SouthEastern Anatolia UHG Business Plan Highlights

1
South-Eastern Anatolia UHG Business Plan
Highlights

• Preliminary and Draft Copy for Discussion
  Purposes Only

2
Background

• Universal Hospitals Group is the largest private
  healthcare provider in Turkey which currently has
  8,500 employees, 1,300 physicians and 58
  healthcare facilities. Foundations of the group
  were laid back in 1972.
• The group started its operations in 1972 when Dr.
  Azmi Ofluoglu has opened the most modern
  out-patient clinic of that 70s in Turkey.
• The group consistently grew over the decades and
  became a healthcare giant providing world-class
  healthcare services, mostly in western Turkey.
• UHG wants to expand its business into South, East
  and South-Eastern Turkey by building new
  hospitals in the region.
• This is to be achieved by establishing business
  relationships with local landlords in the region
  where possible.
• UHG has established a wholly owned subsidiary to
  plan, execute and control operations and building
  its headquarters in Adana.

3
UHGs Mission and Vision

• UHGs mission is to maintain its reference
  hospital status in the Turkish Healthcare
  industry by using modern knowledge and latest
  technology within the framework of
  internationally accepted healthcare standards and
  business ethics. UHG respects patient rights and
  recognizes its social responsibilities and aware
  the importance of patient and family
  satisfaction.
• UHGs vision is to become a global healthcare
  provider by providing services in other parts of
  the world where there is need as it is proud of
  building a model and brand in healthcare with
  its highly qualified team, modern infrastructure
  as well as pioneering applications utilizing
  latest technology, academic achievements and
  great experience.

4
Parties to This Business Plan

• Entrepreneurs
• South Eastern Anatolia UHG (SEA-UHG)(A Wholly
  Owned Subsidiary of UHG)
• Individual Landlords in Various Cities of South,
  Eastern and South-East Anatolia (Landlords)
• Others
• Physicians in Public Hospitals and Independent
  Practice, as well as Nurses and Hospital
  Administrators currently living or willing to
  live in those cities
• Local Businesses
• General Public

5
The Business Model

• Landlords who are mostly wealthy local
  businessmen show interest in building a hospital
  in their cities and apply UHG for consideration.
• UHG studies the local healthcare market and if
  found feasible, drafts and negotiates a contract
  establishing a business relationship with the
  landlords.
• Landlords provide a hospital building either by
  renovating an existing building, or building a
  new one according to specifications given by
  SEA-UHG.
• SEA-UHG provides assistance during renovation
  and/or construction phase with its architects and
  engineers.
• SEA-UHG provides medical equipment and furniture
  and operates the hospital.
• The rental revenue for landlords is variable and
  a pre-determined percentage of the hospital
  revenue.

6
Executive Summary

• Being the leader in the healthcare industry with
  its 58 establishments, The Group wishes to
  further expand into less developed / under
  privileged Southern, Eastern and South-Eastern
  regions of the country to meet demand which was
  not satisfactorily met for decades. This is one
  of the main motives behind the investment
  decision.
• UHG Hospitals will meet the evident demand and
  bring world class healthcare services to the
  people of the region specifically by providing
  most needed hygienic operating theatres and
  intensive care facilities, as well as modern
  medical imaging technologies.
• These hospitals, which are designed to serve
  patients in international healthcare standards,
  will become magnet hospitals and reference
  centers in their areas specifically with their
  high technologies and comfort level they will
  provide.

7
Marketing Highlights
8
Macro Environment

• Turkey in last two decades show enormous
  development and became one of the key economic
  players in Europe and Middle East.
• Turkish economy is becoming more and more stable
  ever year and there is a growing interest among
  foreign investors as politics and economy
  stabilizes.
• There is a very big growth potential in the
  country's economy and the country is a candidate
  for EU membership.
• As the economy grows demand for better education
  and world-class healthcare services, where there
  is an obvious gap between demand and supply, also
  grow.

9
Competitive Environment

• Competition from public hospitals are weak due to
  their very limited resources and insufficient
  service levels. There is a serious funding
  problem for these facilities as these facilities
  are funded by the central governments budget.
• Teaching facilities (tertiary level providers),
  where exist, provide high level services but they
  also have budgetary constraints and are very
  crowded. Physicians working in these facilities
  are looking into better business opportunities
  with private providers.
• There are few private hospitals but they are
  operated mostly by local physicians and
  inadequate in providing world-class services.
  Their buildings and equipment are mostly outdated
  or poor in quality. Some of these facilities have
  serious infection control risks.
• Independent physician offices ad imaging centers
  and labs may meet primary care needs and some
  outpatient need, however the lack complexity
  required by todays care requirements

10
The Industry

• The industry was overwhelmed by public facilities
  which are funded by central governments budget.
  Although this is still the case their dominance
  is loosing strength as privately owned healthcare
  facilities emerge.
• Today only about 10 of the market belongs to
  private hospitals and clinics, but as the public
  facilities grow older, their re-furbishing and
  equipment needs cannot be met by the central
  budget.
• Government has developed a healthcare
  transformation plan which ultimately aims at
  privatizing the whole industry.
• This plan is developed under auspices of The
  World Bank and IMF, who are very determined for
  its success, as they are the main lenders of the
  country.
• A new general public healthcare insurance scheme
  will be taking effect starting from January 2007.
  The new scheme integrates payers into a single
  body.

11
Customer Priorities

• We call customers of healthcare as patients.
  However their patience is running out as they
  compare quality and quantity of healthcare
  services available to them with those of
  developed countries.
• Customers of healthcare are now much better
  informed about their choices than they were a
  decade ago. Thus their demand is much more
  educated.
• Current level of hygiene and comfort in crowded
  public facilities lead patients into private
  services. The are willing to pay more for a
  healthier choice.
• Physicians in private healthcare are more
  emphatic than their counterparts in public
  services, as they are being directly paid by the
  patient.
• Price elasticity of demand in healthcare is very
  low. Patients are willing to pay more, as
  inability to meet these services are considered
  life threatening.

12
Service Strategies

• As the population of the country ages and income
  level increases, cardio-vascular problems are
  becoming very common. Therefore availability of
  cardiology and cardiovascular surgery is key to
  success, as they are not widely available in
  lesser developed regions of the country.
• Patients expect better imaging and lab services
  which can only be provided with modern equipment
  available in wealthy hospitals.
• Recently services of private hospitals became
  available for patients under public insurance. As
  these patients are white and/or blue collar
  workers time management of these services are
  important for them and their employees. An
  integrated approach to spend less time in the
  healthcare facility makes both patients and their
  insurers happy.
• Dark and dirty environments, long waiting queues
  and non-smiling faces are not welcomed in private
  healthcare. One of the most important service
  standards will be a welcoming facility where
  patients and families may feel the comfort and
  peace.

13
Pricing Strategies

• The government fixes the prices it pays for the
  medical services through public insurance.
• The price differentiation is achieved by charging
  a surplus over the amount paid by the public
  insurance.
• The amount of surplus is dependent upon
  availability of similar services in their local
  market and ability of patients to pay the
  difference.
• Private insurance companies started provide
  insurance policies to cover these surplus
  charges. Prices for those policy holders are
  negotiable between hospitals and insurance
  companies, but usually does not vary extensively
  around Turkish Medical Associations minimum
  price list.
• UHG believes that the pricing of its services
  should not be a barrier to access to better
  healthcare. Therefore the pricing of the
  services will be set according to the local
  market conditions, keeping in mind that the
  quality service can be expensive, at times.

14
Distribution Strategies

• One of the key element for quality healthcare
  services is to increase accessibility for those
  services. This requires understanding local
  conditions and careful planning to meet demand,
  local in character. Strong business relations
  with local business circles will enable SEA-UHG
  to satisfy this need.
• Out-patient clinics will be established to
  capture demand where necessary. These will become
  supply centers for patients.
• Some of our hospitals will provide specialty
  services (e.g. oncology treatments or special
  non-invasive diagnostic techniques, etc.) which
  will be marketed by our other hospitals in
  neighboring regions.
• Patient and family education not only a right but
  is a key to success in healthcare. The company
  will extensively use its resources for this
  purpose.

15
SWOT Analysis

• Strengths
• Extensive Experience in Operating Hospitals
• Strong Price Advantage of Centralized Buying
• Adherence to International Healthcare Standards
• Weaknesses
• Need to Educate Nursing and Other Independent
  Providers for Standards
• Geographical Distance from Main Headquarters
• Opportunities
• Growing Demand and Inability of Public Sector to
  Meet Such a Demand
• Early Entry to Those Market Segments
• Threats
• General Economic Crises

16
Operations Highlights
17
Processes

• Main Processes in Hospital Operations are
• Outpatient Visits with Lab and Imaging
• Lab and Imaging Services to Outside Providers
• Ambulatory Surgeries
• Non-Surgical In-patient Admissions
• Surgeries
• Emergency Room Visits
• Wellness and Checkup Programs
• Advanced Diagnostics Services (e.g. Cath-Lab, CT
  Angiography etc.)

18
Facility Requirements

• Each Hospital has its own spacing requirements
  according to its plan of care, however the
  following facilities are musts in almost all of
  our hospitals
• Outpatient Clinics In Almost All Specialties
• Radiology Department MRI, CT, X-Ray,
  Fluoroscopy, US-Doppler etc.
• Central Laboratory Microbiology,
  Bio-chemistry, Pathology
• Inpatient Rooms Single Occupancy
• ICUs Medical Surgical, Cardio-vascular,
  Coronary
• Cath-Lab Cardiac and DSA
• Operating Theatres HEPA Filters, Laminar Flow
• CSSD Steam, Ethylene Oxide, Plasma
• Catering Services Patients families,
  Employees
• Delivery Rooms, Morgue, Administrative Spaces
  etc

19
Equipment and Inventory Requirements

• Each hospital has a room-by-room equipment
  inventory list drawn out of its functional
  program and plan of care.
• Availability on time and proper maintenance of
  medical equipment is one of the keys for success
  in healthcare.
• UHG has both experience and buying /negotiation
  power in purchasing the most modern medical
  equipment in both local and international
  markets.
• UHGs central equipment inventory and ability to
  exchange medical equipment among UHG hospitals is
  an another strength factor.
• The group has a centralized purchasing department
  which can expedite purchasing process
  significantly.

20
Supply Chain Requirements

• Large number of different inventory items.
• Difficult storage requirements.
• Many infrequently used and expensive items.
• Mostly provided by just-in-time basis by
  suppliers.
• Advantage of volume buying and volume contracts.
• Items require fast delivery.

21
Highlights of The Financial Plan

• The project will be financed both by equity and
  loans.
• As buildings are on long-term lease there will be
  no initial cash outflow for land, buildings and
  alike.
• Only medical equipment and furniture will be
  financed with loans (some in operational leasing)
• The company has no existing loans and
  liabilities.
• The company has signed long-term operational
  leasing contracts with landlords.
• The projected financials are available upon
  request.

22
Human Resources

• All HR activities will be centrally coordinated
  from Adana Office.
• Two HR specialists will be employed to coordinate
  the activities.
• HR specialists will have special training on JCI
  standards on credentialing and continuing
  education issues.
• All job descriptions will be written and will be
  presented to prospective employees before a job
  offer and the final interview.
• HR specialists will also arrange training for
  individual hospital managements and action plans
  for labor and union issues
• A well structured compensation plan will be
  prepared and submitted to the management for
  approval.
• A skills inventory will be developed and new
  hiring will only take place according to budget
  and the HR master plan.

23
Hospitals in Construction
Universal Adana Card. Cardiovascular Surgery
Hosp. Universal Adana Ophtalmology
Hospital Universal Adana Gynecology Pediatrics
Hospital Universal Diyarbakir Hospital Universal
Elazig Hospital Universal Van Hospital Universal
Hatay Hospital Universal Urfa Hospital Universal
Agri Hospital Universal Cizre Hospital Universal
Bingöl Hospital TOTAL
Building (m2) 4,000 4,000 8,000 18,000 20,000 12,
000 10,000 20,000 10,000 7,000 5,000 128,000
of beds 52 10 52 100 200 100 80 200 100 50 50
994
24
Hospitals Planned

• Universal Yozgat Physical Theuraphy
  Rehabilitation Hospital
• Universal Sivas Hospital
• Universal Malatya Hospital

• Universal Mersin Hospital
• Universal Bingöl Hospital
• Universal Hakkari Hospital
• Universal Gaziantep Hospital
• Universal Adiyaman Hospital

25
Geographical Positioning