Opportunities for Chartered Accountants in Healthcare - At Bangalore Branch of SIRC, ICAI February 2, 2011 Contents India Population Demographics Indian Healthcare Industry - A perspective Industry Participants Emerging Healthcare Segments Emerging Business Segments Opportunities for CA in the Healthcare Sector 1
Current Life Expectancy Rates Indian Healthcare Industry Contributes to 5% of the country s GDP India's US$60 billion-a-year industry second largest service-sector employer in the country Healthcare expenditure growing at 12% pa Expected to grow to a staggering US$280 billion by 2020 2
Indian Healthcare Industry Highly fragmented industry Entry of private insurance companies - Insurance covers only a third of the total expenses, meaning more than 70% of health care expenditure in India is out-ofpocket Role of Private Players Private sector accounts for more than 80% of total healthcare spending in India Comparatively a more efficient system in place Top Choice for Medical Tourists Future capital investment in boosting the bed count is pegged at $25.7 billion, of which only 15-20% is expected from the Government 3
Role of Private Players It is estimated that nearly 70% of all hospitals and 40% of hospital beds in the country are in the private sector Hospital Beds - India Pvt. Sector 40% Govt. Sector 30% Hospitals - India Govt. Sector 60% Pvt. Sector 70% Healthcare Industry Participants Health Centers Diagnostics 1. Hospitals 1. Diagnostic Laboratories - Primary Healthcare Clinics Pharmaceutical Companies 1. Medical R&D - New drugs (new molecules), Stem Cell research, 2. Radiology Cord Blood Banking etc. Allied and emerging Derivative Industries 1. Medical Transcription 2. Medical Records - e.g Telemedicine 2. Private clinics 3. General Physicians - Multi-Specialty 2. Clinical Research Organization 3. Medical Equipment Manufacturers - Super Specialty 4. Medical Equipment Research - Ambulatory Care 5. Reagents Manufacturers 4
Emerging Segments Emerging Healthcare Segments Preventive Healthcare Diagnostic Treatment Ambulatory Surgery Centers Minimally invasive surgical procedures Dedicated & Comprehensive care facilities Oncology, Diabetes Geriatric Care 5
Preventive Healthcare Rapidly mushrooming wellness centers Market is still largely dominated by unorganized players as entry barriers are low Abysmally low penetration level Drivers of this shift towards preventive healthcare Growing populace in the middle age group More sedentary in working lifestyles Greater awareness about medical and nonmedical treatments Preventive vs. Curative Wellness and continue to be well New medical situations will continue to emerge Curative Health Existing pre-disposed situation. Medical management. Surgical management. Continuous medical management. 6
Ambulatory Surgery Centers Out-patient or same day surgery centers Minor Surgeries Cost saving for the patient as it eliminates hospitalization cost Eg. Laproscopy, Cataract surgeries Emerging Business Segments Healthcare Tourism Teleradiology Telemedicine Corporatization of Hospitals & Diagnostic laboratories Corporatization of Medical Education 7
Implications Rise of Public Private Partnership (PPP) management in Healthcare Growing interest from PE/VC firms New concept of Health Cities Opportunities for Chartered Accountants 8
Core Areas Statutory, Internal Auditing Taxation Financial & Accounting Advisory Services Business Advisory Services Facilitate the growth story Governance, Risk and Compliance Service Tax effective July 2010 Establishing Cost optimization strategic support Opportunities in conducting Techno- Economic Feasibility studies outsourced to CA Valuation 9
Clinical Establishments Act 2010 Passed on May 2010 Currently in force in all Union Territories and four states - Arunachal Pradesh, Himachal Pradesh, Mizoram, and Sikkim Seeks to register and regulate clinical establishments Registration of all clinical establishments in the country to be complete by May 2012 Clinical Establishments Act 2010 Applies to Clinical Establishments under various systems of medicines including Allopathy & AYUSH Hospitals / Clinics including single doctor establishments, with or without beds Laboratories offering Pathological, Bacteriological, Genetic / Radiological, Chemical, Biological and other Investigative services 10
Financial Advisory Services Drawing up an Information Memorandum Business Plan Financial Modeling Bank and Debt Funding Liaison with VC and PE Fund houses Due Diligence for takeover Support in identifying institutions for strategic fit in multi geographies Negotiating with VC/PE on behalf of promoters Documentation Guidance in M&A Documentation Compliance 11
Market Deals Religare acquires diagnostics business of Piramal Healthcare Deal Size Rs. 600 Crores Warburg Pincus Invests USD 85 Million in Metropolis CX Private Equity firm invests Rs.188 crores for a 30% stake in Thyrocare Sequoia Capital to sell part of stakes in Dr. Lal Path Labs Market Deals Kalpathi Investments picks up a 45% stake for Rs.5.1 crores in Primex Diagnostics Touted as the largest overseas deal, Khazanah acquires Singapore-based Parkway Holdings for US$350 crores Siemens buys Bayer`s diagnostics division for approximately Rs.420 crores 12
Costing Application of Marginal Costing and Revenue principles Drawing up a Cost beneficial AMC for the Lab A strong analytical grip on costing of testing procedures Commercial Negotiations Commercial negotiation with medical equipment supplier Strong Technical Knowledge to support upgrades and updates Negotiation with vendor Medico legal situations 13
Health Insurance Business Consulting Selection of insurer based on business trends Fraud Minimization Plans and Controls Cost Optimization Techniques to help boost profitability for Insurance Companies Facilitating Accreditation Process Liaison between the Medical Community and Regulatory Institutions Systems and Process Audit Implementation of Quality Management Systems Information Security Management Systems 14
Opportunities Abound In a world of Futures & Options Our Future is not an Option FOR FURTHER DETAILS CONTACT K.Govind Rajan Partner Head Healthcare Practice R Venkatakrishnan & Associates - Chennai, Hyderabad & Bangalore Tel: (91)-98480-51380 15