What doctors need to know before they venture into hospital business : Dr Jithendra Kumar KH

India is one of the few countries in the world wherein Government is encouraging doctors to venture into private healthcare service without a set of standards on defining the jurisdiction for the hospital. At one side it allows doctors to venture into Hospital project under the entity private limited company that is meant to make a profit and at the same time limits the business of hospital through various policies.

As per our experience, the majority of the doctors take up the decision of venturing into Hospital business just by their gut feeling. They will never work on the virtual hospital and business plan but will have enough contacts to mobilize funds to build a hospital. A busy clinician ends up spending more time on administrative stuff rather than excelling his patient care. This is the story of many doctors in India and there are very fewer case studies that come to the public for one to learn from mistakes because the majority of these doctors do not admit such mistakes.

We as hospital consultants advice all the doctors or promoters venturing into hospital business to work on the dipstick project report at least instead of a detail project report. The study will at least give an idea about the challenges of running a hospital through the virtual hospital. A market survey to understand the need-gap of the healthcare services in a said locality will help to plan better. At the same time, it will also help us understand any potential hospital project in the vicinity if any. The overall expenses towards working on the virtual dream hospital will be less than 0.5% of the total cost of the hospital project for a smaller hospital and it may be around 0.2% for big size project. At the end of the study, it gives a sense of confidence to the promoters to venture into the project.

As per our experience, less than 10% of the promoters venture into hospital project. The remaining 90% of the promoters after a dipstick project report, will either cancel their dream hospital project or defer their decision. The project report will highlight the prospective challenges and ways to overcome those in a systematic way.

The private healthcare service in India is at stake and is complemented by

1.Government, encouraging to register hospital under a commercial entity

2.Government, capping the service price even for hospitals registered under commercial entity

3.The public’s mindset towards the doctors and their thankless efforts to service patients

4.The doctors' overconfidence, of making huge margin through their new hospital venture

5.Cut throat market behaviour of the high-cost medical equipment business.

We as hospital consultants, advice our hospital promoters to plan properly before venturing into a hospital. Dedicated time on the virtual hospital considering all the above points will help the promoters to think for the worst. We advise them to seek funds from Banks even if they do not require funds. Bankers are the financial institutes that operate on public funds, and hence follow strict protocols before sanctioning loan to any projects. You need to really understand what they look into before lending loan to the hospital project. Banks will scrutinize your project report and if they come forward to fund the project, it’s a sure sign that the project has the potential to make good business.

(Dr Jithendra Kumar KH, Director, Macula Healthcare Pvt Ltd. A hospital & healthcare consulting firm based in Bengaluru. Successfully, we have executed more than 60 projects at various cadre within Hospital & Patient care services.)