Specialty hospitals · Healthcare
Procedure-level return for specialty hospitals built around expensive equipment
A specialty hospital is built around a few expensive assets — a cath lab, a linear accelerator, a robotic system — and the specialists who use them. We cost each procedure from equipment time, implants, drugs and consultant fees. You can then see whether the service line repays what was invested in it.
In one paragraph
Cardiac, oncology, orthopaedic, neurosciences, mother-and-child and renal hospitals are built on concentration. They usually have 30–200 beds and ₹30–400 crore turnover. Revenue depends on a narrow range of procedures. High-value equipment and implants dominate cost, and a handful of consultants drive most of the volume. Founders and finance heads need to know which of those few procedures carry the hospital.
Founder or chief executive, often with the finance head
The economics
How the money moves in this trade
In a specialty hospital, equipment shapes the cost of a procedure, and it must be used intensively to pay for itself. Implants, devices or drugs may cost as much as the rest of the admission. Depreciation, maintenance contracts and the staff to run the equipment are fixed, so utilisation decides whether they are affordable. Coronary stents carry a ceiling price, and knee implants have been held under a ceiling renewed by periodic notification. The hospital cannot simply pass their cost through.
Consultants are often engaged on revenue-share or per-procedure fees rather than salary, and their referral base drives volume. Oncology adds day-care chemotherapy with very high-value drugs and multi-session radiation courses. Orthopaedics adds implant consignment from vendors. Cardiac care adds emergency cases with unpredictable payers. Each specialty's economics are distinct, but in every case a few procedures decide the result.
The problem
Where the numbers usually break down
Equipment utilisation is not measured against its cost
Cath lab, radiation or imaging slots are scheduled clinically, but nobody reports the cost of an idle hour or the volume needed to cover the asset.
Implants on consignment are not reconciled
Vendor consignment stock in theatre is replenished on the vendor's word, and implants used are not always matched to patient bills and vendor invoices.
High-value drugs leak between pharmacy and day care
Oncology and critical-care drugs are issued in vials and partly used, so wastage and unbilled doses are hidden in pharmacy cost.
Consultant payouts are not tied to procedure margin
Revenue-share percentages are agreed per consultant without testing what remains after implants, drugs and equipment cost on their case mix.
Multi-session treatments are billed in advance or in arrears
Radiation and chemotherapy courses span weeks, and advances, package billing and completed sessions drift apart in the books.
What we do
The work, and the result each part produces
Procedure costing
Equipment time, implants, drugs, consumables, theatre and nursing time and consultant fees costed for each major procedure.
Each procedure shows its contribution after every direct cost.
Equipment utilisation and break-even
Hours used and available for each major asset, with the volume needed to cover depreciation, maintenance and staff.
Scheduling and pricing decisions can be judged against the asset's cost.
Implant consignment reconciliation
Vendor consignment stock, implants used, patient bills and vendor invoices matched case by case.
Every implant used is billed to the patient and invoiced correctly by the vendor.
High-value drug control
Vial issues, doses administered, wastage and billing reconciled by patient for oncology and critical-care drugs.
Drug cost reaches the patient bill or is reported as wastage.
Consultant payout testing
Payout arrangements tested against procedure contribution on each consultant's actual case mix, and payouts reconciled to billing before release.
Payouts are affordable and computed correctly.
Treatment-course accounting
Multi-session courses tracked from advance to completion, with revenue recognised as sessions are delivered.
Revenue and advances for long treatments are stated correctly each month.
Where we start
The first steps of an engagement
Equipment logs and implant records
We ask for equipment schedules and usage logs, the asset and maintenance-contract register, implant consignment records, pharmacy issues of high-value drugs, consultant agreements and HIS billing by procedure.
Contribution on the main procedures
We cost the procedures that make up most revenue from equipment time, implants, drugs, theatre and nursing time and consultant fees. Each is set against what it is billed at.
Implant matching case by case
Each implant used is matched to the patient bill, the vendor invoice and the consignment stock movement before the vendor is paid.
Procedure and equipment report
The first report shows contribution by procedure and consultant, and the utilisation of each major equipment item against its break-even volume.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Contribution by procedure and consultant
- Utilisation of each major equipment item against break-even
- Implants used, billed and invoiced, reconciled by case
- High-value drug wastage by patient and ward
- Consultant payouts as a share of procedure contribution
- Advances and sessions delivered on multi-session treatments
Who it suits
Written for, and not the right fit for
- You need advice on clinical protocols, equipment selection on clinical grounds or regulatory licences; those sit with your clinicians and the relevant authorities.
- You need a statutory audit or tax-audit report for the specialty hospital on its own — that is signed by an independently engaged CA.
- Cardiac, oncology, orthopaedic and other single-specialty hospitals with high equipment and implant cost.
- Specialty groups opening a second centre or adding a major equipment item.
- Hospitals renegotiating consultant arrangements or vendor consignment terms.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Internal audit
Independent process review that closes findings rather than filing them.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
How do you cost equipment time for a procedure?
From the asset's annual cost — depreciation, maintenance contract, power and dedicated staff — divided by the hours it's realistically available. Each procedure then carries the time it actually takes on the machine.
Can you help us renegotiate consultant arrangements?
We can show what each arrangement leaves the hospital on the consultant's actual case mix and model alternatives. The negotiation, and any legal drafting, stays with you and your advisers.
Do price caps on implants affect how you cost a procedure?
Yes. Where the implant price to the patient is capped, as it is for coronary stents, the hospital's margin on it is fixed, so the rest of the procedure has to carry its own cost. The costing shows that clearly.
5th Quadrant performs costing, reconciliation, payout testing, control and reporting work. Clinical decisions, licences for equipment and premises, implant pricing compliance and accreditation are the hospital's own responsibility with the relevant authorities. Statutory audit and tax-audit reports are performed by independently engaged licensed professionals. Full detail is on our Professional Scope page.
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