Connect with us

Daily News

Amid Tough Times, Private Hospitals Face Shortage of CEOs

KIMS Hospitals, one of India’s largest hospital chain from Hyderabad led by leading Cardio-thoracic Surgeon Dr Bollineni Bhaskar Rao, is on the hunt for a Chief Executive Officer to run the operations. Under Rao’s stewardship, KIMS has grown from a single hospital to a chain of multi-specialty hospitals with 3,000 beds capacity, both organically and through strategic acquisitions. The expansion was fuelled by liberal dollops of private equity money, which Rao raised to expand the hospital chain. Rao wears several hats. If he is not in the operation theater performing bypass surgery, he will be busy overseeing administrative and financial matters of the company as Managing Director and Chief Executive Officer.

But Rao says managing large hospital network is becoming increasingly challenging. “Healthcare industry is going through a difficult phase, we are trying to optimize costs, increase volumes, reduce patients stay in the hospital, restructuring procurement, and even possibly looking at reducing the number of doctors and nurses,” said Rao to Moneycontrol. But to do this difficult surgery at the organization level, Rao needs one more hand, a CEO. It is turning out to be a difficult search. The rapid expansion of private healthcare facilities over the last one decade has not just created a shortage of specialist doctors but qualified senior administrators to manage them.

Limited pool of senior managers

Dr Rana Mehta, Partner and Leader Healthcare at PWC, managed hospitals in New Delhi and Colombo for Apollo Hospitals for a decade. A doctor by training, Mehta says there is a limited pool of top managers available to run operations and these people move from one hospital to the other. “In healthcare, there is a shortage of professionals. And typically professionals who were brought from other industries, but now healthcare is becoming very complex with its own nuances, clearly as much as we say clinical shortage, I think equally there is a shortage of administrators. It is more acute at a CEO level, but it is also there right up to the manager level,” Mehta says. A channel check with headhunters by Moneycontrol confirms this. Aditya Narayan Mishra, CEO, CIEL HR Services says the shortage of CEOs is due to the rise in the number of hospitals in the country that has widened the supply-demand gap.

“Hospitals usually want medical practitioners with some level of administrative experience to be part of the management team and such people are not easy to find. This is especially true after the sudden boom in the number of new hospitals coming up. Further, those who are well qualified for the role have ambitions to go abroad. Shortage of senior professionals in the medical sector is a reality across the globe and skilled Indians are also choosing to move to international locations if they have the requisite skills,” he says. The bigger challenge, according to HR professionals, is also that medical professionals are now not just employable in hospitals, but also other sectors like insurance and e-commerce firms. “The options of employment are much wider and an individual who would otherwise be paid Rs 50 lakh per annum in a hospital could get at least 25-30 percent more if they join the corporate world,” says the medical and pharma vertical head at a global recruitment consultancy. What bothers the industry is the shortage of managerial staff comes at a time when the industry is facing headwinds.

The numbers tell the story

The average revenue per operational bed (ARPOB) of the companies tracked by ICRA has grown by a muted 2 percent in first half of FY19 on a year-on-year (YoY) basis, much below the five-year compounded annual growth rate (CAGR) of 7.2 percent. The EBITDA dropped to the lowest in six-years to 11.4 percent in FY18 from the peak profitability of 15.7 percent in those years. “It all started with the implementation of the Goods and Services Tax (GST), the cap on prices of stents and knee implants by the National Pharmaceutical Pricing Authority (NPPA) and stiff regulatory action by certain states, including putting restrictions on procedure rates, levying penalties and placing operational limitations on erring hospitals,” ICRA said in its recent report on hospital sector.

The recent trade margin cap on 42 cancer drugs by the government is also seen to hit hospitals hard. The low package rates offered by much anticipated Ayushman Bharat also spooked corporate hospitals. All this is hastening consolidation in the sector, with Radiant-Max Healthcare deal followed by Malaysia’s IHH Healthcare’s acquisition of India’s second largest healthcare provider Fortis Healthcare for USD 1.1 billion in June. There is also talk about Manipal Hospitals buying Medanta. “I think given the headwinds the industry is facing both in terms of costs and ability to raise prices, I think obviously the efficiencies need to be improved,” Mehta says. “So cost containment, cost optimization and revenue enhance would be big focus areas for hospitals,” he says. Meanwhile, hospitals are hiring consultants to do some of these things for them. – Money Control

Copyright © 2024 Medical Buyer

error: Content is protected !!