Organizational Structure Project

Fortis Hospital – Noida

Acknowledgement

We would like to express our gratitude to all those who gave us their valuable

time and support to complete this project.

We want to thank Prof. Neeraj Kumar for giving us the opportunity and challenge

to explore our knowledge in organizational structure and design skills through this

topic which has ultimately enhanced our understanding on the subject besides

giving us a practical implication of the real time structure and design of an

organization. It gave us a chance to visualize and analyze the strategy and

design, which would help us in a long run in our streams of corporate lives.  Mr.

Neeraj‘s stimulating suggestions during the course of project were a great help.

We would also like to thank Dr A.V.Chordiya, Director Fortis Noida who

supported us on necessary research work which laid the foundation for our

project.

Besides, the team work within the group has been indispensable at different

stages of work and for the successful completion of the project. Each one’s

contribution and constant suggestions for improvement have gone a long way in

bringing the project to the final shape.

About Fortis Healthcare

Fortis Healthcare Limited, a leading healthcare organization in India has a vision of "creating a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with compassionate patient care". Fortis Healthcare Limited is one of the leading chains of Hospitals and a leader in healthcare consultancy in India which is benchmarked to International standards - achieving quality through the relentless adherence to the protocols observed in some of the world's leading hospitals.

In line with its growth strategy and with the recent acquisition of the Escorts Heart Institute & Research Centre, Fortis Healthcare has taken its total operational hospital strength to 28 hospitals (including 12 satellite/heart command centers). The Fortis Healthcare group has progressive plans to change the healthcare delivery landscape in India by being the premier healthcare provider in the region driven by quality and most importantly "patient-centricity".

Leading healthcare group in India matching international standard

First hospital opened in “1999” at Mohali

Hallmark is “patient-centricity” approach

At present it has 22 hospitals and 2,500 beds.

Vision

"To create a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with compassionate patient care"

Virtuous Values←Vision: Imbibe and share the vision.← Integrity: Lead through honesty and integrity.←Respect: Earn respect.←Trust: Gain patient trust.←Understanding: Commit to compassion, care and understanding. ←Own: Own quality excellence. ←Uphold: Uphold innovation and continuous improvement.←Share: Develop and share success.

Mission

Fortis Healthcare has assembled the finest talents in medicine, be they doctors, nurses or technicians, and even management professionals across a wide spectrum. Enabling them to deliver the highest quality of healthcare are state-of-the art facilities and support infrastructure at each of our hospitals.

Fortis Healthcare India hospitals are benchmarked to International standards - achieving quality through the relentless adherence to the protocols observed in some of the world's leading hospitals.

The Fortis Healthcare circle of caring is fast expanding, spreading the name of Fortis Healthcare, India reaching out to distant communities, welcoming patients from beyond India's shores.

Goals: Market Dominance and Quality Excellence

Fortis has two goals—to be world class in quality and to dominate the market. The pharmaceutical and pathology lab businesses of its promoters were the largest in India.

To assure quality, Fortis’ medical staffing and nursing staffing ratios were based on Harvard recommendations. Fortis maintained 1:1 nurse-patient ration in the ICUs and ICCUs. Every unit identified a quality champion, ideally a senior clinician, who was supported by a full-time quality team leader and two executive assistants. All employees were trained on quality protocols and compliance.

Code of conduct

This talk about the guiding principles which are expected to underpin all operations of Fortis group companies and actions of its people. Adherence to this code of conduct is expected to be modeled and reinforced at all time by directors, management, employees and other full time associates of the Fortis Healthcare group.

The Fortis Healthcare group of Companies is committed to uphold its value in all endeavors and shall partner with business associated who believe in and promote similar values.

SECTION A: ORGANIZATIONAL PERSPECTIVES

Philosophy

The Fortis Healthcare group believes in creating, sustaining and growing successful businesses based on quality products and services; value to customers and shareholders; partnership with employees and other stakeholders; ethical practices and good corporate citizenship.

Universal Causes

The Fortis Healthcare group is committed to fostering the universal causes of Environmental Protection, Human Rights and Health for all. A Fortis Healthcare group Company shall strive to contribute actively to these causes where possible and, minimally, shall ensure that no sphere of its activity impacts detrimentally upon any of these causes.

National Interests

A Fortis Healthcare group Company is committed to contribute to the economic and social development of India and other countries in which it operates. It shall strive to align its activities to the economic development and foreign policies, objectives and priorities of the nation’s government and conduct its business affairs within the legal and statutory framework. The company will respect the socio-cultural and religious mores of the country in which it operates.

Political Non-Alignment

The Fortis Healthcare group is committed to and shall support a functioning democratic system in India. A Fortis Healthcare group Company shall not, directly or indirectly, support any specific political party or candidate for political office.

Community Service

A Fortis Healthcare group Company shall actively engage in, and contribute to, improving the quality of life of people in the communities in which it operates, through specifically identifies initiatives. It shall also encourage and support volunteer activities for community service by its employees.

Industries Development

The Fortis Healthcare group shall actively engage with policy makers and industry associations towards developing the regulatory framework of the industry, establishing quality benchmarks for products and services and promoting ethical business and trade practices.

Shareholders

A Fortis Healthcare group Company is committed to enhance shareholder value. The company shall comply with all regulations and laws that govern shareholders’ rights. The board of directors of the company shall duly and fairly inform its shareholders about all relevant aspects of the company’s business.

Customers

A Fortis Healthcare group Company shall position the customer as the central focus of all its business activities and providing value to customers as its central premise. It shall provide high quality products and services towards meeting identified needs and requirements of its customers and strive to continually upgrade the benchmarks of customer value and experience. A Fortis Healthcare group Company shall adhere to the highest standards of legal and ethical behavior in creating and developing its relationships with customers.

Employees

The Fortis Healthcare group recognizes its people as the key source and drivers of its endeavors. It is committed to upholding its core HR values in all dealings with employees and other significant associates – human dignity, respect, trust and empowerment.

A Fortis Healthcare group Company shall be an equal opportunity employer, with merit being the prime consideration in both recruitment and advancement, and will not discriminate on the basis of race, caste, religion or sex. It will be an affirmative action employer and will actively foster diversity in employment.

A Fortis Healthcare Group Company shall demand, demonstrate and promote professional behavior and respectful treatment of all employees. A Fortis Healthcare group Company shall provide a safe, healthy, gender-unbiased and supportive work environment to its employees, free from any type of harassment, sexual or otherwise, physical or verbal abuse or intimidation.

A Fortis Healthcare group Company shall base its HR management systems and processes on the value of meritocracy, equity, objectivity, teamwork, collaboration and empowerment. The Fortis Healthcare group shall provide opportunities for, and support employees in exploring, developing and utilizing their potential and acquiring new knowledge and skills.

The Fortis Healthcare group encourages and supports its employees in following the code of conduct laid down by their professional associations and accrediting agencies.

Suppliers

The Fortis Healthcare group recognizes that suppliers are important contributors to its business activities and is committed to partnering suppliers in mutually beneficial and respectful relationships. A Fortis Healthcare group Company shall comply with agreements and conditions of engagement with suppliers, in letter and spirit.

Government Agencies

A Fortis Healthcare group Company and its employees shall not offer or give any company funds or properly as donation to any government agencies or their representatives, directly or through intermediaries, in order to obtain a favorable decision in any matter.

Environment

The Fortis Healthcare group believes in sustainable development and is committed to best practices in environmental matters; A Fortis Healthcare Group Company shall comply with all applicable environmental laws and regulations in conducting its business affairs. It shall prevent wasteful use of natural resources and minimize any hazardous impact of development, production, use and disposal of its products and services on the environment.

Health and Safety

The Fortis Healthcare group attaches great importance to a healthy and safe work environment. A Fortis Healthcare group Company shall provide good physical working conditions and encourage high standards of hygiene and housekeeping. The company shall ensure training of employees to increase safety awareness and adoption of safe working practices to prevent workplace accidents and minimize occupational health hazards.

Related Company Transactions & Cooperation within the Group

A Fortis Healthcare group Company shall cooperate with other companies within the group by sharing physical assets, human resources and knowledge, where possible, without adversely affecting its own business interests. A Fortis Healthcare group Company shall five preferences to another Fortis Healthcare company in the procurement of products and services on market competitive terms.

Aligning Work Systems & Processes

It is the responsibility of the Chief Executive of each business to ensure that the Code of Conduct is appropriately communicated and propagated in their businesses, and that policy, systems and processes in all areas of their operations reflect and reinforce the guiding principles.

SECTION B: PERSONAL CONDUCT

The directors, management and employees of the company, though their personal conduct, shape and convey the culture and tone of the company and its professional pursuits. It is expected that each member of the Fortis Healthcare group shall constantly reinforce the stated values of the organization in their behavior and actions, in both internal and external interactions.

Business with Integrity

Employees are expected to carry out company’s business with professionalism, honesty and integrity, displaying high moral standards and ethical business practices, and without in any manner, compromising the interests of the company or group.

Conflict Of Interest

A Fortis Healthcare employee shall not engage in any business, relationship or activity, which may potentially conflict with the interest of his company or the Group, without prior permission from the management. This would include but not be limited to concurrent employment; business relationships with suppliers/customers; employing relatives or introducing them for employment; engaging in business with relatives or introducing relatives for business relationships; financial investment with an actual or potential competitor, supplier, customer or other business associate.

Customers

Employees shall always keep the interests of the customers in the forefront of their activities and give them top priority. They are expected to interact with customers with a high degree of respect and in the spirit of services. Employees shall not accept/give any gifts, monetary or non-monetary, from/to customers.

Suppliers

Employees are expected to ensure that the interests of the company are maintained in terms of quality of products, services and competitiveness of prices and terms offered by suppliers.

Employees shall ensure that the company’s interests are never compromised in dealing with suppliers and will not accept gifts, other than those of a commemorative nature, or any gratuity, payments, commissions or benefits in kind from suppliers.

Protection of Confidential Information

Employees shall not disclose or use any confidential information gained in the course of association with the company, for personal gain or for the advantage of any other person. No information shall be provided to the press, other publicity media or any other external agency, formally or informally, expect within approved policies.

Public Representation

No employee, expect specifically authorized directors and employees, shall interface with the media and other public constituencies, such as the financial community and shareholders, or disclose any information pertaining to the business affairs of the company, to any external agency.

Team Working

Employees are expected to cooperate with their colleagues and work together cohesively and supportively, towards delivering required performance and achieving organizational goals.

Workplace Behavior

Employees shall ensure that their behavior at work is aligned with the Fortis Healthcare values and they conduct themselves with discipline and decorum; exhibit respect for others in their dealings; and do not subject any employee, associate, customer, supplier or visitor to any harassment, sexual or otherwise, verbal or physical abuse or intimidation.

Relationships with Colleagues

It is expected that employees shall not allow any personal relationships with colleagues to impact their work related decisions, manifest in unacceptable conduct in the workplace and/or during working hours, or result in misuse of company facilities or benefits.

Adherence to Code of Conduct

It is expected that all employees will adhere to and promote the Fortis Healthcare code of Conduct, in letter and spirit, and will be committed to building up the image, reputation and business of the company and the group.

Any instance of non-adherence to, or potential violation of, the Code should be brought to the attention of the immediate reporting superior or nominated authority and shall be addressed appropriately.

Fortis Operational Management and Structure

The Fortis hospital network was based on a “hub and spoke” model with multi-specialty “spoke” hospitals providing comprehensive health care services and “hub” hospitals with sub specialty services in one or more areas. This model helped Fortis provide comprehensive health care services from within its own network to a large geographical area. To make optimal use of the intra-network referral model, the number of patients referred for surgeries from within the network versus those who came from outside were constantly monitored.

Fortis’ hospital services prices were among the highest in India. Fortis justified the higher prices by noting its large investments in infrastructure, equipment, nursing facilities, and prominent doctors with high salaries. The price of procedures at sub-specialty hospitals was higher than the “spoke” hospitals. Fortis bundled services at hospitals as “Packages,” a single charge for a range of services associated with a diagnosis, including examinations, common tests, room charges and procedure costs.

Fortis refined many hospital protocols imported from the west for the Indian market. For example, a typical Indian patient checked in accompanied by three to four attendants and this number sometimes grew to 10 to 20 for patients from rural backgrounds. Fortis ensured that the higher number of patient attendants was factored in hospital design and workflows. It also accommodated cultural practices which varied dramatically across the country. The hospitals provisioned for prayer rooms for different communities at different sites.

Fortis’ Human Resource Policies

Fortis considered the recruitment and retention of highly skilled doctors, nurses and other personnel its top priority. The staff at hospitals operated and managed by Fortis was compensated by the respective hospital owners. At its owned hospitals, Fortis hired reputed physicians at above-market salaries to access the patient roster and increase the company’s standing in the industry. Cultural fit was also used as selection criterion in the interview process.

All specialists and most general practitioners were compensated on a salary plus incentive basis. They worked across the network hospitals, depending on demand. The physicians who practiced exclusively within the Fortis network earned a guaranteed income and had predictable working hours. They could also provide better continuum of care to patients, and had more time for resource development and research. Although Fortis paid more in salary costs during the initial years, it hoped to lower personnel costs in the future as physicians’ practices expanded. Fortis outsourced housekeeping, security, grounds maintenance and various other medical support services.

In most cases, Fortis replaced the physician-led management of acquired hospitals with professional managers. This practice sometimes disturbed the power structure within the hospitals, creating friction between physicians and managers. A senior cardiologist at the recently acquired Escorts heart hospital remarked, “Fortis’ management is generating ill-will amongst the physicians, some of whom are the best in the country. They overrule the decisions of senior surgeons and introduce policies without consulting the physicians.” To address such concerns, the Human Resources departments of Fortis group hospitals focused on balancing business requirements with the motivational concerns of the physicians.

Compensation of physicians varied significantly, depending on seniority, specialty, reputation and demand for their services. Fortis had developed a formula to calculate the variable component of salary, which factored success rate of various procedures, patient referrals, and rapport with patients, administrative responsibilities and publications. Though Fortis encouraged physicians to conduct research, it had not developed a clear model to compensate for the time. The physicians in non-core specialty areas, such as dentistry and ophthalmology, and in multi-specialty practices, were permitted to maintain their own separate private practices and to consult at other hospitals. They were compensated on a fee-for-service or revenue-sharing basis.

Fortis’ salaries were considerably higher than the national average. The salaries of the most senior consultants ranged from US$100,000 to US$600,000. In comparison the salaries for a physician trained in internal medicine in an average Indian hospital were in the range of US$10,000–US$15,000 post residency and for specialists with fellowship training in medical sub-specialties in the range of US$12,000–US$20,000. The hospitals expected the high-paying physicians to generate revenues to justify their pay packages.

Marketing and Branding

Under the guiding hand of Ranbaxy, Fortis understood the importance of creating a specific and strong brand identity. Fortis hoped that its message of quality would help overcome the controversy between private primary care practices in the community and hospitals around kickbacks for referrals.

The patient referral system in India was similar to other countries and relied on referrals from the family doctor to specialists or directly to a hospital if the patients needed a procedure. Patients frequently conferred with friends, family members and other doctors before they chose a hospital. Those who were Internet savvy read about their condition and identified the best physicians and hospitals. To aid in physician retention, Fortis conducted Continuing Medical Education (CME) programs. It reimbursed the physicians for any participation fees but did not compensate them for the time spent on non-clinical activities. In 2006, Fortis physicians participated in over 400 CMEs.

Competition

The major competitors of Fortis were the for-profit hospitals in North India, including the nationwide chain of Apollo hospitals, and regional operators like Max Healthcare. Fortis also competed with hospitals owned by government agencies or nonprofit trusts, such as the Post Graduate Institute, All Indian Institute of Medical Sciences, and hospitals affiliated with medical schools. As Fortis expanded into the rest of India, it expected to face competition from established local players. A large number of private hospital groups from Singapore, United States and Australia were also planning hospitals in India.

With a growing demand for health care services by local Indian population, most market participants felt that there was enough room for growth by addressing the domestic market. To build a national brand, the hospitals jointly created the “Indian Health Care Federation” whose agenda was to establish national benchmarks by sharing clinical outcomes information among all the member hospitals.

Organization Effectiveness

Productivity and profit

Net Profit for the year ended 31st March 2008 was Rs 77.56 Lac Profitability ratio is a healthy 26 percent Occupancy rate 70-80 % Quality Wealth of medical expertise with the finest talent amongst doctors,

nurses, technicians and management professionals Utilization of environment Located in best of residential locations

Evaluation by external entities

Financial audits are conducted every year by external auditors ISO 9001:2000 certified by International Certification Services Limited Emphasis on Training and Development New joiners go through an initial training program Fortis training centers are also used Community outreach programs for senior citizens named “Arokya”, Kids

& Teens

Organization Life Cycle

Management Organization Structure at Fortis

Specific Environment

Applying strategic – Constituencies approach

Managing Director

Chief Executive Officer

Chief Financial Officer

President – Strategy and Organizational

Development

President Medical Strategy and Quality

Shareholders: Profit margins of 26 percent

Doctors and Administrative Staff: Competitive remuneration, Learning opportunities

Patients: Multi-specialty, Quality Service

Community: Various community outreach programs

Government: Transparent in operations

About Fortis Noida

The Fortis Hospital at Noida, near Delhi, is a centre of excellence in Orthopedics and Neuroscience with additional focus on Cardiac Sciences, Minimally Access Surgery and Oncology.

The second mega hub hospital, in the Fortis Healthcare group, it caters to the special needs of patients and their families. The hospital has been designed and developed to deliver patient care with maximum ease warmth and effectiveness.

Size

Medium-sized organization

No apparent change in size, after Fortis deal

17 departments

300-bed facility

256 full-time staff

Workforce divided into department heads and teams

Organization Structure at Fortis - Noida

* HK- House Keeping* F&B – Food and Beverages

Structure can be analyzed on following dimensions

Level of complexity

Centralization

Formalization

Complexity

Horizontal Differentiation

37 Medical departments covering the entire breadth of medical specialties

6 other departments (HR, Finance, Marketing and Sales, Materials, Engineering and Nursing)

Social Specialization – Doctors Functional Specialization – Nurses, Technicians

Vertical differentiation 3 levels of Hierarchy

1. Zonal Director 2. Head of Departments of all 43 departments 3. Teams under each department

Wide span of control

Centralization

All departments are controlled by Head of Departments

Heads report to Zonal Director

Autonomy for each individual in the organization is limited

Financially – Highly Centralized

Functionally – Moderately Decentralized

Formalization

Standard operating procedures

High level of standardization for administrative tasks

Low level formalization for Doctors

Subcontracts are highly formalized

Recruitment process is highly formalized

Impact on Structure

Medium-sized but multi-specialty hospital

Low Vertical but High Horizontal complexity

Moderately formalized

No direct impact on centralization

Porter’s Competitive Strategy

Differentiation focus strategy

Focused on upper middle class citizens of Noida Differentiated itself by emphasizing on high technology, patient-centric

centers, high end health care service Impact on structure Moderately flexible structure Moderate complexity in terms of hierarchy Moderate formalization at higher level Highly formalized, moderately decentralized decision making at

operational level

Reference:

www.fortishealthcare.com

www.hoovers.com

\“Fortis Healthcare signs pact with US hospitals,” http://www.thehindubusinessline.com/businessline/2000/10/18/stories/021851e3.htm, accessed July 5, 2007

Interview with the P Virk, March 16, 2007- Business Today

U. Kher, “Outsourcing your heart,” Time Magazine, May 29, 2006

According to estimates, about 500,000 Americans get medical care outside the U.S. Krysten Crawford, “Medical Tourism Agencies Take Operations Overseas,” Business 2.0, August 3, 2006; and “medical tourism industry could grow to $40 billion by 2010” [David Hancock, The Complete Medical Tourist (John Blake Publishing Limited, April 1, 2006)]