Challenges in sustaining a hospital: lessons for managing healthcare institutions

Ramesh Bhat () and Sunil Kumar Maheshwari

No WP2004-02-03, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

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. 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.

Date: 2004-02-03
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