Vinod A. Iyengar February 22, 2012 A-505 & 506 UNESCO Apt.; 55 I. P. Extension; New Delhi – 110 092 (India) Mob: +91-98184-34418; Tel: (11) 2223-8880/1/2;

Assurance of carethrough

Continuum of Care©

Vinod A. IyengarFebruary 22, 2012

A-505 & 506 UNESCO Apt.; 55 I. P. Extension; New Delhi – 110 092 (India)Mob: +91-98184-34418; Tel: (11) 2223-8880/1/2; Email: [email protected]

Vinod A. Iyengar 2

• Thanks to NRHM-ASHA and other socio-economic factors, the Indian public has begun to seek healthcare in far larger numbers than before

• Curative care for at least 10-15% of all illnesses is at the heart of healthcare

• There is a severe shortage of doctors and other trained healthcare personnel, which has led to their concentration in metros, cities and ‘Class 1’ towns

• It is almost impossible to motivate public health doctors to stay in rural and semi-urban areas

Issues with the current public healthcare system

Cities75%

Semi-urban23%

Rural2%

Present MBBS doctor distribution

• The existing system of PHCs and CHCs suffer from chronic absenteeism and doctor shortages, which has made the existing referral process inefficient

• Since rural and semi-urban patients are unable to access doctors, suffer hardships*, and also overwhelm the existing public secondary and tertiary care systems

• Private care at lower level is non-standard while care at higher level is unaffordable – leading to poor standards and/or indebtedness

• All this makes the present public health system inadequate – a state of affairs that needs urgent modification

* Due to travel/stay, loss of wages, forced dependence on ‘quacks’, etc.

22 February, 2012

Vinod A. Iyengar 322 February, 2012

Proposed solution

The solution envisages close cooperation between relevant State Government and a designated agency for the project, together with:• Functioning State government healthcare sub-centers (SCs), primary health centers

(PHCs) and community health centers (CHCs)• Telephonic advise system for rural patients (to be established where there are

none)• Mobile health units visiting villages on fixed days (addition of extra units as and

where needed)• New continuum of care clinics at ‘patient catchment areas’ (i.e., Class-1, 2 and 3

towns)

Vinod A. Iyengar 4

India’s population distribution (2011)

3 mega-citiesPop.: 49 mil.

1mil. plus cities:50Pop.: 112 mil.

1 lakh plus towns: 415Pop.: 104 mil.

Class 2 towns (pop. 50,000-99,999): 785

Pop.: 36 mil.

Class 3 towns (pop. 20,000-49,999): 2,196Pop.: 44 mil.

Class 4, 5 & 6 towns (pop. < 5,000 – 19,999): 4,487Pop.: 33 mil.

Villages: 640,867Pop.: 833 mil.

Qualifi

ed M

BBS doc

tors

Max. (2.8 docs/1000 people)

Min.(0.02 docs/1000 people)22 February, 2012

Vinod A. Iyengar 5

Telephone contact center: patient hand-holding

• Contact Center (using all-India toll-free telephone number ‘104’)– Medical advice to callers/patients– SMS prescriptions of OTC and Schedule ‘K’ drugs available with local ASHA/ANM– Referral (supply-demand management)– Virtual handholding of patients through public health system (PHS)/hospitals– Grievance handling/communication platform– ASHA helpline– HCW support system– Logistics support for Government institutions (inventory, stores, etc.)– Training/advice on major programs (HBNC, JSY eligibility, claims, etc.)

22 February, 2012

The Contact Centre is 1st level Primary Care and the route to 1st level Secondary Care *

* As it not only provides medically validated knowledge and advice to patients over the telephone but also refers them to Primary Care clinics/centres or Secondary Care institutions

Vinod A. Iyengar 6

Mobile Health Units

• Works in coordination with existing government resources– Uses Sub Center ANM (2nd ANM)

• Uses mobile health units (MHUs) on a light commercial vehicle base (Tata Sumo, etc.)• Manned by pharmacist, sub-centre ANM and a driver• Doctor travels with MHU where possible

– Doctors can travel for 1 week every month in places where resources are constrained• Aligned with VHND and ANM travel plan to the maximum extent• Performs RBS, Malaria, US, Urine Albumin, Pregnancy tests• Delivers RCH, Chronic Diseases and National Vertical Programs• IT Backbone to ensure daily data transfer to central system integrated with HMIS and other

Government IT systems

22 February, 2012

Vinod A. Iyengar

Strengths: current telephone & MHU services

Telephonic health advice1. Instant identification of ‘at-risk’ cases2. Immediate referrals to appropriate medical

institutions3. Early warning system for epidemic out-breaks4. Provided through telephone – so high

penetration and accessibility5. Easy access for callers that enables virtual

handholding6. Algorithm based for standardized medical advice

(supported by qualified experts)7. Real-time information and data collection,

availability and retrieval8. Promotes awareness on health issues, hygiene

and Government health programs

Mobile health units1. Not dependent on physical presence of doctors

(can work with paramedics and ASHA/ANM based service where doctors are unavailable by connecting to telephone advise center)

2. Reliable, fixed-day service beyond 3 km from nearest PHC

3. Provides medical examinations, basic path-tests, tracking, referrals and medicines to patients (including expectant mothers, mother& child, chronic cases, etc.)

4. Instant identification of ‘high-risk’ cases5. Early warning system for epidemic out-breaks6. High impact training and expert system for

Healthcare Workers7. Real-time information and data collection,

availability and retrieval8. Promotes awareness on health issues, hygiene

and Government health programs

22 February, 2012 7

Vinod A. Iyengar 8

Weaknesses: current telephone & MHU services

• Telephonic health advise fails to ensure care assurance in areas where there are no reliable facilities for primary or secondary care

• MHU based services fail when patient condition requires active doctor intervention

• Since neither solution charge patients, there is no revenue generation and sustainability

22 February, 2012

Strategy for surmounting

weakness

Establish a self-sustaining chain of continuum of care through systematic telephonic health advice, MHUs and a system of franchisee clinics with path labs for delivery of primary and basic secondary care in regions where the public health system is weak (the proposed clinics not only include existing private clinics but also those that can be improved by standardization and robust management support)

Vinod A. Iyengar

Proposed ‘continuum of care’ model

Telephone-based, health information, advice & referrals

Monthly MHU service for monitoring, testing, referrals & drug distribution

Curative care: Continuum of Care

Clinics

Curative care: Functioning PHCs/CHCs

District/Private Referral

Hospitals

REFERRAL ENGINES

Referrals Referrals

Referrals Referrals

22 February, 2012 9

Vinod A. Iyengar 10

Assurance of care

22 February, 2012

• Sophisticated hybrid model with strong integration to existing health system where appropriate– Mobile health unit (MHU) referrals to PHC– Doctor on MHUs to dispose cases on the spot– Core primary services

• Telemedicine at GP level backed by franchise clinics at ‘Block’ level to handle primary and basic secondary care

• Telephonic advise center to provide state-wide backbone for ‘assurance of care’

Vinod A. Iyengar

Potential doctor/entrepreneur pool

Medical seats in India 2011-12

MBBS 41,569

Post-graduate 20,868

Registered MBBS doctors 2011-12Practicing MBBS 5,30,000Non-practitioners 10,000Retired 25,000Total registered MBBS 7,60,000

Other medical practitioners 2011-12Practicing AYUSH doctors 5,53,000Non-practicing AYUSH 40,000Retired AYUSH 54,000'Quacks' in India 25,00,000

Over 30,000 fresh MBBS graduates in 2011

22 February, 2012 11

Vinod A. Iyengar

Location: doctor/entrepreneur franchise clinics

Mega-cities

1 mil. plus cities: ‘CONTACT CENTRE’

1 lakh + towns: Continuum of Care Clinics

Class 2 towns: Continuum of Care Clinics

Class 3 towns: Continuum of Care Clinics

Class 4, 5 & 6 towns: TELEPHONE HEALTH ADVICE SERVICE and MHU VILLAGE SERVICE (Mobile Health Units)

Villages: TELEPHONE HEALTH ADVICE SERVICE and MHU VILLAGE SERVICE

Focus area


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Vinod A. Iyengar 13

Franchise clinics - prerequisites

• ‘Top-up’ subsidy required for 2-3 years to ensure doctors earn handsomely. The subsidy will stop once clinic begins to earns more than Rs. 50,000 per month, which is expected to be by 3rd year)

• Accredit clinics to provide all family planning procedures (FPP) and some minor surgical ones• Ensure payments for above are timely through an escrow account• Franchise clinics require strong management modules and robust referral engines to:

– Screen and resolve majority of health needs at village or cluster level through a doctor or paramedic driven service

– Provide appropriate referrals to the clinics in order to ensure high effectiveness and quality care for all referred patients

22 February, 2012

It is envisaged that low-cost mobile health units will perform necessary screening, resolution and referral activities at the village level

Vinod A. Iyengar 14

Proposed model: ‘assurance of care’

22 February, 2012

Villages and small towns supported by ASHA & AWW

Combination of self-sustaining Telemedicine Centers (10 villages per unit) operated by RMP/ASHA and/or MHU Village Service covering app. 50 villages/unit

Block level, self sustaining, franchise clinics with doctor, possible telemedicine link for specialists, and lab facilities. Integration with existing PHC/CHC system where possible

Regional/State telephone-advice centers providing patient advice and HCW support as well as specialists for telemedicine & tele-trauma

Curative care: Continuum of Care

Clinics

Villages & small towns

Software algorithms Disease summaries

Counsellors Doctors

Patient database

Vinod A. Iyengar

Proposal

A PPP to be established with the Government/NRHM/others, which would:

• Motivate doctors into semi-urban areas with catchment of rural area by offering highly remunerative entrepreneurial alternative

• Arrange ‘soft loans’, financial subsidies, government incentives, 3-4 bed clinic facilities, etc., for young MBBS doctors for setting-up self-owned clinics in Class 1, 2 and 3 towns (clinics to also undertake family planning procedures and minor surgeries)

• Guarantee Rs. 50,000 per month (pre-tax) to the doctor/entrepreneur until the clinic becomes self-sustaining (in 2-3 years), and he/she starts earning Rs. 50,000 to over Rs. 1 lakhs per month

• Station senior doctors and specialist in a ‘Contact Centre’ (preferably in the state capital or an appropriate 1 million plus population city) to assist the doctors during clinic hours (8 am to 8 pm)

• Arrange video and ICT links between clinics and Contact Centre

• Organise a reliable reference system between the clinics and pubic and private hospitals, together with 4-bed ‘step-up corners’ (interim ‘holding stations’) in a general wards to ensure seamless and quick service

• Arrange appropriate management and administrative support for all the clinics in a state

• ICT driven telephonic health advice and MHU based out-reach programs to address acute minor illnesses, MCH, identify and refer patients with chronic diseases, and track patients in rural areas


Vinod A. Iyengar

• Enter into PPP with Government for easy flow of incentives (in bulk) for RCH services (especially Family Planning) to the clinics through designated agency

• Identify sites where clinics may be deployed• Identify appropriate doctors/entrepreneurs for setting-up franchise clinics• Facilitate soft-loans from banks• Provide expertise in HR, finance, procurement, training, etc., to the clinics to ensure doctors

are backed-up managerially and can concentrate on curative care• Develop software for managing back office functions of the health system• Integrate data flow with government HMIS for data and outcome sharing


Responsibilities vis-à-vis proposed clinics

Vinod A. Iyengar

Financial support required from Government


1. Telephonic Health Advice Centre

a) The centre needs all capital/non-recurring expenditure to be funded by Government

b) The centre will include: citizen triaging, healthcare worker support and telemedicine support

c) It will be able to manage with a charge Rs. 12 per call (which can be suitably shared between the general public and the Government)

2. MHU Village Service

a) Requires funding all through 5 years

b) Doctors, sub-center ANMs, drugs and consumables will need to be provided by the Government separately

Vinod A. Iyengar

Financial support required from Government (contd.)


4. Clinics

Government support is required as follows:

a) CAPEX: Rs. 9.25 lakhs (for 20 clinics)

b) Doctor/entrepreneur support (for 20 clinics): 1st year Rs. 100 lakhs; 2nd year Rs. 65 lakhs

5. Management Overheads

a) Management overheads include salaries and administration costs, and are to the tune of Rs. 60 lakhs per district in ‘Year 1’ and Rs. 17 lakhs per district in ‘Year 5’

6. Institutional Fee

a) Process fee is required by designated agency of 5% of total recurring expenditure to finance process, software and monitoring costs

Vinod A. Iyengar

Other support from government


a) Furnished operating space of 4,000 sq. ft. in each district to setup and operate the Health Help Center


a) Provide necessary medicines and consumables to be dispensed through mobile health units on proper process and checks

b) Provide parking spaces of 500 sq. ft. in nearby PHC/CHC for night halt and other back office activities

3. Franchisee Clinics

a) Provide furnished space (including renovation if any) of 1,500 sq. ft. for each clinic in the designated areas either through defunct PHCs or other existing buildings

b) Provide necessary medicines and consumables to each Clinic during the first 5 years of operationc) Where Government has functional PHCs that need to be strengthened through Telemedicine, all

operating costs of such clinics can be managed within existing resources.

NOTE: Additional resources needs (up to IT support) are already factored into the costs of clinics


Vinod A. Iyengar

Operational support from government


1. Necessary approvals to release and activate ‘104’ telephone number in BSNL in the district2. Authorize 104 HHC to manage referral patients through the entire system for patient hand-holding

and monitoring of ‘at-risk’ patients


1. Authorize mobile health units to make and follow-up on referrals in catchment areas on designated medical conditions

2. Authorize MHUs to pickup and utilize Sub Center ANM and local MO or Ayush MO to travel with MMU on designated days

3. Form necessary teams to identify and resolve any missing gaps such as referral processes, maps, etc.

3. Franchisee Clinics

1. Accredit franchisee clinics to perform necessary Family Planning procedures and minor surgeries in the designated area

2. Reimburse franchise clinics as per existing guidelines for delivering Family Planning services3. Allow clinical staff to undergo regular training on Family Planning procedures at Government facilities


Vinod A. Iyengar

Funds flow support from government

1. Escrow Account

a) Escrow account (grant-in-aid, reimbursements, etc. for above) – all monies for 6 months operation to be deposited two months in advance)

b) Three months working capital to be drawn in full for continuity of operations

2. Reimbursement Mechanism

a) Utilization certificate will be submitted every quarteri. 90% to be paid on presenting of UCii. 10% to be paid after District Head receives Performance Report through

designated agency, provided the Performance Report is submitted to District Health Authority within 15 days of month end


Vinod A. Iyengar

Estimated funds required per district

Government support spread over 5 years: app. Rs. 17 crores/ district22 February, 2012 22

Cost of operating & managing services in 1 district (Rs. 'lakhs)Service No. CAPEX OPEX OPEX OPEX OPEX OPEX

Year 1 Year 2 Year 3 Year 4 Year 5Tel. Health Advice Centre 10 30 120 126 132 139 146MHU Village Service 20 50 132 139 146 153 161Franchisee Clinics 20 185 184 206 234 263 287Management overheads 5 0 60 63 66 69 72Institutional fee 0 0 25 27 29 31 33

Total 265 521 561 607 655 699

Financial support required from Government (per district) (Rs. 'lakhs)Service No. CAPEX OPEX OPEX OPEX OPEX OPEX

Year 1 Year 2 Year 3 Year 4 Year 5Tel. Health Advice Center 10 30 120 126 99 66 33MHU Village Service 20 50 132 139 146 153 161Franchisee Clinics 20 9 100 65 0 0 0Management overheads 5 0 60 63 50 33 17Institutional fee 0 0 21 20 15 13 11

Total 89 433 413 310 265 222Government share 83% 74% 51% 40% 32%

Vinod A. Iyengar 23

Revenue reduction possibilities

• Telephone Health Advice Center— Revenue generation from callers may be possible to the extent of Rs. 10 per call after

negotiations with telephone/mobile service providers – but it is recommended that this option be explored in a phased manner once the service matures (2-3 years)

• MHU Village Service— Most States already have MMUs, which can be co-opted - thus saving on Capex— Patients visiting the vans could pay a small fee (say Rs. 30) – an option could be

explored in a phased manner once the service matures, and people see value— The sides of the vans, and the TV sets they carry, could be used to advertise commercial

products for a fee – but the true potential can only be estimated after a detailed ‘market’ survey, which is strongly recommended

• Continuum of care clinics— Extra revenue could be generated through the sale of drugs (at a margin of say 10%)

that are procured ‘free-of-cost’ from the Public Health System – but the Government will need to authorise this

22 February, 2012

Vinod A. Iyengar

Continuum of care clinicsFinancials


Vinod A. Iyengar

Assumptions (single clinic)

ASSUMPTIONS:Clinic timings:

OPD: 8-10 am & 4-8 pmFamily planning procedures/minor surgeries 6-8 am; 11 am - 1 pm and 1:30-3:30 pmNumber of working days in a year 300 (assumed)OPD

No. of OPD hours per day 6No. of OPD minutes per day 360App. time spent per patient (minutes) 7No. of OPD patients examined per day 51OPD patients examined per year 15,429

Family Planning Procedures/Minor Surgeries No. of FPP/MS hours per day 6App. time spent per procedure 45 (minutes)No. of FPP/MS per day 8No. of FPP/MS per year 2,400

Fees and other incomeOPD fee per patient per visit Rs. 50 per patient/visitFee per FPP/MS (on average) Rs. 750 averagePat-lab (@ consumables + 10%) Rs. 22,000 per monthDrugs (@ cost of drugs + 10%) Rs. 0 per month


Vinod A. Iyengar

Capital expenditure (single clinic)

CAPEXS. No. Item Cost(Rs.)

A LOCATION SETUP COST1 Furniture 1,50,0002 Washbasin 3,0003 Electricals (fans, lights, inverter, etc.) 60,0004 Communication (broadband, LAN, etc.) 18,8005 Computers, scanner, printer, etc. 82,5006 Path lab equipment 1,27,5007 Miscellaneous clinic equipment 3,02,750

Sub-Total (A) 7,44,550B OTHER COSTS

1 Share in detailed market survey 6,6002 Travel & stay (60 days) 90,0003 Contingency 84,115

Sub-Total (B) 1,80,715GRAND TOTAL (A+B) 9,25,265


Vinod A. Iyengar

Operating expenses (single clinic)

(At 100% capacity utilization)S. No. Item Per Month (Rs.) Per Year (Rs.)

1 Rent 10,000 1,20,000 2 Broadband Fee 5,000 60,000 3 Salary - Lab Technician 8,000 96,000 4 Salary - Pharmacist 10,000 1,20,000 5 Salary - Night Nurse 10,000 1,20,000 6 Salary - Day Nurse 7,000 84,000 7 Salary - Maid 3,000 36,000 8 Salary - Sweeper 1,000 12,000 9 Salary - Night Watchman 4,000 48,000

10 Water 1,500 18,000 11 Electricity 2,500 30,000 12 Stationery & postage 1,000 12,000 13 Consumables 20,000 2,40,000 14 Drugs 0 - 15 Communication Cost 2,800 33,600 16 Insurance 8,190 98,280 17 Repairs & maintenance 3,413 40,956 18 Unforeseen expenses 4,290 51,480

GRAND TOTAL 1,01,693 12,20,316


Vinod A. Iyengar

Means of finance (single clinic)

CAPITAL

S. No. Source Share Interest pa Amount (Rs.)

1 Entrepreneur/doctor 5% N. A. 46,263

2 Designated agency 5% N. A. 46,263

3 Soft-loan from bank 90% 7.5% 8,32,739

TOTAL CAPEX 9,25,265


MEANS OF FINANCE (@ 100% Capacity) Months: 1

OPEX Share Interest pa Amount (Rs.)

Entrepreneur/doctor 67% N. A. 86,893

Working capital loan 33% 11.5% 42,600

TOTAL OPEX 1,29,493

Vinod A. Iyengar

Term-loan repayment & interest (single clinic)

TERM LOAN REPAYMENT & INTEREST

Principal 8,32,739 (bank loan)

Interest rate 7.5% per annumPay-back 7 yearsItem Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)Opening balance 8,32,739 7,13,776 5,94,813 4,75,851 3,56,888 2,37,925 1,18,962

Repayment - 1 59,481 59,481 59,481 59,481 59,481 59,481 59,481

Balance: end 1st half 7,73,258

6,54,295 5,35,332 4,16,369 2,97,407 1,78,444 59,481

Repayment – 2 59,481 59,481 59,481 59,481 59,481 59,481 59,481

Closing balance 7,13,776 5,94,813 4,75,851 3,56,888 2,37,925 1,18,962 ---

Interest: 1st half 31,228 26,767 22,305 17,844 13,383 8,922 4,461

2nd half 28,997 24,536 20,075 15,614 11,153 6,692 2,231

Total Interest 60,225 51,303 42,380 33,458 24,536 15,614 6,692

Total re-payment 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963


Vinod A. Iyengar

Margin money for working capital loan (single clinic)


Margin Money for Working Capital (For 1 month at 100% capacity)Item Days Bank Total Bank Margin

(Share) (Rs.) (Rs.) (Rs.)Drugs 25 75% - - - Consumables 25 75% 2,800 2,100 700

Sub-total 2,800 2,100 700 Utilities 25 0% 4,000 - 4,000 Wages & Salaries 30 0% 43,000 - 43,000 Administration Overheads 30 0% 23,090 - 23,090 Insurance 30 0% 8,190 - 8,190 Repair & Maintenance 25 0% 3,413 - 3,413 Accounts Receivable* 15 90% 45,000 40,500 4,500

Sub-Total 1,26,693 40,500 86,193 Grand Total 1,29,493 42,600 86,893

* 15 day period assumed for funds transfer from Government for Family Planning Procedures

Vinod A. Iyengar

Financial projections (single clinic)

PROJECTIONS OF PERFORMANCE, PROFITABILITY AND REPAYMENTItem Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Capacity utilization assumed 40% 50% 70% 90% 100% 100% 100%No. of OPD patients expected per day 21 26 36 46 51 51 51No. of FPP/MS* per day 2 4 6 7 8 8 8No. of OPD patients per year 6,300 7,800 10,800 13,800 15,300 15,300 15,300No. of FPP/MS expected per year 960 1,200 1,680 2,160 2,400 2,400 2,400Income (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

From OPD 3,15,000 3,90,000 5,40,000 6,90,000 7,65,000 7,65,000 7,65,000 From FPP/MS 7,20,000 9,00,000 12,60,000 16,20,000 18,00,000 18,00,000 18,00,000 From 'path-lab' tests 1,05,600 1,32,000 1,84,800 2,37,600 2,64,000 2,64,000 2,64,000 From sale of drugs - - - - - - -

Total Income 11,40,600 14,22,000 19,84,800 25,47,600 28,29,000 28,29,000 28,29,000 * Family Planning Procedures/Minor Surgeries


Vinod A. Iyengar

Financial projections (single clinic, contd.)

Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Expenditure (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)Fixed costs

Interest on CAPEX soft-loan 60,225 51,303 42,380 33,458 24,536 15,614 6,692 Rent (incl. 10% escalation every year) 1,20,000 1,32,000 1,45,200 1,59,720 1,75,692 1,93,261 1,93,261 Salaries ( - do - ) 4,68,000 5,14,800 5,66,280 6,22,908 6,85,199 7,53,719 7,53,719 Broadband Fee ( - do - ) 60,000 66,000 72,600 79,860 87,846 96,631 96,631 Water ( - do - ) 18,000 19,800 21,780 23,958 26,354 28,989 28,989 Electricity ( - do - ) 30,000 33,000 36,300 39,930 43,923 48,315 48,315 Stationery & postage ( - do - ) 12,000 13,200 14,520 15,972 17,569 19,326 19,326 Communication Cost ( - do - ) 33,600 36,960 40,656 44,722 49,194 54,113 54,113

Sub-Total (Fixed Costs) 8,01,825 8,67,063 9,39,716 10,20,528 11,10,313 12,09,968 12,01,046 Variable costs

Interest on working capital loan * 1,863 2,562 3,586 4,611 5,123 5,123 5,123 Consumables ( - do - ) 96,000 1,32,000 1,84,800 2,37,600 2,64,000 2,64,000 2,64,000 Drugs ( - do - ) - - - - - - - Unforeseen expenses ( - do - ) 20,592 28,314 39,640 50,965 56,628 56,628 56,628

Sub-Total (Variable Costs) 1,18,455 1,62,876 2,28,026 2,93,176 3,25,751 3,25,751 3,25,751 Total Expenditure 9,20,280 10,29,939 11,67,742 13,13,704 14,36,064 15,35,719 15,26,797

Earnings Before Depreciation & Taxes 2,20,320 3,92,061 8,17,058 12,33,896 13,92,936 12,93,281 13,02,203 Depreciation (over 10 years) 81,901 81,901 81,901 81,901 81,901 81,901 81,901 Earnings Before Taxes 1,38,419 3,10,160 7,35,157 11,51,995 13,11,035 12,11,380 12,20,302 * Includes 10% escalation per year


Vinod A. Iyengar

Cash-flow projections (single clinic)

CASH-FLOWS FROM OPERATIONS Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

In-flows (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

Income 10,97,475 14,54,500 20,17,300 26,01,350 29,14,625 29,35,875 29,35,875

Out-flows

OPEX 9,20,280 10,29,939 11,67,742 13,13,704 14,36,064 15,35,719 15,26,797

Nett Cash-flows from operations 1,77,195 4,24,561 8,49,558 12,87,646 14,78,561 14,00,156 14,09,078


Vinod A. Iyengar

Financial analysis (single clinic)

Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Sources (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

CAPEX Term Loan Margin 46,263 Incremental Working Capital Margin 34,757 8,690 17,378 17,379 8,689 0 0 - do - Entrepreneur/doctor investment 81,020 8,690 17,378 17,379 8,689 0 0 - do - Working Capital loan 17,040 4,260 8,520 8,520 4,260 0 0 CAPEX soft term loan 8,32,739

Cash-flows from operations 1,77,195 4,24,561 8,49,558 12,87,646 14,78,561 14,00,156 14,09,078 Total (Sources) 11,89,014 4,46,201 8,92,834 13,30,924 15,00,199 14,00,156 14,09,078

Application of FundsCAPEX 9,25,265

CAPEX loan re-payment 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 Receivables 86,250 1,07,500 1,50,000 1,92,500 2,13,750 2,13,750 2,13,750

Total (Applications) 11,30,478 2,26,463 2,68,963 3,11,463 3,32,713 3,32,713 3,32,713 Nett surplus/deficit 58,536 2,19,739 6,23,871 10,19,461 11,67,487 10,67,443 10,76,365

Opening cash/bank balance 58,536 2,78,275 9,02,146 19,21,607 30,89,094 41,56,537 Closing cash/bank balance 58,536 2,78,275 9,02,146 19,21,607 30,89,094 41,56,537 52,32,903 CAPEX soft-loan loan repayment 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 1,18,963 Annual 'take-home' cash earnings 1,01,357 2,73,099 6,98,095 11,14,933 12,73,974 11,74,318 11,83,240

Monthly 'take-home' cash earnings 8,446 22,758 58,175 92,911 1,06,164 97,860 98,603 Monthly Government/NRHM support 41,554 27,242 0 0 0 0 0 Annual Government/NRHM support 4,98,643 3,26,901 0 0 0 0 0

NOTE: To make the scheme attractive, a ‘top-up’ subsidy is required for two years to ensure the doctor/entrepreneur takes home at least Rs. 50,000 per month. The subsidy shall cease once monthly ‘take-home’ earnings exceed this amount.


Vinod A. Iyengar

THANK YOU


Documents

Vinod A. Iyengar February 22, 2012 A-505 & 506 UNESCO Apt.; 55 I. P. Extension; New Delhi – 110 092 (India) Mob: +91-98184-34418; Tel: (11) 2223-8880/1/2;