BI group assignment_Group 3

8/7/2019 BI group assignment_Group 3

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Banking and Insurance

Arogya Health Care

Group 3

Gautam Nair

Krishna M Pillai

Rahul Chakravorti

Ravi Kumar Gupta

Sandeep Kumar Mohapatra

Seema Rani Mishra

Sushant Kumar Behera

V Tanmaie


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INTRODUCTION

Health consciousness among people in India is growing at rapid pace as people are becoming more and

more health conscious. Their spending on personal health and hygiene is improving year after year. The

rate of growth of the health care industry in India is moving ahead neck to neck with the pharmaceutical

industry and the software industry of the country. Much has been said and done in the health care

sector for bringing about improvement. Till date, approximately 12% of the scope offered by the health

care industry in India has been tapped. The health care industry in India is reckoned to be the engine of

the economy in the years to come. Health care industry in India is worth INR 800 billion and is

anticipated to grow by 13% every year. The health care sector encompasses health care instruments,

health care in the retail market, hospitals enrolled to the hospital networks etc. Information Technology

and Medical Tourism are two booming sectors of India with a significant contribution to the GDP of the

country.

Employment opportunities are provided to as many as 4 million people in the health care segment or

other related sectors catering to the health care industry in India in some way or the other. Owing to the

vast differences in medical expenses in western countries and that of India, India has become one of the

favorites for health care treatments.

AROGYA HEALTH CARE

Arogya Healthcare is a well-established hospital chain based in Chennai, India. It has 20 nursing homesacross southern India. All the nursing homes are well equipped with latest technology in medical arena

and with well-trained medical specialists. The management of the organization believes in delivering

best health service to their patients. Health care is a social sector and Arogya Healthcare, too, adopts a

stakeholder wealth maximization model as it contributes to the welfare of all parties involved ranging

from the government, local community, shareholders, medical community and the hospital

management. The company is providing employment directly and indirectly to communities where it

operates in and develops tools and technologies for the advancement of medical community in India.

But, at this expansion stage management is finding many difficulties while dealing with many

unforeseen incidences. Now they are much more risk conscious and they are looking for a suitable risk

minimization structure.


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RISK MANAGEMENT IN PRIVATELY MANAGED ENTERPRISES

Enterprise risk management (ERM) in business includes the methods and processes used by organizations to

manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for

risk management, which typically involves identifying particular events or circumstances relevant to the

organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact,

determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and

opportunities, business enterprises protect and create value for their stakeholders, including owners, employees,

customers, regulators, and society overall.

Risk assessment is a step in a risk management procedure. Risk assessment is the determination of quantitative or

qualitative value of risk related to a concrete situation and a recognized threat (also called hazard).

Goals of an ERM program

Organizations by nature manage risks and have a variety of existing departments or functions ("risk functions")

that identify and manage particular risks. However, each risk function varies in capability and how it coordinates

with other risk functions. A central goal and challenge of ERM is improving this capability and coordination, while

integrating the output to provide a unified picture of risk for stakeholders and improving the organization's ability

to manage the risks effectively.

Typical risk functions

The primary risk functions in large corporations that may participate in an ERM program typically include:

Strategic planning - identifies external threats and competitive opportunities, along with strategicinitiatives to address them

Marketing - understands the target customer to ensure product/service alignment with customerrequirements

Compliance & Ethics - monitors compliance with code of conduct and directs fraud investigations

RiskManagem

ent

1.Identification

of Risks

2. Analysisof Risks

3. Risk Control

4.Monitor


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Accounting / Financial compliance - directs the Sarbanes-Oxley Section 302 and 404 assessment, whichidentifies financial reporting risks

Law Department - manages litigation and analyzes emerging legal trends that may impact theorganization

Insurance - ensures the proper insurance coverage for the organization Treasury - ensures cash is sufficient to meet business needs, while managing risk related to commodity

pricing or foreign exchange

Operational Quality Assurance - verifies operational output is within tolerances Operations management - ensures the business runs day-to-day and that related barriers are surfaced for

resolution

Credit - ensures any credit provided to customers is appropriate to their ability to pay Customer service - ensures customer complaints are handled promptly and root causes are reported to

operations for resolution

Internal audit - evaluates the effectiveness of each of the above risk functions and recommendsimprovements

Different aspects in risk analysis

Risk management encompasses various kinds of factors which are discussed below.

Economic risk Financial risk

Natural risks Operational risks Political risks Reputational risks

Economic risk in hospitals

Economic crisis Currency devaluation GDP growth rate Inflation Interest rate labor force (Human resource) Education and official reserves


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Analysis and Evaluation of risk

Insurable risks:

Labor force (HR)Uninsurable risks:

Other risks are macro-economic factors which cant be insuredFinancial risk in hospitals:

Uncertainties in revenueso Fluctuation in no. of patientso Bed chargeso Foodo Surgeryo Tests

Uncertainties in costso Salary hikeo New technology requiremento Maintenance cost

Default in payment risko Fixed payment per visito Diagnostic charge

-Inflation

-Labor force (HR)

-Education & Official reserves

-Interest rate

-Economic crisis

- Currency devaluation

Probability of risk

Impact

Ofrisk


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o Treatment chargeANALYSIS AND EVALUATION OF RISK

Insurable Financial risks

Insuring the property of hospital (others financial cannot be insured)Un-Insurable Financial risks

All the risks discussed above are not insurableNatural risks in Hospital:

Threat form natural disaster:o Economic losso Loss of property (Building, equipments, etc.)o Lack of availability of basic services due to destructiono No occupancy for injured and affected people

Threat form weathero Changing weather increases the diseaseso Increase in the number of communicable diseaseso Logistic issues

Threat from accidents:o Defect in equipment

-food

-Surgery

-technology update

-maintenance cost

-salary hike

-fixed payment per visit

-diagnostic charge

-treatment charge

-fluctuation in no. of patients

-bed charge

-tests

Im

pact

Ofrisk

Probability of risk


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o Theft of propertieso Mistakes

Threat from diseaseso Non curable diseases (swine flu, chicken pox))o Lack of knowledgeo Infectious diseases


Insured risks: hospital property and equipments

Uninsured risks: threat from weather, diseases

Operational risks in Hospital:

Managing facilitates in hospital (different divisions of a hospital)o

Reception

o Nursingo Pharmacisto Schedulingo Supplieso Cleaningo Blood bank

Risks in resource tracking and resource allocation

- No occupancy for injured and

affected people during natural

disaster

- Lack of availability of basic services

due to destruction

- increase in communicable diseases

- Threat from natural disaster

- Economic loss

- Loss of property

- Logistic issues

- defect in equipments

Theft of property

Probability of risk

Impact

Ofrisk


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o Capital equipment location and utilizationo Inventory management

Improve operational efficiencyo Process flows, support, physician, house-keeping, visitors, routingso Wait times

medicine/Supplies managemento Supplier relations managemento medicines sortingo Expiry date checkings of medicines


Insurable operational risks

Insuring supplies Capital equipment Insuring Inventory Insuring equipment

Non insurable operational risks

Reception Nursing

Managing facilitates in hospital

Inventory management

Support, house-keeping

Wait times

Capital equipment location and

utilization

Physician

Blood bank

Process flows

Supplier relations management

Medicines sorting

Expiry date checkings of

medicines

Impact

Ofrisk

Probability of risk


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Pharmacist Scheduling Blood bank Process flows, support, physician, house-keeping, visitors, routings Wait times Supplier relations management medicines sorting Expiry date checkings of medicines

Political risks in Hospital

Criminal cases cant be entertained immediately Stringent Govt. rules and regulations Problems from Environmental authorizes Consumer forum (patient can claim their compensation in consumer forums) Corruption Terrorist attacks

ANALYSIS AND EVALUATION OF RISK

Insurable Political risks-

Terrorist attacks can be insuredNon-Insurable political risks

All other risks cannot be insured because all the above risks are not physical and very much uncertain

-Corruption

- Problems from

Environmental authorizes

Terrorist attacks -Stringent Govt. rules

Probability of risk

Impact

Ofrisk


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Reputational (Brand Value) risks in Hospital

Ego class between partnerso One partner may try to sabotage other partnero The reputation can come down in market Negative word of moutho Bad service by hospitalo Associated operational failureso Bad behavior by hospital staffs and authoritieso Dispute between doctor and patient

Non-availability of Specialized doctor Unhygienic Hospital atmosphere

o Ambianceo Cleanliness

ANALYSIS AND EALUATION OF RISK

Insurable reputational risks

Operational failures (providing compensation or medic claim)Uninsurable Insurable reputational risks

Ego class between partners Negative word of mouth Non-availability of Specialized doctor Unhygienic Hospital atmosphere

- Negative word of mouth

- Bad service by hospital

- Bad behavior by hospital

staffs and authorities

- Unhygienic Hospital

atmosphere

- Ego class between partners

-Non-availability of Specialized

doctor

- Associated operational

failures

Probability of risk

Impact

Ofrisk


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Human Risks involved in a Hospital

It can be either to the individuals or to the organization.

Risk to individuals:

Nosocomial Infection which means infection that is the result from the treatment in hospitalswhich is very risky.

Discontinuing in the middle of course of treatment due to financial problems. Lack of proper knowledge of medical course.

Risk due to Management:

Lack of expert medical team. No proper hygiene conditions, accommodation facilities due to which diseases spread easily to

other patients

Not able to fulfill the employee demands Selling out dated medicines

Risk due to lack of resources:

No proper technological devices Lack of knowledge of usage of medical equipment

Nosocomial Infection

Lack of expert medicalteam.

No proper hygiene

conditions.

Selling out dated

medicines

Not able to fulfill the

employee demand

Discontinuing

treatment due to

financial problems.

No propertechnological devices

Lack of knowledge of

usage of medical

equipment.

Lack of proper

knowledge in medical

course.


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Individual Health Insurance

Health insurance covers mainly two types of benefits

1. Reimbursement of medical expenses to specific diseases2. Hospitalization

Some of the medical policies available are Individual medi claim policy, Group medi-claim policies,

Bhavishya Arogya policy, Jan Arogya policy, Cancer insurance and overseas medical policy. The third

party administrators (TPAs) ate tying up with insurers to offer their services under health and medical

insurance plans.

Some of the individual health insurance plans are listed below

Institution Product name Coverage amount premium

National Insurance Mediclaim policy Rs. 1,00,000 Rs. 1,270

New India Insurance Mediclaim Rs. 1,00,000 Rs. 1,377

BI group assignment_Group 3

Documents

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