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1
Managing Organizations
Project Presentation
Wockhardt Hospitals Group, India(A subsidiary of Wockhardt Ltd.)
2
Industry Overview
Source: Rediff Business, IBEF, News Article
Industry HighlightsIndustry Highlights
Estimated to 50% of total Healthcare market in 2008
Key Growth Driverso Demand for quality healthcareo Changing disease profileo Rising urban disposable incomeo Increase in medical insurance
penetrationo Increase in Government healthcare
spending
Key Challengeso Significant capital requirementso Shortage of medical professionals
o Surging Medical tourism segment
Estimated to 50% of total Healthcare market in 2008
Key Growth Driverso Demand for quality healthcareo Changing disease profileo Rising urban disposable incomeo Increase in medical insurance
penetrationo Increase in Government healthcare
spending
Key Challengeso Significant capital requirementso Shortage of medical professionals
o Surging Medical tourism segment
Indian Hospital industry is estimated to be USD 25Bn in 2008, witnessing rising participation from private sector players as opposed to the traditionally government owned hospitals
US $ Bn
CAGR
14%
3
Wockhardt - Overview
• Global Pharmaceutical (veterinary & human), Biotech & Healthcare services company
• Market capitalisation of over US$ 1 Bn; Annual turnover of US$ 650 Mo 65% revenues from US and EU
• In India - among Top 10 Pharma companies; Top 25 Biotech and Top 3 Hospital Chains
• Headquartered in Mumbai in India; Operates 12 super speciality hospitals
Group OverviewGroup Overview
Wockhardt Bannerghatta
Hospital
Wockhardt Bannerghatta
Hospital
• Set up in 2007 as a multi disciplinary super specialty hospital
• 400-bed centre focused on providing critical medical and surgical care
• 5 major centres of excellence - Cardiac, Orthopaedics, Neurosciences, Minimal Access Surgery and Women & Child Services
• 450-500 footfalls per day
• Also cater to Medical Tourism customers
Source: Wockhardt Website, Prowess Pharmaceutical Industry Statistics, Interviews with Bannerghatta Unit Admin Head
Wockhardt is a leading player in hospitals industry in India, operating 12 super speciality centers mostly in the Southern half
4
Key Environmental Factors Affecting Wockhardt
Source: Interviews with Bannerghatta Unit Admin Head, News Articles
Large number of factors make the environment for Wockhardt complex
Shortage of medical experts
Shifting Disease Profile
Wockhardt Hospitals
Increasing Accreditation requirement
Economic Condition
Technology
Financial Resources
High Competition
5
Key Characteristics of Environment
Source: Team Analysis
The uncertainty in Wockhardt’s environment has profound implications on their structure and processes
Moderately Uncertain
Environment
High Complexity
Moderate Stability
• Heavily competitive- Apollo Healthcare, Fortis Healthcare, Vijaya Hospitals etc.
• Heavily regulated by medical, governmental and legal agencies
• Interaction with a large number of patients• Large disease pool
• Demand for health care moderately stable, except in case of epidemics
• Technology obsolescence not too rapid
6
Key Manifestations of Environment in Structure
Source: Team Analysis, Interviews with HR Manager
Barring a few departments which require quicker response, Wockhardt has largely tried to formalize and specialize its internal departments, structured in a hierarchical fashion
Large number of Clinical departments
High formalization of support functions
High degree of specialization
Hierarchical structure
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7
Non Clinical Functions – Roles and Responsibilities
Source: Team Analysis, Interview with HR Manager
Finance • Accounts, Payroll, Purchases (including Pharmacy), Recovery
Operation• Coordinate Operative care and Customer Care, New Technology Induction
HR• Recruitment, Training, Performance Management, Employee Engagement, Grievance Redressal
Domestic Marketing
• Local branding, Catchment area communication through brochures, Online Marketing
Training • Conduct regular and need based training
IT • HIS Maintenance, System Control, Information Flow
Quality • Accreditation, Auditing, General Housekeeping
International Marketing
• Handle marketing for Medical Tourism, Building alliances with Federal Governments, Surgical Tele-consulting
8
Organizational Structure –Clinical Functions
Source: Interviews with HR Manager and Admin Head
Internally the clinical functions are segregated based on expertise, similar to a divisional structure
• 340 nurses across 4 units in Bangalore
• 191 consultants in Bangalore
Center Medical Head
PharmacyHODsNursing Superintendent
Ward Managers
Senior Nurses
Junior Nurses
Senior Consultants
Junior Consultants
InternsTechnicians
9
Clinical Functions – Key Observations
Source: Team Analysis, Interviews with HODs and Nursing Staff
Nursing
• Shuffle across multiple wards
• Minimal discretion exercised by nurses (largely follow doctor’s direction)
• Flexible timing and skills
• High attrition
• Ward Manager at each level; supervising multiple wardso Coordinate with housekeeping, nursing and pharmacy
• 4 broad categories of wardso Multi Bed (3 Beds)o Twin Deluxe(2 Beds)o Private (Single Bed)o Royal (Royal Suite)
Ward Structure
10
Normal versus Emergency healthcare
Normal healthcare Emergency healthcare
Loosely Mechanical approach Fluid with heavy reciprocal interdependence
Monolithic team responds Greater collaboration, task force response
Process oriented, planned beforehand Ad hoc planning
Low speed of response Rapid response
Precedents available Unprecedented
Hierarchical response- Junior doctor hands over to senior doctor
Senior leadership responds immediately
Routine encounter Rarer
Emergency healthcare necessitates Ad-hoc planning, rapid response, reciprocal interdependence and senior consultant involvement.
11
Information Linkages
Source: Interview with Admin Head and IT Manager
Vertical Information Linkages
HierarchicalReferrals
• Junior doctors consult senior doctors
• Nurses consult senior nurses and doctors
• Hospital Information Systems• Flow streamlining
Horizontal Information Linkages
Rules and Plans
Vertical IT Systems
• Standard operating procedures in non clinical departments
• No rules and procedures in clinical departments
IT Systems
• Extensive database of doctors, consultants and nurses listing responsibilities and experience
Full Time Integrators
• Appear only at medical, corporate and administration departments
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12
Culture Analysis at Wockhardt
• New employee Induction program• Apron handover at the Linen room
• Employee of the Month award• Nurse of the Month• Star Performer of the Month• Wall of Fame
• Team outings• Cultural festivities during festivals• Informal get-togethers
Wockhardt could do with more rites of integration
Rites of Passage
Rites of Integration
Rites of Enhancement
• Identification to particular non-clinical department very strong
• Clinical departments- friction between senior and junior doctors
Sub-culture spawning
Degree of openness
• Professed culture “open-doors”• Team work across echelons• Team work across departments• Professed benefits in internal and
external adaptability
Claims questionable. Evident distrust with respect to finance and HR departments
The culture at Wockhardt is in general strong and healthy, except for minor discord
13
Strategy – Focused Differentiation
Source: Team Analysis
LOW COST LEADERSHI
P
DIFFERENTIATION
FOCUSSED LOW COST LEADERSHI
P
FOCUSSED DIFFERENTIA
TION: WOCKHARDT
BR
OA
DN
AR
RO
W
LOW COST
UNIQUENESS
COMPETITIVE ADVANTAGE
CO
MP
ETIT
IVE S
CO
PE
• Multi Specialty Hospital Heart Care Brain and Spine Bone and Joints Minimal Invasive Surgery Women Care
• JCI Accreditation
• Partnership with Harvard Medical International
• High end customized surgeries
14
Marketing Strategy
Source: Team Analysis and wockhardt website
Target Customers
Domestic Customers
• Focus on Rich and upper middle class• Tie ups with referral hospitals and nursing homes in
primary and secondary sectors• Tie ups with associate hospitals in secondary sectors• Information centres • Pamphlets, news and print media.• Free health check up camps, Wockhardt Diabetes Day etc.
• Tie ups with government in Africa and developing countries• Target non insured patients in developed countries• Online marketing• Case study publications
Corporates
International Patients
• Medical services on campuses• Events showcasing break throughs in healthcare adopted
by Wockhardt• Pre employment check ups• Free health check up camps
15
Quality Control Strategy
Source: Team analysis
Training• Need based and regular training
• Soft skills training
Performance Management
• Half- yearly performance review
• Performance based compensation
• Target setting by Supervisor
• 360 degree feedback from doctors, nurses, patients
Wockhardt uses two levers – training and performance management – to maintain quality
16
Information Systems and Knowledge Managament
Source: Team Analysis, Interview with Admin Head
Wockhardt extensively uses robust IT systems for hospital management. Knowledge is more of tacit and shared following a ‘Personalization Strategy’
IT Systems
• Use customized Hospital Information Systems developed by Wiproo Centralized Billing and Automated Alerts making processes fastero Data Warehousing and Data Processing functionality
• Data line Analysis
• Online Appointment with Doctors
• “Give me a quote” facility
• Informal sharing largely through one-on-one conversations
• Trainings and Seminars
• CME (Continual Medical Education) – every week
• Case Studies
Knowledge Management
17
Decision Making
High Level of Delegation – responsibilities given to junior reporting doctors
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Hands on Experience in values – Leads to intuitive decision making
2
Doctors mostly have to follow Bounded Rationality Model
3
Given the very natures of work, Wockhardt largely follows fluid decision making processes, with sufficiently decentralized authority in clinical units
18
Wockhardt – Fortis Deal
Source: Business week
Hospital Buy Deal
• 24th August 2009 : Fortis Healthcare, acquired 10 hospitals from Wockhardt for Rs 909 crores
• 2 in Mumbai, 3 in Kolkata and 5 in Bengaluru, including the Bannerghatta Road hospital
• 10 hospitals comprise 85% of the company’s revenue and more than 70% of the total number of beds
• CEO Vishal Bali, along with 12 other senior members of the Wockhardt Hospital management team shift to Fortis
Reasons
• Proposed Rs 800-crore IPO collapsed in 2008 • To reduce Debt burden of Wockhardt group's flagship firm, Wockhardt• Liabilities of Rs.14,414 million in 2008 – greater than expected cash flows• Debt restructuring to reschedule loans of about Rs 3,700 crore• Fortis will gain a lot –market presence and profitability