MANILA, Philippines - Managing a hospital is not for the faint-hearted.
The interests of its stakeholders – namely the patients, the shareholders/owners, the doctors, the employees, the health maintenance organizations (HMO)/insurance companies – often come into conflict. The patients want better facilities and lower prices, but this of course means lower returns for the other stakeholders.
Finding the right mix, a win-win-situation, can be tough, especially in an environment marked by intense competition.
Who would think that a finance guy, one without any exposure in the hospital business, could bring back in the pink of health a hospital that has been written off by some of its competitors. In fact, a number of hospitals have approached him to learn a thing or two and he is more than glad to share his success story.
In a span of less than a year, Raul Pagdanganan, president and CEO of De los Santos Medical Center, was able to register a complete turnaround, which is a remarkable feat even as far as the standards set by the Metro Pacific Hospital group, to which De Los Santos now belongs.
Metro Pacific Investments Corp. (MPIC) acquired in June 2013 a 51 percent stake in DLSMC (the Delos Santos siblings still own 34 percent while STI has 15 percent).
In 2012, DLSMC had gross revenues of P325 million and a net profit after tax of negative P20.4 million. The following year, gross revenues grew to P418 million which NPAT was a positive P24.36 million. The new management was able to turn around DLSMC in just six months after taking over.
As of last year, topline was at P735.9 million while bottomline reached P51.5 million. Revenue doubled in just five years and Pagdanganan is confident that revenue can reach P868 million this year and P1 billion next year. “We hope to hit P2 billion in 2021,” he said.
But success did not come easy and a lot of hardwork went into finding out where the revenue leaks are.
A number of issues also plagued DLSMC when MPIC took over. It was an old hospital (it is now 42 years old) with limited clinical services, limited practitioners, poor public image, poor patient traffic management, among others. “It had limited number of doctors’ clinics, it was not financially viable, it was flood-prone, and the floor plans were not efficient. It was authorized to have 150 beds of which only 108 were operational. HMOs did not want to have anything to do with it,” Pagdanganan said. (It now has around 250 bed capacity)
Pagdanganan once noted that most people simply have dismissed the hospital as the one located in front of a community of informal settlers and bounded by a murky creek, and one with the dark hallways.
But not everything that glitters is gold, so they say. Pagdanganan said he saw a diamond in the rough. He saw potential, especially since the hospital’s location, which is at the crossroads of E. Rodriguez and Araneta Avenues in Quezon City, is strategic. “I always draw inspiration from the fact that Fort Bonifacio was once a military camp,” he said.
Finance guy
Before joining DLSMC, Pagdanganan had a distinguished career in finance, starting his career with SGV as a CPA, and then joining other industries later (as vice president finance of Infocom, chief finance officer of Eastern Communications, division finance director of Metro Pacific consumer division, chief finance officer of Stradcom, CFO of Alphaland, CFO of Rustans Commercial Corp., DOTC office of the undersecretary chief of staff, among others.) These experiences allowed him to bring an out-of-the-box mentality in running DLSMC.
He is also concurrently the chairman and chief finance officer of Jesus Delgado Memorial Hospital which was acquired by the MPIC group in January and director of Marikina Valley Medical Center, another MPIC hospital.
Pagdanganan identifies his key success factors by the acronym DEAR, referring to the doctors, employees, apparatus (equipment), and the residency training program. “Do you know that before, nobody wanted to apply as intern but now we have as much as 120 applicants and we only choose around 40?” he pointed out. As part of this DEAR initiative, DLSMC underwent a series of structural improvements during what was dubbed as the “fix and shape up”phase.
Every quarter, he holds a townhall meeting at the employees lounge (DLSMC has 460 regular, organic employees) during which he delivers the state-of-the-hospital address. “I also have a coffee chats with three to four rank-and-file employee every Friday. In these meetings, I encourage them to sit on my seat and have their picture taken. I also have one-on-one meetings with a specific employee during which he is free to talk about anything, complain if he wants to, and after our meeting, he gets a special mug,” he shared. He also has a separate town hall meeting with the doctors.
And because he wants the employees to be happy and to show genuine empathy for the patients, management has promised to take care of the employees. And this includes giving them merit increases.
Making DLSMC great again
DLSMC has also been investing in new equipment. The new majority owners have invested around P800 million up to last year, about 75 percent of which was spent for replacing old equipment and 11 percent of which is for equipment and facilities that the hospital did not use to have. Pagdanganan is proud of the fact that the hospital has not been asking funds from its parent Metro Pacific but is instead sourcing funds internally or from debts. “But our debt to equity ratio is still very low, at 40:60,” he emphasized.
MPIC has committed about P1.6 billion in total investment to support DLSMC’s bid to become a full tertiary medical center by 2020.
The employees and the doctors have found themselves rallying toward a common cause, and that is to make DLSMC great again. But for Pagdanganan, all he wants is to attain a certain degree of respectability in the industry.
DLSMC has undergone tremendous changes physically. Before, people where confused whether DLSMC/STI was a hospital, a computer or nursing school or what, especially when it was known as Delos Santos-STI Medical Center. The hospital had a signage that said “De Los Santos –STI” that downplayed the words “medical center.”
The old STI building was converted into the Medical Arts Building that now houses the doctors clinics (about 55), the HMO offices, and four of its centers of excellence, namely the arthritis, eye, memory, and wellness centers.
The four centers were introduced in 2015. Also in that year, it revealed its upgraded hemodialysis unit and inaugurated its new phototherapy unit. Last year, it unveiled its new rehabilitation medicine and sports center as well as its women’s center.
The new five-storey hospital complex will also house DLSMC’s cardiac catheterization laboratory, endoscopy center, ICU, and telemetry unit, all equipped with the latest state-of-the-art equipment and modalities. The construction of these facilities is meant to prelude the institution’s first open heart surgery this year or next year and the opening of its cancer institute in 2020. DLSMC has also renovated its neo-natal ICU.
The main building which was renovated is for the in-patients and other facilities.
Among the facilities which he is proud of are the rehab and sports center, the womens’ center, and the newly renovated neo-natal ICU. “Our ICU is also being transferred to what we refer to as the ‘deep zone’ and we are spending around P25 million for that purpose. Once finished, each of these units will have their own waiting area for the visitors and relatives. Before, anybody can just pass by the ICU and this is not acceptable by hospital standards,” he said.
Looking forward, Pagdanganan said he wants DLSMC to have the so-called excellence centers and these would be in the area of cardio, gastroenterology, and transplant surgeries.
He proudly shared that DLSMC is the first private level 3 hospital in Quezon City to be recognized as a Philhealth-contracted institutional healthcare provider of specialized care for end stage renal disease requiring kidney transplantation. As such, the hospital can now offer Philhealth’s Z benefit package under which Philhealth will cover half of the hospital expenses incurred as a result of the transplant.
“In the future, we would want to have the capability to perform heart transplants. But for now, we are spending around P55 million for our catheterization laboratory that will allow the hospital to do various cardiovascular treatments,” he said. These treatments would include simple diagnostic angiograms to complex invasive procedures such as angioplasty and stenting. The cath lab will be ready by next year and Pagdanangan hopes that they will be ready to do open heart surgeries by then.
DLSMC is acquiring the optical coherence tomography for glaucoma which is a state-of-the-art equipment to complete the eye center’s efficiency, according to Pagdanganan.
The hospital would also like to be a center for excellence in the field of orthopedics, especially since its founder, Dr. Jose delos Santos, is also one of the founders of the then National Orthopedic Hospital, the founder and first president of the Philippine Orthopedic Association, and is called the father of Philippine Orthopedics.
In four years time, DLSMC would also want to have its very own cancer institute.
But what the hospital’s management and employees are equally proud of is the fact that the hospital is becoming more and more customer-centric. “Our dream is to become a green hospital, thus the green logo. We also have a new contact center (89-DLSMC). Our partnerships with the HMOs are now more defined and this we achieved by directly talking to the heads of these HMOs. We are continuously developing our products and services and doing market development. And we are moving towards being a fully digital hospital by 2020. We will be fully wifi equipped and will have our electronic health record system by the second quarter of this year. Soon, we we will be seamless, paperless,” Pagdanganan shared.
They have chosen “Alaga’t Kalinga” as their brand of healthcare and they even have a jingle for that.
So far, DLSMC has offered various new packages, including ortho, OB, surgical, wellness, and ESWL (extracorporeal shock wave lithotripsy) which is a non-invasive treatment of kidney stones and gallstones. And Pagdanganan promises more will be unveiled soon.
According to him, their goal is to make a difference in the lives of people in Quezon City and they have achieved this by continuing to provide the best possible patient experience at a price that’s well within the patient’s reach.