Certainty
December 2014 Monthly Newsletter
PRESENTED BY: CONSULTING CONNOISSEURS, OFFICE - 4, SAI BABA PLAZA, SECTOR - 15, AIROLI, NAVI MUMBAI, INDIA 400 708, WWW.CONSULTINGCONNOISSEURS.COM, INFO@CONSULTINGCONNOISSEURS.COM
IN THIS EDITION The Recovery of Healthcare 1 Rebuilding Real Estate 3 An Implementation Walkthrough 4
The Recovery of the Healthcare Sector
With the changing economic conditions in the country, most healthcare practices are seeing steady revenue streams rather than the strong increasing revenues that were seen a decade ago. In other words, there is a stagnation that is setting into the economic outlook of most existing healthcare businesses. While most traditional medical practitioners would treat this as an indication of ‘stability’, this scenario is a serious one if one incorporates the chang-
Volume of Patients
The healthcare sector has been de- ing conditions in the right perspective. scribed by many as an evergreen sector. In other words, its time to strategize! This is, from many perspectives, very true. However, with the changes in the healthcare sector, this evergreen sector too has begun having its own challenges.
Price of the Service. Before one tries to understand the strategies, one needs to understand what has changed in the healthcare sector. Key Drivers
Today, there are 10 key drivers that are changing the healthcare sector. And as a healthcare practitioner, one needs to Price of Service actually understand these drivers to ensure that one is responding to the right As one can see in the figure, there are quadrant with the right strategy. Many essentially 9 quadrants in which any es- times this is non-trivial to the player and tablished healthcare practice would fall. is not directly derived from the ‘business This segmentation is actually based on symptoms’. The intensity, therefore, of two fundamental parameters: The Vol- each driver is important to understand ume of Beneficiaries / Patients and The as it affects the definition of the solution
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that is to be associated with the implementation of a given strategy. The first one is the skewed supply of medical professionals. After the ‘liberalization/privatization’ of the education sector, medical colleges sprung up in every part of the country. The resulting situation today is the inversion of the healthcare-pyramid. Today, there are more doctors than nursing staff that are being trained in the country! The situation is not very different in the engineering sector as well. This has multiple consequences on the medical sector. With newer models (like PPP) with the government, there has been a tacit, yet formal, recognition of the healthcare industry/sector as a business rather than a social profession. The information age has now generated a complex constellation due to increased customer/consumer awareness that has reshaped the expectations and the assessments of traditional practices. Medico-litigation has become a growing practice area. Needless to say, technology options in healthcare have been changing. The adoption of newer technologies for treatment has made a marked impact on the segmentation of the sector. A once-touted approach to research, the ‘Jugaad’ methodology seems to be an accepted norm for research in the country. In other words, it is providing the medical professionals with a mechanism to ‘optimize’ (cut corners) and ‘define’ new practices that seem to work fine in many situations. For instance, stem cells is a more recognized system of treatment in India that in other countries and the cost of the treatment is significantly lower than that in other countries through this methodology!
The pressures on the financing have increased with the new regime of ‘Cashless/Insurance’ based treatments picking up. At the same time, there has been a rise in the affordability of the upper middle class to travel and take treatment elsewhere, particularly because the costs of premium healthcare in the country are comparable to those in other competing countries that are promoting medical tourism. The recent spate of hospital tragedies have called for a mechanism to ensure reasonable standardization of protocols. This is an impending change likely to affect the sector in the coming months. The increasing emphasis on trade has also meant a reduction in entry barriers for established players. In other words, there is a potential opening of the market to new players that could severely shift the balance. And lastly, the rural-urban divide that is requiring newer paradigms to exploit the potential across the masses in the country. With a target to develop 400 cities, this opportunity is going to knock earlier than one would expect. What Healthcare Players Need to do? There are three fundamental categories of strategies for the healthcare players. They are Enlargement, Enrichment and Innovation.
different strategic options for players across the grid. The enlargement strategy looks at increasing the number of offerings. The enrichment strategy focuses on improving the experience of the offerings. The innovation strategy tries to look at how new markets can be tapped based on out-of-the-box approaches. For instance, a low-cost player who also sees a low volume of beneficiaries needs to revamp his entire business model, to avoid going bankrupt! Similarly, a highcost player with medium flow of beneficiaries needs to focus on ‘class’ practices as opposed to ‘mass’ practices. The nine different strategies, therefore, help the business player understand the issues involved and tells them the focus areas. However, the most difficult task is to ensure the right balance between the idea and the implementation. Most providers have a serious problem with the same. The end effect turns out to be positive only if the implementation is adequately engineered to incorporate the idea to the desired business objective. The Consulting Connoisseurs Healthcare Practice has a Transformation R Toolkit helps healthcare professionals: IDENTIFY THEIR POSITION ON THE GRID DERIVE THE MOST ATE STRATEGY AND THE SOLUTION
BALANCE ALL THE ELEMENTS OF ENLARGEMENT , ENRICHMENT AND INNOVATION IN THE IMPLEMENTATION
HANDOVER OF A LUTION
Enlargement
APPROPRIENGINEER
MANAGED SO-
Enrichment
Innovation
These generic categories manifest as
Get your Healthcare Transformation Toolkit Today! Call Dr. Pallavi @+91 - 22 - 2779 8950 to Book your Appointment Today
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Rebuilding the Residential Real Estate available to the consumers. This allowed for several new entrants to come in and harness the business eco-system.
If one books a flat at USD 100 000 at the time of development, the same flat would sell at USD 300 000 by the time it is completed. This has multiple fall-outs. Since the appreciation is far greater than any other investment, the builder actually stands to gain when a project is ‘delayed’ by some extent. Moreover, the rise in prices covers not just the rising costs of raw materials, but also provides the builder with a sizeable working capital that allows him to adjust/reduce his own exposure. In other words, the rise in prices was actually protecting the builders by levering on their in-efficiencies: Cost and Time Overrun. This becomes a dangerous situation for any economy.
The real estate sector actually relies on ‘pegged pricing’ today. In other words, just like petroleum, there is a strong lobby in the real estate industry that dictates the prices at which properties are to be offered. This aspect has forced most of them to remain in a state of an economically suspended animation. The first concern is, therefore, to ensure that financial movement occurs. Unfortunately, this isn’t happening the way one would expect and there is a shake-out being witnessed in the industry.
Consulting Connoisseurs has frameworks for improving the efficiencies in the processes of project management looking at all the aspects including the financing, the organization, the management and the sales and marketing. Our unique methodology will enable the client understand:
While most of the builders turn to financial institutions to borrow sums to ‘hold’ their prices, they need to focus on pushing their sales by creating pockets of ‘viable pockets of affordability’ in their customer base. The best way to do this is by minimizing the sensitivity to price rise. In other words, accelerate projects and the sales processes to ensure that the investment cycles are short. Unfortunately, most builders, large or small, are having difficulties in managing their projects and sales processes efficiently.
THE INTEGRATION BETWEEN THE OPERATIONS AND THE STRATEGY TO ENSURE JUDICIOUS MANAGEMENT AND FINANCIAL DECISION MAKING
Further, the rise in prices also means that the builder is able to advance his ‘break-even’ to 31 rd the number of sales that he had earlier. This comes as a relief to most builders. So, their own systemic inefficiencies were covered well by the rising prices and the same factor also de-stressed the builder from the sales. In short, the minimum ‘sale’ required for a residential building was less than a third of what it was earlier on. The builder could start new projects without having to worry about vacant and unsold flats in their existing projects. And to maintain affordability, there have been several ‘low-cost low-quality’ options made
The situation began changing when the affordability of the population started reaching its limit. In other words, there was a reduction in the number of buyers. Initially, this triggered a further rise in prices to ensure that the builder’s exposure wasn’t truly affected. However, that strategy has only worsened the situation. In short, the era of expecting windfall profits from real estate investments is quickly losing its shine.
level, but also at the industry level, the investor level and most importantly, the regulatory level. Its time to start at the organizational level for most of them to ensure that they are aligned and agile with a predictable tool to revamp their business models to the changing conditions of the environment. Strategic Environmental Factors
The Indian Real Estate industry is currently having serious issues and concerns to address. Over the past few years, the cost of real estate (particularly self owned residential, commercial or industrial properties), has gone up many-folds. With the rise in demand for land, the cost of the land has appreciated. This is the simple demand-supply equation. Since the cost of the land has appreciated, the cost of such properties has further appreciated. The end-result is that a builder who has bought a landparcel a few years ago, is able to gain from the premium that people are willing to pay for the properties that are with him. This needs a little more clarification. Let us look at an example.
Stable
Unstable
Expansion Mode (Growth)
Shorten Project Cycle
Niche Product / Market
In-Efficient
Efficient
Pegged-Pricing Strategies
What Builders Need to do?
The second most important strategy for the builder community is to ensure new financial models as part of their overall business models. A revamp of the financial models would mean a massive overhaul not just at the organizational
Improve Financial Model
DEFINING THE NEW PORTFOLIO FOR SUSTENANCE AND GROWTH.
QUICK TRACKING TO ENABLE THERE IS A STRONG VALUE ADDITION TO THE BUYERS NEW
ENGAGEMENT WITH BUYERS AND AGENCIES
MODELS LENDING
SMOOTH HANDLING OF LEGAL CLAIMS
To learn more about this solution, please contact our office at info@consultingconnoisseurs.com
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Business System Implementation Walkthrough: Ground Zero Guiding Values Shared with Clients Our Consultant, Rekha Shetty, has had the opportunity and the experience to help Small Business Clients in Business System Implementations when they don’t have any to start with. She has summarized the guiding values shared with clients in her own words in a beautiful way: We create successful stories of small, medium, new, derailed business owners who have burning desire to grow, unfortunately they missed many opportunities of growth due to various genuine and minute [micro] reasons.
usefulness and value of ideas, we can help you in realizing them as consultants. The Strategic Positioning for an Engagement When an organization is devoid of formal processes, it is necessary to start at some point. While most business owners typically know and see their problems, they have serious issues in understanding: The cause of the problem The extent of the problem in terms of what causes are contributing to what amount of the problem
We aim to troubleshoot all such obstacles of business owners to (a)fill the gaps between them and their desired achievement through the diagnosing of the root causes aka the weak areas of their business and (b)implement the right result oriented systems on right time to bring out their hidden potential and (c)to achieve those significant events that act as the turning points in their lives.
The hidden impact of the problem A manage-able solution to the problem
A Quick Functional Walkthrough In companies that just have to start exploring the waters, it is advised to go for a systematic fast-track approach that is iterative in nature. The implementation methodology, therefore, looks at the following areas in greater detail. Core Concept and Vision Alignment to clarify the objectives. MIS-View your business every day to take necessary actions on the very next day, week and/or month. Evaluation and concrete result oriented action on seven main areasBusiness Technology, Corporate Finance, Marketing And Sales, Operations, Organization, Risk, And Strategy.
A method to check and contain the problem in the future
Improving Quality, Productivity, Sales and Profit in your organization.
The actual Return on Investment that is to be expected
Giving a boost to your marketing and branding activities.
All these rely on a systematic evaluation of the current business condition, failing which one would be building on assumptions that would start questioning the objectives without leaving much of a scope to work and improve the situation. In other words, it requires an The Necessary Pre-condition intensive amount of study of the current practices. Depending on the perIt is said that An idea can change our ception of the ‘blind’ and ‘visible’ spots life. An entrepreneur’s mind is a fertile in the business, therefore, there are 4 difground which picks up ideas and sows ferent postures that could be harnessed. them in their businesses; thereby nurturing them into bigger forms. Therefore, an entrepreneur must be very careRatify Issues Packaged Visible With Consultant Solution ful while picking/choosing any idea that is given to them, especially because of Allow Preliminary Allow Consultant Blind Capture To be the the high stakes that could be involved.
Establishing better coordination and communication in the team.
If you have an open mind to receive and nurture new ideas to improve your business, and if you believe in the power,
Issues from the Perspective Of the Business Owner
Being outsiders we shall do justified in-depth analyses of their business in various faculties. We shall help them with various options required to achieve progress.
Mechanisms Blind
Defacto CEO Visible
Issues from the Perspective Of the Consultant
Reducing customer complaints and improving customer satisfaction. Setting up and streamlining efficient Standard Operating Procedures. Formulating various systems and policies. Setting up, tracking and achieving organization goals. Setting up an objective and meaningful reporting system. Establishing the culture of systematic decision making and business management.
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