Leaner management, empowered hospitals: IHH’s plan for Fortis Healthcare

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February 12, 2019 4:10 AM

The board members held meetings in Chandigarh, Gurgaon — which had in attendance, apart from local hospital managers, representatives from Jaipur, Chennai and Kolkata hospitals — and then Bengaluru.

Leaner management, empowered hospitals: IHH’s plan for Fortis Healthcare

IHH Healthcare plans to have a leaner top management and reduce the hierarchy between hospital managers and the top management of Fortis Healthcare. The message was conveyed by the IHH Healthcare-appointed board members to senior managers and doctors of the Indian company during meetings that took place within a week of IHH infusing Rs 4,000 crore in Fortis Healthcare for a 31.1% stake in November.

The board members held meetings in Chandigarh, Gurgaon — which had in attendance, apart from local hospital managers, representatives from Jaipur, Chennai and Kolkata hospitals — and then Bengaluru. The same message was conveyed by the board members during these interactions.
According to a person who was part of one of these meetings, the Singapore-based IHH’s representatives reassured the staff that while nothing will change at the operational level in hospitals, at the management level there will be changes —empowerment of individual units and a not-so-top-heavy management.

IHH has appointed three of its employees on Fortis board — Tan See Leng (chief executive and managing director), Low Soon Teck (group financial chief), and Chan Boon Kheng (group head for strategy, planning and mergers and acquisitions). The fourth director appointed by it is Bhagat Chintamani Aniruddha, the head of the Indian operations of Malaysian sovereign wealth fund Khazanah Nasional, the biggest shareholder of IHH.
Fortis Hospitals are typically run by a facility director, who is assisted by a medical superintendent, and heads for administration, nursing, quality, and finance. The facility director reports to a zonal director who then reports to a regional director, who finally interacts with the top management. In addition, the assistants to the facility director also report to zonal heads of their respective departments.

According to the person FE spoke to, though IHH is still to reveal the changes in the structure, these will be customised. “Right now everything is decided at one place and then disseminated. The new management plans to make it more local to suit the gentry or population of the area a hospital is situated in,” said the person.

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The strategy shared by the new management was refreshing for hospital managers who have been operating on a thin budget, at least for the past one year. “While there has always been limitation on equipment and capital expenditure, in the last one year it was very restrictive. Four years back negotiating was easy but in the last one year it was tough,” said the person.

However, the person was quick to add that restrictions were not for life-saving equipment and were mostly for desirable equipment which were required for upgrade of services and having an edge over competition hospitals. Leng, in an internal letter written to Fortis employees in December, had assured  that the `4,000 crore will  be utilised to take care of the day-to-day operations and capital expenditure of the hospital chain.

The letter was written by Leng after a Supreme Court order effectively barred it from going through with its open offer to buy an additional 26% stake in Fortis. The court order came due to a contempt application filed by Japanese drugmaker Daiichi Sankyo which is seeking to enforce an arbitration award of `2,300 crore on Malvinder and Shivinder Singh, former promoters of Fortis.

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