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Pre-Feasibility Study
PPRRIIVVAATTEE HHOOSSPPIITTAALL
Small and Medium Enterprise Development Authority
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th Floor LDA Plaza Egerton Road, Lahore
Tel (042)111 111 456,
Fax: 36304926-7
REGIONAL OFFICE
PUNJAB REGIONAL OFFICE
SINDH REGIONAL OFFICE
KHYBER PAKTUNKHWA REGIONAL OFFICE
BALOCHISTAN
8th Floor LDA Plaza, Egerton Road,
Lahore.
Tel: (042) 111 111 456, Fax: (042) 36370474
5TH Floor, Bahria Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456 Fax: (021) 5610572
Ground Floor State Life Building The Mall,
Peshawar.
Tel: (091)111 111 456, 9213046-7 Fax: (091) 286908
Bungalow No. 15-A Chamn Housing Scheme Airport Road,
Quetta.
Tel: (081) 2831623, 2831702 Fax: (081) 2831922
April, 2012
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
2
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
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
3
1 EXECUTIVE SUMMARY................................................................................................................. 1
2 PROJECT PROFILE ......................................................................................................................... 2
2.1 OPPORTUNITY RATIONALE ............................................................................................................... 2 2.2 PROJECT BRIEF ................................................................................................................................. 2 2.3 PROJECT CAPACITY AND RATIONALE ............................................................................................... 2 2.4 PROJECT INVESTMENT ...................................................................................................................... 2 2.5 PROPOSED LOCATION ....................................................................................................................... 3 2.6 KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS ................................................................. 3 2.7 THREATS FOR THE BUSINESS ............................................................................................................ 3
3 SECTOR & INDUSTRY ANALYSIS ............................................................................................... 3
3.1 HEALTH CARE DELIVERY ................................................................................................................. 3 3.2 PHYSICAL TARGETS AND ACHIEVEMENTS DURING 2010-11 ............................................................. 4 3.3 HEALTH AND NUTRITION EXPENDITURES ......................................................................................... 5 3.4 REGULATIONS ................................................................................................................................... 6
4 MARKET INFORMATION .............................................................................................................. 6
4.1 MARKET POTENTIAL ......................................................................................................................... 6 4.2 NATIONAL MEDICAL AND HEALTH ESTABLISHMENTS ...................................................................... 6 4.3 TARGET CUSTOMERS ........................................................................................................................ 7 4.4 DEPARTMENTS .................................................................................................................................. 7
5 MACHINERY DETAILS................................................................................................................... 7
5.1 MACHINERY AND EQUIPMENT REQUIREMENT .................................................................................. 7 5.2 MOTOR VEHICLES ............................................................................................................................10
6 LAND & BUILDING REQUIREMENT .........................................................................................10
6.1 TOTAL LAND REQUIREMENT ...........................................................................................................10 6.2 SUITABLE LOCATIONS .....................................................................................................................11 6.3 COVERED AREA REQUIREMENT .......................................................................................................11 6.4 UTILITIES REQUIREMENT .................................................................................................................13
7 HUMAN RESOURCE REQUIREMENT .......................................................................................13
7.1 HUMAN RESOURCE REQUIREMENTS ................................................................................................13 7.1.1 Consultants ............................................................................................................................13
8 FINANCIAL ANALYSIS ..................................................................................................................15
8.1 INITIAL PROJECT COSTS ...................................................................................................................15 8.2 ESTIMATED TIME FOR PROJECT COMPLETION ..................................................................................16 8.3 PROJECT RETURNS ...........................................................................................................................16
9 FINANCIAL ANALYSIS ..................................................................................................................17
9.1 PROJECTED INCOME STATEMENT .....................................................................................................17 9.2 PROJECTED CASH FLOW STATEMENT ..............................................................................................18 9.3 PROJECTED BALANCE SHEET ...........................................................................................................19
10 KEY ASSUMPTIONS .......................................................................................................................20
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
1
11 EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY
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.
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
2
22 PPRROOJJEECCTT PPRROOFFIILLEE
22..11 OOppppoorrttuunniittyy RRaattiioonnaallee
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.
22..22 PPrroojjeecctt BBrriieeff
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.
22..33 PPrroojjeecctt CCaappaacciittyy aanndd RRaattiioonnaallee
The proposed capacity of this hospital is given in the table below:
TTaabbllee 22--11:: PPrrooppoosseedd CCaappaacciittyy
EEmmeerrggeennccyy 10 Beds
IICCUU//CCCCUU 5 Beds
RRoooommss ((2255 NNooss)) 25 Beds
GGeenneerraall WWaarrdd 10 Beds
LLaabboorr WWaarrdd 10 Beds
22..44 PPrroojjeecctt IInnvveessttmmeenntt
Total project cost for setting up a Private Hospital is estimated at Rs 95.578 million.
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
3
22..55 PPrrooppoosseedd LLooccaattiioonn
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.
22..66 KKeeyy SSuucccceessss FFaaccttoorrss // PPrraaccttiiccaall TTiippss ffoorr SSuucccceessss
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.
22..77 TThhrreeaattss ffoorr tthhee BBuussiinneessss
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.
33 SSEECCTTOORR && IINNDDUUSSTTRRYY AANNAALLYYSSIISS
33..11 HHeeaalltthh CCaarree DDeelliivveerryy
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
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
4
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:
TTaabbllee 33--11:: AAvvaaiillaabbllee HHuummaann RReessoouurrccee11
2008-09 2009-10 2010-11
Registered Doctors 133,984 139,555 144,901
Registered Dentists 9,013 9,822 10,508
Registered Nurses 65,387 69,313 73,244
Population Per Doctor 1,310 1,183 1,222
Population Per Dentist 18,101 16,914 16,854
Population Per Nurse 1,575 1,592 1,701
33..22 PPhhyyssiiccaall TTaarrggeettss aanndd AAcchhiieevveemmeennttss dduurriinngg 22001100--111122
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 Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #143)
2 Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #143)
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
5
TTaabbllee 33--22:: PPhhyyssiiccaall TTaarrggeettss aanndd AAcchhiieevveemmeennttss dduurriinngg 22001100--111133
Sub Sector Targets (No)
2010-11
Estimated
Achievements
(No)
Achievements
(%)
A. Rural Health Program
i. New Basic Health Units
(BHUs)
40 35 87
ii. New Rural Health Centres
(RHCs)
15 13 86
iii. Up gradation of existing
RHCs
45 40 88
iv. Up gradation of existing
BHUs
900 850 94
B. Beds in
Hospitals/RHCs/BHUs
4500 4300 95
C. Health Manpower
Development
i. Doctors 5,000 4,500 90
ii. Dentists 450 400 80
iii. Nurses 3,500 3,200 90
iv. Paramedics 5500 5000 90
v. Training of TBAs 500 450 90
vi. Training of LHWs 100,000 96,000 96
D. Preventive Program
i. Immunization (Million Nos) 8.5 8 94
ii. Oral Re hydration Salt
(ORS) (Million Packets)
25 24 96
33..33 HHeeaalltthh aanndd NNuuttrriittiioonn EExxppeennddiittuurreess
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)
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
6
TTaabbllee 33--33:: EExxppeennddiittuurree ddeettaaiill ((RRss.. bbiilllliioonnss))44
Fiscal
Year
Total
Expenditure
Development
Expenditure
Current
Expenditure
Change
(%)
As %of
GDP
2010-11 42 19 23 -47 0.23
2009-10 79 38 41 7 0.54
2008-09 74 33 41.10 23 0.56
2007-08 60 27.22 32.67 20 0.57
2006-07 50 20 30 25 0.57
33..44 RReegguullaattiioonnss
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.
44 MMAARRKKEETT IINNFFOORRMMAATTIIOONN
44..11 MMaarrkkeett PPootteennttiiaall
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.
44..22 NNaattiioonnaall MMeeddiiccaall aanndd HHeeaalltthh EEssttaabblliisshhmmeennttss55
Total number of hospitals and other health center detail is given in below table:
TTaabbllee 44--11:: HHeeaalltthh EEssttaabblliisshhmmeenntt iinn PPaakkiissttaann
Year Hospitals Dispen-
saries
BHUs
Sub
Health
Centers
Maternity &
Child Health
Centers
Total Beds Population
Per Bed
2005 919 4632 5334 907 101,490 1483
2006 924 4712 5336 906 102,073 1508
2007 945 4755 5349 903 103,285 1544
4 Source: Economic Survey of Pakistan 2010-11 (Ch#11, Page #142) 5 Source: Economic Survey of Pakistan 2010-11 (Statistical Appendixes, Health & Nutrition, Table # 11.1 )
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
7
2008 948 4794 5310 908 103,037 1575
2009 968 4813 5345 906 103,708 1592
2010 972 4842 5344 909 104,137 1701
44..33 TTaarrggeett CCuussttoommeerrss
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.
44..44 DDeeppaarrttmmeennttss
The proposed hospital would have the following departments:
Emergency
ICU/CCU
Diagnostic Centre
Radiology Department
Surgical Consultancy
Medical Consultancy
Gynecology and Obstetrics review
55 MMAACCHHIINNEERRYY DDEETTAAIILLSS
55..11 MMaacchhiinneerryy aanndd EEqquuiippmmeenntt RReeqquuiirreemmeenntt
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:
TTaabbllee 55--11:: MMaacchhiinneerryy aanndd EEqquuiippmmeenntt RReeqquuiirreemmeenntt66
Description No Cost Per Unit
(Rs)
Total in Rs.
Radiology Department
X-Ray Apparatus with motorized tilting
table
1 450,000 450,000
Dark Room X-Ray Accessories 1 75,000 75,000
ECG Machine 2 35,000 70,000
Ultrasound Machine 1 135,000 135,000
Printer for Ultrasound 1 58,000 58,000
Total 788,000
6 Machinery cost has been taken from Mediequip and Nurani Surgical, Lahore.
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
8
Diagnostic Center
Blood Analyzer 1 195,000 195,000
ELISA for hormone Analysis fully
automatic
1 3,200,000 3,200,000
Binocular Microscope 1 150,000 150,000
Centrifuge Machine 1 4,000 4,000
Clinical water bath 1 6,500 6,500
Photo Calorimeter 1 45,000 45,000
Lab Incubator 1 95,000 95,000
Miscellaneous Lab Equipment 1 500,000 500,000
Oxygen Supply Plant with Supply in all
Rooms
1 150,000 150,000
Total 4,345,500
Operation Theatre
Operation Theatre Shadow less Light 1 33,000 33,000
Electric suction apparatus 1 23,000 23,000
Surgical Diathermy 1 65,000 65,000
Anesthesia Apparatus 1 450,000 450,000
Trolley for Anesthesia 1 85,000 85,000
Cardiac Resuscitation Trolley 1 95,000 95,000
Cardiac Monitor 1 135,000 135,000
Hydraulic Operation Table 1 48,000 48,000
Horizontal and Vertical Autoclave 1 60,200 60,200
Operation Table 1 48,000 48,000
Emergency Oxygen Kit 3 350,000 1,050,000
Total 2,092,200
Gynecology, Obstetrics & Pediatrics
Operation Theatre Shadow less Light 1 33,000 33,000
Electric suction apparatus 1 23,000 23,000
Delivery Table 2 45,000 90,000
Computerized Baby Incubator 3 125,000 375,000
Phototherapy Apparatus 2 15,000 30,000
Baby Cot with side protection 5 8,500 42,500
Total 593,500
ICU/CCU 5 Beds
Ventilator 2 1,500,000 3,000,000
Cardiac Monitors 5 450,000 2,250,000
Arterial Blood Gas Analyzer 5 800,000 4,000,000
Total 9,250,000
Grand Total 17,069,200
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
9
In addition to this machinery, small auxiliary tools are also required for the smooth
operations of the hospital.
TTaabbllee 55--22:: OOtthheerr EEqquuiippmmeenntt RReeqquuiirreemmeenntt
Description No Cost Per Unit
(Rs) Total
Electricity Generator 1 1,700,000 1,700,000
Elevator 1 1,500,000 1,500,000
Light and Electricity Appliances 10 1,500 15,000
Instrument sterilizers 2 5,000 10,000
Baby Weighing Machine 1 3,500 3,500
Instrument cabinets 2 8,500 17,000
Stethoscope 12 2,000 24,000
LV Stands 40 850 34,000
Blood Pressure apparatus 6 1,950 11,700
Miscellaneous 500,000
Total 3,815,200
Moreover, there is other office equipment that is required for the daily operations of the
hospital.
TTaabbllee 55--33:: OOffffiiccee EEqquuiippmmeenntt RReeqquuiirreemmeenntt
Description No Cost Per Unit
(Rs) Total in PKR
Split Units 99 45,000 4,455,000
Refrigerators 30 29,000 870,000
TVs 25 11,000 275,000
LCDs 2 50,000 100,000
Computers with UPS 14 40,000 560,000
Printers 5 15,000 75,000
Telephone Exchange 1 100,000 100,000
Telephone Sets 40 1,000 40,000
Fire Extinguishers 20 4,000 80,000
File Cabinets 15 9,000 135,000
Total 6,690,000
To furnish the hospital rooms, laboratories, and visiting area the following furniture is
required.
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
10
TTaabbllee 55--44:: FFuurrnniittuurree aanndd FFiixxttuurree RReeqquuiirreemmeenntt
Description No. Cost Per Unit
(Rs)
Total
Single side liftable beds 71 18,900 1,341,900
Examination Couch 13 9,950 129,350
Sofa set 3 seat 57 18,400 1,048,800
Chairs etc 69 4,199 289,725
Office Table 24 3,450 82,800
Bed Side Cabinets 60 3,500 210,000
Mobile stretcher trolleys 8 8,500 68,000
Wheel Chairs 8 5,900 47,200
Instrument trolley 10 6,500 65,000
Total 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.
55..22 MMoottoorr VVeehhiicclleess
Along with the above mentioned machinery and equipment the proposed hospital will
also be using two ambulances.
TTaabbllee 55--55:: AAmmbbuullaannccee
Sr. No Description QTY Cost per
Unit Total Amount in Rs.
1 Ambulance 2 1,500,000 3,000,000
66 LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT
66..11 TToottaall LLaanndd RReeqquuiirreemmeenntt
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.
TTaabbllee 66--11:: LLaanndd CCoosstt
Description No. of Kanal Rate per Kanal (Rs.) Total Cost in PKR
Total Land 1.5 10,000,000 15,000,000
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
11
66..22 SSuuiittaabbllee LLooccaattiioonnss
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:
TTaabbllee 66--22:: SSuuiittaabbllee LLooccaattiioonnss aanndd tthheeiirr pprriisseess rraannggee
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
66..33 CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt
Following is the covered area requirement split into various departments and sections:
TTaabbllee 66--33:: CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt
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
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
12
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 4,580 6,070,000
Ground floor
Reception and waiting
room 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 for 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
Child nursery and labor
room 1 25 x 25 625 1,500 937,500
Space for Stairs and
Elevator 1 20 x 15 300 1,000 300,000
Store room 1 20 x 15 300 800 240,000
Total 5,553 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
Pre-Feasibility Study Private Hospital
PREF-53/Apr, 2012/Rev 3
13
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 1,000 4,284,400
Total Civil Works Cost 34,787,400
66..44 UUttiilliittiieess RReeqquuiirreemmeenntt
Electricity
Telephone
Gas
Water
Waste disposal
77 HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT
77..11 HHuummaann RReessoouurrccee RReeqquuiirreemmeennttss
77..11..11 CCoonnssuullttaannttss
Consultant services for the following specialized areas would be made available in the
hospital:
1. Gastroenterology Specialist
2. Pediatric Physician
3. General Surgeon
4. General Physician (Chest & TB)
5. Diabetes & Endocrinologist
6. Cardiologist
7. Orthopedic Surgeon
8. Gynecologist
9. Pathologist
10. 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
his team share the rest 2/3rd
.
For the proposed size of hospital, apart from consultants following manpower is required:
Pre-Feasibility Study Private Hospital
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TTaabbllee 77--11:: HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt
Positions Required Salary per Month Salary per Annum
Chief Executive 1 100,000 1,200,000
Admin & Finance Manager 1 75,000 900,000
Admin Officers 2 35,000 840,000
Medical Officers 24 45,000 12,960,000
Nursing Staff 45 18,000 9,720,000
Laboratory Technicians 9 15,000 1,620,000
Operation Theater Assistant. 6 15,000 1,080,000
Mid Wives 6 12,000 864,000
Radiology Technicians 6 15,000 1,080,000
Receptionist 6 15,000 1,080,000
Accountant 2 25,000 600,000
Accounts clerk / Cashier 3 15,000 540,000
Security Guards 6 10,000 720,000
Electrician/technician 3 12,000 432,000
Cleaner + Ayas 6 7,500 540,000
Ward Boy /Office Boy 15 7,500 1,350,000
Male Nurse 18 10,000 2,160,000
Store Keeper 3 9,000 324,000
Total 162 38,010,000
Pre-Feasibility Study Private Hospital
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15
88 FFIINNAANNCCIIAALL AANNAALLYYSSIISS
88..11 IInniittiiaall PPrroojjeecctt CCoossttss
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.
TTaabbllee 88--11:: TToottaall PPrroojjeecctt CCoosstt
Project Costs Total Cost in Rs.
Capital Costs
Land 15,000,000
Building 34,787,400
Machinery & Equipment 17,069,200
Other Equipments 3,815,200
Office Equipment 6,690,000
Furniture & Fixture 3,282,775
Ambulance (02 Nos) 3,000,000
Pre-operating costs7 3,460,000
Total Capital Costs 87,104,575
Working Capital
Raw Material Cost8 478,603
Cash Required for 2 Months Operations
Salaries 6,335,000
Electricity 660,015
Minimum Cash Required 1,000,000
Total Working Capital 8,473,618
Total Project Costs 95,578,193
TTaabbllee 88--22:: FFiinnaanncciinngg PPllaann
Financing
Debt (50%) 47,789,096
Equity (50%) 47,789,096
Total 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.
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88..22 EEssttiimmaatteedd TTiimmee ffoorr PPrroojjeecctt CCoommpplleettiioonn
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.
88..33 PPrroojjeecctt RReettuurrnnss
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:
TTaabbllee 88--33:: PPrroojjeecctt RReettuurrnnss
Project
IRR 36.39%
NPV Rs. 99,544,391
Payback Period (Years) 3.86
Pre-Feasibility Study Private Hospital
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17
99 FFIINNAANNCCIIAALL AANNAALLYYSSIISS
99..11 PPrroojjeecctteedd IInnccoommee SSttaatteemmeenntt
PROJECTED INCOME STATEMENT
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees RupeesREVENUE
Indoors
- Surgery 19,800,000 24,750,000 30,492,000 37,853,640 46,822,236 58,074,996 71,641,692 88,978,128 110,222,736 136,807,284
- Room rent 23,850,000 28,858,500 34,918,785 42,251,730 51,124,593 61,860,758 74,851,517 89,459,586 102,635,032 112,898,535
43,650,000 53,608,500 65,410,785 80,105,370 97,946,829 119,935,754 146,493,209 178,437,714 212,857,768 249,705,819
Outdoors
- Consultation fee 33,750,000 42,075,000 51,756,000 62,937,000 75,831,000 90,675,000 111,720,000 136,059,000 164,118,000 196,470,000
- Diagnostic Center 12,420,000 15,028,200 18,207,360 22,060,800 26,698,320 32,304,096 39,119,040 47,349,972 57,300,552 69,343,008
46,170,000 57,103,200 69,963,360 84,997,800 102,529,320 122,979,096 150,839,040 183,408,972 221,418,552 265,813,008
Pahrmacy rent 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431
Canteen Rent 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
DIRECT COSTS
Surgeon's & Anaesthesist's Share 11,880,000 14,850,000 18,295,200 22,712,184 28,093,342 34,844,998 42,985,015 53,386,877 66,133,642 82,084,370
Consultants' Share 16,875,000 21,037,500 25,878,000 31,468,500 37,915,500 45,337,500 55,860,000 68,029,500 82,059,000 98,235,000
Direct diagnostic and Surgery costs 5,823,000 7,204,230 8,829,504 10,879,848 13,369,195 16,460,614 20,196,194 24,898,121 30,639,630 37,762,908
Rooms Electricity 2,760,090 3,440,902 4,230,274 5,143,110 6,196,209 7,408,496 9,127,250 10,946,523 12,403,404 13,497,822
Total Variable Cost of Services 37,338,090 46,532,632 57,232,978 70,203,642 85,574,246 104,051,607 128,168,460 157,261,021 191,235,676 231,580,100
Fixed Overheads
Payroll 27,324,000 30,056,400 33,062,040 36,368,244 40,005,068 44,005,575 48,406,133 53,246,746 58,571,421 64,428,563
Depreciation 5,474,578 5,474,578 5,474,578 5,474,578 5,474,578 5,474,578 5,474,578 5,474,578 5,474,578 5,474,578
Maintenance 686,446 755,090 830,599 913,659 1,005,025 1,105,528 1,216,081 1,337,689 1,471,457 -
Total Services Cost (Fixed + Variable) 70,823,113 82,818,700 96,600,195 112,960,123 132,058,917 154,637,288 183,265,251 217,320,033 256,753,131 301,483,241
Contribution Margin 52,781,910 64,509,068 78,504,167 95,298,828 115,341,133 139,346,395 169,695,257 205,170,280 243,683,721 284,646,111
Gross Profit 19,296,887 28,223,000 39,136,950 52,542,347 68,856,462 88,760,715 114,598,466 145,111,268 178,166,266 214,742,971
OPERATING OVERHEADS
Payroll 10,686,000 11,754,600 12,930,060 14,223,066 15,645,373 17,209,910 18,930,901 20,823,991 22,906,390 25,197,029
Depreciation 1,389,880 1,389,880 1,389,880 1,389,880 1,389,880 1,389,880 1,389,880 1,389,880 1,389,880 1,389,880
Electricity 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920 1,932,612 2,125,873 2,338,460 2,572,306 2,829,537
Other operating costs 600,000 660,000 726,000 798,600 878,460 966,306 1,062,937 1,169,230 1,286,153 1,414,769
Legal & professional charges 75,000 82,500 90,750 99,825 109,808 120,788 132,867 146,154 160,769 176,846
Telephone 350,000 385,000 423,500 465,850 512,435 563,679 620,047 682,052 750,257 825,283
Amortization of pre-opertaing ezpenses 346,000 346,000 346,000 346,000 346,000 346,000 346,000 346,000 346,000 346,000
Total 14,646,880 15,937,980 17,358,190 18,920,421 20,638,875 22,529,175 24,608,505 26,895,767 29,411,755 32,179,344
Rental Income 420,000 462,000 508,200 559,020 614,922 676,414 744,056 818,461 900,307 990,338
Financial charges
Long term loan @ 16% 7,646,255 6,117,004 4,587,753 3,058,502 1,529,251 - - - - -
Net profit before tax (2,576,249) 6,630,016 17,699,207 31,122,444 47,303,258 66,907,954 90,734,018 119,033,962 149,654,818 183,553,965
Tax - 1,657,504 4,424,802 7,780,611 11,825,814 16,726,989 22,683,504 29,758,491 37,413,704 45,888,491
Net Profit after tax (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
Pre-Feasibility Study Private Hospital
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99..22 PPrroojjeecctteedd CCaasshh FFllooww SSttaatteemmeenntt
PROJECTED CASH FLOW STATEMENT
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
Profit after tax - (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
Adjustment of non-cash changes and other items:
Depreciation - 6,864,458 6,864,458 6,864,458 6,864,458 6,864,458 6,864,458 6,864,458 6,864,458 6,864,458 6,864,458
Amortization of preoperating expenses - 346,000 346,000 346,000 346,000 346,000 346,000 346,000 346,000 346,000 346,000
Working Capital Changes
(Increase) in stocks (478,603) (113,526) (133,584) (168,521) (204,604) (254,089) (307,034) (386,460) (471,905) (585,475) 3,103,801
Increase/(Decrease) in financial charges payable - 7,646,255 (1,529,251) (1,529,251) (1,529,251) (1,529,251) (1,529,251) - - - -
Increase/(Decrease) in payables - 4,382,376 4,517,482 2,029,763 2,446,465 2,910,650 3,491,722 4,476,634 5,306,925 5,957,926 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
Net Cash Flow from operating activities (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 (3,460,000) - - - - - - - - - -
Fixed Capital expenditure (83,644,575) - - - - - - - - - -
Net Cash Flow from investing activities (87,104,575) - - - - - - - - - -
Capital issued 47,789,096 - - - - - - - - - -
Long term Loan 47,789,096 (9,557,819) (9,557,819) (9,557,819) (9,557,819) (9,557,819) - - - - -
Dividends paid - - - - - - - - - - -
Net Cash Flow from financing activities 95,578,193 (9,557,819) (9,557,819) (9,557,819) (9,557,819) (9,557,819) - - - - -
Cash generated (injected) during the year 7,995,015 6,991,495 5,479,797 11,259,033 21,707,081 34,257,391 59,046,860 79,351,145 101,320,949 124,824,021 154,662,484
Pre-Feasibility Study Private Hospital
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99..33 PPrroojjeecctteedd BBaallaannccee SShheeeett
PROJECTED BALANCE SHEETYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
CAPITAL AND RESERVESIssued, subscribed and paid up capital 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096 47,789,096
Retained Earnings - (2,576,249) 2,396,263 15,670,668 39,012,501 74,489,945 124,670,910 192,721,423 281,996,895 394,238,008 531,903,482
47,789,096 45,212,848 50,185,360 63,459,765 86,801,598 122,279,041 172,460,007 240,510,520 329,785,992 442,027,105 579,692,579
LONG TERM LOAN
Long term loans - unsecured
LONG TERM LOAN @14% 47,789,096 38,231,277 28,673,458 19,115,639 9,557,819 - - - - - -
CURRENT LIABILITIES
Creditors accrued and other liabilities - 4,382,376 8,899,858 10,929,621 13,376,086 16,286,736 19,778,459 24,255,093 29,562,017 35,519,943 42,202,695
Financial Charges payable - 7,646,255 6,117,004 4,587,753 3,058,502 1,529,251 - - - - -
- 12,028,632 15,016,863 15,517,374 16,434,588 17,815,987 19,778,459 24,255,093 29,562,017 35,519,943 42,202,695 95,578,193 95,472,756 93,875,680 98,092,778 112,794,005 140,095,028 192,238,465 264,765,612 359,348,009 477,547,048 621,895,274
FIXED CAPITAL EXPENDITURE
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 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400 34,787,400
Medical Equipment and furniture 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175 33,857,175
Accumulated depreciation - (6,864,458) (13,728,915) (20,593,373) (27,457,830) (34,322,288) (41,186,745) (48,051,203) (54,915,660) (61,780,118) (68,644,575)
68,644,575 61,780,118 54,915,660 48,051,203 41,186,745 34,322,288 27,457,830 20,593,373 13,728,915 6,864,458 -
Preoperating expenses 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 -
CURRENT ASSETS
Raw Material Inventory 478,603 592,128 725,713 894,234 1,098,838 1,352,927 1,659,961 2,046,421 2,518,326 3,103,801
Cash and Banks balances 7,995,015 14,986,510 20,466,307 31,725,341 53,432,422 87,689,814 146,736,674 226,087,819 327,408,768 452,232,790 606,895,274
8,473,618 15,578,639 21,192,020 32,619,575 54,531,260 89,042,741 148,396,635 228,134,240 329,927,094 455,336,590 606,895,274 95,578,193 95,472,756 93,875,680 98,092,778 112,794,005 140,095,028 192,238,465 264,765,612 359,348,009 477,547,048 621,895,274
Pre-Feasibility Study Private Hospital
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20
1100 KKEEYY AASSSSUUMMPPTTIIOONNSS
TTaabbllee 1100--11:: RReevveennuuee AAssssuummppttiioonnss
Description Annual
Growth Rate
Assumptions
Surgery
- General Surgery
- No of operations per month 15% 30
- Average fee per operation 10% 25,000
- Gynecology & Obstetrics
- No of deliveries per month 10% 45
- Average fee per delivery 10% 20,000
Room Rent
- No of Rooms 25
- Working Days 360
- Total Working Days (Weighted) 9,000
- Occupancy Rate 10% 45%
- Occupancy 4,050
- Room Rent per Day 10% 3,000
Emergency
- No of Beds in Emergency 10
- Working Days 360
- Total Working Days (Weighted) 3,600
- Occupancy Rate 10% 50%
- Occupancy 1,800
- Bed Rent per Day 10% 1,500
Labor Ward
- No of Beds in Labor Ward 10
- Working Days 360
- Total Working Days (Weighted) 3,600
- Occupancy Rate 10% 50%
- Occupancy 1,800
- Bed Rent per Day 10% 1,500
ICU/CCU
- No of Beds in ICU/CCU 5
- Working Days 360
- Total Working Days (Weighted) 1,800
- Occupancy Rate 10% 50%
- Occupancy 900
- Bed Rent per Day 10% 3,000
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21
General Ward
- No of Beds in General Ward 10
- Working Days 360
- Total Working Days (Weighted) 3,600
- Occupancy Rate 10% 50%
- Occupancy 1,800
- Bed Rent per Day 10% 2,000
Diagnostic center
- Ultra-Sound
No of patients per month 10% 450
Ultrasound Fee per patient 10% 750
- X-Ray
No of patients per month 10% 450
X Ray Fee per patient 10% 550
- ECG
No of patients per month 10% 450
ECG Fee per patient 10% 500
- Complete Blood Test/Urine Test
No of patients per month 10% 450
Test Fee per patient 10% 500
TTaabbllee 1100--22:: EElleeccttrriicciittyy AAssssuummppttiioonnss
Room Electricity Consumption
One Ton AC Operating for 16 Hours/Day 26.67 units
Other Electric Appliances 6 units
Rate Per Unit (Rupees/Kwh) 15
Electricity Price Growth Rate 10%
TTaabbllee 1100--33:: OOppeerraattiinngg EExxppeennssee AAssssuummppttiioonnss
Costs Basis
Surgeon's & Anesthetist’s Share 60% of Total Surgery Fee
Consultants' Share 50 % of Total Consultation Fee
Direct Diagnostic Costs 15% of Total Diagnostic Center Fee
TTaabbllee 1100--44:: OOtthheerr OOppeerraattiinngg EExxppeennssee AAssssuummppttiioonnss
Accounts Payable Cycle 30 Days
Raw Material Inventory 30 Days
Amortization Of Pre-Operating Expenses 10 Years
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TTaabbllee 1100--55:: FFiinnaanncciiaall AAssssuummppttiioonnss
Interest On Long Term Loan 16%
Long Term Debt Tenure 5 years
Weighted Average Cost Of Capital 20%