10 Things One Should Know Before Starting a New Hospital

The dream of every medical practitioner is to build or own a hospital. Building a hospital requires meticulous planning and execution to avoid delays and cost escalations. Most medical professionals depend on known sources instead of approaching professional consultants, which can lead to enormous rework and cost escalations. Here are the 10 critical things to know when building your dream hospital project.

1. Feasibility Study :-

Most promoters go by their personal experiences or references in finalizing the location instead of conducting a proper feasibility study. It is crucial to seek help from external professionals to perform a feasibility study, which will help in understanding the potential, size, and services needed to be provided.

2. Budgeting & Financial Planning :-

Once the feasibility study is done, budgeting is key to finalizing the investment required to start a hospital. Important aspects of budgeting include identifying the heads of capital expenditure and operating expenditure. This will help you understand the capital needed to raise for both Capex and Opex requirements for the first 12 months of operations. Promoters need to put in at least 25% to 35% equity contribution (use own funds and not personal loan funds) to make the project viable.

3. Detailed Project Report (DPR) :-

Project reports are typically made for availing bank loans, but preparing a good DPR will act as a reference for monitoring hospital performance over a period of time. This will also help in understanding where gaps exist so that you can correct them promptly.

4. Choosing the Right Lending Options :-

As a start-up, it is important to choose the right lending options that match your projected cash flows with your repayments. It is prudent to keep initial repayments lower than projected cash flows. Most promoters avail short-term funds to close the funding gap, which can create cash flow mismatches in the initial years of the hospital and cause stress in repayments.

5. Identifying the Right Architect :-

Architects who design healthcare spaces based on NABH and other Standard Operating Procedures will help you save a lot of space. They also assist in drawing proper Bill of Quantities (BOQs) and ensuring the quality of materials used. The right architect and design will save both money and time

6. Recruiting a Project Management Consultant :-

Often, people keep one known person as a supervisor at the site who is not experienced in handling vendors and works. This creates coordination issues among vendors. To overcome this problem, appoint a PMC who can handle the project and coordinate with all vendors to complete the project on time. Always ask the architect to provide a PMC so that he can understand the drawings and get the work done from vendors on time.

7. Identifying the Right Biomedical Consultant :-

Medical equipment forms a major investment in any hospital. An experienced biomedical consultant can help in finalizing the right equipment and distinguish between must-have and nice-to-have equipment based on services offered at hospital. Often, healthcare providers purchase equipment that is not required or opt for higher-end models, causing cash flow issues in the future.

8. Identifying the Right Vendors :-

Building a hospital requires vendors for interior works, MEP works, and equipment vendors. Choosing the right vendor is half the work done. Before finalizing the vendor, perform background checks and, if possible, visit some show sites to understand their work. Most people go by references instead of checking the background and work. Also, don’t fall for the lower price before comparing the BOQs.

9. Identifying the Right Team of Doctors :-

This is very critical for any hospital's success. A good team of doctors can help the hospital provide better patient care and achieve break-even faster. Retaining the team for the first few years is essential, so have a clear understanding with the doctors to ensure their long-term commitment.

10. Tracking Timelines :-

It is important to track the project timelines, as delays can escalate project costs by 2% to 3% each month and also incur opportunity costs. Timely completion of the hospital will help in saving costs and generating revenue on time.

Finbot: Helping Healthcare Providers in Financial Closure of Their Dream Hospital Project

Finbot, a healthcare fintech platform, specializes in assisting healthcare providers in preparing the project report and choosing the right lenders with suitable financing options. With a network of over 20 lenders on the platform, Finbot can identify the right lender and financial product to suit customer requirements, offering the best possible terms and rates. Partner with Finbot in building your dream hospital project with the best possible finance options.