Strategy Development XXX Hospital Project

Justifications of XXX entry in to hospital sector Widening demand gap Government beds per 1000 population 5 ( Colombo) Private beds per 1000 population 3 ( Colombo) Growth of private sector hospitals Average revenue growth 15% Sector vision to be the leader in health care business Platform to enter other areas in the Healthcare sector Favourable impression in the market & among professionals about Hemas entry to hospital sector

Method of Entry to hospital sector Hospital with unique concepts acceptable to local community XXX Equity Foreign partner, experienced in hospital management

Objectives of the XXX hospital Project To established a Multi-specialty hospital in Colombo district. To establish 2-3 satellite hospitals in selected outstations. To support related special projects identified by Hemas.

Project model Multi-specialty hospital Group of hospitals Colombo (01) , initially Selected Outstations ( 03), later Partnership with existing hospitals Outsource unavailable facilities Reach outstations

Multi Specialty Hospital Vs. Single Specialty hospital Disease pattern in Sri Lanka Direct patient care & Supportive care Capital investment Hospital utilization Attracting doctors & patients

Group of Hospitals Vs. single hospital Feeding hospitals Demand in the Outstations

Hospital Model New concepts to attract doctors & patients Use of IT in patient care & administration Controlled infrastructure High quality of care with minimal waiting time & cost Comfortable environment for doctors & patients Focused on the largest (60%) middle income group Concentrate on the general specialties Combination of Medical management & Hotel management

Three basic models According to bed strength Large Medium Small

Hospital Model A Bed strength 100 Cost: Rs. 1000 million Multi-specialty General hospital Curative, preventive & rehabilitative care Services General specialties No high end,capital intensive services Facilities Inward & outdoor care Special care units Diagnostics ,up to CT scanner

Hospital Model B Hospital Model C beds -75 Beds -25 Project cost :Rs.750 million Tertiary care facilities Outdoor: all related specialties Diagnostics up to CT scanner Hospital Model C Beds -25 Project cost :Rs.250 million Inward: 04 General specialties Outdoor: all related specialties Diagnostics up to an US Scanner

Selection of the location People Population density Household income & Expenditure on health Demand gap Government hospitals & beds Teaching / University hospital Availability of Government doctors Private sector hospitals Availability of land Lease basis Selection of the location.xls

Selected of areas Colombo Central : Krimandala Colombo South: Rajagiriya, Malabe Colombo North: Gampaha, Kribathgoda, Galle : Karapitiya Kandy : Municipality area Kurunegalla: Omitted after preliminary analysis

Selection of the land Highway & Visibility Residential area Closer to Government Hospital/ medical faculty On a Lease basis 30 years Other facilities 02 acres

Search for lands Contacts: BOI & Private Colombo Krimandala Mawata Parliament road: Kandy road Negambo High level road Kurunegalla Suitable private land on a lease basis UDA land Kandy Suitable land of UDA Land of Commercial Company Galle - 04 Plots of land available

Human Resource Preferred Doctors Nursing & other staff full time University staff preferred Second line, young doctors IT competence Part time / Full time staff Pros & cons of permanent/part time staff Mix of local & foreign doctors ( for back office work) Nursing & other staff full time

Financial Forecast Assumptions made Model A hospital, with 100 beds Utilization pattern Ist Year 55% 2nd Year 75% 3rd Year 90% HR. Ist Year 90% 2nd Year 100% 3rd Year 100% Finacial forecast.xls Revenue forecast of hospital.xls

Project cost a. Capital Cost= SLR 1000 million Capital Cost Category % Project cost Cost in SLR (Million) Depreciation Annual contribution Land 10% 100 30 3.3 Building 60% 600 20 Equipment 30% 300 10 40 Total 1000 63.3

Project cost b. Recurrent cost (SLR Million) Category % of cost 1st Year 2nd Year 3rd Year HR 57 51.3 Gen. Supplies 1.8 1.1 1.5 Med. Supplies 45 27.5 37.5 Diet 9 5.5 7.5 Overheads 15.5 9.5 13 15.3 Others 4.5 2.7 4 TOTAL 100 97.5 105 126

Revenue Forecast (SLR Millions) Category 1st Year 2nd Year 3rd Year Apollo (100 Beds) Channeling 6 8 11 - Room Fees 31 42 56 46 Surgery 99 134 179 332 Laboratory fees 62 84 113 78 Diagnostics 27 37 49 65 Pharmacy 136 Others 12 15 255 TOTAL 264 359 479 683

Financial Forecast XXX Hospital Revenue 1st Year 2nd 3rd Apollo 90% Utilization 100 Beds 264 359 479 683 Expenditure 160 169 201 292 Gross profit 104 190 278 391

Project Schedule Completion of Project proposal Completion of Design Agreements Initiation of construction Equipment installation Training & recruitment of staff Opening of the hospital

The Hospital project Feasibility Development of the concept & strategy Medical plan Development of the finances Development of the project budget Operational finances Project planning

Feasibility Demography Epidemiology Health Services Market research Financials