensaries

2005 2006 2007

919 924 945

4632 4712 4755

4

5

BHUs Sub Health Centers

Maternity & Child Health Centers

Total Beds

Population Per Bed

5334 5336 5349

907 906 903

101,490 102,073 103,285

1483 1508 1544

Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #142) Source: Economic Survey of Pakistan 2010-11 (Statistical Appendixes, Health & Nutrition, Table # 11.1 ) 6



2008 2009 2010 4.3

948 968 972

Private Hospital

4794 4813 4842

5310 5345 5344

908 906 909

103,037 103,708 104,137

1575 1592 1701

Target Customers

The major target market for the facility consists of residential areas in the vicinity of the hospital. The basic services that will be provided will also be determined by the need of the locality and its adjacent areas. 4.4

Departments

The proposed hospital would have the following departments: Emergency ICU/CCU Diagnostic Centre Radiology Department Surgical Consultancy Medical Consultancy Gynecology and Obstetrics review

5

MACHINERY DETAILS

5.1

Machinery and Equipment Requirement

The major cost involved in establishing a well-equipped hospital is the cost involved in machinery, equipment and furnishing. The proposed hospital is providing basic in-house diagnostic and radiology services to its patients. It is also proposed that the hospital is equipped with a fully functional operation theatre. Following machinery is proposed for setting up the private hospital: 6

Table 5-1: Machinery and Equipment Requirement 6 Description Radiology Department X-Ray Apparatus with motorized tilting table Dark Room X-Ray Accessories ECG Machine Ultrasound Machine Printer for Ultrasound

No

Cost Per Unit (Rs)

1

450,000

450,000

1 2 1 1

75,000 35,000 135,000 58,000

75,000 70,000 135,000 58,000 788,000

Total 6

Machinery cost has been taken from Mediequip and Nurani Surgical, Lahore. 7


Total in Rs.


Private Hospital

Diagnostic Center Blood Analyzer ELISA for hormone Analysis fully automatic Binocular Microscope Centrifuge Machine Clinical water bath Photo Calorimeter Lab Incubator Miscellaneous Lab Equipment Oxygen Supply Plant with Supply in all Rooms Total Operation Theatre Operation Theatre Shadow less Light Electric suction apparatus Surgical Diathermy Anesthesia Apparatus Trolley for Anesthesia Cardiac Resuscitation Trolley Cardiac Monitor Hydraulic Operation Table Horizontal and Vertical Autoclave Operation Table Emergency Oxygen Kit

1 1 1 1 1 1 1 1 1 1 3

33,000 23,000 65,000 450,000 85,000 95,000 135,000 48,000 60,200 48,000 350,000

Total Gynecology, Obstetrics & Pediatrics Operation Theatre Shadow less Light Electric suction apparatus Delivery Table Computerized Baby Incubator Phototherapy Apparatus Baby Cot with side protection

33,000 23,000 65,000 450,000 85,000 95,000 135,000 48,000 60,200 48,000 1,050,000 2,092,200

1 1 2 3 2 5

33,000 23,000 45,000 125,000 15,000 8,500

Total ICU/CCU 5 Beds Ventilator Cardiac Monitors Arterial Blood Gas Analyzer

33,000 23,000 90,000 375,000 30,000 42,500 593,500

2 5 5

1,500,000 450,000 800,000

195,000 3,200,000

1 1 1 1 1 1 1

150,000 4,000 6,500 45,000 95,000 500,000 150,000

195,000 3,200,000 150,000 4,000 6,500 45,000 95,000 500,000 150,000 4,345,500

Total Grand Total 8 PREF-53/Apr, 2012/Rev 3

1 1

3,000,000 2,250,000 4,000,000 9,250,000 17,069,200


Private Hospital

In addition to this machinery, small auxiliary tools are also required for the smooth operations of the hospital. Table 5-2: Other Equipment Requirement Description

No

Electricity Generator Elevator Light and Electricity Appliances Instrument sterilizers Baby Weighing Machine Instrument cabinets Stethoscope LV Stands Blood Pressure apparatus Miscellaneous Total

1 1 10 2 1 2 12 40 6

Cost Per Unit (Rs) 1,700,000 1,500,000 1,500 5,000 3,500 8,500 2,000 850 1,950

Total

1,700,000 1,500,000 15,000 10,000 3,500 17,000 24,000 34,000 11,700 500,000 3,815,200

Moreover, there is other office equipment that is required for the daily operations of the hospital. Table 5-3: Of f fi ce Equipment Requirement Description

No

Split Units Refrigerators TVs LCDs Computers with UPS Printers Telephone Exchange Telephone Sets Fire Extinguishers File Cabinets Total

99 30 25 2 14 5 1 40 20 15

Cost Per Unit (Rs) 45,000 29,000 11,000 50,000 40,000 15,000 100,000 1,000 4,000 9,000

Total in PKR

4,455,000 870,000 275,000 100,000 560,000 75,000 100,000 40,000 80,000 135,000 6,690,000

To furnish the hospital rooms, laboratories, and visiting area the following furniture is required.



Private Hospital

Table 5-4: Furniture and Fixture Requirement Description

No.

Single side liftable beds Examination Couch Sofa set 3 seat Chairs etc Office Table Bed Side Cabinets Mobile stretcher trolleys Wheel Chairs Instrument trolley Total

71 13 57 69 24 60 8 8 10

Cost Per Unit (Rs) 18,900 9,950 18,400 4,199 3,450 3,500 8,500 5,900 6,500

Total

1,341,900 129,350 1,048,800 289,725 82,800 210,000 68,000 47,200 65,000 3,282,775

Alternative Chinese machines are available for Radiology and Diagnostic Departments and for the Operation Theatre. However, their prices are 2 to 3 times lower than Japanese equipment. However, a mix of Japanese and Korean machinery is proposed for the project. 5.2

Motor Vehicles

Along with the above mentioned machinery and equipment the proposed hospital will also be using two ambulances. Table 5-5: Ambulance Sr. No

Description

QTY

1

Ambulance

2

6 6.1

Cost per Unit 1,500,000

Total Amount in Rs.

3,000,000

LAND & BUILDING REQUIREMENT Total Land Requirement

For above recommended size of hospital, approximately 6,750 square feet (1.5 kanal) area is required with 4 floors including the basement and open area. Table 6-1: Land Cost Description Total Land

No. of Kanal Rate per Kanal (Rs.) 1.5 10,000,000

10 PREF-53/Apr, 2012/Rev 3

Total Cost in PKR 15,000,000


6.2

Private Hospital

Suitable Locations

A hospital is supposed to be in a location that is easily accessible and has considerable population concentration. Considering the spread of new residential areas some of the suitable locations in some of the cities of Pakistan are: Table 6-2: Suitable Locations and their prises range City

Location

Lahore

Main Road Johar Town Canal Road LCCHS New Phases Jail Road, Gulberg Ferozepur Road

Rawalpindi

West Ridge Peshawar Road

Karachi

North Nazimabad Gulshan-e-Iqbal Defence Phase I to III

Quetta

Satellite Town Madrussa Road, Cantt Hazara Town Jinnah Road

Faisalabad

Susan Road Railway Road Madina Town

Peshawar

Dabgari garden Hayatabad

Multan

Cantonment Area New Multan

6.3

Covered Area Requirement

Following is the covered area requirement split into various departments and sections: Table 6-3: Covered Area Requirement Building

No

Dimensions

Required Area

Rate per Sq. Ft

Total Cost in Rs.

Basement

Canteen

1

20

x

20

400

1,000

400,000

Pharmacy

1

20

x

15

300

1,000

300,000

Diagnostic

1

30

x

35

1,050

1,500

1,575,000

Wash rooms

5

6

x

6

180

1,000

180,000

Laboratory

1

30

x

35

1,050

1,500

1,575,000

11 PREF-53/Apr, 2012/Rev 3


Private Hospital

ICU/CCU

1

20

x

25

500

1,500

750,000

Store room

1

20

x

15

300

800

240,000

Lounge

1

25

x

20

500

1,500

750,000

space for stairs and elevator

1

20

x

15

300

1,000

300,000

Total Ground floor Reception and waiting room

4,580

6,070,000

1

50

x

50

2,500

1,500

3,750,000

Emergency

1

20

x

30

600

1,500

900,000

Wash rooms

5

6

x

6

180

1,000

180,000

Consultants rooms

4

12

x

12

576

1,500

864,000

General Ward

1

20

x

30

600

1,500

900,000

Nursing centers

1

12

x

10

120

1,500

180,000

Doctors' Room

3

12

x

10

360

1,500

540,000

Lounge

1

25

x

20

500

1,500

750,000

Nurses' room

1

15

x

12

180

1,500

270,000

Space f or stairs and elevator

1

10

x

10

100

1,000

100,000

Total

5,716

8,434,000

1st Floor

Bed rooms

12

14

x

14

2,352

1,500

3,528,000

Wash rooms

5

6

x

6

180

1,000

180,000

Consultants rooms

4

12

x

12

576

1,500

864,000

Labor Ward

1

20

x

30

600

1,500

900,000

Nursing centers

1

12

x

10

120

1,500

180,000

Lounge

1

25

x

20

500

1,500

750,000

1

25

x

25

625

1,500

937,500

1

20

x

15

300

1,000

300,000

1

20

x

15

300

800

240,000

Child nursery and labor room Space for Stairs and Elevator Store room

5,553

Total

7,879,500

2nd floor

Bed rooms

13

14

x

14

2,548

1,500

3,822,000

Wash rooms

5

6

x

6

180

1,000

180,000

Operation theatre

1

30

x

30

900

1,500

1,350,000

12 PREF-53/Apr, 2012/Rev 3


Private Hospital

Sterilization room

1

15

x

15

225

1,500

337,500

Surgeons room

1

12

x

10

120

1,500

180,000

Recovery room

1

15

x

12

180

1,500

270,000

Nursing centers

1

12

x

10

120

1,500

180,000

Lounge

1

25

x

20

500

1,500

750,000

Admin block

1

25

x

20

500

1,500

750,000

Space for Stairs and Elevator

1

20

x

15

300

1,000

300,000

Total

5,573

8,119,500

TOTAL

21,422

30,503,000

Circulation Space 20% of Covered Area

4,284.4

Total Civil Works Cost 6.4

1,000

4,284,400 34,787,400

Utilities Requirement

Electricity Telephone Gas Water Waste disposal

7

HUMAN RESOURCE REQUIREMENT

7.1 7 .1.1

Human Resource Requirements C onsult ant s

Consultant services for the following specialized areas would be made available in the hospital: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Gastroenterology Specialist Pediatric Physician General Surgeon General Physician (Chest & TB) Diabetes & Endocrinologist Cardiologist Orthopedic Surgeon Gynecologist Pathologist Dentist

The consultants generally get 60-70% of the professional fee charged to the patient. In surgical cases, 1/3rd of the fee charged is shared by the hospital, while the surgeon and rd his team share the rest 2/3 . For the proposed size of hospital, apart from consultants following manpower is required: 13 PREF-53/Apr, 2012/Rev 3


Private Hospital

Table 7-1: Human Resource Requirement Positions

Chief Executive Admin & Finance Manager Admin Officers Medical Officers Nursing Staff Laboratory Technicians Operation Theater Assistant. Mid Wives Radiology Technicians Receptionist Accountant Accounts clerk / Cashier Security Guards Electrician/technician Cleaner + Ayas Ward Boy /Office Boy Male Nurse Store Keeper Total

Required

Salary per Month

1 1 2 24 45 9 6 6 6 6 2 3 6 3 6 15 18 3 162

100,000 75,000 35,000 45,000 18,000 15,000 15,000 12,000 15,000 15,000 25,000 15,000 10,000 12,000 7,500 7,500 10,000 9,000

14 PREF-53/Apr, 2012/Rev 3

Salary per Annum

1,200,000 900,000 840,000 12,960,000 9,720,000 1,620,000 1,080,000 864,000 1,080,000 1,080,000 600,000 540,000 720,000 432,000 540,000 1,350,000 2,160,000 324,000 38,010,000


8 8.1

Private Hospital

FINANCIAL ANALYSIS Initial Pro ject Costs

Following is the breakdown of the startup project cost for the proposed hospital. It is suggested that the land for the hospital is purchased and a custom designed building would be constructed keeping in mind the future expansion plan. Table 8-1: Total Pro ject Cost Project Costs Capital Costs Land Building Machinery & Equipment Other Equipments Office Equipment Furniture & Fixture Ambulance (02 Nos) 7 Pre-operating costs Total Capital Costs Working Capital 8 Raw Material Cost Cash Required for 2 Months Operations Salaries Electricity Minimum Cash Required

Total Cost in Rs.

15,000,000 34,787,400 17,069,200 3,815,200 6,690,000 3,282,775 3,000,000 3,460,000 87,104,575 478,603 6,335,000 660,015 1,000,000 8,473,618 95,578,193

Total Working Capital Total Project Costs Table 8-2: Financing Plan Financing Debt (50%) Equity (50%) Total

47,789,096 47,789,096 95,578,192

7

These include salaries of administration staff during the period of construction; incorporation charges and interest accrued during first year. 8 This represents chemicals, radiology films and other disposable items used in diagnostic department and Operation Theatre. 15 PREF-53/Apr, 2012/Rev 3


8.2

Private Hospital

Estimated Time f or Pro ject Completion

Three months for completion of initial formalities i.e. formation, registration of the company etc. One year for purchase of land and construction of building. Six months for sanction of loan (In case, if financing has to be arranged through bank) 5-6 months for purchase of machinery, its installation and testing. Thirty days for premises furnishing and Consultants / Staff appointments. 8.3

Pro ject Returns

Project economics is intended to assess the financial sustainability of the project. This financial analysis however, depends on the assumption used for the analysis. Since this document concern a generic hospital business unit, the financials will vary considerably for individual projects. According to the information analyzed, the hospital business is a viable business opportunity. Projected returns are given in the table below:

Table 8-3: Pro je ject Returns Project 36.39% Rs. 99,544,391 3.86

IRR NPV Payback Period (Years)

16 PREF-53/Apr, 2012/Rev 3


9 9.1

Private Hospital

FINANCIAL ANALYSIS Pro je jected Income Statement

PROJECTED INCOME STATEMENT Year 1 Rupees REVENUE Indoors - Surgery - Room rent Outdoors - Consultation fee - Diagnostic Center Pahrmacy rent Canteen Rent DIRECT COSTS Surgeon's & Anaesthesist's Share Consultants' Share Direct diagnostic and Surgery costs Rooms Electricity Total Variable Cost of Services Fixed Overheads Payroll Depreciation Maintenance T ot al Se rv ic es C os t (F ix ed + Va ri ab le ) Contribution Margin Gross Profit OPERATING OVERHEADS Payroll Depreciation Electricity Other operating costs Legal & professional charges Telephone Amortization of pre-o pertaing ezpenses Total Rental Income Financial charges Long term loan @ 16% Net profit before tax Tax Net Profit after tax

Year 2 Rupees

Year 3 Rupees

Year 4 Rupees

Year 5 Rupees

Year 6 Rupees

19,800,000 23,850,000 43,650,000

24,750,000 28,858,500 53,608,500

30,492,000 34,918,785 65,410,785

37,853,640 42,251,730 80,105,370

46,822,236 51,124,593 97,946,829

33,750,000 12,420,000 46,170,000 180,000

42,075,000 15,028,200 57,103,200 198,000

51,756,000 18,207,360 69,963,360 217,800

62,937,000 22,060,800 84,997,800 239,580

75,831,000 26,698,320 102,529,320 263,538

Year 7 Rupees

Year 8 Rupees

Year 9 Rupees

Year 10 Rupees

58,074,996 61,860,758 119,935,754

71,641,692 74,851,517 146,493,209

88,978,128 89,459,586 178,437,714

110,222,736 102,635,032 212,857,768

136,807,284 112,898,535 249,705,819

90,675,000 32,304,096 122,979,096 289,892

111,720,000 39,119,040 150,839,040 318,881

136,059,000 47,349,972 183,408,972 350,769

164,118,000 57,300,552 221,418,552 385,846

196,470,000 69,343,008 265,813,008 424,431

120,000

132,000

145,200

159,720

175,692

193,261

212,587

233,846

257,231

282,954

90,120,000

111,041,700

135,737,145

165,502,470

200,915,379

243,398,003

297,863,717

362,431,301

434,919,397

516,226,212

11,880,000 16,875,000 5,823,000 2,760,090 37,338,090

14,850,000 21,037,500 7,204,230 3,440,902 46,532,632

18,295,200 25,878,000 8,829,504 4,230,274 57,232,978

22,712,184 31,468,500 10,879,848 5,143,110 70,203,642

28,093,342 37,915,500 13,369,195 6,196,209 85,574,246

34,844,998 45,337,500 16,460,614 7,408,496 104,051,607

42,985,015 55,860,000 20,196,194 9,127,250 128,168,460

53,386,877 68,029,500 24,898,121 10,946,523 157,261,021

66,133,642 82,059,000 30,639,630 12,403,404 191,235,676

82,084,370 98,235,000 37,762,908 13,497,822 231,580,100

27,324,000 5,474,578 686,446 7 0, 82 3, 11 3

30,056,400 5,474,578 755,090 82,818,700

33,062,040 5,474,578 830,599 96,600,195

36,368,244 5,474,578 913,659 112,960,123

40,005,068 5,474,578 1,005,025 132,058,917

44,005,575 5,474,578 1,105,528 154,637,288

48,406,133 5,474,578 1,216,081 183,265,251

53,246,746 5,474,578 1,337,689 217,320,033

58,571,421 5,474,578 1,471,457 256,753,131

64,428,563 5,474,578 301,483,241

52,781,910 19,296,887

64,509,068 28,223,000

78,504,167 39,136,950

95,298,828 52,542,347

115,341,133 68,856,462

139,346,395 88,760,715

169,695,257 114,598,466

205,170,280 145,111,268

243,683,721 178,166,266

284,646,111 214,742,971

10,686,000 1,389,880 1,200,000 600,000 75,000 350,000 346, 000 14,646,880 420,000

11,754,600 1,389,880 1,320,000 660,000 82,500 385,000 346,000 15,937,980 462,000

12,930,060 1,389,880 1,452,000 726,000 90,750 423,500 346,000 17,358,190 508,200

14,223,066 1,389,880 1,597,200 798,600 99,825 465,850 346,000 18,920,421 559,020

15,645,373 1,389,880 1,756,920 878,460 109,808 512,435 346,000 20,638,875 614,922

17,209,910 1,389,880 1,932,612 966,306 120,788 563,679 346,000 22,529,175 676,414

18,930,901 1,389,880 2,125,873 1,062,937 132,867 620,047 346,000 24,608,505 744,056

20,823,991 1,389,880 2,338,460 1,169,230 146,154 682,052 346,000 26,895,767 818,461

22,906,390 1,389,880 2,572,306 1,286,153 160,769 750,257 346,000 29,411,755 900,307

25,197,029 1,389,880 2,829,537 1,414,769 176,846 825,283 346,000 32,179,344 990,338

6,117,004 6,630,016 1,657,504 4,972,512

4,587,753 17,699,207 4,424,802 13,274,405

3,058,502 31,122,444 7,780,611 23,341,833

1,529,251 47,303,258 11,825,814 35,477,443

66,907,954 16,726,989 50,180,966

90,734,018 22,683,504 68,050,513

119,033,962 29,758,491 89,275,472

149,654,818 37,413,704 112,241,113

183,553,965 45,888,491 137,665,474

7,646,255 (2,576,249) (2,576,249)

17 PREF-53/Apr, 2012/Rev 3


9.2

Private Hospital

Pro je jected Cash Flow Statement

PROJECTED CASH FLOW STATEMENT Year 0 Rupees Profit after tax

Adjustment of non-cash changes and other items: Depreciation Amortization of preoperating expenses Working Capital Changes (Increase) in stocks Increase/(Decrease) in financial charges payable Increase/(Decrease) in payables

Net Cash Flow from operating activities

Year 1 Rupees

Year 2 Rupees

Year 3 Rupees

Year 5 Rupees

Year 6 Rupees

Year 7 Rupees

Year 8 Rupees

Year 9 Rupees

Year 10 Rupees

-

(2,576,249)

4,972,512

13,274,405

23,341,833

35,477,443

50,180,966

68,050,513

89,275,472

112,241,113

137,665,474

-

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

(113,526) 7,646,255 4,382,376

(133,584) (1,529,251) 4,517,482

(168,521) (1,529,251) 2,029,763

(204,604) (1,529,251) 2,446,465

(254,089) (1,529,251) 2,910,650

(307,034) (1,529,251) 3,491,722

(386,460) 4,476,634

(471,905) 5,306,925

(585,475) 5,957,926

3,103,801 6,682,752

(478,603) (478,603)

11,915,106

2,854,647

331,990

712,610

1,127,310

1,655,437

4,090,174

4,835,020

5,372,451

9,786,553

(478,603)

16,549,315

15,037,616

20,816,853

31,264,901

43,815,211

59,046,860

79,351,145

101,320,949

124,824,021

154,662,484

Pre-operating expenses Fixed Capital expenditure Net Cash Flow from investing activities

(3,460,000) (83,644,575) (87,104,575)

Capital issued Long term Loan Dividends paid Net Cash Flow from financing activities

47,789,096 47,789,096 95,578,193

(9,557,819) (9,557,819)

(9,557,819) (9,557,819)

7,995,015

6,991,495

5,479,797

Cash generated (injected) during the year

Year 4 Rupees

-

-

-

-

-

(9,557,819) (9,557,819)

(9,557,819) (9,557,819)

(9,557,819) (9,557,819)

11,259,033

21,707,081

34,257,391

-

-

-

-

-

-

-

-

-

-

59,046,860

79,351,145

101,320,949

124,824,021

154,662,484


9.2

Private Hospital

Pro je jected Cash Flow Statement

PROJECTED CASH FLOW STATEMENT Year 0 Rupees Profit after tax

Adjustment of non-cash changes and other items: Depreciation Amortization of preoperating expenses Working Capital Changes (Increase) in stocks Increase/(Decrease) in financial charges payable Increase/(Decrease) in payables

Year 2 Rupees

Year 3 Rupees

Year 5 Rupees

Year 6 Rupees

Year 7 Rupees

Year 8 Rupees

Year 9 Rupees

Year 10 Rupees

(2,576,249)

4,972,512

13,274,405

23,341,833

35,477,443

50,180,966

68,050,513

89,275,472

112,241,113

137,665,474

-

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

6,864,458 346,000

(113,526) 7,646,255 4,382,376

(133,584) (1,529,251) 4,517,482

(168,521) (1,529,251) 2,029,763

(204,604) (1,529,251) 2,446,465

(254,089) (1,529,251) 2,910,650

(307,034) (1,529,251) 3,491,722

(386,460) 4,476,634

(471,905) 5,306,925

(585,475) 5,957,926

3,103,801 6,682,752

(478,603)

11,915,106

2,854,647

331,990

712,610

1,127,310

1,655,437

4,090,174

4,835,020

5,372,451

9,786,553

(478,603)

16,549,315

15,037,616

20,816,853

31,264,901

43,815,211

59,046,860

79,351,145

101,320,949

124,824,021

154,662,484

Pre-operating expenses Fixed Capital expenditure Net Cash Flow from investing activities

(3,460,000) (83,644,575) (87,104,575)

Capital issued Long term Loan Dividends paid Net Cash Flow from financing activities

47,789,096 47,789,096 95,578,193

(9,557,819) (9,557,819)

(9,557,819) (9,557,819)

7,995,015

6,991,495

5,479,797

Cash generated (injected) during the year

Year 4 Rupees

-

(478,603) -

Net Cash Flow from operating activities

Year 1 Rupees

-

-

-

-

-

(9,557,819) (9,557,819)

(9,557,819) (9,557,819)

(9,557,819) (9,557,819)

11,259,033

21,707,081

34,257,391

-

-

-

-

-

-

-

-

-

-

59,046,860

79,351,145

101,320,949

124,824,021

154,662,484

18 PREF-53/Apr, 2012/Rev 3


9.3

Private Hospital

Pro je jected Balance Sheet

PROJECTED BALANCE SHEET Year 0 Rupees

Year 1 Rupees

Year 2 Rupees

Year 3 Rupees

Year 4 Rupees

47,789,096 47,789,096

47,789,096 (2,576,249) 45,212,848

47,789,096 2,396,263 50,185,360

47,789,096 15,670,668 63,459,765

47,789,096 39,012,501 86,801,598

47,789,096

38,231,277

28,673,458

19,115,639

9,557,819

4,382,376 7,646,255

8,899,858 6,117,004

10,929,621 4,587,753

13,376,086 3,058,502

16,286,736 1,529,251

19,778,459 -

24,255,093 -

29,562,017 -

35,519,943 -

42,202,695 -

95,578,193

12,028,632 95,472,756

15,016,863 93,875,680

15,517,374 98,092,778

16,434,588 112,794,005

17,815,987 140,095,028

19,778,459 192,238,465

24,255,093 264,765,612

29,562,017 359,348,009

35,519,943 477,547,048

42,202,695 621,895,274

Freehold Land

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

Building Medical Equipment and furniture Accumulated depreciation

34,787,400 33,857,175 68,644,575

34,787,400 33,857,175 (6,864,458) 61,780,118

34,787,400 33,857,175 (13,728,915) 54,915,660

34,787,400 33,857,175 (20,593,373) 48,051,203

34,787,400 33,857,175 (27,457,830) 41,186,745

34,787,400 33,857,175 (34,322,288) 34,322,288

34,787,400 33,857,175 (41,186,745) 27,457,830

34,787,400 33,857,175 (48,051,203) 20,593,373

34,787,400 33,857,175 (54,915,660) 13,728,915

34,787,400 33,857,175 (61,780,118) 6,864,458

34,787,400 33,857,175 (68,644,575) -

3,460,000

3,114,000

2,768,000

2,422,000

2,076,000

1,730,000

1,384,000

1,038,000

692,000

346,000

478,603 7,995,015

592,128 14,986,510

725,713 20,466,307

894,234 31,725,341

1,098,838 53,432,422

1,352,927 87,689,814

1,659,961 146,736,674

2,046,421 226,087,819

2,518,326 327,408,768

3,103,801 452,232,790

CAPITAL AND RESERVES Issued, subscribed and paid up capital Retained Earnings

Year 5 Rupees

Year 6 Rupees

47,789,096 74,489,945 122,279,041

47,789,096 124,670,910 172,460,007

Year 7 Rupees

Year 8 Rupees

47,789,096 192,721,423 240,510,520

Year 9 Rupees

47,789,096 281,996,895 329,785,992

Year 10 Rupees

47,789,096 394,238,008 442,027,105

47,789,096 531,903,482 579,692,579

LONG TERM LOAN Long term loans - unsecured LONG TERM LOAN @14%

-

-

-

-

-

-

CURRENT LIABILITIES Creditors accrued and other liabilities Financial Charges payable

-

FIXED CAPITAL EXPENDITURE

Preoperating expenses

-

CURRENT ASSETS Raw Material Inventory Cash and Banks balances

606,895,274


9.3

Private Hospital

Pro je jected Balance Sheet

PROJECTED BALANCE SHEET Year 0 Rupees

Year 1 Rupees

Year 2 Rupees

Year 3 Rupees

Year 4 Rupees

47,789,096 47,789,096

47,789,096 (2,576,249) 45,212,848

47,789,096 2,396,263 50,185,360

47,789,096 15,670,668 63,459,765

47,789,096 39,012,501 86,801,598

47,789,096

38,231,277

28,673,458

19,115,639

9,557,819

4,382,376 7,646,255

8,899,858 6,117,004

10,929,621 4,587,753

13,376,086 3,058,502

16,286,736 1,529,251

19,778,459 -

24,255,093 -

29,562,017 -

35,519,943 -

42,202,695 -

95,578,193

12,028,632 95,472,756

15,016,863 93,875,680

15,517,374 98,092,778

16,434,588 112,794,005

17,815,987 140,095,028

19,778,459 192,238,465

24,255,093 264,765,612

29,562,017 359,348,009

35,519,943 477,547,048

42,202,695 621,895,274

Freehold Land

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

15,000,000

Building Medical Equipment and furniture Accumulated depreciation

34,787,400 33,857,175 68,644,575

34,787,400 33,857,175 (6,864,458) 61,780,118

34,787,400 33,857,175 (13,728,915) 54,915,660

34,787,400 33,857,175 (20,593,373) 48,051,203

34,787,400 33,857,175 (27,457,830) 41,186,745

34,787,400 33,857,175 (34,322,288) 34,322,288

34,787,400 33,857,175 (41,186,745) 27,457,830

34,787,400 33,857,175 (48,051,203) 20,593,373

34,787,400 33,857,175 (54,915,660) 13,728,915

34,787,400 33,857,175 (61,780,118) 6,864,458

34,787,400 33,857,175 (68,644,575) -

3,460,000

3,114,000

2,768,000

2,422,000

2,076,000

1,730,000

1,384,000

1,038,000

692,000

346,000

478,603 7,995,015 8,473,618 95,578,193

592,128 14,986,510 15,578,639 95,472,756

725,713 20,466,307 21,192,020 93,875,680

894,234 31,725,341 32,619,575 98,092,778

1,098,838 53,432,422 54,531,260 112,794,005

1,352,927 87,689,814 89,042,741 140,095,028

1,659,961 146,736,674 148,396,635 192,238,465

2,046,421 226,087,819 228,134,240 264,765,612

2,518,326 327,408,768 329,927,094 359,348,009

3,103,801 452,232,790 455,336,590 477,547,048

CAPITAL AND RESERVES Issued, subscribed and paid up capital Retained Earnings

Year 5 Rupees

Year 6 Rupees

47,789,096 74,489,945 122,279,041

47,789,096 124,670,910 172,460,007

Year 7 Rupees

Year 8 Rupees

47,789,096 192,721,423 240,510,520

Year 9 Rupees

47,789,096 281,996,895 329,785,992

Year 10 Rupees

47,789,096 394,238,008 442,027,105

47,789,096 531,903,482 579,692,579

LONG TERM LOAN Long term loans - unsecured LONG TERM LOAN @14%

-

-

-

-

-

-

CURRENT LIABILITIES Creditors accrued and other liabilities Financial Charges payable

-

FIXED CAPITAL EXPENDITURE

Preoperating expenses

-

CURRENT ASSETS Raw Material Inventory Cash and Banks balances

19 PREF-53/Apr, 2012/Rev 3


Private Hospital

10 KEY ASSUMPTIONS Table 10-1: Revenue Assumptions Description Surgery - General Surgery - No of operations per month - Average fee per operation - Gynecology & Obstetrics - No of deliveries per month - Average fee per delivery Room Rent - No of Rooms Working Days

Annual Growth Rate

Assumptions

15% 10%

30 25,000

10% 10%

45 20,000 25 360

606,895,274 606,895,274 621,895,274


Private Hospital

10 KEY ASSUMPTIONS Table 10-1: Revenue Assumptions Description Surgery - General Surgery - No of operations per month - Average fee per operation - Gynecology & Obstetrics - No of deliveries per month - Average fee per delivery Room Rent - No of Rooms - Working Days - Total Working Days (Weighted) - Occupancy Rate - Occupancy - Room Rent per Day

Assumptions

15% 10%

30 25,000

10% 10%

45 20,000

10% 10%

Emergency - No of Beds in Emergency - Working Days - Total Working Days (Weighted) - Occupancy Rate - Occupancy - Bed Rent per Day Labor Ward - No of Beds in Labor Ward - Working Days - Total Working Days (Weighted) - Occupancy Rate - Occupancy - Bed Rent per Day

10% 10%

10% 10%

ICU/CCU - No of Beds in ICU/CCU - Working Days - Total Working Days (Weighted) - Occupancy Rate - Occupancy - Bed Rent per Day

10% 10% 20


Annual Growth Rate

25 360 9,000 45% 4,050 3,000 10 360 3,600 50% 1,800 1,500 10 360 3,600 50% 1,800 1,500 5 360 1,800 50% 900 3,000


Private Hospital

General Ward - No of Beds in General Ward - Working Days - Total Working Days (Weighted) - Occupancy Rate - Occupancy - Bed Rent per Day

10%

10 360 3,600 50% 1,800 2,000

10% 10%

450 750

10% 10%

450 550

10% 10%

450 500

10% 10%

450 500

10%

Diagnostic center - Ultra-Sound No of patients per month Ultrasound Fee per patient - X-Ray No of patients per month X Ray Fee per patient - ECG No of patients per month ECG Fee per patient - Complete Blood Test/Urine Test No of patients per month Test Fee per patient

Table 10-2: Electricity Assumptions Room Electricity Consumption One Ton AC Operating for 16 Hours/Day Other Electric Appliances Rate Per Unit (Rupees/Kwh) Electricity Price Growth Rate

26.67 units 6 units 15 10%

Table 10-3: Operating Expense Assumptions Costs Surgeon's & Anesthetist’s Share Consultants' Share Direct Diagnostic Costs

Basis 60% of Total Surgery Fee 50 % of Total Consultation Fee 15% of Total Diagnostic Center Fee

Table 10-4: Other Operating Expense Assumptions

Accounts Payable Cycle Raw Material Inventory Amortization Of Pre-Operating Expenses

30 Days 30 Days 10 Years 21



Private Hospital

Table 10-5: Financial Assumptions

Interest On Long Term Loan Long Term Debt Tenure Weighted Average Cost Of Capital

16% 5 years 20%

22 PREF-53/Apr, 2012/Rev 3

SMEDA Private Hospital

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