Company Analysis of Fortis Healthcare Care

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 same is the case with Gujrat. Apart from that, Chennai has become the eye specialist city and Kerala has become the ayurvedic center for healing. These facilities are being made use of by the non-Indian nations (Connell, 2011).

Huge market at hand

The population is surging, the patterns of diseases are altering, salary levels are rising, clinical needs aren't attended, health issues aren't being attended, demand for quality care is needed at moderate prices and medical tourism is all set to rise. So is the need for modern equipment. In any case, demand for modern equipment is needed in India on a basis of 12%-15% yearly. Many foreign companies commence their initial 500 surgeries in India after getting approval from FDA. Medical services are still shallow by the way. China has 106 doctors while India has 60 doctors per 1000. Australia has 247 doctors per 1000 people. The rural areas suffer a lot from this lack of doctors. The Indian healthcare industry is slow with respect to IT skills adaptation. Just a few handfuls of the hospitals are using the high tech facilities and infrastructure. Thus there is an urgent need in the improvement of the IT infrastructure of India (Woodman, 2011).

China an emerging market

China is the new Mecca for medical care and operations now. It is dealing in a wide spectrum of medical facilities such as neurology, cardiology, orthopedics and other services. Many private and government hospitals have international wings for services in bigger cities. Some hospitals provide western care and treatment while some provide conventional Chinese treatments (Woodman, 2011).

In the end

In the end, the patients or the clients don't have much power in India as is the case with suppliers as there aren't many manufacturers of medical equipment. Thus there is no competition for the time being and healthcare remains a vacant industry in India at large. Thus that's the idea behind Fortis Healthcare Limited's aims and objectives in India (Woodman, 2011).

5: Corporate level strategy pursued by Fortis Healthcare Limited

The corporate strategy of Fortis is certainly to venture and expand into new markets. It aims to sells its products in new markets and making headways in new markets. Fortis has been using the mergers and acquisition strategy for this matter (Herzlinger, 2008):

Mergers and takeovers

Fortis Healthcare Limited was busy in purchasing some ten hospitals in India for a staggering price of 9.09 billion rupees, according to Wall Street Journal. This strategic move was to capture the hospital segment completely. This acquisition will enable Fortis Healthcare Limited to 38 hospitals and 52,000 beds in India. Apart from that, ten more hospitals were added after Wockhardt's deal was signed (Herzlinger, 2008).

Global alliances

Fortis Healthcare Limited is enabled and equipped with world's finest infrastructure, medical treatments, technology equipment from all over the world targeted in the Indian soil. Its aim is to provide high quality care to its customers all across the world. In order to improve its treatments, processes and surgeries, it has collaborated with international service providers to corroborate on insurance, healthcare, medical, travel, tourism and other fields (Herzlinger, 2008).

Prominent names are:

Bupa

Aetna

Cigna

GMC services

The collaboration with international brands ensures that quality services are given to patients and health coverage is available for the clients in country and out of the country. Mostly, Fortis Healthcare Limited is operating in Asia-Pacific region and India (Herzlinger, 2008).

It has created a large network of hospital which is working to support its clients. Fortis Healthcare Limited meets its quality service goals by collaborating with world class service providers which impart immediate medical advice, medical expertise and healthcare services (Herzlinger, 2008).

Worldwide environment and technological environs

The healthcare systems in United States of America and Europe are under fire for being very expensive with health infrastructure strained. The National Health Service in UK is certainly under the weather for the exact same reason. The patients have been waiting for one year for surgery. In United States of America, 50 million population is not insured at all. They can't pay for their treatments. There is acute shortage of nurses and trained staff (Herzlinger, 2008).

Now the patients are regularly visiting India to get their operations done as their hospitals are affiliated with Indian private hospitals (Gulati and Taneja, 2012). India is known for providing low cost services for high quality care in quite many fields such as (Herzlinger, 2008):

Dentistry

Cardiology

Cosmetic

Orthopedic surgery

Eye care

Health checks

India is capable of offering world class operations such as:

Hip replacement

Bypass surgery

Organ transplant

Vision correction

Dental surgery

Cosmetic surgery

The price of a treatment is a fraction of what it is in UK and USA. The cost of surgery is still high for that matter. The surgeons can't be bought in courts like in UK and USA (Herzlinger, 2008).

Cost of insurance malpractice within New York City and India varies by a stretch. In New York City is $100,000 while in India it is $4,000. This drives down the cost of treatment to the ground. The diagnostic tools and tests being less pricey in India; it has the ability to become the Mecca for health screening (Herzlinger, 2008).

In a regular clinic in London, a routine blood test, x ray test, lung test, electrocardiogram test and abdominal test can cost like £350. While in India, the same tests can be done under just $84 at Max Healthcare. The Magnetic Resonance Imaging (MRI) scan can cost only $60 in India while in New York City it can cost around $700 (Herzlinger, 2008).

Evaluating future prospects

Fortis Healthcare Limited is a new entry into the healthcare industry. It has however ventured into pharmacy business and old age home business. In the future, the possibility of specialty hospital business won't be so profitable anymore; therefore it's time to move on. The old age homes and pharmacy mills will be the mainstay while the super specialty hospitals won't be profitable anymore with the arrival of life style diseases. Its better to sell off these hospitals to other enterprises in the region. It's a new entry in the healthcare region but is armed with a long portfolio (Herzlinger, 2008).