Feasibility Study for a Hospital in Saudi Arabia - Essay Example

? Feasibility Report Building Hospital in Saudi Arabia Tabeeb Health Care Facility June 0 General Information 1 Purpose The purpose for making this feasibility report is to build a 205 bed hospital in Saudi Arabia. This hospital will have all the facilities expected of a state of the art health care facility operational in the middle-east. 1.2 Scope Once the hospital becomes functional, it will be a healthy addition for the patients of Saudi Arabia. The scope does not include huge profits that would become a burden for Saudis. But even by simply following policies of Saudi Government, this health care facility will prove to be a great investment as patients with almost all kinds of diseases will get their treatment at the facility. 1.3 System Overview Responsible Organization Independent Research Foundation (IRF) is the responsible organization. IRF has conducted most of the surveys on their own as well as taken help from Government and Private Organization in establishing the feasibility. IRF is responsible for handling all the investment and making sure that all goes according to the plan. System Name Tabeeb Healthcare Facility System Code BJH-699-I2011 System Category ---- Major Application: General Health Care. The facility provides services of general nature but a Cancer Research facility will also be established. The hospital will be modeled after the famous Princeton Planes Borough Hospital (US). Diagnostics and Cancer research will be given special attention and investment. ---- General Support System: The Investors for this facility will mostly be from all over the world but the facility will provide services for all the locals. As there isn’t much insurance market strength in Saudi Arabia (comparatively), there will not be much trouble in treating patients from all walks of life. Economic Analysis and Indicators Three economic indicators were used to analyze the investment for Tabeeb Health Care Facility; the Payback period of 2.5 years, NPV of US $20 million and ROI of 13%. The economic analysis shows that to raise capital for establishing the facility, IRF is in no position to raise the capital themselves. Therefore, the most likely sources of capital to all the above scenarios are grants and / or units owned by third parties, such as energy service companies (ie, through the contract or other similar contracts for energy services). As most of the foreign investment floods into Saudi Arabia in the form of oil sector development, our most likely sponsor will be any reputable oil company, preferably, Shell. Lifecycle costs of different scenarios were performed using the reputable software software (NRC 2005). Economic indicators to assess the economic viability were: a simple payback period, NPV, and ROI. This type of analysis makes more sense as it will be simpler to present and more likely our sponsors will agree to our plan. Agencies typically grant funds by listing projects based on a simple payback period. For life cycle cost analysis, assumptions are made as follows: Projected Life 65 years Cost Inflation Rate 2.25% Discount Rate 7% Debt Term 15 years Interest Rate 4.7% Contingencies 4% (of capital costs) Cost (Energy) Savings 55%-98% 2.0 Market Analysis Recent Studies have shown an upward trend in the demand for health care facilities among the people of Kingdom. Population is increasing at a rapid pace but the health care facilities aren’t matching the population growth rate. Other than the fact that growth rate of health care facilities is not impressive in Saudi Arabia indicating that there will be an increase in the demand for doctors and nurses, everyone needs to see a doctor. Medical and health care facilities have an inelastic demand. Investments in pharmaceuticals and medical facilities are often always considered an option that people go for. Tabeeb Health Care Facility will be built in the heart of the capital Riyadh. The patient statistics (as they are discussed below) were relatively easy to collect and we have a very good reason to believe that the data is as relevant as can be. The final investment decision (from IRF) was made based on the inpatient and outpatient statistics. 2.1 Governmental Spending on Health Saudi Government’s own statistics show that 70-75% of the budget is allocated to the health ministry. These funds are used for health and social development. By carefully studying the trends in government spending it becomes clear that government itself has been increasing budget portion for health in giant folds. Most recently in 2009, the health sector received SAR 52.3 billion (constitutes about 18.3% of GDP), which is a huge jump from SAR 16 billion (about 7.9% of GDP) back in 2001. One thing that any business analyst can figure out from these statistics is there is a lucrative opportunity to invest in the health care sector of Saudi Arabia. Governments alone hardly bear all the medical expenses of its country in Asian countries. And when you fuse this thought with the stats of increasing demand of health care in Saudi Arabia, it all adds up. Here is a list of Government spending for past nine years: year total budget health & social % to budget % growth 185 16 8.90% 7.90% 2001 215 18 8.40% 10.40% 2002 202 19 9.40% 5.00% 2003 209 17 8.00% -11.60% 2004 230 18 7.80% 7.10% 2005 280 23 8.20% 27.80% 2006 335 31 9.30% 34.80% 2007 380 40 10.40% 27.40% 2008 410 44 10.80% 12.40% 2009 475 52.3 11.01% 18.73% Trends in Health Care Spending According to the published data, the number of hospitals in the kingdom jumped from 350 in 2004 to 386 in 2007, registering a CAGR of 3.32%. The number of beds in all health care centers was 49,200 in 2004 which reached to 54,700 in 2007. General CAGR was 3.59% of beds, accounted for the relatively less growth in hospitalized patients. The government may have difficulty in the future to maintain the relationship between the beds and the ever increasing population of 2.29% of beds per 1000 population as population is growing over 2.62% per year, higher than the number of beds growth. 2007 No. of Hospitals 350 364 379 386 Private 110 113 123 127 MOH 200 213 218 220 OGS 40 38 38 39 Beds 49.2 51.1 53.2 54.7 Private 10.1 11.1 12.5 12.6 MOH 28.7 30.0 30.4 31.9 OGS 10.3 9.9 10.2 10.2 Demographics The young women of the population will need prenatal care more than any other group. A large part of Saudi society is moving toward the age of marriage. So, more maternity leaves are expected in the near future. International Data Base confirms that people in the older age group are more susceptible to disease than younger people. For Saudi Arabia, the population of relatively old (over 60 years) was estimated to be 3.5% of the total population from 2008 to 2011. Analysis reveals that the along with the age, insurance premium will increase. To show this, a fixed table of contents was created, the Commission took data for people over the age of 15 years and with a base of 100 days and expenses for the next age was calculated on the same basis. The index numbers for different age groups for male and female clients are presented in the table below. The table also shows that the rate of premiums for women in the age group of 16-50 years is higher than men of the same age, which shows the greatest need for medical services for women (probably due to maternity) . Total amount of premiums for people aged fewer than 15 is the same for men and women. Similarly, the age group for over 50 years has the same premium for men and women. Saudi Arabia’s population is growing and many women will quickly move to the age group of 16-50 years. And health care costs related to insurance will increase. AGE BRACKET MALE FEMALE 15 days -15 years 100 100 16 years-25 years 117 156 26 years-35 years 142 179 36 years-40 years 177 204 41 years-45 years 189 216 46 years-50 years 202 231 51 years-55 years 230 230 56 years-60 years 248 248 61 years-65 years 333 333 66 years-70 years 452 452 Management Summary Environment Organizations Involved The project Tabeeb Health Care Facility is the brain child of Independent Research Foundation. The other organizations involved are the investors. The list of all the investors can be provided on demand as it is a project in which individuals are contributing. We do not have a major sponsor to list here. We will be requiring the services of one construction company i-e, the Concrete Builders. Every block and room will be constructed by them and after construction services like renovation and modifications will be provided by the same construction company. Physical Environment Tabeeb Health Care Facility will be a three storied building with 205 rooms. The Diagnostic center and Cancer research Center will be included in this building. It will be located only 10 km from the King Khalid International airport, a very easy access. We will separate the hospital into two units; Unit B1 and Unit B2. B1 will be a part of a wide range of laboratory services, operating room, hall warehouse the operating room, trauma, emergency room visits and day care center, and B2 will provide a single area (corridors, etc.). B1 is will be modified to cover the core arrangements: cold, warm air flows will be sufficient to meet the individual zone thermostats. Ring of ice water B1 has a Trane chiller installed in the building. B2 will be packed with an air cooling coil hot water supplied by the evaporative cooling system installed outside, at the roof of the hospital attic. B1 fan will have the capacity of 5650 CFM and will be 100% outside air (i-e, when the return air is used). B2 Fan has been estimated at approximately 5625 cfm, 70% of the air outlets. These quantities of exhaust air results because of using energy for heating. Bed Dimensions: The base of the platform will be 900 mm x 2000 mm and external dimensions of the measure 920 x 2230 mm mm. The bed height will be adjustable from 440 mm - 780 mm. The mattress platform will have four components packed with shock steps. Current Functional Procedures The construction process will take about 9 months. Hospital will be available to patients within 9 months. Other modifications will continue while the hospital will be open. At the moment a team of 50 doctors and 200 nurses is available. They are ready to start immediately. We have hired these people from different hospitals so all of them have experience and can handle a new health facility. Therefore they become part of the current work force. Functional Objectives The Hospital is supposed to start treatment of general diseases right away. These diseases include migraine, cough, cold, Flu, pertussis, muscular dystrophy, SARS, sleep disorders, prostate disorders, Myopia, Menopause, non-Hodgkin’s Lymphoma are just to name a few. Some new services will also be introduced especially in the psychiatric department. There will be a specialized team of personnel to handle the mental disorders as well as treating the patient psychiatrically. Key Investment Opportunities Potential investors should consider the following competitive advantages in assessing the merits of the proposed investment in the Company. 1. Business demand for the area of ??health is growing and this trend should continue in the near future. In the coming years, Saudi Arabia is expected to strengthen due to health needs of the population, an aging society, and most health conditions such as diabetes, obesity, cancer, and heart, which is building a new high demand for health services. 2. Studies have confirmed that the private, inpatient, outpatient, and the demand for private health care has increased, which is higher than the overall growth. In 2015, the population of Saudi Arabia is expected to grow by 10% according to International Data Base (IDB) is expectations. During the same period, health spending is expected to grow strongly, even faster than population growth. The demand for hospital beds, doctors and the number of hospitals in the Kingdom is expected to grow. This makes private sector investment more lucrative. Conclusions Tabeeb Health Care Facility will confirm its commitment to providing the functions of health care and social welfare. This Hospital will recognize the need to work closely with partners to deliver this commitment. The Working Group needs assessment is a way to highlight the possible uses of Tabeeb Health Care Facility and allows the development of a basic function for health care and nurturing. It is widely accepted that the location of Tabeeb Health Care Facility is of high quality and with good access for people of Riyadh and provides essential services to the population. The working group of Doctors and nurses proposes that the assessment of needs in the next 10 to 20 years (after establishing the facility) in Tabeeb Health Care Facility should continue to be used this way. Tabeeb Health Care Facility will continue to provide health services in accordance with national and local policies and strategies. It is, for example, the fact of using the site as an accident and emergency unit that national guidance sets out the accident and emergency units must be on site by a District General Hospital. However, services designed to meet the needs of the changing population in Riyadh and in Saudi Arabia generally, with particular priority given the appropriate outpatient services, community services and services to our growing elderly population. To meet these priorities, it is likely that Tabeeb Health Care Facility will offer a wide range of outpatient services, physical therapy and rehabilitation which will betargeted to meet the needs of the population. Works Cited Saudi Arabia: Health Profile. (2009). Retrieved June 22, 2011, from World Health Organization (WHO): http://www.who.int/gho/countries/sau.pdf Read More