Managing Organizations Project Presentation

Wockhardt Hospitals Group, India

(A subsidiary of Wockhardt Ltd.)

Industry Overview
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 Industry Highlights

Estimated to 50% of total Healthcare market in 2008

US $ Bn

Key Growth Drivers o Demand for quality healthcare o Changing disease profile o Rising urban disposable income o Increase in medical insurance penetration o Increase in Government healthcare spending
Key Challenges o Significant capital requirements o Shortage of medical professionals Surging Medical tourism segment

Source: Rediff Business, IBEF, News Article

Wockhardt - Overview
Wockhardt is a leading player in hospitals industry in India, operating 12 super speciality centers mostly in the Southern half
Global Pharmaceutical (veterinary & human), Biotech & Healthcare services company Market capitalisation of over US$ 1 Bn; Annual turnover of US$ 650 M o 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 Overview

Set up in 2007 as a multi disciplinary super specialty hospital 400-bed centre focused on providing critical medical and surgical care Wockhardt Bannerghatta Hospital 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 3

Key Environmental Factors Affecting Wockhardt

Large number of factors make the environment for Wockhardt complex

Shortage of medical experts Shifting Disease Profile High Competition

Wockhardt Hospitals
Increasing Accreditation requirement Financial Resources

Economic Condition

Technology

Source: Interviews with Bannerghatta Unit Admin Head, News Articles

Key Characteristics of Environment

The uncertainty in Wockhardts environment has profound implications on their structure and processes
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

High Complexity

Moderately Uncertain Environment

Demand for health care moderately stable, except in case of epidemics Technology obsolescence not too rapid

Moderate Stability

Source: Team Analysis

Key Manifestations of Environment in Structure

Barring a few departments which require quicker response, Wockhardt has largely tried to formalize and specialize its internal departments, structured in a hierarchical fashion
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Large number of Clinical departments

High formalization of support functions

High degree of specialization

Hierarchical structure

Source: Team Analysis, Interviews with HR Manager

Non Clinical Functions Roles and Responsibilities Finance Operation

Accounts, Payroll, Purchases (including Pharmacy), Recovery Coordinate Operative care and Customer Care, New Technology Induction

HR
Domestic Marketing Training IT Quality International Marketing

Recruitment, Training, Performance Management, Employee Engagement, Grievance Redressal Local branding, Catchment area communication through brochures, Online Marketing

Conduct regular and need based training HIS Maintenance, System Control, Information Flow

Accreditation, Auditing, General Housekeeping Handle marketing for Medical Tourism, Building alliances with Federal Governments, Surgical Tele-consulting
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Source: Team Analysis, Interview with HR Manager

Organizational Structure Clinical Functions

Internally the clinical functions are segregated based on expertise, similar to a divisional structure Center Medical Head Nursing Superintendent

HODs

Pharmacy

Ward Managers

Senior Consultants

Junior Consultants

Senior Nurses

Technicians

Interns

Junior Nurses
340 nurses across 4 units in Bangalore 191 consultants in Bangalore
Source: Interviews with HR Manager and Admin Head
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Clinical Functions Key Observations

Shuffle across multiple wards

Minimal discretion exercised by nurses (largely follow doctors direction)

Nursing

Flexible timing and skills High attrition

Ward Manager at each level; supervising multiple wards o Coordinate with housekeeping, nursing and pharmacy

Ward Structure

4 broad categories of wards o Multi Bed (3 Beds) o Twin Deluxe(2 Beds) o Private (Single Bed) o Royal (Royal Suite)

Source: Team Analysis, Interviews with HODs and Nursing Staff

Normal versus Emergency healthcare

Emergency healthcare necessitates Ad-hoc planning, rapid response, reciprocal interdependence and senior consultant involvement.

Normal healthcare Loosely Mechanical approach

Monolithic team responds Process oriented, planned beforehand Low speed of response Precedents available Hierarchical response- Junior doctor hands over to senior doctor Routine encounter

Emergency healthcare Fluid with heavy reciprocal interdependence

Greater collaboration, task force response Ad hoc planning Rapid response Unprecedented Senior leadership responds immediately Rarer

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Information Linkages
Vertical Information Linkages
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Horizontal Information Linkages

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Hierarchical Referrals

Junior doctors consult senior doctors Nurses consult senior nurses and doctors

IT Systems

Extensive database of doctors, consultants and nurses listing responsibilities and experience

Rules and Plans

Standard operating procedures in non clinical departments No rules and procedures in clinical departments

Full Time Integrators

Appear only at medical, corporate and administration departments

Vertical IT Systems

Hospital Information Systems Flow streamlining

Source: Interview with Admin Head and IT Manager

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Culture Analysis at Wockhardt

The culture at Wockhardt is in general strong and healthy, except for minor discord

Rites of Passage New employee Induction program Apron handover at the Linen room Rites of Enhancement Employee of the Month award Nurse of the Month Star Performer of the Month Wall of Fame

Sub-culture spawning Identification to particular non-clinical department very strong Clinical departments- friction between senior and junior doctors

Degree of openness
Professed culture open-doors Team work across echelons Team work across departments Professed benefits in internal and external adaptability

Rites of Integration
Team outings Cultural festivities during festivals Informal get-togethers Wockhardt could do with more rites of integration
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Claims questionable. Evident distrust with respect to finance and HR departments

Strategy Focused Differentiation COMPETITIVE

LOW COST

ADVANTAGE
UNIQUENESS

Multi Specialty Hospital

Heart Care Brain and Spine Bone and Joints Minimal Invasive Surgery Women Care JCI Accreditation

COMPETITIVE SCOPE

BROAD

LOW COST LEADERSHIP

DIFFERENTI ATION

NARROW

FOCUSSED LOW COST LEADERSHIP

FOCUSSED DIFFERENTIATI ON:

WOCKHARDT

Partnership with Harvard Medical International High end customized surgeries

Source: Team Analysis

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Marketing Strategy
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.

International Patients

Tie ups with government in Africa and developing countries Target non insured patients in developed countries Online marketing Case study publications

Corporates

Medical services on campuses Events showcasing break throughs in healthcare adopted by Wockhardt Pre employment check ups Free health check up camps

Source: Team Analysis and wockhardt website

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Quality Control Strategy

Wockhardt uses two levers training and performance management to maintain quality

Need based and regular training

Training

Soft skills training

Half- yearly performance review

Performance Management

Performance based compensation Target setting by Supervisor 360 degree feedback from doctors, nurses, patients

Source: Team analysis

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Information Systems and Knowledge Managament

Wockhardt extensively uses robust IT systems for hospital management. Knowledge is more of tacit and shared following a Personalization Strategy
Use customized Hospital Information Systems developed by Wipro o Centralized Billing and Automated Alerts making processes faster o Data Warehousing and Data Processing functionality

IT Systems

Data line Analysis Online Appointment with Doctors Give me a quote facility

Informal sharing largely through one-on-one conversations

Knowledge Management

Trainings and Seminars

CME (Continual Medical Education) every week Case Studies

Source: Team Analysis, Interview with Admin Head

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Decision Making
Given the very natures of work, Wockhardt largely follows fluid decision making processes, with sufficiently decentralized authority in clinical units
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High Level of Delegation responsibilities given to junior reporting doctors

Hands on Experience in values Leads to intuitive decision making

Doctors mostly have to follow Bounded Rationality Model

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Wockhardt Fortis Deal

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 companys 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

Source: Business week

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