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Challenges in sustaining a hospital: lessons for managing healthcare institutions

Authors:
  • School of Business Management, NMIMS University

Abstract and Figures

One of the important components of the private health care sector has been health care facilities set up by corporate sector. The financial sustainability of these facilities is closely linked to the financial performance of the main business. In this paper we examine a case of one such hospital which is part of a corporate facing difficult time and its revival strategy. The revival strategy of a hospital presented here provides many interesting ideas of reviving hospitals which are going through difficult times. In some sense the government hospitals have many similarities like a corporate hospital dedicated to its employees. Like dedicated corporate hospital, the government facilities are required to provide free care or highly subsidised care to its users and depend on financial allocations from government. Both dedicated corporate hospital and government facility depend on budget allocations which in turn depend on good financial health of corporate and good fiscal position of government respectively. Tinplate Hospital, one of the oldest hospitals in Jamshedpur, was started to extend medical care facilities for its employees in the early 1940. It graduated into a 210-bedded hospital with 35 doctors and 187 supporting staff in 1990s. The parent company was facing serious financial losses in late 1990s. Due to recurring losses, inadequate operating performances and increasing expenditure the management of the parent company was in a dilemma whether to close down the hospital or at least downsize the staff to save an annual expenditure of nearly Rs. 30 million. The hospital redefined its offer of services, undertook leadership changes and improved operations to achieve financial independence. It continues to provide free medical facilities to nearly 28000 members of 5500 families of the employees of the parent company.
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Challenges in sustaining a hospital:
lessons for managing healthcare institutions
Sunil Kumar Maheshwari
Ramesh Bhat
Working paper No. 2004-02-03
February 2004
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Challenges in sustaining a hospital:
lessons for managing healthcare institutions1
Abstract
One of the important components of the private health care sector has been health care facilities set
up by corporate sector. The financial sustainability of these facilities is closely linked to the financial
performance of the main business. In this paper we examine a case of one such hospital which is part
of a corporate facing difficult time and its revival strategy. The revival strategy of a hospital presented
here provides many interesting ideas of reviving hospitals which are going through difficult times. In
some sense the government hospitals have many similarities like a corporate hospital dedicated to its
employees. Like dedicated corporate hospital, the government facilities are required to provide free
care or highly subsidised care to its users and depend on financial allocations from government. Both
dedicated corporate hospital and government facility depend on budget allocations which in turn
depend on good financial health of corporate and good fiscal position of government respectively.
Tinplate Hospital, one of the oldest hospitals in Jamshedpur, was started to extend medical care
facilities for its employees in the early 1940's. It graduated into a 210-bedded hospital with 35 doctors
and 187 supporting staff in 1990s. The parent company was facing serious financial losses in late
1990s. Due to recurring losses, inadequate operating performances and increasing expenditure the
management of the parent company was in a dilemma whether to close down the hospital or at least
downsize the staff to save an annual expenditure of nearly Rs. 30 million.
The hospital redefined its offer of services, undertook leadership changes and improved operations to
achieve financial independence. It continues to provide free medical facilities to nearly 28000
members of 5500 families of the employees of the parent company.
1 Authors are grateful to Mr. Bushen Raina, MD Tinplate Company of India, Dr. C.D. Singh and other doctors of
the Tinplate Hospital for their sharing of information and cooperation.
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Challenges in sustaining a hospital:
lessons for managing healthcare institutions
1. Introduction
The health sector in India has witnessed significant growth in private sector provision and
financing of health care services. Over the years the number of private clinical
establishments all over the country has grown significantly. The private sector, therefore,
assumes considerable importance in India’s health care delivery system. The reason for
popularity of these establishments has been their ability to bring almost all types of health
care services to the doorsteps of patients. Most of these establishments use latest medical
technologies in provision of health services. The utilisation surveys suggest that on an
average 3/4th of outpatients and 1/3rd of in-patients seek care from private providers. About
75 per cent of health expenditure in the country is for private health care treatment. About 80
per cent of the qualified doctors in the country work in the private sector. The private out-of-
pocket expenditures have grown at the rate of 12.5 per cent annum.
One of the important components of the private health care sector has been health care
facilities set up by corporate sector. Many corporate entities in India have also set-up health
facilities which are dedicated to their employees. These facilities depend on main business
of these corporate for their financial allocations. The financial sustainability of these
facilities is closely linked to the financial performance of the main business. There have
been number of cases where the health facilities set-up by corporate face severe financial
crisis when the performance of the main business of the corporate goes down. Under these
situations the revival strategy of the health facility cannot be closely linked with the main
business revival. During this time the health facility has also an obligation to provide free
care to all employees. In this paper we examine a case of one such hospital which is part of a
corporate facing difficult time and its revival strategy.
The revival strategy of a hospital presented here provides many interesting ideas of reviving
hospitals which are going through difficult times. The findings and discussion presented here
has also learning for the government hospitals. In some sense the government hospitals have
many similarities like a corporate hospital dedicated to its employees. Like dedicated
corporate hospital, these facilities are required to provide free care or highly subsidised to its
users and depend on financial allocations from government. Besides this the governments
perform primarily two roles relating to health sector. First, it frames rules, procedures and
policies and regulates the services in this sector. Second, government invests resources in the
sector to ensure provision of health services. These services co-exist with private service
providers in India. Both dedicated corporate hospital and government facility depend on
budget allocations which in turn depend on good financial health of corporate and good fiscal
position of government respectively.
Growing financial and fiscal problems at the top may critically affect the sustainability of the
hospitals and its operations. Over the years one experiences this happening in many
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corporate health facilities and government systems. The present study discusses the decline
and turnaround of a hospital with the objective to understand the following:
· What are the turnaround challenges of a hospital and what are the options to make a
hospital sustainable?
· What are its lessons to managing health care facilities facing similar situations?
2. The Literature
The turnaround of organisations has been examined with economic, psychological, and
sociological perspectives (Argneti 1976; Cameron et. al. 1988a; D’Aveni 1989; Kahneman
and Lovallo 1993; Kelly and Amburgey 1991; Khandwalla 1989). The common thread in all
these works has been the inquiry about managerial actions that lead the organisational
decline and subsequent recovery of organisations.
The turnaround of non-performing organisation is one of the most complex managerial
challenges, as different stakeholders become hostile towards the management knowing upon
the poor performance of the organisation and organisations lack resources. Management feels
stigma. Hence, management of relationship with different stakeholders by changed
leadership is essential for turnaround management. Research has consistently indicated that
the change of leadership is a prerequisite (Khandwalla 1992) to initiate action for turnaround
due to escalated commitment of the existing strategies.
Turnaround actions have received considerable attention of researchers in the recent past.
Most of the researchers in this stream have tried to develop typology of turnaround strategy
(Schendel et. al. 1976; Ford and Baucus 1987; Khandwalla 1992; Robbins and Pearce 1992).
The fundamental tenant of inquiry to develop typology has been to identify consistent mix of
different actions to turnaround the organisation. Khandwalla (1992) identified twenty seven
set of activities to be classified under seven broad groups namely: (a) personnel changes, (b)
diagnosing and troubleshooting, (c) stakeholder or people-management, (d) operations
management, (e) management systems and structure, (f) financial management, and (g) strategic
management. However, this typology of turnaround management (surgical re-constructive,
surgical innovative, non-surgical innovative, non-surgical transformational) is based on
retrenchment of people, technology up-gradation and people-management. Zammuto and
Cameron (1985) identify strategies on the basis of domain change and cost reduction efforts. His
argument for matching the turnaround strategy to the changes in the environment niche has
received attention of researchers. Robbins and Pearce (1992) classify turnaround strategy in two
types (a) efficiency driven, and (b) competition driven. However the relevance of this literature
in the context of health care management is unknown. This study extends this stream of
literature to health care management.
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3. Methodology
Management of organisational turnaround is a complex phenomenon where multiple
subjective realities coexist. Such ontological context suggests the adoption of qualitative
research. Further in epistemological terms, researchers need to observe the phenomena to
understand the dynamics of actions in organisations, suggesting adopting qualitative research
route through case method (Lee 1999). For these and other similar reasons, turnaround and
related decision processes have often been studied through case methods (e.g. Allison 1971,
Eisenhardt 1989, Pettigrew 1973, Harris and Sutton 1986). The resultant theory through case
research provides an advantage of novelty and testability (Eisenhardt 1989) but it requires
careful examination of validity of data and possible bias of researchers through collection
and interpretation of data through multiple sources.
Five in-depth interviews were initially conducted with the CEO, Head of the hospital and
other senior doctors of the hospital. These interviews were largely unstructured and open-
ended as author tried to understand the process of the turnaround of the hospital. These
interviews provided a detailed list of activities that led to the turnaround. One focused group
discussion was subsequently conducted with other staff in the hospital.
The key information during the interviewers was validated from at least two different sources
like another interview or documented information. The paper reports only such validated
statements. These interviews provided data on decision-making process, leadership
characteristics, stakeholders’ response, and key actions in the history of the hospital. To
further facilitate data gathering and cross validation, three days were spent at the hospital as
an observer. In the process some patients were also interviewed informally.
4. The Case Study
Tinplate Hospital is one of the oldest hospitals in Jamshedpur, an industrial town in Eastern
India. It was started by a Tata group company - The Tinplate Company of India Ltd. (TCIL),
primarily to extend medical care facilities for its employees in the early 1940's. The hospital
started off as a very small first-aid post/dispensary. Slowly it metamorphosed into a 60-
bedded hospital in 1980 with 8 doctors and graduated into a 210-bedded hospital with 35
doctors and 187 supporting staff in 1990s. The hospital was a captive hospital only for the
employees and the families of TCIL. The Managing Director of TCIL stated:
Tinplate hospital was not among the best hospitals in the town. It lacked emergency
facilities and Intensive Care Units. For serious and prolonged illnesses, employees
used to be referred to other hospitals of Tata group companies i.e., Tata Steel and
Tata Motors in the city. However, it was serving well common health care needs of
nearly 2000 employees, their families, more than 3500 voluntary retired employees
and their families.”
TCIL was facing serious financial losses in late 1990s. Due to recurring losses, inadequate
operating performances and increasing expenditure the management of TCIL was in a
dilemma whether to close down the hospital or at least downsize the staff to save an annual
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expenditure of nearly Rs. 30 million. TCIL, a company, known for its philosophy of social
good, employment security, healthy working conditions and human welfare, had tried to
alleviate the problems of people who undertook voluntary retirement by extending many
facilities such as free education to children, highly subsidised electricity etc. The company
had allotted a small plot of land on lease for 25 years to voluntary retired workers who stayed
back in the town. The company also allowed them to avail free medical facility in Tinplate
Hospital for the self and family. The voluntary retirement of employees of TCIL was
necessitated by its own turnaround. Bushen Raina, the Managing Director of TCIL stated:
We were facing serious cash problems. Our losses were more than Rs. 50 million
per month in 1998. We had no funds to support operations of the hospital. However,
we had promised health care facility to voluntary retired employees in the hospital. I
shared my concerns to the hospital management.”
The 210-bed hospital faced certain death when TCIL finally announced in an internal
meeting its inability to support the operations of the hospital. But a team of senior doctors
was determined to revive the hospital and bring it to fiscal health. A member of the team
stated:
I felt sad to visualize a possible demise of nearly 60 years old institution. It provided
health care to many. It also provided employment to many people. I was determined
to run it without financial support of TCIL.”
Health of the Hospital in 1998
Tinplate hospital was having an occupancy rate of only 40 per cent in 1998. It used to get
annual support of Rs. 30 million from TCIL. The general upkeep and hygiene of the hospital
was poor. One of the doctors stated:
We had an operating table but it was lying unused. The wards in the hospitals were
in poor conditions due to lack of financial budget allocation for maintenance. The
whitewashing of the hospital was also not regular. The place did not inspire many of
us. There was no specialty in the hospital for which it could be known in the town.”
Internally there were conflicts between doctors themselves. One of the doctors stated:
When senior staff members and the doctors of the hospital were invited in a meeting
to accept the challenge of turning the hospital into financially viable hospital, they
laughed at it. They also opposed many of the ideas that were developed in the
meeting. These people were generally not happy in the hospital.”
The clients of the hospitals were primarily TCIL employees. It was providing free medical
services to the families of 3500 retired employees and 2000 current employees i.e. 5500
families or 27500 people, assuming an average of five persons per family. Others in the town
used to prefer other hospitals in the town to Tinplate Hospital.
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5. Revival Process
With TCIL’s serious consideration to stop funding the hospital and to close it down
altogether, the then Director, Medical Services decided to revive the hospital and make it into
a financially sustainable centre within TCIL. He conducted a series of meetings with doctors
and staff of the hospital to brainstorm and develop strategies for revival.
Developing Strategy
The brainstorming sessions with the key stakeholders of the organisation generated ideas to
improve the revenue of the hospital. These meetings led to the documenting the main
strength, weakness, opportunities and threats of the hospital.
Strengths
· An old hospital about which people
knew well
· Many emotionally committed staff and
doctors
· TCIL’s requirement to provide
healthcare to its employees
· Located in an industrial town
· Dynamic leadership of the TCIL’s MD
Weaknesses
· Not well known for any specialisation
· Internal conflicts between people
· Low morale of many staff members and
doctors
· Poorly maintained wards and
equipments
· Declining financial support from TCIL
· No ICU, Trauma Center, and Blood
Bank.
Opportunities
· Autonomy to operate and develop
strategies
· Attract patients from other industrial
units who used to send to expensive
Tata Main Hospital
Threats
· Possible closure of the hospital
· Competition from other corporate
hospitals
The brainstorming sessions helped the hospital to generate innovative ideas for its revival.
Based on its SWOT analysis, the hospital developed following proposals to compete
effectively with big and well-known hospitals in the region.
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1. Personalised care
Doctors realised that one of the key problems of patients in big hospitals is that they are
left alone to move from one location to another within the hospital for registration,
investigations, consultations and collection of drugs. The indifferent attitude of staff is a
major deterrent in these hospitals. TCIL decided to provide personal care. One of the
senior doctors stated:
We decided to attend every non-TCIL patient with personal care. An attendant
accompanied him/her to help in registration and other processes in the hospital.
2. Efficiency and honesty
Doctors in the hospital realised that another weakness of the hospitals was a perception
among the patients of doing unnecessary investigations. We planned to communicate to
corporate houses and patients about our clear intent of not conducting unnecessary
investigation. A senior doctor stated:
We decided not to cheat the patient by conducting unnecessary investigations. We
wanted to be known as a fair and honest hospital.”
3. Affordable
Tinplate hospital people realised that they could attract some patients from outside if they
could be provided personalised and honest care at a low cost. They decided to charge the
patient the least of all the hospitals in the town. For example, they decided a tariff of Rs.
350 per day in general ward against the prevailing rate of Rs. 700 per day in other similar
facilities in the region.
The hospital decided to slowly build its brand for the quality of care in the town and
nearby areas.
The Vision
The hospital identified its Vision statement as:
"We shall offer the best health care services on competitive terms and strive for
exceeding patients' expectations by delivering added advantages".
Networking
Hospital could not have generated revenue from serving and retired employees of TCIL. It
was committed to provide free care to nearly 5500 families. Hence, it had to attract patients
based on what the hospital could offer. Having decided to attract patients from outside, the
hospital administration decided to network with other corporate clients and encourage them
to avail healthcare services from Tinplate Hospital.
Corporate Heads in Jamshedpur were approached and convinced to send patients for
treatment to Tinplate Hospital. Although the affordability factor played a key role, but there
were apprehensions among company heads, that by asking its employees to avail cheaper
Comment: They means patients or
hospital?
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services, the employees might feel that the management is depriving them of quality services
of contemporary big hospitals of Jamshedpur. The Hospital countered the apprehension by
asking the company heads to just include the name of Tinplate Hospital in their list of
empanelled hospitals rather than making it exclusive for their employees. So if people want
to come to Tinplate Hospital, they will get credit and the hospital will send the bill at the end
of the month. One of the doctors stated:
Employees in these corporate houses were reluctant to come to Tinplate Hospital, as
the hospital was lesser known than other hospitals in the region. The cost of
treatment was not important to them as it was borne by the employers.”
To overcome this barrier, the then superintendent of the hospital offered to run the dispensary
in their premises. These dispensaries were not being run properly for the lack of willing
doctors to manage them. Having got an entry in these corporate houses, patients during their
visits to the dispensary were persuaded to visit Tinplate Hospital for further referral. The
personalised persuasion of doctors convinced some patients to visit Tinplate Hospital. They
were provided personalised care with least trouble, common in big hospitals. Slowly people
started coming in Tinplate hospital and they were happy to get personalised care.
Improving the outlook
Encouraged with the initial success and increase in patient volume, the hospital management
undertook the job of improving the outlook of the hospital. They outsourced the kitchen
services to one of the reputed caterer of Jamshedpur, who agreed to provide good food at a
lower rate, owing to high volume. The management also subsequently undertook various
renovation works on the hospital in order to give it a facelift. Though it did not cost much,
but it gave a much-needed benefit to the hospital.
Faster decision-making and expanding services
Having sensed the initial success, the hospital management realised to undertake many quick
changes to reap the full benefits of its initial success. The hospital formed Tinplate Medical
Council with the Managing Director of Tinplate Company as its Chairman. The process
helped the hospital to speed up the decision making process. It helped the hospital to launch
many new services – like initiating health check-up programme, taking up a large
immunisation campaign etc. These services were aimed to improve the visibility of the
hospital in the area and generate badly needed revenue.
Inducting emergency services
With the hospital starting to generate funds, TCIL agreed to support it for a limited period of
time to help it become financially independent. The TCIL MD stated:
The dependence of hospital on TCIL reduced to Rs. 20 million from Rs. 30 million
within one year of undertaking change initiatives. Considering that it was continuing
to provide free medical care to families of TCIL employees and retired employees, it
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was remarkable. I decided to support the hospital for some more time. I wanted it to
become independent revenue surplus sustainable centre.”
Encouraged by the initial success, the hospital management initiated the process of procuring
high-end equipments and facilities. A senior doctor recollected his conversation with the MD
of a company:
“You lack emergency facilities like ICU, trauma Center and blood bank. You refer
serious patients to Tata Main Hospital. Hence, it is always advisable to many patients
to directly visit Tata Main Hospital even if their illness may not appear serious.”
Consequently, the management of the hospital proposed to set-up a full-scale Intensive Care
Unit in the hospital. However, internal funds for the same were not available. A proposal to
that extent was forwarded to Timken Foundation for seeking grant. The proposal was
rejected initially on the ground that the Foundation could fund only public hospitals and
Tinplate Hospital belonged to a commercial organisation. The management then came with
the idea of forming a trust for running the ICU/Trauma centre. This led to the formation of
Dr. T.C. John Memorial Charitable Trust. The trust by-laws were formulated in October
1999 and the trust was registered. Subsequently, it also obtained income tax exemption
certificate. This time, Timken Foundation sanctioned a grant of 6.5 million to the trust. The
amount was not adequate for setting up the ICU centre. However, the hospital could set-up
the entire ICU within the stipulated timeframe and within the budget through price
negotiation with the equipment supplier.
Price negotiation skills
HP was the best-known ICU equipments manufacturer. It quoted 3.35 million for the
equipment supply. With a grant of only Rs. 6.5 million, the trust could not have spent such
money on equipments alone. So the management approached the HP people at national level,
but could only achieve discount upto 10 per cent. At last, they contacted directly with their
parent office at US, and after an extensive negotiation and HP recognising their “desire to
achieve the unachievable” it agreed to supply the whole equipment for Rs. 1.8 million.
Although medical emergencies could be handled by the Intensive Care Unit, but handling
surgical emergencies required setting-up of Trauma Centre. Recognising these, the hospital
approached Dorabji Tata Trust, and with their grant of 3.5 million it could establish a Trauma
Centre to handle surgical emergencies. The hospital also planned to establish a Blood Bank
in the near future.
Brand building
For any hospital its major brand is the reputation of doctors attached with it. Recognising the
same, the Tinplate hospital aimed at attracting the finest of doctors in the city. Dr. C.D.
Singh, a reputed surgeon from Telco Hospital, joined the Tinplate hospital in the year 2001.
His joining the hospital gave a big boost towards its brand building effort. According to Dr.
C.D. Singh:
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I came from Telco Main Hospital where I was the head of Surgery. However, I was
not learning new things there. The environment over here is quite conducive to
personal as well as professional growth. I am able workout strategy for the hospital. I
can buy any equipment with my internally generated funds.”
In its constant endeavour of providing quality care, the hospital management decided of
developing unique specialisations. In doing so, it also decided to restrict itself in secondary
care, since becoming a tertiary care would have required high investments, technical skills
and staff.
The hospital decided to focus on specialised areas like Ophthalmology, ENT, Obstetric and
Gynecology as compared to Orthopedics and cardiac care, which are cost intensive. For these
particular areas, the hospital decided to procure most modern equipments and attract most
experienced doctors to join the hospital. Dr. Singh said:
To build the brand of the hospital for its quality of care we had to be among
the best at least in few streams of healthcare. We decided to focus on surgery.
I purchased the latest equipment that reduced the recovery periods of patients
significantly. I concentrated on ophthalmology and gynecology next. We have
purchased latest equipments in these streams.”
The hospital management decided to open up the hospital facilities for private practice.
Private practitioners of the city, as well as the hospital doctors were encouraged to examine
and operate their private patients utilising the hospital’s facilities like Operation Theatre,
Radiology, Pathology etc. at a reasonable rates. It helped the hospital to achieve three
objectives. First, it increased the bed occupancy and utilisation. The bed utilisation was
reported to be 74 per cent in the year 2003, up from 40 per cent in 1997. Second, with the
modern facilities available in the hospital, some of most reputed doctors of the city started
utilising the services of the hospital. It helped the hospital to develop an image of quality
service provider. Third, the doctors of the Tinplate Hospitals started using hospital services
to treat their private patients. It enhanced their commitment to the hospital.
Regarding the wards, Dr. Singh recalled how an MD of a company refused to bring his
family for treatment as wards with modern facilities in early 2003. The existing air
conditioned separate rooms in wards were not liked by them. Immediately thereafter, the
hospital added a new block where rooms had attached family restrooms and furnished
kitchen for relatives of the patients. Some of the employees of the hospital rated these rooms
as the best in the city.
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Customer satisfaction
The Director, medical services of Tinplate Hospital stated:
Customer satisfaction is the ultimate determining factor for the success of any
hospital, as the message spreads through words of mouth.”
Personalised care to each patient, minimising time wastage in availing hospital services and
an efficient patient feedback mechanism helped the hospital achieve customer satisfaction.
The hospital computerised the registration procedure, created multiple windows for
registration purpose and ensured availability of all the drugs round-the clock to reduce the
anxiety of patients.
Employee satisfaction
The hospital management was of the view that only satisfied employees can ensure customer
delight in health sector. It undertook various measures to ensure employee satisfaction in the
hospital.
· Continuous Medical Education
Continued medical education is among the most important measures to ensure the
commitment of doctors (Bhat and Maheshwari, 2004). Innovative ways were identified
for continued medical education in Tinplate Hospital. Every Thursday all doctors met for
case presentation, experience sharing, and learning new technologies etc. Outside guests
were also invited for sharing the knowledge. The doctors were encouraged for outside
conferences once a year. The hospital housed a library for improving their knowledge
base. It started scheme of loan for purchasing computer facilities etc.
· Modern equipments and procedures
For the specialised areas, the hospital ensures providing the modern equipments and most
recent procedures in order to enable the doctors to provide modern healthcare services.
The hospital intends to update itself with technology up-gradation. The hospital also
encourages its doctors for undergoing new procedures in the hospital that are not
available in the city.
· Professional autonomy
A senior doctor stated:
“I found a very poor person whose son was bleeding profusely after an accident. I
admitted the child and kept in ICU for many days. I could wave off his bill after
knowing his inability to pay. I felt extremely satisfied for having served him free.”
Present Form
Tinplate has shown a remarkable turnaround in the last three-odd years and currently earns
more than Rs 2 million a month. The list of companies in Jamshedpur using the hospital for
its employees include Public Sector Banks, cement company-Lafarge India, Timken,
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Uranium Corporation and several smaller companies of the Tata group. The efficient
management of the hospital is evident from the fact that the bed occupancy rate in the
hospital which was only 40 per cent before revival has increased to 74 per cent by 2003. On
an average 700 patients visit OPD per day. The average length of inpatient stay of 3 days is a
crucial indicator of the efficiency and effectiveness in management of the hospital.
The hospital's busy maternity ward is equipped with the latest equipment like a foetal
monitor. There is a competent trauma care centre. The management views the transition
from being a unit in danger of being sold, to one of the best healthcare facilities in Jharkhand
state, certainly a feat worthy of emulation.
The hospital, which even a few years ago was unknown to the people of Jamshedpur, has
become a major hub of medical care in the city. The efficient management of the hospital has
prompted many hospitals in and around Jamshedpur to benchmark their services against the
Tinplate Hospital. Various hospitals also approached the centre for their consultancy in
turning out their loss-making organisation into a financially sustainable centre. Tata
Refractory Hospital at Belpahar, Tata Special Steel Hospital in Tarapur and Tata Chemical
Hospital in Mithapur are few examples of hospital which has sought advice of Tinplate
Hospital in turning their hospitals into a financially viable organisation.
6. Findings and discussion
The turnaround of the Tinplate hospital could be ascribed to three broad areas: strategic,
leadership and operational. It is consistent with the existing literature on turnaround
(Maheshwari, 2004).
Strategically, the hospital decided to expand its services to make its presence felt in a city
where better well known hospital already existed. To achieve it, community health initiatives
were undertaken. The hospital decided to provide the best care in the city in specialisations
that were less capital expensive. Consequently it chose to focus on areas such as
ophthalmology and gynecology than on orthopedics and cardiology. They attracted the best
doctors to visit the hospital by allowing them to use the facilities of the hospital. The brand of
the hospital in those selected areas improved by getting associated with well-known doctors
of the city and modern equipments.
Hospital decided to provide personalised care at lower cost to attract patients who generally
used to prefer other well-known hospitals in the region. It added emergency services and a
new ward to develop confidence among the corporate clients.
One of the strategic directions the hospital took was developing partnerships and networking
with various healthcare providers in that region. In health sector the clients approach
hospitals through the referral system. In a country where 80 per cent of patients approach to
private providers for their basic health needs, they are theones who play an important role in
referring the patients to hospitals. One of the important strategic shifts this hospital made
was allowing the private doctors to use the facilities at the hospital. This not only helped the
hospital to solve problem of man-power resources but also improved the capacity utilisation.
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These interactions and partnerships between various providers in health sector can assume
several forms and institutional arrangements. The basic thrust of involving private providers
is based on the argument that it helps to improve the efficiency of existing limited resources
and also it ensures the availability of services, which is important to improve access to health
care. This not only ensured provision of quality care to their existing employees but also to
community in large. This case suggests that the access to quality care can be significantly
strengthened by developing partnerships and collaborations.
The experience of hospital has been good in implementing these partnerships. It is important
that while developing such initiatives one takes care of several factors. These are: (i) sharing
of information, (ii) involving all stakeholders, (iii) good monitoring mechanisms, (iv)
institutional capacity to address complexities. These are described below.
First, sharing of information plays a critical role in strengthening these partnerships. The
outsiders while forming such alliances have to make a number of decisions that would
involve complex process of information search and analysis. In the absence of appropriate
mechanisms for information sharing, the providers would incur high transaction costs. This
makes the partnership vulnerable to inefficiency and high cost.
Second, there must be appropriate mechanisms in place to involve all stakeholders and
ensuring transparency in the process. One of the ways, which would strengthen the process of
developing sustainable partnerships, is through the involvement of all stakeholders and
prospective private sector partners. Information, transparency, and stakeholder involvement
are critical components. As revealed by the experiences, each proposed partnership involves
considerable amount of co-ordination across different entities. Various proposals can not be
finalised without involving various departments and parent organisation having significant
stakes in the process. To address these issues require developing appropriate institutional
mechanisms to handle many of these complex interfaces and conflicts.
Third, appropriate mechanisms to monitor the performance of these partnerships should be in
place. Who should benefit from these initiatives is not clear. The hospital in present case had
major obligation to meet the health needs of a large number of their own employees. While
developing these partnerships there has to be complete understanding on the terms and
conditions of use of facilities by the employees. Such guidelines would also help the
facilities to regulate their activities so that collaborators do not behave opportunistically.
Fourth, many of these partnerships would involve complex set of incentives, most of them
not measurable and as a result may remain inadequately defined. The facilities need good
analytical capabilities to understand and address these issues.
Last, institutional arrangements and management structure assume critical importance in
managing these collaborations and partnerships. Developing these structures is a difficult
task. Once these structures are in place they provide mechanisms to monitor the performance
of contracts. Organisations would need to develop and organise the necessary capacity
required to manage these tasks in the short run. For example, the management of these
initiatives would require high quality financial analysis and project management skills and
15
capabilities. The Tinplate Company appointed a management post graduate from a reputed
institute to augment management skills of Tinplate hospital in 2001.
Leadership of the hospital ensured autonomy to doctors to perform professional duties. Raina
ensured autonomy to the hospital to develop strategies for its revival. He was firm in
overcoming the internal conflicts in the hospital. He appointed Dr C D Singh as the new head
of the hospital despite resistance of some. Singh adopted a consultative but firm style to
manage the hospital. It increased the commitment of different doctors and staff. Further, Dr.
Singh encouraged doctors to enhance their professional knowledge in different ways. It
probably enhanced the professional commitment of the doctors.
Operationally, hospital got equipped with state-of-art equipment in selected specialisation.
The appointment of a management graduate in the administration helped the hospital to
streamline many of its processes. The procedures right from admission to discharge was
simplified and computerised. Drugs were made available round-the-clock. The transactions
between the Trust and the hospital were streamlined for accounting and operational purposes.
Having improved the hygiene, quality of food and upkeep of the building; the hospital
management worked hard to network with doctors outside the hospital and persuaded its own
doctors to use hospital facilities for private patients to increase the bed utilisation. Different
accounting norms were developed for different kinds of patients. Many of the activities like
food were outsourced.
The turnaround of the Tinplate hospital suggests ways to improve the quality of care of
hospitals in public health system at different levels. Various measures adopted by the
hospital can be summarised in the following way:
Strategic initiatives, leadership directions and operational measures
in addressing the revival process
Initiatives Intended implications Specific measures
Expanding
speciality
services in select
area
Access
Quality
Cost effective
Identifying areas which are cost effective
Protecting employees and other
community from catastrophic financial
burden
Continuing medical education
programmes
Developing
partnerships and
networking
Utilisation of services
Access to Facilities
Human resource issues
Career opportunities
Various types of incentives
Financing of New
Investments
Cost
Quality
Negotiating prices
Creating specialised financial channels
within the existing set-up
Appropriate technologies after examining
its cost-effectiveness.
Organisation and
institution
Autonomy
Capacities to handle new
tasks
Registering hospital as autonomous body
under the societies and trust
16
Table 1
Income & Expenses (Rs. in lakhs)
2000-01 2001-02 2002-03
Income
Billing on other companies 67.84 104.75 106.03
Non-entitled dependent and others 59.37 89.57 115.06
Total Income 127.21 194.32 221.09
Expenses
Medicines/non-medicine items 56.37 98.67 129.01
Other expenses 29.58 44.88 33.88
Staff Welfare Expenses 02.86 05.08 03.17
General Expenses 02.87 01.82 03.42
Telephone Charges 00.53 00.67 00.59
Power Consumption 22.00 17.41 24.25
Salaries and Wages 204.00 198.96 245.95
Depreciation 05.04 05.04 05.62
Repairs and Maintenance - 22.19 00.99
Bills raised by TC John Trust - 10.57 22.01
Total Expenses 323.25 405.29 468.89
OPD paid cases 28698 33906 17956
OPD employees 199197 198839 191744
Break-up of revenue from different sources (Rs. In lakhs)
Pathology 31.90 18.42 20.95
Radiology 5.63 8.49 10.22
Operations 10.31 12.14 10.94
Delivery 11.18 14.15 17.07
Note: Income before 2000-01 was zero.
Table 2
Break-up of earnings (%)
Source
Outside
Patients
Non-entitled
Dependents of
Employees
Doctor’s
Patients
Associated
companies
OPD 07 03 - 90
Operations 19 07 32 42
Delivery 18 27 41 14
Admitted cases 15 11 20 36
17
Figure 1: Income components
Bed
41%
OPD
17%
Pathology
10%
Gyne
8%
Operations
7%
Radiology
4%
Others
13%
Table 3
Break-up of Department-wise earnings (%)
2000-01 2001-02 2002-03
Pathology 54.0 34.6 35.4
Radiology 9.5 15.9 17.3
Operations 17.6 22.9 18.5
Birth 18.9 26.6 28.8
18
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