THE HOSPITAL PROJECT

Author: Dr.Bhalachandra H Keni

1997-Richmond, Sydney NSW Australia

PROJECT : To establish a medium sized modern, multi-speciality Hospital / Health care centre of
100 beds strength of International Standards in India.

OBJECT : To Examine & Estimate approximately the cost involved in establishing a turnkey
project of the above said Hospital Industry.

LOCATION : A cosmopolitan city/town Ex.Bangalore,Ahmedabad,Pune & Nagpur etc.

TYPE OF BUSINESS : Corporate style of Industry.

RATIONALE : “ Need of the hour “ Absolute want of Hi-tech Hospital Industry under one roof.
The Hospital clientele today is drawn from the more educated & affluent classes of
society. These clientele are more aware of their Rights & Obligations of the Public
Hospital towards society. This affordable people utilising the Hospitals demand
Quality service, promptness as well as courtesy. This can only happen in the Private
sector to deliver the goods effectively to the utmost satisfaction of the customer/client

TARGET AREA : The suitable area for the Hospital is chosen on considering the following factors
such as , Social ,Economic,Cultural, Literacy, Age distribution ,Mode of payments ,
Physical attitude - which influences the utilisation of the said industry.
Choosing a location is vital role as it requires to have provision for expansion,
must have a good communication & transport, adequate water supply ,electricity,
drainage and sewerage. Sun ,wind & other weather conditions should be congenial.
Last but not the least Soil must be tested for its suitablity.

...................page 2

A ) THE ESTABLISHMENT COST

1] THE LAND COST : The approximate area chosen Rs: 50,00,000/= to
in the range of 40,000 - 50,000 Sq ft. 1,00,00,000/=

{ At the rate of Rs.100 - 200 per Sq ft. }

2 ] CONSTRUCTION : To construct 35,000 Sq ft. Building Rs. 1,75,00,000/= to

COST {This ratio is arrived at 2: 1 as per the 2,00,00,000/=
recommended standards }
{ Construction cost at the rate of
Rs.50,000/= per 100 Sq ft. }

3 ] EQUIPMENT COST : Costing of all equipment inclusive of Rs. 3,00,00,000/= to

all the Hi-tech instruments currently in 5,00,00,000/=
India is Rs. 3 lacks to Rs.5 lacks/ bed.

Apart from the above said establishment cost , other areas need to be
considered are OPERATING COST & WORKING CAPITAL COST.

B ) OPERATING COST : As Hospital has to provide facilities round the clock & through out the
year ,these facilities have to be created though they are seldom fully
utilised. Operating costs has 2 components : The Direct Cost & The
Indirect Cost.
The Direct Costs for operating a ward bed that includes - the diet
salary & wages for the ward staffs,linen & its washing costs,
consumables in the stores, water & electricity ,cleaning &
maintainence etc..
Rs.200/ bed/day (a)

The Indirect Costs are Salary &Wages for the Adminstrative staffs
and other supportive services staffs, Social costs {P.F,Gratuity,&
other benefits to all the employees. }, General repair & Maintainence
of the entire Hospital and its equipments, Stationary & Printing,
Communication & Transportation etc..
{ 50 % of the Direct Cost } ........................Rs.100/ bed/day (b)

(a) + (b) Rs.300/bed/day

therfore for 100 bed/day (a) & (b) costs = Rs. 30,000/=

.............................page 3

THE PROJECT PROFILE

A] ESTABLISHMENT PERIOD 18 MONTHS

 This is the time period measured from the stage of the planning of the Hospital project to the
commissioning of the Hospital & Health Care Centre with the entire compliment of staffs recruited,
which includes Administrative,Medical & Paramedical personnel.

B ] GESTATION PERIOD 06 MONTHS

This is the period where in the Health Care Organisation is made aware to the general public
of its available facilities for their utility,through different media. During this span of time
Administrative and Public Relations department jointly pursue the Public & Private sector companies
for empanelment of the hospital for the benefit of the employees and their families.Gradual admission
and discharges can be expected with a steady growth .By the end of the period Promoters can envisage
to achive the Break Even Point.

C ] ROUGH ESTIMATE

Liabilities calculated per day per 100 beds (a) + (b) Rs. 30,000 / =

Interest Calculated per day per Capital Rs. 16,666 / =

---------------------------------
Total amount Rs. 46,666 / =

{ This figure is arrived at basis of the working methods and calculations of similar strength & style of
Hospital and Health Care Centre in the city of Bangalore,India. }

D ] EXISTING ORGANISATIONS

Average admissions of patients / day (range) 8 - 10

Average discharges of patients / day (range) 8 - 10

Average advances collected from patients / day Rs.20.000 / =

(10 X Rs.2,000/=)
Average billing / patients at rate of Rs.10.000 / = Rs.80,000/=
( 10 x Rs,8,000/=)

E ] PROFILE

In comparison to the busy established hospital even the 50 % of the Revenue will attain the
Break Even Point.