Starting a Healthcare Business

India's healthcare sector is currently the second fastest-growing surpassed only by retail. Unsurprisingly, many corporate houses are looking to exploit the opportunities this field of business provides and are actively considering diversification into or have already diversified into this sector by setting up their own hospitals. As an example, Apollo Hospitals in Chennai, India, has grown rapidly in about 30 years from a small unrecognized hospital brand in a small part of southern India to an extensive set of more than 8500 hospitals within and outside India, with even more rapid growth anticipated in the coming years. In this article, we look at the nuances of starting healthcare business in India.

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URBAN-RURAL DIVIDE AND RESPECTIVE PRIVATE-PUBLIC REACH:

The study conducted by IMS Institute for Healthcare Informatics in 2013, across 12 states in over 14,000 households indicated a steady increase in the usage of private healthcare facilities over the last 25 years for both Out-Patient and In-Patient services, across rural and urban areas. The National Family Health Survey reported in a study that the private medical sector remains the primary source of health care for almost 2/3rds of the country (the distribution in urban areas being about 70% of households and a corresponding proportion in rural areas of about 63% of households)

Several reasons are cited for relying on private rather than public sector; the main reason at the national level is the poor quality of care in the public sector, There are over 57% of households that point to the poor quality of public healthcare as the predominant reason for this persistent preference for private health care. There are a host of other lesser important factors affecting this choice, such as the distance of the public sector facility, the sometimes abnormally lengthy waiting time involved, and the generally inconvenient hours of operation.

Since the process of setting up a hospital involves so many processes, sub-processes, and finance, it is imperative to prepare a detailed feasibility study report before one gets started. Setting up a hospital is a complex mix that includes proper building design, permissions, finance, advisors, and consultants.

NECESSARY LICENSES

The following licenses are required to start a health care business:

1. Relating to land and construction: The first problem to tackle is the land, and one should ideally look for non-agricultural land specifically designated for hospitals. This information can be obtained from the land records of the local authorities or municipal corporations. If a prior designation for hospitals does not exist, the local authorities will have to be notified about this change of use.

To begin construction, you will need several documents, such as the land title deed, corporate or company details, permission from the local authority to use land space for construction, building permit, tax identification card, and the architect’s plan. The last of these must have the formal approval of the local government before construction can commence. A certificate of no objection also needs to be procured.

On obtaining electricity supply and setting the tiles, you can get a completion certificate from the authorities after the premises have been inspected. The Government issues an occupation certificate after all the clearances.

2. Electricity requirements: A hospital’s approximate electricity requirement is estimated based on the usage of lighting, air-conditioning as well as that of the medical equipment. These can be assessed with the help of the architect or hospital consultant. The permission is to be obtained from the local electric supply board.

3. Water needs: As an approximate measure, your hospital will require approximately 100 liters of water per bed per day. In reality, the water requirement for a hospital can vary vastly from project to project, depending on whether it is a primary, secondary, tertiary, or special care hospital. This figure includes everything from a patient’s water requirements to hospital maintenance. The local authorities grants permission for the water requirements.

4. Sewage waste and Sanitation For the installation of sanitation measures and waste control faculties, including tanks, pipelines, and the like, you need permission from the local authorities.

5. Bio-medical waste issues Large hospitals need to have incinerators installed for disposing of biomedical waste, such as body parts or tissues. As incinerators usually take up between 500 to 1,000 square feet of space, smaller hospitals cannot afford to have them installed. Therefore, they need to register themselves with municipal corporations for waste disposal.

6. Fire department approval This is a necessary requirement for large hospitals.

7. Health certification In most cities, the local authority will certify a healthcare facility only after all beds and equipment have been installed. This involves a nominal fee.

LOAN AND FINANCE REQUIREMENTS

Because of the positive past performance of new startups in the hospital business, obtaining finance for setting up a hospital or healthcare center is not difficult as a rule, with banks being ready and willing to invest in opportunities undertaken with a clear vision for growth and profitability.

ADVISORS AND EXPERTS

In the process of setting up a hospital, you will need to enlist the services of these professionals - Experts in Architecture, Structural and Electrical Engineering, as well as advisors in Water and Sanitation, Fire prevention, and Hospital design.

DEPARTMENT-WISE PLANNING

Purchase of Medical Equipment: Budgeting, Vendor Identification, Selection of the appropriate seller, Purchase, Installation and obtaining of annual maintenance contracts
HR functional assessment: Making a requirement matrix, department-wise, Making HR available, Interview and selection, Assessing financial implication
Types of doctors and other medical professionals: Freelance medical professionals, Resident medical officers, Visiting Doctors, other medical consultants, Nursing staff
Everyday Equipment and services: Air-conditioner, Air handling unit, Plumbing, Electricity maintenance, Medical gas pipelines, Civil works
Computerization and Automation: Hardware and Software (e.g., Hospital Management Information System), CRM systems
Systems and protocols: Nursing & Admissions protocol, Infection control protocol, etc.
Additional Planning requirements: Stores and pharmacy, Hi-tech equipment selection, installation, and training, Setting up super-specialty departments

About the Author: Nishant is an MBA graduate from IIM Lucknow. He has extensive experience in business and professional writing, having authored dozens of business articles and personally prepared hundreds of project reports. He has specialized in finance.

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