Setting up of Diagnostic Units on

Hub and Spoke Model

Healthcare
Government of Gujarat
Contents

Project Concept 3
Market Potential 6
Growth Drivers 7
Gujarat – Competitive Advantage 8
Project Information 9
- Location

- Infrastructure Availability / Connectivity

- Manpower Requirement

- Key Players

- Potential Collaboration Opportunities

Project Financials 11
Approvals 13
Key Department Contacts 15

Page 2
Project Concept

Hub and Spoke Model

► Tier II and tier III cities have an increasing demand for improved healthcare infrastructure \
► It is proposed that a statewide network of radiology centers and pathology centers on a hub and
spoke model would be an effective model to ensure an adequate diagnostic facility across the
state
► Hub will have high end equipment like MRI & CT Scan
► Spoke will equipment such as X-ray and ECG machines, perform routine tests such as blood
sugar test, blood pressure check and also act as collection centers

The proposed model will have 1 reference lab with state-of-the-art technology to
conduct routine, specialized pathology and radiology tests

A number of satellite labs will offer only a limited test types such as X-ray and
sonography, and will feed the reference lab. The satellite labs will be existing labs
set up by the Government

Collection centers that will be located in PHCs, CHCs, clinics and nursing homes.
The samples collected here will be sent to either the reference lab or the satellite
labs

Under the hub-and-spoke model, specimens / samples will be collected across multiple locations
within a catchment area for delivery to a reference lab where diagnosis will be done. This shall
provide a platform for scalable growth.

Collection Collection
Centre Centre

Reference Lab

Collection Collection
Centre Centre

Satellite Satellite
Lab Lab

Collection Collection
Centre Centre

Page 3
Project Concept

Objectives of the Proposed Diagnostic Units

Objectives of the project:
► Provide quality tests at affordable prices
► Conduct quick diagnosis, reduce incidence of complications due to delays in diagnosis
► Increase access to health facilities in rural areas at affordable price
► Reduce burden on District Hospitals
► Reduce Out of Pocket expenses of patients on account of distance travelled
► Minimize the casualties due to lack of diagnostic facilities in rural areas

Pathology
Radiology
CC
Spoke
Area: 2300 SFT
Spoke
CC Area: 1000 SFT

Hub
Hub Area: 3300 SFT
Area: 2300 SFT

Spoke Spoke
Spoke
Spoke

The above is only an illustration

Service Offerings
The diagnostic services will include (but not limited to):

► Radiology & Imaging: X-ray, USG, CT scan, ECG, EEG and others. The hub can perform tests
such as MRI & CT scan whereas the spoke can perform tests such as blood sugar test, blood
pressure check and other routine tests
► Laboratory: hematology, biochemistry, clinical pathology
► Hubs shall be equipped to provide all the services while spoke shall be equipped to provide
limited services in accordance with the Concession Agreement
► Centers may be equipped for tele-diagnostics and Mobile Medical Units

Other Facilities

The proposed unit may provide services such as long-term specimen storage

Page 4
Market Potential

Healthcare Spend

Comparing healthcare spend - India and Spending as % of GDP

Global 20.0%
17.10%
100.0%
15.0%
80.0%
10%
60.0% 67.60% 60.50% 10.0% 8.30%
9.10%

40.0% 52.70%
82.60% 5.50%
4.70%
52.20%
47.30%
56%
47.85% 5.0%
20.0% 44%
32.40% 39.50%
17.40%
0.0% 0.0%
China Brazil India USA UK Global China Brazil India USA UK Global
Public Private

► Indian healthcare sector is forecasted to reach USD 160 b in 2017, and is poised to reach
USD 280 b by 2020

► India is expected to rank amongst the top three healthcare markets in terms of incremental
growth by 2020
Source: Vibrant Gujarat. Accessible, Affordable and Quality Healthcare for All (Sector Profile); India Brand Equity
Foundation. Health Sector Report 2016

India Diagnostic Market Size

India Diagnostic Market Size (USD B)

35 32 Projected Growth in Diagnostic Services:

Pathology & Radiology Market
30
Market size in USD b

6 4.9
25 5
4 2.9
20
3 2
15 2 0.9 1.2
1 0.4
10 0
5 2009 2015 2021(F)
5
Year
0
2012 2022E Pathalogy Radiology Linear (Pathalogy)

► India diagnostic market is expected to grow at a CAGR of 20% to USD 32 b in 2022 from USD
5 b in 2012

► In-vitro diagnostic, sub-sector of diagnostic, is expected to grow at a CAGR of 15% between

2012 and 2015

Source: India Brand Equity Foundation. Health Sector Report 2016

Page 5
Growth Drivers

► Healthcare has become a large sector with respect to revenue

and employment.
Increase in ► The healthcare industry size is expected to touch US$ 280 bn by
healthcare 2020.
spending ► India diagnostic market value is expected to reach US $ 32 bn by
2020

► Increasing demand for timely medical care as a result of rising

income that translates into ability to have access to healthcare
Growing demand services
► There is an increase in the evidence based medical care and the
same trend is expected to continue

► Tier II and tier III cities have huge unmet demand for diagnostic
Underserved services
areas ► Most of the diagnostic facilities are concentrated in Tier I cities
and patients in rural areas doesn’t have access to these facilities
in their nearby areas

► Cost of surgery in India is one-tenth of that in the Western

countries
Cost advantage ► Cost of medical treatment in India is less than 1/3rd of that in
many European and US hospitals.
► This sector has potential to generate huge employment and
attract foreign patients

► Gujarat being an attractive tourist destination and also has some

of the best healthcare facilities, combining the two (Medical
Increasing tourism), the state is estimated to contribute 25-31% of industry
Medical Tourism earning of INR 100,000 crore*

Source: India Brand Equity Foundation. Health Sector Report 2016

* Rana S N, Medical tourism in Gujarat : Undiscovered Opportunities, 2015

Page 6
Gujarat – Competitive
Advantage
Witnessing a High and Growing Literacy Rate of 79%
► Male literacy rate is 85.80 percent

► Female literacy rate is 69.70 percent

This leads to growing health awareness and thus demand for healthcare services

Medical Tourism
► Medical tourism is growing at around 30 percent per annum

► Expected to contribute 25-31% of the industry earning of 100000 crore

Source: Rana S N, Medical tourism in Gujarat : Undiscovered Opportunities, 2015

Demographic Dividend
► It is estimated that the State would witness a gross addition of more than 32 lakh
people and a net addition (excluding the number of retirements from the existing
labour force) of more than 15 lakh people to the labour force during the period 2017-
22
This translates into rising middle class and changing attitude towards preventive
healthcare
Source: NSDC. District wise Skill Gap Study for the State of Gujarat (2012-17, 2017-22)

Encouraging the Private Sector

► Government is encouraging the PPP model to improve availability of healthcare
services and provide healthcare financing

State Medical Infrastructure

► 22 medical colleges
► 22 district hospitals
► 33 Sub-district hospitals
► 351 Community Health Centers
► 1393 Primary Health Centers
► 9156 Sub-centers
Focus on medical facilities for the masses

Quality Initiatives
► Gujarat is the first state in India to have NABH and NABL accreditation process
► 37 healthcare facilities are NABH / NABL accredited
► Capacity building – 14,583 participants were trained in Quality Improvement
Programme

Source: Vibrant Gujarat. Accessible, Affordable and Quality Healthcare for All (Sector Profile)

Page 7
Project Information

Possible Location for the Reference Lab

Reference labs will be set up at:

Ahmedabad
Rajkot ► Ahmedabad
Baroda
► Rajkot
Bhavnagar ► Baroda
► Bhavnagar

Satellite labs and collection centers will be located in

tier II & III cities

Infrastructure Availability / Connectivity

Gujarat is well connected to all Gujarat is well connected to all

major locations such as Delhi, major locations such as Delhi
Mumbai and other nearby and Mumbai through Delhi-
states from where Broad gauge Mumbai Industrial Corridor
railway line passes through (DMIC) and neighbouring states

► Gujarat has an international

airport in Ahmedabad. Gujarat has a major seaport in
► 8 domestic airports in Surat Kandla and around 40 non major
Vadodara, Rajkot, Bhavnagar, seaports
Junagadh, Jamnagar,
Porbandar & Kachchh which is
well connected with metro cities
in India

Page 8
Project Information

Project Components
► Space for diagnostic service
► Semi-automatic, fully automatic and manual equipments
► Patient waiting area
► Consumables and chemicals
► Sample collection set-up

Indicative Manpower Requirement of a hub

Position Number
CEO, Commercial, Finance 3
Pathologist 4
Radiologist 3
Lab technicians 10
Lab attendants 7
Total 27

Key Players

Dr Lal PathLabs SRL Diagnostics LUCID Medical Diagnostics

Potential Collaboration Opportunities

Hospitals Nursing homes

Page 9
Project Information

Project Structure and Implementation

► The Government will set performance measurement targets and a monitoring mechanism

► The private player will establish requisite facilities which will be at par with international
standards. It will also be the responsibility of the private player to manage and ensure the facility
remains the best in class

Government of Gujarat Private Player

Provides necessary Sets up the hub and the

clearances spokes and other
facilities at the units

Roles and
responsibilities

Government of Gujarat Private Sector

► Ensure smooth flow of basic ► Constructing the facility at par with

amenities like electricity, water, etc. globally defined standards
► Establishment of monitoring ► Recruiting and training human
mechanism resource
► Managing operations
► Maintenance of the facility

Page 10
Project Financials

Indicative Cost of Equipment

Pathological equipment In INR crore

Tissue Processor 0.3
Immunoassy analyzer 0.25
Fully Automated Bio-Chemistry Analyzer (with a Semi) 0.19
HPLC Analyser 0.08
Auto Cell Counter (3 Part) 0.05
Other Equipment 0.04
Laminar flow air station 0.03
Eliza reader 0.02
Electrolyte and Blood gas analyzer 0.02
Microscope 0.01
Microtome & Accessories 0.01
Urine strip analyzer 0.01
Accessories for cold chain 0.01
Total 1.02
Radiology equipment In INR crore
MRI Capex 5.5
CT Scan (4/ 16 Slice) Capex 2
USG Capex 0.6
X-Ray (Dig) Capex 0.5
Eco-cardio Capex 0.25
TMT Capex 0.15
Mamography Capex 0.12
PFT Capex 0.08
ECG Capex 0.02
Total 9.22

Page 11
Project Financials

Indicative Project Cost

Cost of setting up a hub lab

Project components & specifications Cost (INR crore)

Land cost would vary depending on the size and location of the site

Building (testing labs, restrooms, patient waiting area)

(Built-up area: 306 sq meter, 0.76
Average rate: INR 25,000)

Site Development (water drainage system, levelling)

0.05
(Average rate: INR 1,200 per sq meter)

Fixed assets (furniture, computers) 0.38

Pathology Equipment 1.02

Radiology equipment 9.22

Total 11.43

Preliminary and pre-operative expenses (@12%)

1.38
(Company formation, interest during construction, etc.)

Project engineering and consultancy charges (@5%) 0.57

Contingency (@10%) 1.14

Indicative Project cost 14.52

Note: The figures presented here are indicative. However the actual cost would depend upon the exact configuration

Page 12
Project Financials

Indicative Project Cost

Cost of setting up a spoke lab

Project components & specifications Cost (INR cr)

Land cost would vary depending on the size and location of the site

Building (testing labs, restrooms, patient waiting area)

(Built-up area: 93 sq meter, 0.53
Average rate: INR 25,000)

Site Development (water drainage system, levelling)

0.03
(Average rate: INR 1,200 per sq meter)

Fixed assets (furniture, computers) 0.15

Pathology equipment 1.02

Radiology equipment 3.52

Total 5.25

Preliminary and pre-operative expenses (@12%)

0.63
(Company formation, interest during construction, etc.)

Project engineering and consultancy charges (@5%) 0.26

Contingency (@10%) 0.52

Indicative Project cost 6.66

Note: The figures presented here are indicative. However the actual cost would depend upon the exact configuration

Page 13
Approvals

Approvals Required

► Acquisition of land from concerned office / owner

► Arrangement of power with zonal distribution company
► Arrangement of water with concerned municipal corporations
► The diagnostic centre shall be governed by all existing bio medical, statutory and legal laws

Page 14
 Gujarat State Portal

www.gujaratindia.com

Gujarat Industrial Development Corporation

www.gidc.gov.in

Industries Commissionerate

http://ic.gujarat.gov.in/

Health & family welfare department, Government of Gujarat

www.gujhealth.gov.in

National health mission, Government of Gujarat

https://nrhm.gujarat.gov.in

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Commissionerate of Health, Medical Services

& Medical Education (Health)
Office Address :Block No. 5, Dr. Jivraj Mehta Bhawan,
Gandhinagar.
Phone No. : 079-23253271
Email : cohealth@gujarat.gov.in
https://gujhealth.gujarat.gov.in/