HEALTHCARE

INDUSTRY
 GROUP MEMBERS
NAME ROLL NO.
AARTI ASRANI 62

JIGAR MORADIA 88

SHRUTI VAGERIA 111

KINJAL VORA 115

 TOPICS TO BE COVERED
INTRODUCTION TO HEALTHCARE INDUSTRY

PRIME COSTS IN HEALTHCARE

OVERHEAD COSTS IN HEALTHCARE

FIXED COSTS IN HEALTHCARE

VARIABLE COSTS IN HEALTHCARE

CASE STUDY
 INTRODUCTION
Provides goods and services to treat patients with
curative, preventive care.
Depends on interdisciplinary teams of trained
professionals and paraprofessionals to meet health
needs of individuals

The health care industry is one of the world's largest and

fastest-growing industries.

Accounts for 5.2 of GDP in India.

 Healthcare in India features a universal
health care system run by the constituent
states and territories of India.

The Constitution charges every state with

"raising of the level of nutrition and the
standard of living of its people and the
improvement of public health as among its
primary duties".

The National Health Policy was endorsed by

the Parliament of India in 1983 and
updated in 2002.
The Indian healthcare industry is seen to be growing at
a rapid pace and is expected to become a US$280 billion
industry by 2020.

Rising income levels and a growing elderly population

are all factors that are driving this growth. In addition,
changing demographics, disease profiles and the shift
from chronic to lifestyle diseases in the country has led
to increased spending on healthcare delivery.

In order to meet manpower shortages and reach

world standards India would require investments of
up to $20 billion over the next 5 years.
 INTERNATIONAL STANDARD
INDUSTRIAL CLASSIFICATION
(ISIC)
HOSPITAL
ACTIVITIES

HEALTHCARE MEDICAL &

DENTAL PRACTICE
INDUSTRY ACTIVITIES

OTHER HUMAN
HEALTH
ACTIVITIES
 TYPES OF COSTS IN HOSPITALS

COSTS

PRIME
OVERHEADS
COSTS

DIRECT DIRECT DIRECT INDIRECT INDIRECT INDIRECT

MATERIAL LABOUR OVERHEADS MATERIAL LABOUR OVERHEADS
PRIME COSTS

A business’s expenses for the materials and labor it uses

in production. Prime cost is a way of measuring the total
cost of the production inputs needed to create a given
output.

By analyzing its prime costs, a company can determine

how much it must charge for its finished product in
order to make a profit. By lowering its prime costs, a
company can increase its profit margin and/or undercut
its competitors’ prices.
 TYPES OF PRIME COSTS
 DIRECT MATERIAL
 MEDICAL INSTRUMENTS
 FURNITURES
 PHARMACY
 LABORATORY CHEMICAL COSTS
 OUTSOURCED INSTRUMENT COST

 DIRECT LABOUR
 SALARY (WARD BOYS, NURSES ETC)
 DOCTOR’S FEES
 OUTPATIENT CHARGES
 DIRECT OVERHEADS
 REGISTRATION CHARGES
 AMBULANCE
 CANTEEN
 UNIFORMS
 ELECTRICAL INSTALLATIONS
 WATER SUPPLY
 INSURANCE
 In business, overhead COST refers to an ongoing
expense of operating a business .The term overhead is
usually used to group expenses that are necessary to
the continued functioning of the business but cannot
be immediately associated with the products/services
being offered. (e.g. do not directly generate profits).

Overhead expenses are all costs on the income

statement except for direct labor, direct materials &
direct expenses.
 INDIRECT MATERIAL
 OFFICE EQUIPMENTS
 STATIONARY

 INDIRECT LABOUR
 SECURITY
 HOUSEKEEPER
 ADMINISTRATIVE STAFF
 INDIRECT OVERHEADS
 HYGIENE & SANITATION
 ADVERTISING & MARKETTING
 EDUCATION AND TRAINING OF INTERNS
 RENT
 DEPRICIATION
 EMPLOYEE INSURANCE
 MISCELLANEOUS COSTS
 LAUNDRY
 TYPES OF COSTS

COSTS

FIXED VARIABLE
FIXED COSTS

Fixed costs are business expenses that

are not dependent on the level of
goods or services produced by the
business. They tend to be time-related.

Fixed costs are not permanently fixed;

they will change over time, but are
fixed in relation to the quantity of
production for the relevant period
 FIXED COSTS IN HEALTHCARE
• LAND
• BUILDING
• LEASEHOLD BUILDING
• MEDICAL INSTRUMENT
• ELECTRICAL INSTALLATION
• OFFICE EQUIPMENTS
• FURNITURE
• FIRE EXTINGUISHER
• CONTRIBUTION TO PF
• BOILERS
• KITCHEN
• REFRIGERATOR
• AMBULANCE
• GENERATOR
• REGISTRATION CHARGES
(All government formalities)
• SOFTWARE
• EMPLOYEE INSURANCE
• DEPRICIATION
• SALARY
• PHARMACY
• SECURITY
• LAB
• RENT
• DIRECTOR’S FEES
• LEGAL FEES
VARIABLE COSTS

Variable costs are expenses that

change in proportion to the
activity of a business.

Variable cost is the sum of

marginal costs over all units
produced. It can also be
considered normal cost
 VARIABLE COSTS IN
HEALTHCARE
• SEMINAR
• LOSS ON SALE OF ASSET
• LOSS ON CURRENT
INVESTMENT
• HIRING
• DONATION
• POWER
• HOUSEKEEPING
• WAGES
• CONVEYANCE
• BONUS
• UNIFORM
• BAD DEBT
• LAUNDRY
• LIGHT
• CUSTOM DUTY
 CASE STUDY
HEALTH AND HOSPITAL CORP. (HHC), NEW YORK
• HHC is moving to a just-in-time inventory system.
Supplies now arrive as needed five days a week,
which will slash inventory in half and reduce cost by
$5 million.
• HHC once stocked 20 varieties of rubber gloves of
different colors and thicknesses, doctors now choose
from two, which will lead to a savings of almost $4
million a year on gloves alone.
 OTHER COST REDUCTION
TECHNIQUES
• Reduce Manpower
• Waste Management
• Outsourcing
THANK-YOU!!