Based on the case study by Dr. Naga Lakshmi Damaraju, Prafulla Rawal, Bavneet Singh, Himanshu Jain and Magesh Karthik
Kamla Nehru Memorial Hospital (KNMH) is a non-profit, non-government trust organization that is managed by the Gandhi-Nehru family, the premier political family which provided three prime ministers across generations in India. The family members continue to be at the helm of the board. The hospital operates primarily in the areas of Obstretrics and Gynaecology (O&G) and Oncology with several other supporting departments. It is a very reputed hospital in Uttar Pradesh, a very largely populated state in India and draws people from nearby states, primarily from the eastern part of India where infrastructure is largely underdeveloped, and other developing countries like Nepal, Bhutan, to name a few. The hospital is endowed by the trust. In view of its reach, it attracts funds through several governmental and non-governmental agencies as an implementing agency for several health schemes and initiatives.
The hospital largely operated independently and without a dedicated administrative structure for several years. Consequently, the governance and also the efficiency of hospital operations were going downhill leading to several patients choosing other hospitals and nursing homes instead of KNMH being the choicest hospital. The decreasing revenues and inefficient operations led to losses accruing in operations. With the next generation of the Gandhi-Nehru family entering into the governing board, there was some rethinking at the top that the time has come to manage this organization professionally in order to be able to serve in a more efficient and effective manner.
It is in this setting that Dr. Madhu Chandra, a pathologist and PhD by profession and who served at a corporate hospital (Yashoda Hospitals, Hyderabad), has been chosen to be the chief executive officer to streamline the operations and put the hospital back on the trajectory of growth. Dr. Madhu Chandra also faced the task of understanding the linkages between the departments, i.e., whether the different specialties should operate under the same umbrella or should they be managed as separate entities? Further, whether the focus should be only on the poor or whether it could become a hospital serving premier clients as well was another question. In addition, whether the hospital could be transformed into a multi-speciality or super-speciality hospital was also being deliberated upon.
KNMH: History and Background
Kamla Nehru Memorial Hospital, Allahabad has been an edifice of selfless service to humanity. The hospital traces its roots to India’s freedom struggle when in the year 1931, Smt. Kamla Nehru (wife of the first prime minister of India in 1947, Sri Pandit Jawaharlal Nehru) converted some rooms in her ancestral house, Swaraj Bhawan into Congress Dispensary. After her untimely death, Mahatma Gandhi and other national leaders took it upon themselves to “see that the work for which she made herself responsible was carried on even after her death (Mahatma Gandhi)”. Gandhiji laid the foundation of the Kamala Nehru Memorial Hospital (KNMH) on Nov. 19, 1939 and later inaugurated it on Feb 28, 1941 on the death anniversary of Kamla Nehru. The initial money for the hospital was collected not only from various regions of undivided India but also from Burma, Sri Lanka, Malaya and Indian communities in UK and Africa.
The hospital made its beginning with a fledgling unit with just 40 beds of Obstretics & Gynaecology and 28 of these were for free service. Subsequently, on 14th November, 1943, Pt. Jawaharlal Nehru announced that a Cancer wing would be established at the hospital similar to the TATA memorial centre, Bombay. The cancer wing was inaugurated by Shri. R. Rajagopalachari, the then Governor General of India in 1949. Since then it has been serving the people of Uttar Pradesh, Madhya Pradesh and other adjoining states of the Northern Indian and some neighbouring countries such as Nepal and Bhutan.
The involvement and commitment of the Nehru-Gandhi family continued through the years and the later Prime Minister Mr. Rajiv Gandhi has contributed further assets and facilities to the KNMH trust and served as a trustee as well. The current President of the Trust is Mrs. Sonia Gandhi (wife of Late Mr. Rajiv Gandhi), the current Congress Party President, and Mr. Rahul Gandhi and Mrs. Priyanka Gandhi also serve on the board of KNMH.
The hospital has steadily grown and serves as a crucial base for Mother and Child Health care and Cancer treatment. It had 300+ beds by the mid 2011. KNMH is one of the largest centres that caters to U.P. and its neighbouring states and also treats the patients from Nepal, Sikkim and Bhutan, covering a population of over 3 million. Apart from health care, the hospital has also worked for social welfare, for example No Tobacco Day, National Cancer and HIV/AIDS awareness etc. Additionally, it has taken several initiatives in areas of family planning, health education, awareness camps, vocational training and rural heath.
Departments and Developments
KNMH has several departments within its large premises which included Department of Obstetrics & Gynaecology, Department of Neonatology, Department of Radiation Oncology, Department of Surgery, Department of Medicine, Department of Medical Physics & RIA Laboratory, Department of Radio-diagnosis and Imaging, Department of Pathology and Microbiology and Department of Anaesthesiology. These departments could be grouped into three categories of medical service: Maternal and Child Health, Oncology and Diagnostics.
Maternal and Child Health Services commenced in the Hospital with its inception in the year 1941. Since then, the hospital has provided medical care and treatment needy women (several of them who were poor) and new-borns. This wing includes Department of Obstetrics & Gynaecology (O&G) and Department of Neonatology.
In 1992 the Hospital was recognized as Regional Institute of Mother & Child Health by Government of India.
The number of beds has increased over the years from 40 to 306. Out of the 306 beds at the hospital, 235 are for free service and 175 beds are reserved for teaching purposes. The department is quite well-equipped with modern day facilities including hysteroscopy, microphotocolposcope, surgical laparoscope, treatment of infertility and hystrology, cryosurgery etc. The hospital has 4 major and 2 minor operation theatres for all types of O&G care and gyno-onco surgeries. The department of Neonatology was founded in 1993 to deal with new-borns. The department has the new key support systems such as the 25 bed Neonatal-ICU, which is capable of providing life support systems to new-borns in complicated cases. The department is also well equipped with neonatal ventilator, 2 incubators and facilities for 24 hr portable X-Ray, ABG and RBS testing.
The Cancer wing was established in 1943 and cancer treatment began in 1949 with the installation of the Deep X-ray therapy unit. The cancer wing of the hospital was further expanded and formally inaugurated by the then Vice-President of India Dr. S. Radhakrishnan on April 8, 1959 with three Deep X-ray units, one Cobalt Unit and 200mg Radium for Brachytherapy. This made KNMH the third centre in the country for comprehensive cancer treatment in the early fifties, the other two being Tata memorial hospital, Mumbai and Chittaranjan National Cancer Hospital, Kolkata.
A modernization program of the cancer wing was initiated in 1983. By 2011, the cancer wing evolved into an upgraded cancer treatment centre with modern facilities and infrastructure. The hospital brought cancer treatment and care to reach the people in the region who otherwise would have had to travel to distant locations such as Mumbai or Kolkata. The cancer wing was being constantly upgraded with donations from various sources, both domestic and foreign. Some of the key developments include the installation of stationary head Janus Cobalt unit in 1984, r-establishment of cancer wards in 1984 and commissioning of rotational head Isocentric Teletherapy Unit, Theratron 780C, Selectron LDR (remote control after loading) unit with Caesium-137 source and RT 3000 Ultrasonography unit. In 1987, the imaging section was further strengthened by addition of whole body CT scan-CTW 700 under the Indo Japanese Aid Programme for cancer control in India. In more recent years, the hospital has purchased a new machine for tumour treatment using Intensity-Modulated Radiation Therapy. This machine cuts down the time required for locating and identifying the size of a tumor and planning its removal. The whole process can be completed in about 3 days. The hospital also recently installed a linear accelerator, one of the more sophisticated equipments to treat cancer.
The general occupancy of hospital for cancer patients is around 85-90%. Cancer patients are referred from all parts of the country especially north and eastern India. In the year 2010, about 6668 patients reported for the treatment, of which 5634 cases were registered for specific cancer treatment. The total OPD attendances, including follow-up cases were 81,825. Majority of the cases were imparted Radiotherapy, including teletherapy and brachytherapy. 28,156 sittings of radiotherapy including 58,946 exposures were given with the support of the two Theratron units. The total number of Chemotherapy doses administered was 18338. The two cancer wards of the hospital had almost full occupancy in the year 2010. The hospital still needed to develop competencies and employ enough doctors and related staff in both surgical oncology and chemotherapy, which complete the capability gaps for being a cutting-edge cancer center.
As mentioned in the beginning, the hospital has been bestowed with the support of one of the strongest political families in India. The family has been very generous in providing the endowments and left the hands-on operations into the hands of the appointees. The hospital was run by a group of doctors and support staff. Over the years, a medical superintendent, who was a practising doctor at the hospital, was also asked to take charge of the administration. The medical doctor devoted time to administration in addition to taking care of treating the patients. Quite a few of the key decisions were made at Delhi, where most of the trustees resided.
From its very beginning, the hospital has attracted some of the very talent work force from the city of Allahabad. Most doctors, nurses and other staff have been serving the hospital for several decades and have set the tone for the culture in the organization. Several of the graduates of KNMH, the alumni, chose to join KNMH either for the love and passion for the hospital or for the fact that they are attached to the city and their family and friends are all settled in Allahabad. Dr. Madhu Chandra herself has been an intern at the hospital in the early part of her career. Several of the doctors were very well-renowned and have won awards at the national level.
The reward structure at KNMH was not a very formal one. No formal revisions have taken for several years and from a position of being extremely attractive, the salaries at KNMH have become relatively unattractive. Quite a few of the junior doctors and other staff have taken up jobs elsewhere and it poses a challenge to recruit well-qualified and committed staff. In several cases, salary inversions have occurred when junior doctors were paid higher salaries without commensurate increases for senior folks. Doctors were paid a base salary and a percentage on the tests and procedures they prescribe. The salaries have gone so low for lower cadres in the hospital that they involved the labour court to deal with the matter in August 2011.
The hospital has grown in capacity and the number of beds has increased over years. However, the number of staff has relatively remained unchanged. By 2011, there was shortage of staff at all levels including doctors, emergency services and nursing. The attrition rate was way above the industry average. It was not uncommon to find people managing multiple responsibilities. High attrition has impacted the training programs for new staff members. The hospital also had strict qualification requirements for recruitment. However, several of those who did not get a job at KNMH, managed to get jobs at government hospitals or other competing hospitals. As for retrenchment, KNMH was generous to its staff and provided employment even after their retirement age. This applied to the doctors as well as other staff and their employment contracts were renewed periodically. KNMH did not believe in a policy of firing its employees. There was a lot of faith and trust in the goodness of people and the hospital did not necessarily maintain entry and exit registers for its employees on a daily basis.
The hospital is run by the KNMH trust. The trust received grants from various national and international sources. Since the hospital was primarily catering to the needs of the poor and needy, it was a target for the Government of India’s health programs for the poor. Several of the government health programs were administered through the hospital and the hospital received funds from the government for the same. Government usually allocated quotas to hospitals in a region as to how any patients will be covered under particular schemes. It was not unusual for delays to occur in the payments to the hospital. The major sources of funds were grants, donations, income from hospital operations, and income from pharmacy.
Buildings and facilities
The KNMH complex comprised of a main building that housed the O&G department and another building that was designated for the Cancer Center. However, the wards were not necessarily segregated. A new facility was also proposed by the late prime minister Shri Rajiv Gandhi in 1987 and a foundation stone was laid for the Indira Gandhi Bhawan in 1989. The proposed Centre of Excellence was envisioned to evolve into a Medical Technology Developer in Reproductive Health and Oncology Care. However, the project did not quite take-off in view of paucity of funds at a later date.
KNMH also owned a large facility known as its ‘Base Hospital’ situated at the village Newada Samogar on Allahabad-Mirzapur road. The purpose of this facility was to take quality health care at affordable prices into the rural regions of Uttar Pradesh. The 15 bed hospital had excellent out patient department and basic diagnostic facilities like X-ray, Pathology etc. KNMH used this hospital for conducting outpatient consultation and day care surgeries. Though the facility had a fully equipped operation theatre etc., it was basically used only for health camps, cancer and paediatric consultations but not full-fledged treatments because of the unavailability of resident doctors on campus. Though the facility was in the industrial belt of Allahabad and thus catered to a large local population, other amenities were not adequately developed in and around for running a full-fledge hospital. Therefore, several of the cases that needed further attention and treatment were referred to the main hospital.
Over the years, competition in the healthcare segment has become severe in Allahabad with more than 50 famous, and many more not-so-famous hospitals, clinics, and specialization centres. With some of the hospitals receiving government and missionary funding, Allahabad also attracted patients from nearby regions, cities and even countries such as Bhutan, Nepal etc.
Nazareth is a missionary hospital managed by Roman Catholic Diocese of Allahabad and Bishop of Allahabad as the chairman. This is the second oldest hospital in Allahabad after KNMH. With quality patient and doctor care, transparency in billing, huge subsidies for the poor, and free access to top authority –The Father, who runs the hospital, Nazareth has become very famous in and around Allahabad. The hospital was very famous for its Department of Nephrology (concerned with the kidney). KNMH faces direct and fierce competition from Nazareth.
Jagriti hospital, managed by five founder doctors who effectively work as a board, is well known for its Department of Orthopaedics (concerned with disorders or deformities of the spine and joints). The hospital claims to be the one of the first hospital in Allahabad to have NABH Accreditation and in-process NABL accreditation. The target patient segment of Jagriti does not overlap much with KNMH’s as Jagriti caters mostly to urban patients with split of 70-30 between urban and rural.
Jeevan Jyoti Hospital (JJH)
JJH is one of the biggest private hospitals in Allahabad, providing excellent health care services to central UP since 1988. The 500 bed hospital has introduced multi-specialty in the region with the mission of providing international healthcare standards within the reach of every individual. The hospital tries to target both rich and poor by offering different price points for quality healthcare. Other than the array of specializations, the hospital also offers paramedical and nursing courses, test tube baby center, IVF and infertility treatment. JJH also engages in charitable endeavours across Uttar Pradesh, regularly and frequently, through free medical camps, free distribution of medicines in rural areas, training of birth attendants in different blocks and reaching out to those who find it difficult to reach hospital. KNMH model is very similar to this model.
More Recent Developments
In 2007, the move towards salary revisions did not go well and employees went on strike moving the labour commissioner to get the issue sorted. In the mean time, the Board of Trustees also realized that the growth of the hospital made it imperative to put more professional management into place. After a competitive recruitment process, Dr. Madhu Chandra, a pathologist and PhD by training, who had experience in working in a corporate hospital setting at Yashoda Hospitals, has been chosen for the job in August 2011 Dr. Chandra’s first task was to negotiate with the labour union to design a salary revision. Dr. Chandra decided to seek the help of compensation experts to recalibrate salaries and link pay appropriately with performance at all levels. She was also contemplating employing a Human Resource Manager and a Finance Manager to help her deal with the respective matters and clear her time to focus on the strategy and fund raising part for the hospital.
Dr. Chandra also recognized that the hospital is at a very critical juncture in terms of making some strategic choices. It was evident that the funds being raised currently, from all the sources, were not adequate in having profitable and healthy operations on an on-going basis. She was contemplating several alternative choices for growth.
The first alternative was to immediately prune some obvious problems and go after the low-hanging fruits. A six-bed ICU was opened on a priority basis in 2012. The hospital also increased the total number of beds and the number of paying beds. The Pathology and Radiology departments were converted into 24-hour service units. In addition, the hospital added a number of other departments and services to its portfolio, including a Nephrology department with a dialysis ward, a Pediatric ward, an Orthopedic department, a Gastroenterology department and a hormone testing laboratory. The old pharmacy was revamped and modernised, and became a revenue generator for the hospital. It was converted to a 24/7 pharmacy operating in three shifts with four full-fledged counters. A nursing school with an enrolment capacity of 60 was launched in September 2011. The nurses from this school provided a much needed helping hand to hospital staff. To improve the hospital’s revenue situation the rates for air-conditioned rooms were revised upwards, although they were still significantly lower than the market rate. Among other services, the installation of an in-house incinerator strengthened KNMH’s ability to manage its waste in-house on a sustainable basis, while on the other hand, the hospital outsourced cleaning and security services.
The more difficult issue was about the long-term. Should the hospital remain focused on Cancer and O&G as core specialities Or should it be a super-speciality hospital with world-class heart, kidney, liver, lung centers etc.,? Should it focus on catering to the poor and increase that pie to attract more revenues from national and international government and non-government sources (and what are those sources??) Or should it focus on pursuing more profit-oriented objectives (like a corporate hospital) and catering to premium customers to solve some of the revenue and profitability issues? What else could be done to build the KNMH as a brand? In the case of pursuing the alternative of serving the poor, the razor thin margins make it difficult to sustain high quality doctors or facilities. In pursuing the alternative of chasing the premium customers, the hospital could very well lose its original character positioning of being a Trust for serving the poor. Dr. Chandra wondered if she could dream of a super-speciality hospital that was highly profitable but also catered to the poor simultaneously.
About the Authors
Dr. Naga Lakshmi Damaraju is an Assistant Professor in the area of Strategic Management at the Indian School of Business. Prafulla Rawal, Bavneet Singh, Himanshu Jain and Magesh Karthik are alumni from ISB’s PGP Class of 2012.
About the Case Study
“Kamla Nehru Memorial Hospital: Which way forward?” Indian School of Business case no. ISB057 (Indian School of Business, December 2015) is available with Harvard Business Publishing. http://hbsp.harvard.edu/. This case study has been written based on primary research with the organization.
About the Writer
Vineet R Bhatt, Content Lead with the Marketing and Communications department at the Indian School of Business, wrote this summary.