Abuja London Clinic
Ambulatory Surgery Center
Strategic Investment and Business Plan
March 2014
Table of Contents
1.0 Executive Summary ..................................................................................................3
2.0 Company and Financing Summary..........................................................................10
3.0 Surgery Services .....................................................................................................16
4.0 Strategic and Market Analysis and Investment Case...............................................26
5.0 Marketing Plan ........................................................................................................32
6.0 Operations Management and Structure...................................................................36
7.0 Financial Analysis and Modeling .............................................................................48
This Business Plan is updated from the February 2014 issue following the
completion of due diligence undertaken by RMS Nigeria on the development of
costs and sales assumptions. The output of this due diligence exercise is now
reflected in the updated Business Plan and Financial Model.
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1.0 Executive Summary
This business plan is produced by Resuscitate Medical Services (RMS) Nigeria Limited and
the purpose of the business plan is to secure equity investment of a minimum of USD $1
million for the development of the Abuja London Clinic (the ALC Facility) as an ambulatory
surgery centre. An equity interest of 10% is offered in return for this minimum equity
investment of USD$1m. In principle, RMS Nigeria is prepared to release additional equity
interest where increased equity investment beyond USD$1m is provided and RMS Nigeria
will engage in discussions and negotiations on this point. The business plan further
demonstrates the profitable commercial operation of the ALC Facility over a 10 year period.
1.1 Background
The Abuja London Clinic facility (hereinafter the “ALC Facility”) in Abuja, Nigeria is the
brainchild of Resuscitate Medical Services (RMS) Nigeria Limited, a fully owned and
operated Nigerian medical services provider. RMS Nigeria was established in 2002 and
operated an office in Benin City, Edo State. RMS Nigeria was awarded the Private Sector
distributor of vaccines in Edo State by the National Immunisation Commission. RMS
(Nigeria) has also organised and sponsored a training programme on The Management of
Post Partum Haemorrhage held in Lagos in 2010 – RMS Nigeria was responsible for
sourcing expert expatriate trainers from the United Kingdom and for facilitating their visas,
flights, accommodation and other logistics. The Directors of RMS Nigeria have drawn upon
their extensive experience of operating RMS (UK) Limited which has operated in the UK
since 2000 and have developed extensive and proven experience and pedigree in delivering
medical recruitment solutions and management of medical facilities.
This business plan sets out the strategic intent behind the establishment of the ALC Facility
as being the need to exploit a gap and tap into a burgeoning demand in Nigeria for surgical
services provided by highly skilled professionals working with the best technology in a high
quality environment to deliver the best quality service comparable to what is obtainable in
the western world. RMS Nigeria has first hand evidence of this market gap – RMS UK has
already facilitated the conduct of over 15 surgical operations (fibroid removal and eye
surgery) for Nigerian medical tourists in the UK. These operations were facilitated by RMS
UK and originated through RMS Nigeria’s presence. In essence, RMS Nigeria’s strategy is
to establish the ALC Facility as a highly equipped modern facility with the same surgical
experts providing the operations to Nigerians locally, thus saving such Nigerians on flight
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and accommodation costs. Further details of the above evidence are contained in Section
2.2 of this business plan.
The Business Plan also sets out the investment case to prospective equity investors and
demonstrates through competitive analysis and financial projection and modeling, a robust
return on investment case for the discerning investor.
Abuja London Clinic will be operated by RMS Nigeria and will draw upon the vast and
significant experience that its Directors have acquired in operating medical and surgical
facilities in the United Kingdom through RMS UK limited. RMS UK will therefore be a
technical partner to RMS Nigeria. The ALC Facility will have:
(a) A pioneering fibroid clinic offering the full range of treatments (including Uterine Artery
Embolisation (UAE) and Ultrasound ablation) for women with fibroids;
(b) An executive Renal Dialysis unit;
(c) A Day surgery unit initially providing gynecological procedures and ophthalmology
procedures e.g. eye cataract removal surgery, cosmetic surgery (breast lift and
augmentation) and such other services described in the this business plan;
(d) Diagnostic unit for cancer screening.
The ALC Facility will be equipped and staffed to deliver these clinical and surgical
procedures. In addition, RMS Nigeria will initially engage the services of expatriate experts
working together with the local RMS Nigeria’s medical team to undertake the ambulatory
surgery at the ALC Facility – thus providing the patients with the assurance of excellence,
expertise and healthcare service delivery to international standards.
Through its historical trading, RMS Nigeria has already secured the readiness of 2
consultant surgeons – a specialist in fibroid removal through the Uterine Artery Embolisation
procedure and a specialist in eye surgeries – to attend the ALC Facility and undertake
procedures in collaboration with the local RMS Nigeria team. More details are contained in
Section 3.4 of this business plan. In addition, RMS Nigeria will actively pursue technical
partnerships with specific hospitals in India in order to establish an alternative pool of
souring expert surgeons – this arrangement is expected to provide a more long term cost
effective option for engaging expert expatriate surgeons.
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RMS Nigeria has ownership of a modern purpose built medical infrastructure for use for the
ALC Facility. RMS Nigeria will lease this purpose built infrastructure to the ALC Facility
indefinitely thus ensuring that the ALC Facility will always be based on this site. This lease
will be rent free for the first 10 years of commercial operation. This business plan therefore
seeks to secure an equity investor or investors that will provide a minimum of USD $1m of
equity funding under mutually agreed terms which will be used for purchasing diagnostic
and clinical equipment, purchasing ancillary equipment such as water treatment plant, an
electric transformer for the ALC Facility as well as providing the start-up working capital for
the operation of the ALC Facility.
The ALC Facility will be operated profitably under sound commercial principles to build a
long-term sustainable operation whilst maximising dividend payouts to investors.
1.2 The Services
The ambulatory surgical services to be provided will have the following strands:
1. A pioneering fibroid clinic offering the full range of treatments for fibroids, including the
cutting edge treatment of Uterine Artery Embolisation (UAE) and also Ultrasound
Ablation. Uterine Fibroids is a major and extremely common problem among West
African women. UAE and ultrasound ablation are alternatives to surgery for ladies who
suffer from fibroids. These procedures do not require general anaesthesia and the
patients can be discharged home the next day following overnight observation.
The establishment of this fibroid centre offering the full options of treatment for fibroids
under one roof will be a unique venture without precedence, being the first of its kind in
the whole of West Africa. The success of this centre both as a financial venture and as a
centre for ambulatory surgery excellence is certainly assured;
2. High quality Renal Dialysis service;
3. Day surgery unit initially providing a wide range of surgical procedures on a rolling
programme basis. Initial services to be provided will include but not be limited to
gynaecological procedures, endoscopies, ophthalmology procedures (e.g. cataract
removal), cosmetic surgery (breast lift and augmentation, breast enlargement), and such
similar services.
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The Renal Dialysis service will be a key product and the services of a consultant
Nephrologist will be secured. The revenue from this Dialysis service will cover a good
proportion of the fixed operating costs of the ALC Facility. Accordingly, the ambulatory
surgical services will be significant contributors to the profit margin of the ALC facility.
In addition to the ALC Facility, RMS Nigeria intends to establish a consulting clinic in Abuja
city centre - the Abuja City Centre Clinic Facility (the A3C Facility). This A3C Facility will
provide general consultation, wellness clinic and similar services. The ALC Facility will
however contribute over 95% of sales income and will generally be the focus of this
business plan.
Section 3 of this business plan provides more detail on the services to be offered.
1.3 Financing
RMS Nigeria has ownership of a modern purpose built hospital property offered lease-free
for use as the ALC Facility. An equity investor or group of investors is sought to provide a
minimum investment of USD $1m of equity funding. This minimum equity funding of USD
$1m will be used for:
(a) Acquisition of basic diagnostic and clinical equipment;
(b) Purchase of all fixtures and furniture;
(c) Water treatment plant, electrical transformer and generators;
(d) Working capital;
(e) Establishment of a world class, fully equipped operating theatre;
(f) Establish a state of the art dialysis treatment suite;
(g) Provide heating, ventilation and air-conditioning systems (HVAC);
(h) Purchasing ambulance(s) and operational vehicles.
The transaction environment in Nigeria is cash intensive with most patients paying cash in
advance of receipt of medical treatment. Accordingly, the working capital requirement of the
facility is expected to reduce very quickly with time.
Section 2 of this business plan provides more detail on the key financial parameters as well
as the output of the financial model.
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Investment Returns
A detailed 10 year Financial Model has been prepared – the income modelling has been
undertaken on a conservative income basis and the model demonstrates the high
profitability of the ALC Facility at conservative income and robust cost assumptions. Please
note that the dividend distributions have been modelled on the basis of 10% equity interest.
Key outputs of the model are in Section 7 of this document with a summary below:
(a) 10 year income forecast at $68.5m;
(b) 5 year EBITDA is USD$19.8m;
(c) Profit margin of 44.1% – 51.6% averaging at 49.5% over 10 years;
(d) Payback on USD$1m equity investment within 4 years;
(e) 5 year cumulative dividend to equity investor(s) in excess of USD$1.35m;
(f) 10 year cumulative dividend to equity investor(s) of USD$3.4m.
Please note that equity interest modeled is 10% based on an equity investment of USD$1m.
RMS Nigeria is prepared to release a greater amount of equity interest where investment in
excess of USD$1m is provided. RMS Nigeria is open to discussions and negotiations on this
matter. The ALC Facility will be a high cash generative business operation. It represents a
highly attractive investment opportunity for the discerning equity investor.
1.4 Mission Statement
The Mission Statement for the Abuja London Clinic Facility is set out below:
“To establish the ALC Facility as the first and market-leading ambulatory surgical centre in
Nigeria and deliver high quality specialised surgical treatments that will make the Abuja
London Clinic a center for medical tourism that will be commercially sustainable in the long
term”.
This Mission Statement is underpinned by a precise operations strategy that will be
measured by objectives set from time to time by the corporate Board.
1.5 Management Team
Resuscitate Medical Services Nigeria Limited, which will operate the facility and provide
overall management oversight, was founded by Dr. A. Ojeikere who has more than 12 years
of experience in the healthcare management industry. Through his expertise, he will be able
to bring the operations of the business to profitability within its first year of operations.
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Operations at the ALC Facility will be managed in a comprehensive and proactive manner to
ensure that the ALC Facility remains available for clinical and surgical procedures on a
commercial and profitable basis at all times. The management approach will be as follows:
(a) Arrangements for day-to-day management of delivery of clinical and medical services
and for ensuring availability of the ALC Facility’s assets and infrastructure;
(b) Oversight structure through the establishment of 2 management boards and a strategic
corporate Board.
The objective of the management structure that will be established is two-fold:
• Management of medical staff, clinical procedures and processes to ensure satisfactory
surgical and medical outcomes;
• Management of the facilities and clinical asset and to ensure constant operational
serviceability and readiness.
Section 6 of this business plan contains more detail on operational plans.
1.6 Strategic Operational Approach
In establishing the ambulatory surgery centre, RMS Nigeria has undertaken extensive
research to identify the key issues in the provision of healthcare in Nigeria. In addition, the
key reasons for the current penchant for overseas medical tourism by Nigerians has been
analysed. RMS Nigeria’s strategic operational approach has therefore been developed to
address the findings from the above issues. This approach is three-pronged:
(a) Ensure that adequate funding is available at all times (either through proceeds of the
business, or shareholder investment or debt financing) to fund all operational
requirements and well as future equipment needs of the ALC Facility;
(b) Offer a strong combination of modern equipment and high ambience environment along
with excellent surgical skills to deliver surgical care of international standard;
(c) Develop a skills (clinical and non-clinical) enhancement model that will ensure that staff
are trained and motivated to deliver the highest standards of clinical and non-clinical
customer service.
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RMS Nigeria believe that the deployment of this three-pronged approach will engender the
establishment of a high quality ambulatory surgery center that is sustainable in the long
term. Further detail is contained in Section 6 of this business plan.
1.7 Sales Forecasts
There is a very strong demand for high quality surgical services in Nigeria. This, coupled
with the significant purchasing power of the populace will lead to a strong demand for the
surgical services provided by the ALC Facility. Accordingly, whilst conservative assumptions
have been made in terms of service take-up, the result of the financial modeling
demonstrates a very strong sales performance in the first 3 years with strong sales growth in
the medium term.
Sales in the first 5 years are forecast to be in excess of USD $27m.
1.8 Strategic and Competitive Analysis
The ALC Facility has the following strategic advantages:
(a) It will be the first ambulatory surgical centre in Nigeria and will therefore enjoy first mover
commercial and financial advantages;
(b) The standard of surgical services to be provided cannot easily be replicated or
commoditised, The quantity and quality of competitors is therefore limited;
(c) The ambulatory surgery centre enables a low cost model to be deployed as in-patient
stays will be very limited. This provides room for maximisation of profit and dividend
distribution to investors and shareholders;
The provision of high quality surgical and medical services within a well-equipped clinical
facility is a differentiated offering that cannot easily be replicated or commoditised. There is
an established and growing market both in terms of the demographic quantum of people
who desire quality healthcare provision but also in terms of the economic and financial
ability and capacity of such people to afford quality healthcare treatment.
Competitive analysis is undertaken within this document using the Porter’s 5 Forces model.
The resulting conclusion is that the investment case is STRONG.
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2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
The registered name of the corporate entity is Resuscitate Medical Services Nigeria Limited.
This entity was registered at the Corporate Affairs Commission in Abuja on 6th June 2002.
The registered company number is 451992. The Company is registered to conduct business
operations in Nigeria. Abuja London Clinic will be the operating brand name.
2.2 Strategic Competence and Capability of RMS UK
RMS UK will provide technical support and assistance to RMS Nigeria. RMS UK is an
established medical services provider in the United Kingdom with an annual turnover of
USD $3.75m. RMS UK has been operating within the United Kingdom for over 12 years.
RMS UK operates in two professional spheres:
(a) It operates as a medical consortium to provide and recruit medical doctors for the UK
National Health Service (NHS). RMS UK has been recruiting doctors for the NHS for
over 10 years – as a mark of their professionalism and pedigree, RMS UK were awarded
the much coveted National Framework contract to supply doctors to the NHS. RMS UK
has gained the ISO 9001 kitemark as a proved quality-assured company and is a
corporate member of the Recruitment and Employment Confederation (REC);
(b) RMS UK also established and currently manages a medical practice called The Clinic
MK, based in Milton Keynes, United Kingdom. The Clinic MK is a private medical
doctors’ service that provides the following clinical services:
• Treatment of Disease, Disorder and Injury – providing consultation, examination and
treatment in general medicine, general surgery, cardiology, gynaecology,
ophthalmology, vascular medicine, urology, blood tests, ECG and spirometry;
• Diagnostic and Screening Procedures in general medicine, general surgery,
cardiology, gynaecology. ophthalmology, vascular medicine, urology, blood tests,
ECG and spirometry;
• Surgical procedures carried out under local anesthetic and/or IV sedation.
The above capability, which has been developed over a 12-year period, will serve as the
springboard for the delivery of ambulatory surgical services at the Abuja London Clinic.
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RMS Nigeria therefore possesses the strategic competence to establish the ALC Facility,
equip it and manage the profitable delivery of high quality ambulatory surgical services.
In addition to the above, RMS Nigeria has facilitated surgical treatment for Nigerians at its
Milton Keynes Clinic in the United Kingdom. Details are as follows:
(a) To date, RMS Nigeria arranged for a number of women to travel from Nigeria to the UK
to undergo fibroid removal using the Uterine Artery Embolisation method. The surgery
was performed by a consultant interventional radiologist, Dr Kyoshi Choji, with whom
RMS UK has had an established professional relationship ;
(b) Also along the same vein, eye cataract removal operations were conducted for Nigerians
who travelled in from their bases in Nigeria. The surgeries were facilitated by RMS
Nigeria and performed by consultant eye surgeon, Mr B. R. Kumar, with whom RMS UK
has had an established professional relationship.
RMS Nigeria therefore already facilitates surgical operations in the UK for Nigerian based
patients and is aware of the growing market for high quality surgical services. More
importantly, RMS Nigeria already has surgical experts with who m it has conducted
engagements with over the past 10 years – these expert surgeons have consistently
expressed a readiness to come to Nigeria to undertake the surgeries contemplated in this
business plan. Hence Dr K. Choji will be initially be engaged to perform the UAE surgeries
at the ALC Facility in collaboration with the local RMS Nigeria medical team whilst Mr. B. R.
Kumar will initially be engaged to perform the eye cataract operations at the ALC Facility in
collaboration with the local RMS Nigeria medical team.
2.3 Current Status and Required Funds
RMS Nigeria has ownership of a new purpose-built medical property – RMS Nigeria will
lease this property to the ALC Facility for an indefinite period with the first 10 years being on
a rent free basis. In order to establish the ALC Facility as a fully functional ambulatory
surgical centre, RMS Nigeria has determined that a minimum equity investment of sum of
USD $1m is required for start-up. Further details are provided in Section 2.4 below.
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2.4 Investor and Management Equity
On the basis of the above, RMS Nigeria is seeking equity investment of a minimum of
USD$1m. A 10% equity interest in the business will be released in exchange for the USD
$1m equity investment sought. The amount of equity interest released will be dependent on
the quantum of equity investment provided – with more equity interest being released as
consideration for increased equity investment. This business plan demonstrates the
commercial viability of the ALC Facility and the financial returns due to the equity investor(s).
The minimum $1m equity investment sought will be used for the following:
Item Proposed Use Sum (USD $)
1 Fully equip operating theatre and recovery room $200,000
2 Fully equip dialysis unit to operational level and $175,000
other medical equipment
3 Air-conditioning and ventilation of the facility $100,000
4 All furniture and fitting $75,000
5 Working Capital $250,000
6 Leasing and furnishing A3C Facility in City Center $100,000
7 Ambulances and other establishment costs $100,000
$1,000,000
Total
Where equity investment in excess of USD $1m is provided, RMS Nigeria will invest this in
the purchase of additional diagnostic and clinical equipment for the ALC Facility.
In addition to the above, the financial model makes a capital allowance of $50,000 every
year (starting from the second year) and $300,000 every 5th year for the purchase of new
medical equipment that may be needed to augment the ambulatory surgical services or for
specialised surgical equipment at the ALC Facility – this amounts to a total of an additional
$700,000 for new equipment over a 10 year period. These capital funds are financed directly
from operational cash flow and do not require external borrowing or equity investor cash
injection. Where additional funds beyond these capital allowances are required, then such
additional funds will be raised either through a cash call from the shareholders or through
special lease finance arrangements.
The investor will receive a seat on the board of directors and will receive a strong recurring
stream of dividends ommencing at the end of the first year of revenue generation
operations.
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Upon the drawdown of the full amount of the USD$1m equity investment sought, RMS
Nigeria will release 10% of the equity interest and retain ownership of the balance of equity
interest in the business.
2.5 Equity Investment Valuation
The link between the equity investment and the equity interest released has been carefully
calibrated by RMS Nigeria to provide an equitable ownership to the investor. The following
matters have been considered:
(a) RMS Nigeria has ownership of a purpose built property;
(b) RMS Nigeria will lease the purpose built infrastructure to the venture indefinitely thus
ensuring that the ALC Facility will always be based at this site – this lease will be rent
free for the first 10 years of commercial operation. Given that the assessable annual rent
for such infrastructure in Abuja is in the region of USD$100,000 per annum, this
represents a value contribution by RMS Nigeria of USD$1m over the initial 10 year
period;
(c) RMS Nigeria also places a financial value on the following:
• The entrepreneurial initiative arising from the ownership of the idea (this project is
the brainchild of Resuscitate Medical Services (RMS) Nigeria Limited);
• The intellectual capital resident in the business;
• The goodwill to the business by virtue of a patient base of Nigerian patients who
currently access treatment in the UK through RMS UK
• The operator role of RMS Nigeria delivered in partnership with RMS UK
Based on the above, RMS Nigeria values the ALC Facility on a conservative basis in the
region of USD$12m – an equity contribution of USD$1m will therefore represent an 8.3%
value in the business. RMS Nigeria is willing to adopt a more favourable valuation rationale
by offering 10% equity release for an equity investment of USD$1m – thereby providing a
value benefit to the equity investor.
As stated in this business plan, the value of equity released will depend on the equity
investment offered. The above demonstrates that there is a strong investment rationale
underpinning the equity value released. RMS Nigeria is prepared to engage in discussions
and negotiations once the value of equity investment is known.
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2.6 Investment Appraisal
An appraisal of the investment opportunity has been undertaken through the development of
a comprehensive financial model and the output of the financial model is detailed in Section
7 of this business plan. Both the sales income and the costs of the ALC Facility and the A3C
Facility are addressed in the financial model. A prudent approach has been adopted in the
development of the financial model in that a conservative approach has been taken to sales
general whilst a more robust approach is taken towards costs and expenses assessment.
Key financial outputs of the model are detailed below. Please note that returns to the equity
investor will depend on equity investment provided and the amount of equity interest
released. A 10% equity release (based on USD$1m equity investment) is adopted within the
financial model:
(a) 10 year income of USD$68.5m based on conservative sales assumptions;
(b) 98% of annual free cash designated for distribution to reward shareholders;
(c) Over USD$1.35m of dividends for equity investor in the first 5 years;
(d) Payback of USD$1m equity investment within 3 - 4 years;
(e) Profit margin over 10 year timeframe modeled is 49.5%;
(f) 10 year dividend income to equity investor is USD$3.4m based on USD$1m equity
investment.
The investment case for this opportunity is STRONG.
RMS Nigeria is able to make the financial model available to potential investors who are
intent on engagement and negotiation for scrutiny and assessment following the execution
of a Non Disclosure Agreement.
2.7 Cashflow Analysis
The trading environment in Nigeria is predominantly cash based. Patients will be required to
pay for their treatment before the treatment. It is not intended to offer credit facilities. Based
on the sales and costs projects, the business is expect to become cash positive in trading
terms in the second quarter of operations. This is based on a very conservatively modeled
uptake of the services by patients in the first quarter of operations – whilst having the
business fully equipped and staffed. The pre-operational marketing exercise (detailed in
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Section 4 of this document) is expected to yield patronage in excess of the income
assumptions in the financial model.
A sum of $250,000 has been assumed as working capital to cover this period of negative
cash flow during this first quarter of commercial operation and this sum provides a 50%
buffer to the maximum negative cash position (modeled at approximately $122,000) prior to
trading cash positive.
2.8 Investment Structure
A special purpose vehicle called RMS Abuja London Clinic (RMS ALC) will be established
for the purpose of the investment structure. Upon drawdown of the entire equity funding,
RMS Nigeria will release equity in RMS ALC to the equity investor dependent on the equity
investment provided. RMS Nigeria will retain the balance of the equity interest of RMS ALC.
A Shareholders Agreement will be agreed and executed between RMS Nigeria and the
equity investor which will regulate the shareholding relationship between the parties as well
as the provision of the equity funding. It is expected that the shareholding of RMS Nigeria
and those of the equity investor in RMS ALC will be of equal rank and it is not intended to
have preference shares.
2.9 Consideration of Other Financing Options
The options for debt financing have been considered. However, RMS Nigeria believes that
equity investment rather than debt financing is in the best long term interest of the business.
RMS Nigeria believes that there will be a need to be operationally agile to respond to new
opportunity at any time – something which the terms of any debt may hinder. It is also felt
that the cost of credit will destroy value that could otherwise accrue to the benefit of the ALC
Facility or the equity investors. On balance of consideration, the judgment is that equity
investment is the best route forward for this opportunity but debt financing will also be
considered.
2.10 Business Expansion
The proposed business is being established with significant opportunity for expansion in
mind. This expansion is anticipated in 3 possible areas:
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(a) The volume of surgical operations assumed in the financial model amounts to a theatre
occupancy rate of just under 75%. Accordingly, there is sufficient capacity to increase
the number of surgical operations to expand the business. Please see Section 3.5;
(b) The services identified in this business plan represent the initial offering at the ALC
Facility. RMS Nigeria has the strategic intent to introduce additional procedures once the
ALC Facility is established as a credible ambulatory healthcare services provider – such
additional procedures are contained in Section 3.5;
(c) The ASC model is predicated on having small, flexible and highly profitable ASC
operational centers that are replicable rather than setting up large facilities. Accordingly,
RMS Nigeria has a strategic intent to establish similar franchised operations in other
large cities in Nigeria such as Lagos and Port Harcourt. RMS Nigeria will offer the equity
investor the first opportunity to invest in any new proposed franchises before the making
such investment opportunity open to the wider market.
2.11 Medical Licensing
Licensing by the Federal Ministry of Health will be required to operate the ALC Facility. The
application has already been lodged with the Federal Ministry of Health. An inspection of the
completed facility remains the outstanding part of the application process and the grant of
the licence is expected once the inspection is conducted by the Federal Ministry of Health.
Dr Ojeikere is registered to practice medicine in Nigeria by the Nigerian Medical and Dental
Council (NMDC). Temporary or provisional registration with NMDC will be secured for the
expatriate contract surgeons who will be undertaking the ambulatory surgeries at the ALC
Facility.
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3.0 Surgery Services
What is an Ambulatory Surgery Center?
An Ambulatory Surgery Centre (ASC) is a modern healthcare facility focused on providing
and specialising in same-day surgical care to outpatients, including diagnostic and
preventive procedures. ASCs do not offer emergency care. Patients treated in the ASCs do
not require admission to a hospital and are generally well enough to go home after the
procedure.
ASCs provide a more convenient alternative to hospital-based outpatient procedures and
the track record of ASCs in the United States of America demonstrates that a strong track
record of quality care and positive patient outcomes has been established.
Since their inception in the USA over 40 years ago, ASCs have demonstrated an
exceptional ability to improve quality and customer service while simultaneously reducing
costs. As at 2003, there were over 3,700 ASCs in the United States compared with 275 in
1980.
3.1 The Abuja London Clinic, Gwagwalada
There are no ASCs in Nigeria.
The ALC Facility will be the first Ambulatory Surgery Centre in Nigeria. By setting up this
ASC, RMS Nigeria intends to tap into a massive gap in the market that is evidenced by:
(a) The evidence already provided in Section 2.2 of this business plan in respect of the
operation already facilitated by RMS Nigeria in the UK for Nigerian medical tourists;
(b) The scale of overseas medical tourism being undertaken by Nigerians where people fly
out to India and western European destinations for medical procedures. In a recent
article in The Economist, it is documented that The Organising Committee of the
Nigerian Centenary Charity Ball has calculated that Nigerians spend around N250bn
(USD $1.6bn) a year on medical treatment abroad;
(c) There is a high interest from overseas businesses to attract Nigerians seeking high-
quality healthcare not accessible within the country. This is demonstrated by the placing
of advertisements in local Nigerian newspapers by foreign medical institutions offering
package sums (including flights and accommodation) for medical procedures abroad;
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The ALC Facility will be located in Gwagwalada, Abuja, which is about 10 – 15 minutes drive
away from the Abuja International airport. This location is advantageous for the following
reasons:
(a) The ALC Facility is expected to attract patients from the entire country (following a
marketing programme) and subsequently also from along the West African coast.
Accordingly, a location in close proximity to the airport is advantageous;
(b) Gwagwalada offers a calmer environment than the City Center which will be more
conducive to patient well-being upon arrival at the ALC Facility for procedures;
The ALC Facility at Gwagwalada will comprise the following as a minimum:
(a) 1 fully equipped operating theatre – this state of the art operating theatre will be
equipped to highest western standards with proven and reliable equipment. This theatre
will be equipped to undertake all types of ambulatory surgery procedures contemplated;
(b) I recovery room with two recovery beds – for immediate post-operation care;
(c) 6 private wards – for those patients whose surgical procedure necessitates an overnight
stay for observation;
(d) A fully equipped Renal Dialysis unit with 2 private dialysis rooms;
(e) An out-patients area comprising 2 consulting rooms and 1 treatment room;
(f) Administrative block comprising 3 offices, a meeting room and 3 sleep-in rooms for
doctors.
Construction has already commenced on the site. RMS Nigeria was heavily involved in the
architectural design work undertaken in order to ensure that the knowledge of ambulatory
surgical centers was applied to ensure that the operating requirements of ambulatory
services were fully considered and incorporated into the design philosophy and outcome.
In addition, RMS Nigeria will establish a consultation and assessment Clinic – Abuja City
Centre Consulting Clinic (A3C Facility) in the centre of Abuja – this will be a support facility
to the ALC Facility. The premises for the A3C Facility will be rented or leased and will
comprise 2 consulting rooms and 1 treatment room. The bulk of the staffing will be from the
ALC Facility at Gwagwalada. The location in the city centre will provide easy access for
people residing in Abuja city. The A3C Facility will provide out-patient services, wellness
clinic and antenatal clinics. Also, patients can be assessed and prepared for surgical
procedures to be performed at ALC Facility in Gwagwalada.
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3.2 Services to be provided at the ALC Facility
The long term operations strategy is to offer a widening range of surgical services over time.
However, to start off, the ALC Facility will offer 3 categories of services. These are services
that have been researched and are found to be most in demand within the Nigerian
environment. These 3 categories are:
(a) Renal Dialysis;
(b) Surgical Procedures.
(c) Out-patient services
The provision of Renal Dialysis service will be on a full time basis. The primary source of
revenue for the ALC Facility will come from ambulatory surgical services performed onsite.
3.2.1 Renal Dialysis
Renal Dialysis is a highly sought-after medical service in Nigeria due to the damage to
kidneys caused by the high incidence of high blood pressure among the populace. The ALC
Facility will have 2 Dialysis suites fully equipped to the highest modern standards.
The provision of the Dialysis service will be overseen by a visiting specialist Nephrologist.
3.2.2 Surgical Procedures
The following procedures will be initially offered at the ALC Facility:
(a) Treatment of Fibroids;
(b) Eye surgery for the removal of cataracts;
(c) Breast enhancement cosmetic surgery;
(d) Gynaecological procedures.
Further details are provided below.
19
Treatment of Fibroids
Fibroids are benign growths in the uterus or uterine wall ranging in size from 1cm to 30cm.
For thousands of women affected by fibroids, the choice has been stark – live with the
extreme pain and discomfort, or undergo invasive major surgery. Statistically, fibroids occur
in 70% of African women of child-bearing age. Women with fibroids have routinely been
given two surgical procedure choices namely either a hysterectomy (removal of the womb)
or a myomectomy which involves removal of the growth through a surgical incision in the
womb. Both choices have implications for future pregnancies.
In the past 10 years, a new procedure has been developed called the Uterine Artery
Embolisation (UAE) – this is a viable alternative to a hysterectomy or a myomectomy. UAE
is performed by a radiologist and it works by blocking the blood vessels that supply blood to
the fibroids, causing them to shrink. During the procedure, a chemical is injected through a
small tube (catheter) which is guided by X-Ray through a blood vessel in the leg. The UAE
procedure is conducted under local anesthetic. In-patient residency for 24 to 36 hours will be
required after the procedure.
The ALC Facility will be equipped and will engage the services of an interventional
radiologist to undertake fibroid removal using the UAE process. Dr Kyoshi Choji, consultant
interventionist radiologist has already confirmed his readiness to be engaged on a contract
basis to attend the ALC Facility and undertake operations in collaboration with the local
RMS Nigeria medical team.
Eye Surgery – Removal of Cataracts
According to a survey of blindness and low vision initiated by the Federal Ministry of Health
and conducted by Sightsavers, a medical charity, almost half a million people aged 40 and
above are in immediate need of cataract surgery in order to save eyesight. The survey
highlighted certain other facts:
• Over 3million adults are visually impaired;
• 42 out of every 1000 adults aged 40 and above are blind;
• 2 out of every 3 Nigerians are blind from avoidable caused such as cataracts which is
the single commonest cause of blindness
20
Cataract operations are already conducted in Nigeria. However there are insufficient
facilities and inadequate expertise as clinical outcomes are generally unsatisfactory.
Significantly, an increasing number of the population is travelling to Europe and India to
undergo this surgical procedure. The ALC Facility will be equipped and staffed by an
experienced team who would work with highly trained and experienced specialist coming in
periodically to undertake surgical procedures involving the removal of cataracts and other
eye operations.
Schematic of Lens Implantation
Mr. B. R. Kumar, a UK based experienced consultant eye surgeon has already confirmed
his readiness to be engaged on a contract basis to attend the ALC Facility and undertake
eye surgery operations in collaboration with the local RMS Nigeria medical team.
Breast Enhancement Cosmetic Surgery
There are two factors that have led to the increase in demand for breast enhancement
surgery – these are the increased detection rate of breast cancer resulting in the conduct of
surgical treatment procedures such as mastectomies, and secondly, the increased
economic and financial means that has led to the desire for young and middle aged women
to seek breast enlargement surgical procedures.
The ALC Facility will be equipped to conduct either autologous breast reconstruction
procedures or procedures requiring enhancement through the use of implants. It is intended
that it will be possible to undertake digital scanning and image development to produce
21
three-dimensional digital computer images of what tissue and blood vessels are best used in
the autologous reconstruction procedure.
The ALC Facility will be equipped with all necessary equipment to undertake breast
reconstructive or enhancement surgical procedures. We will engage the services of
experienced expatriate surgeons who will work with the local RMS Nigeria medical team to
provide the associated diagnosis, surgery and treatment.
3.3 Services to be provided at the Abuja City Center Clinic (A3C Facility)
In addition to the ALC Facility at Gwagwalada, RMS Nigeria will establish a Clinic in Abuja
City Centre Clinic (A3C Facility). This will provide easy access to the people who reside in
Abuja City. The A3C Facility will be equipped to undertake:
(a) Assessment of patients for surgical procedures;
(b) Blood and other samples collection for laboratory investigations;
(c) Pregnancy ultrasound scans and general scans for other internal checks;
(d) Sexual health;
(e) General wellness checks and examinations specific to gender or specific age groups –
similar to examinations undertaken by BUPA in the United Kingdom;
(f) Corporate and Occupational Health;
(g) Antenatal care;
The A3C Facility will structure the nature of wellness and wellbeing checks along the lines of
those provided by BUPA in the United Kingdom. Hence there will be structured tests to cater
for different demographic profiles e.g. men over 50 years and women over 50 years, young
22
adults, middle aged adults. Hence the wellness assessments will look to check the typical
ailments associated with such age groups – for instance, the wellness check will include
prostate checks for men over 50 years of age.
The clinical management and support staff based at Gwagwalada will also be responsible
for providing the bulk of the services at the A3C Clinic as well.
3.4 Services Delivery Strategy
Ambulatory Surgical Centers generally operate on a low fixed cost model basis. This will be
replicated at the ALC Facility in the following manner:
(a) It is not intended to have full time surgeons at the ALC Facility;
(b) 2 full time doctors with surgical experience will be employed and are provided for in the
financial model. They will generally be based at the A3C Facility in the City Center but
will be required to attend to any matters at the ALC Facility where the need arises or if
business expansion demands such. In particular, these doctors will be present at the
ALC Facility on a rotational basis whenever expatriate surgeons are present and
conducting operations at the ALC Facility in order to undergo “on the job training” as part
of their skills enhancement programme (see Section 6.8);
(c) We will engage the services of surgeons who will undertake the surgical procedures on
a contract basis. The ALC Facility will schedule specific types of surgeries for a set
period – hence, as an example, it is intended that there will be up to 20 eye cataract
operations scheduled over a 2 – 3 week period and there will be a number of these 2 – 3
weeks periods over any calendar year. Once patients have been confirmed for that
period, the surgeon will be flown into Abuja from the UK or India to undertake the
surgery. Once all the surgeries are completed and the patient recovery period is over,
the surgeon’s contract will end and they will depart the country back to their bases.
Expert surgeons for the UAE procedure (Dr Choji) and for eye surgery procedures (Mr.
B. R. Kumar) have already confirmed their readiness to be engaged on a contract basis
to travel to Abuja to perform surgeries in collaboration with the local RMS Nigeria team.
Where expert surgeons of other disciplines are required, these will be sourced by RMS
23
UK from United Kingdom or India where RMS UK will utilise its database which contains
over 1000 doctors, surgeons and medical experts of different disciplines. RMS UK has
established relationships with such experts over the past 10 years. The above strategy
has the significant advantage of keeping fixed costs low.
In addition to this, RMS Nigeria intends to forge and develop a technical partnership with
a hospital (to be identified and selected) in India from which experts surgeons and
consultants can be soured in the future. This will have the distinct advantage of providing
better cost value when compared with experts sourced from the United Kingdom. The
Head of Clinical and Medical Board will have oversight of this partnership to ensure that
the quality of the surgical service offering at the ALC Facility is not diminished.
(d) RMS Nigeria will provide oversight and expertise (both operational and clinical) into the
establishment and operation of the ALC Facility and the A3C Facility. In addition, RMS
Nigeria will employ 3 senior managers who will have responsibility for management of
the entire business operation. Further detail of this is provided in Section 6 of this
business plan.
A pre-operational assessment will be undertaken for every patient. Accordingly, where there
is any surgical treatment or process that is beyond the capacity of the ALC Facility, such
patient will be referred to main hospitals for treatment following such assessment.
3.5 Possible Business Expansion
There is scope for expansion of activities in 4 ways:
(a) Increase on theatre occupancy rates - The table below shows the occupancy rates of the
operating theatre currently assumed for the financial model:
Eye Cataract Approx Av. Fin Model Capacity in 1 Occupancy
Fibroid Embolisation Surgery Duration Assumption week period
Breast Surgery 67%
Gynaecology Surgery 45mins 40 60 67%
60mins 40 60 83%
Totals 90mins 40 48 83%
120mins 40 48 74%
160 216
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Assumptions
1. For cataract surgery, this takes 45 min on average (source www.nhs.co.uk). This means
that it is possible to undertake up to 10 operations in a day which amounts to 60 possible
in a 6 day week;
2. For fibroid embolisation, this takes approximately 1 hour (source www.nhs.co.uk). This
means that it is possible to undertake up to 10 operations a day which amounts to 48
possible operations in a 6 day week;
3. For breast augmentation, this takes 1 – 2 hours (source www.fda.org). This means that it
is possible to conduct up to 8 operations a day which amounts to 48 possible operations
in a 6 day week;
4. The above logic is assumed for gynaecological surgery analysis.
The above demonstrates that there is upside room in the theatre occupancy inventory for
more operations to be undertaken in support of business expansion.
(b) Extension of Surgical service offering – The surgical services at the ALC Facility
described in this Section 3 is intended to be the initial surgical service offerings by RMS
Nigeria. They are considered those that are in particularly high demand in Nigeria and
can be delivered within the estimated start-up capital contemplated by RMS Nigeria. As
the reputation of the ALC Facility becomes established when initial these surgical
operations are in a steady state mode, RMS Nigeria intends to increase the scope of
surgical offering that will be available at the ALC Facility to include but not limited to:
• Endoscopy operations;
• Laparoscopy operations;
• Diagnostic procedures for prostate cancer;
• Diagnostic procedures for cervical cancer.
(c) Expansion by replicable franchising – The ambulatory surgery center is based on having
small infrastructure facilities rather than large ones – this enables operators to be
nimble, agile, highly profitable and replicable by the operators. Accordingly, it is RMS
Nigeria’s intention to explore and establish similar ambulatory surgery centers in major
cities such as Lagos and Port-Harcourt. Once the ALC Facility is securely established as
a reputable ambulatory surgery center, RMS Nigeria will give consideration to the
establishment of similar franchises in other parts of Nigeria. Any such expansion
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franchise set-up such that there is a transfer of knowledge and capability to sustain the
quality of healthcare delivery but such franchise will be operated on a commercial arms-
length basis to ensure that each unit remains highly profitable commercial centre of
excellence with full visibility of financial performance. RMS Nigeria will offer the equity
investor(s) for the ALC Facility the first opportunity to be equity investors in any
subsequent franchises established before such opportunity is made available to the
wider market;
(d) Extension of Infrastructure – If the demand of services grows to the point where a
physical extension of the ALC Facility is required through the construction of another
operating theatre, then this will be considered in direct consultation with the equity
investor.
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4.0 Strategic and Market Analysis and the Investment Case
4.1 Economic Outlook
Nigeria is generally regarded as a middle income nation with a mixed economy and
emerging market, particularly with expanding financial service, communication and
entertainment sectors. With an estimated population of 160 million, its Gross Domestic
Product in 2012 is estimated at $451bn USD (£300bn GBP) – this GDP level having
doubled from approximately $220m in 2000. The growth in GDP has corresponded with the
exponential increase in the earning and spending capacity of the middle class population in
the nation – with a significant increase in the desire for imported goods e.g. cars, electronics
as well as services. In addition, there has been an increase in the access to overseas
markets on a personal and wholesale basis with significant number of Nigeria’s middle
classes travelling abroad to purchase products and services across the educational, fashion,
electronic, healthcare and automotive spectrum to name a few.
Paradoxically, the healthcare sector in Nigeria has failed to keep pace with the scale of the
increasing population as well as the scope of the healthcare needs and demands of the
general population as well as the heightened purchasing capability of the burgeoning middle
class and affluent elite. Such people have increasingly resorted to measures such as taking
out health insurance with European based firms, such as BUPA and undertaking health
tourism to European destination (where such Nigerians are willing to pay significant sums of
money for certain standard procedures). More recently, health tourism focus has switched to
India s it has been shown that European standard healthcare delivery can be purchased at a
fraction of the price that would have been paid in Europe. In October 2013, the Economist
conservatively estimated that Nigerians spend over $1.2bn annually on medical tourism.
International healthcare operators have seized upon this gap in the market in a number of
ways. As an example, private hospitals in India now advertise their services and rates in
local Nigerian newspapers. American entrepreneurs have set up local businesses which
make all arrangements for medical tourism for the benefit of the intending patient.
It is against this background and the opportunity presented by this gap in the market that
RMS Nigeria has set out to establish the Abuja London Clinic with the aim of providing high
quality. The strategic intent is as follows:
27
(a) Utilise local knowledge of the environment to locate and establish the facility in an
appropriate area;
(b) Provide a well-equipped medical facility focused on specific clinical procedures;
(c) Provide highly qualified foreign trained medical staff working in collaboration with
their Nigerian counterparts to provide surgical and diagnostic services.
This Business Plan sets out the detail in respect of the above.
4.2 Competitive Analysis and Investment Case
The desire for good health and general wellbeing is universal. Every human being desires
good health and will be prepared to spend as much as he can afford to obtain the highest
standards of medical care that his funds can acquire. In an increasingly health-conscious
environment such Nigeria and particularly with the burgeoning economic power of the
middle class and elite, the demand for high quality healthcare is strong and continues to
grow – this is evidenced by the increase in medical tourism being played out by within the
population.
A critical analysis of this opportunity as well as a competitive analysis using Porter’s 5 forces
Model:
4.2.1 Competitive Analysis using Porter’s 5 Forces Model
The Porters Five forces analysis tool is a framework for industry analysis and business
strategy development and it is used to assess and determine the competitiveness and
hence the attractiveness or profitability of a market. It enables a firm (potential entrants or
current participant in a market) to assess its competitive positioning vis-à-vis the other
players.
Michael Porter, a renowned strategist identified five forces that determine the level of
competition and underlying profit opportunities. These are:
(a) The extent and nature of competitive rivalry;
(b) The threat of substitutes;
(c) Ease of new entry into the market;
(d) The power of buyers;
(e) The power of suppliers.
28
Three of these forces refer to competition from external sources whilst the remainder arises
from internal threats. Porter referred to these forces as the micro environment in that they
consist of those forces close to a company that can affect its ability to serve its customers
and make the desired profit.
The five forces are graphically represented below:
Bargaining Bargaining
Power of Power of
Suppliers Buyers
Nature of
Competitive
Rivalry
Threat of Threat of
New Substitute
Entrants Products
Analysis
In undertaking the competitive analysis, due cognisance is taken of the fact that the service
offering at the ALC Facility will not be commoditised. The service offering will be
differentiated on the basis of a specialist medical offering provided by experts optimised by a
highly equipped medical environment resulting in a high quality of service offered.
29
(a) Threat of New Entrants – It is generally recognised that newcomers to an industry often
enter the competitive fray with aggressive strategies focused on achieving a high market
share or with substantial leveraging of resources. The seriousness of the threat
presented by such new entrants to established players depends on the height of entry
barriers. In the case of the offering at ALC Facility, the nature of ambulatory surgery
services being offered and the provision of expert expatriates has raised the bar of entry.
This market sector is not one that can be easily replicated or penetrated unless a
comparable level of medical expertise and service offering is developed. Furthermore,
the area of clinical medical services is highly regulated by the medical profession and by
Government oversight which will further limit the possibility of new entrants. This
analysis therefore concludes that the treat of new entrants is LOW due to the height of
the entry barriers;
(b) Threat of Substitutes – This relates to the provision of substitute products or services
performing a similar function or satisfying the same needs as the offering of RMS Nigeria
at the ALC Facility. A further critical component of this threat is the issue of the buyer
propensity to substitute. In the case of the offering at ALC Facility, the provision of
substitute products will be limited as very few organisations will be able to provide the
breadth of ambulatory surgery services described in Section 3 of this document. Even
Government hospitals will not be able to offer such services. With regard to the buyer
propensity to substitute, such propensity will be low given the innate human desire for
good health and long life. Accordingly, it is believed that once established, the ALC
Facility range and provision of ambulatory surgery services will be difficult to replicate
and that buyer propensity to substitute will be very limited. This analysis therefore
concludes that the threat of substitutes is LOW.
30
(c) The Bargaining Power of Suppliers – The key suppliers to the ALC Facility will be
highly trained surgeons, doctors and nurses who will conduct the ambulatory surgeries
at the Clinic. RMS Nigeria will be able to source such staff from RMS UK’s wide
database of staff using its well established network, thus removing the possibility of
shortages or suppliers holding ALC Facility to ransom. Also, the nature of the specialist
services means that the likelihood of the suppliers switching their services to competitive
firms is low as there will be limited competitors. This analysis therefore concludes that
the bargaining power or pressure that the suppliers can exert on ALC Facility is LOW;
(d) Bargaining Power of Buyers – The buyers will be the customer base that will pay for
the ambulatory surgical services. Whilst noting the willingness of Nigerians to spend
whatever is necessary for good health, it is recognised that the strategic offering at the
ALC Facility must be priced such that it portrays the delivery of quality ambulatory
surgical services whilst making it attractive for those who would otherwise have travelled
abroad for similar treatment. It is recognised that that there will be a medium to high
propensity to switch to or remain with overseas medical tourism destinations. The
extensive population base within the country who cannot afford overseas medical
tourism however will remain an effective counterbalance. This analysis therefore
concludes that the bargaining power of buyers is LOW to MEDIUM;
(e) Intensity of Competitive Rivalry – The nature of ambulatory surgical services to be
provided by the ALC Facility will be specialist and highly differentiated. Accordingly,
there will be limited rivals. It is therefore unlikely that there will be promotional battles or
price competition from other medical services providers. In any event, the ALC Facility
will have the necessary strategic competence (through its potential for capital investment
and access to specialist medical expertise) to innovate through the widening of the
scope of ambulatory surgical services services as well as the provision of new
ambulatory services. This analysis therefore concludes that the intensity of competitive
rivalry is LOW.
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Porters 5 Forces Summary
The provision of good quality ambulatory surgical services by overseas trained specialist
consultants, doctors and nurses within a well-equipped ambulatory surgical centre is a
differentiated offering that cannot easily be replicated or commoditised. The Porter’s 5
Forces model analysis demonstrates that the establishment of the ALC Facility within an
environment where there is existing and proven demand for such service will not suffer any
significant competitive pressure that will threaten the viability and profitability of the venture.
The overall competitive threat is deemed to be LOW and the range of ambulatory surgery
services offering presents the ALC Facility with a strategic positioning that is best placed to
gain and secure significant market share and thereby tap into the burgeoning medical
tourism industry and is unlikely to be surpassed within the domestic environment.
Investment Case Summary
The Service
The ambulatory surgery services offering at the ALC Facility is unique, detailed, and most
importantly, there is an existing demand for high ambulatory surgical services.
Paradoxically, the market (i.e. the populace) is generally willing to pay whatever is
necessary to obtain and receive such high quality services. The nature and scope of the
services that will be offered at the ALC Facility are targeted and clearly defined.
The Market
There is an established and growing market both in terms of the demographic quantum and
also in terms of the economic and financial capacity of the market set. This is evidenced
both by the increasing amount of money being spent by individuals on medical tourism
abroad as well as the growing volume of advertisements being placed in local Nigerian
publications (newspapers, journals, periodicals) by overseas based medical institutions
providing details of medical services offered as well as their prices. There is a proven and
ready market for the ambulatory surgery services that will be provided at the ALC Facility.
The above summaries on market and service, when taken together with competitive analysis
previously undertaken demonstrate that there is a STRONG investment case. RMS Nigeria
is therefore convinced on the basis of the analysis undertaken in this section that the
provision of the services at the ALC Facility represents an excellent investment opportunity
for the willing and discerning investor.
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5.0 Marketing Plan
The ALC Facility, as an ambulatory surgery centre, is a new and unique offering into the
Nigerian healthcare market environment. Accordingly, it will be necessary to sensitise and
educate other medical professionals as well as the populace on the characteristics, benefits
and healthcare offering of the ALC Facility. The Marketing Plan for the ALC Facility and the
A3C Facility will therefore be founded on 2 key strands:
(a) Sensitising the medical community i.e. doctors, surgeons, hospitals to the unique
healthcare service offering at the ALC Facility;
(b) Sensitising the members of the public (both corporate entities and individuals) to the
healthcare service offering at the ALC Facility.
Consequently, the key objective of the marketing strategy will be to deliver marketing
initiatives and activities will both be broadcast (advertisements) and narrowcast – through
personal engagement, presentations and meetings with medical and corporate
organisations.
5.1 Marketing Plan
RMS Nigeria has identified and defined its target market as follows:
The target market is:
(a) Individuals who can afford the cost of the ambulatory surgery provided irrespective of
their geographical location;
(b) Individuals who currently travel abroad for surgery;
(c) Individuals who require surgery but do not require the burden of the attendant cost of full
in-patient service at a hospital;
(d) Other medical institutions/practices/professionals who are unable to undertake such
surgeries and need to refer their patients for surgical treatment;
(e) Corporations and business who offer discounted healthcare benefits or insurance to their
staff.
The Marketing Plan is set out below and is based on the 4Ps model of Product, Placing
Price and Promotion.
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Product
Strategically, the ALC Facility will be marketed and positioned as a facility that will provide
ambulatory surgery by western trained surgeons in Nigeria and will cater for all socio-
demographic groupings within the population. Hence, it will not be positioned as a facility for
the political or business elite of the country, but will be positioned as a healthcare delivery
enterprise that is available to all who can afford to pay for the medical services offered.
Furthermore, RMS Nigeria intends to position the ALC Facility as an attractive medical
destination to citizens of other West African Countries. The location of the facility (within a
few minutes drive of the Abuja International Airport) provides an added advantage.
Accordingly, the ALC Facility will be positioned to attract such new market.
Placing
This refers to the unique differentiator.
The unique differentiator is the fact that surgeries will be initially performed by a team of
western trained medical surgeons who will be flown to Abuja working in collaboration with
Nigerian counterparts for the specific purpose of undertaking the operations in a medical
facility equipped to the highest standards. In effect, ALC Facility will replicate the personnel,
equipment and process that are deployed in western ambulatory surgery centres. This key
differentiator will be the platform for placing the ALC Facility healthcare offering in a
premium quality position.
Hence, ALC will position itself as a direct competitor to those foreign enterprises who
advertise in Nigeria or local business who secure local clients for treatment abroad - such
clients ultimately have to pay the equivalent of airfares, accommodation whilst under
treatment in addition to the surgical fees.
34
Price
The marketing plan will communicate the message that the price of the specific operations
at the ALC Facility represents good value to the patient for the quality of the services to be
provided when compared with the prices and costs for overseas health tourism. For
example, RMS UK has facilitated medical tourists from Nigeria to undertake UAE
procedures in the UK at a cost £7,000 (USD $10,500) which is the current market rate. RMS
Nigeria will offer the same procedure by the same consultant at the ALC Facility at a cost of
$4,500 to the patient – this represents a saving of $6,500. In addition, the management of
the ALC Facility will be sensitive to changes in the economic environment and produce price
promotions from time to time.
The pricing policy will be clear – such that clients are given one single all-inclusive price.
There will be no hidden charges. Prices advertised will be that which will be paid by the
intending patient.
Proposed pricing structure for the surgeries is detailed in Section 7.4 of this business plan.
Promotion
Based on the above perspective, RMS Nigeria will deploy a broad based promotional plan to
ensure that the ALC Facility is marketed effectively. The following is planned:
(a) A sum of USD $40,000 is budgeted to be spent on Marketing activities in the period
leading to opening as well as during the first year of operations. At least 50% of this sum
will be spent in the pre-opening period in order to establish market awareness of the
ALC Facility and the remaining will be spent through the year
(b) Beyond the first year, a sum of $25,000 will be spent annually – this sum will increase
annually by 2.5%;
The pre-opening marking activities will be as follows:
(a) Placing of full-page multi-burst colour advertisements in a minimum of 5 national
newspapers of repute – The Guardian, The Punch, Vanguard, This Day and Business
Day;
(b) Placing full page advertisements in Nigerian Medical Journal, which is the journal of the
Nigerian Medical Council;
35
(c) Producing and distributing high quality literature packs to hospitals, medical practices
that will showcase the offering of the ALC Facility;
(d) Producing high-quality flyers that will be distributed in offices, businesses, shops;
(e) Developing an interactive, high-content, high-quality graphic website that will provide
detailed information for prospective patients, such as services, rates, and particularly
when surgeries of any particular nature will be conducted;
(f) Making presentations at medical institutions to doctors and other professionals.
Once the ALC Facility is open, there will be additional and sustained marketing activities
albeit of lower intensity – this will be necessary to maintain an appropriate market presence
among the general public. Such will include:
(a) Maintaining a programme of placing advertisements in key newspapers;
(b) Ensuring that high quality flyers are printed and placed at medical institution, practices
and other doctors and surgeons for circulation and distribution;
(c) Delivering presentations to appropriate audiences;
(d) Sustain relationships with other medical establishments;
(e) Identifying appropriate journals in other West African countries in which to initial
advertising of the ALC Facility.
The management at ALC Facility will conduct regular reviews of its marketing strategy to
ensure that appropriate action is taken to address any change in the economic or
competition environment and to ensure that the ALC Facility is agile enough to respond to
significant changes to its operating environment.
36
6.0 Operations Management and Structure
6.1 Strategic Operational Approach
Effective and efficient management will determine the sustainability of the ALC Facility as a
business enterprise. In its determination to be successful, RMS Nigeria conducted market
research to identify key issues in healthcare delivery, factors leading to failure of private
healthcare operations, factors behind the current penchant for overseas medical tourism.
The findings of this research is summarized below as well as RMS Nigeria’s three-pronged
approach to ensuring that the ALC Facility is established as a sustainable enterprise.
The key issues characterising the Nigerian healthcare environment are:
(a) Clinical and surgical skills gap;
(b) Absence of modern diagnostic and surgical equipment;
(c) Poor infrastructure lacking appropriate ambient environment;
(d) Apathy to investment by the health care authorities.
The factors contributing to the above include but are not limited to inadequate funding by
successive governments and the brain drain of existing skilled physicians to overseas
markets, all of which lead to a loss of confidence in the Nigerian healthcare system by the
population. Research further suggests that even a significant number of private sector
healthcare enterprises soon flounder mainly due to little or no access to investor funds and
inability to maintain desirable surgical skills and clinical environment.
RMS Nigeria has developed a strategic three-pronged approach to establish a profitable and
sustainable ambulatory surgery enterprise. The elements of this approach are:
(a) Ensure that adequate funding is available at all times (either through capital allowances
from proceeds of the business, or shareholder investment or debt financing) to fund all
operational requirements and well as future equipment needs of the ALC Facility;
37
(b) Offer a strong combination of modern equipment and high ambience environment along
with excellent surgical skills. RMS Nigeria will consider establishing lease arrangements
with reputable suppliers who will provide medical equipment and undertake regular
training of staff who will operate such equipment;
(c) Develop a skills (clinical and non-clinical) enhancement model that will ensure that staff
are trained and motivated to deliver the highest standards of clinical and non-clinical
customer service. RMS Nigeria will recruit highly skilled and motivated clinical and non-
clinical staff who will undergo an intensive induction programme delivered by expatriate
surgeons. With specific regard to the clinical staff, RMS Nigeria’s use of expatriate
contract staff (detailed in Section 3.4) is not intended to be long term and these contract
staff will be needed until the RMS Nigeria surgeons are delivering high quality services
that generate confidence in the patients and ALC is known for high standards. These
expatriate surgeons will visit the ALC Facility for the first year or two and during such
periods, there will be extensive “on-the-job” skills training to increase the clinical
capability of the RMS Nigeria surgeons and the RMS Nigeria surgeons and doctors will
work in collaboration with these expatriate surgeons.
Accordingly, RMS Nigeria intends to gradually reduce the engagement of and
dependency on the expatriate contract surgeons as the skills capability of the RMS
Nigeria surgeons increases – the reliance on the expatriate surgeons will be reduced to
a minimal supervisory and operative level which will be enough to ensure that the RMS
Nigeria medical team maintains a level of knowledge and expertise to enable them
provide a service of international standards.
RMS Nigeria is confident that this three-pronged strategy will enable the establishment of a
high quality sustainable healthcare enterprise. The above strategy, when captured within the
38
low fixed cost model of an ambulatory surgery center will enable the delivery of high quality
ambulatory surgery services on a sustainable and profitable basis.
6.2 Operations Overview
Operations at the ALC Facility and the A3C Facility will be managed by RMS Nigeria in a
comprehensive and proactive manner to ensure that the ALC facility remains available for
clinical and surgical procedures on a commercial and profitable basis at all times. The
management approach will be as follows:
(a) Arrangements for day-to-day management of delivery of clinical and surgical services by
ensuring availability of the ALC Facility assets and infrastructure;
(b) Oversight structure through the establishment of 2 management boards and a strategic
corporate Board.
The objective of the management structure that will be established is two-fold:
• Management of medical staff, clinical procedures and processes to ensure satisfactory
surgical and medical outcomes;
• Management of the facilities and clinical asset and to ensure constant operational
serviceability and readiness.
6.3 Day-to-Day Management
The day-to-day management of the ALC Facility and A3C Facility will be undertaken by Dr
Ojeikere acting as the Chief Executive Officer. Dr Ojeikere has extensive experience of
managing medical enterprises from his role on the board of RMS UK and therefore has the
knowledge and experience to undertake this role.
The efficient and effective management of the ALC Facility will be enabled by the following
two factors:
(a) Employment of qualified and experienced management staff;
(b) Installation and optimal utilisation of administrative support systems including patient
databases and modern communication facilities;
39
Experienced and competent individuals will be recruited into the key positions of Finance
Director and heads of the two management boards.
The key strategic competence of the ALC Facility will be the ability to engage the services of
expatriate surgical experts to deliver the healthcare services at the ALC Facility. This strand
of activity will be operated and managed by Dr Ojeikere himself using the significant
knowledge, database of contacts and experience he has built from recruiting medical
experts (of varying disciplines) for the NHS sector in the United Kingdom over 10 years.
Dr Ojeikere regularly commutes between United Kingdom and Abuja to ensure oversight of
the construction process and will increase his presence over time at the ALC Facility. His
medical operation at Milton Keynes is an established and mature operation with experienced
and trusted personnel managing the business which requires less of his presence.
Accordingly, upon establishment of the ALC Facility, Dr Ojeikere will devote majority of his
professional and managerial time and expertise over the next 3 – 5 years to establish the
ALC Facility as a successful ambulatory surgical services delivery centre operating on a
sound commercial and profitable basis.
6.4 Key Individuals and Biographies
Dr Ojeikere and Professor Lynch are key individuals in the establishment of the ALC Facility
as an ambulatory surgery centre. As proprietor, Dr Ojeikere will have strategic oversight
over the operation of the entire business and will be fully responsible for the deployment of
this business plan and the successful commercial operation of the business. Professor C.
Lynch will provide unrivalled clinical expertise and surgical excellence into the provision of
the ambulatory surgical services. Both men bring significant weight of experience, expertise
and professionalism and are personally committed to success of the proposed business.
A summary of their CV and their key roles is provided below:
40
Dr Abidoye Ojeikere
• Qualified from University of Ibadan in 1988 and qualified as a
General Practitioner in 1998 in UK through the Oxford Deanery
• Established RMS (UK) in 2000 and developed reputation as
leading provider of doctors to NHS Trusts. RMS has a database
of over 1000 doctors
• Established The Clinic MK in 2010 – private clinic providing
general medical services and specialist services to patients
employing surgeons, eye specialists, gynaecologists
• Organised and sponsored medical conference in Lagos on
Management of Post Partum Haemorrhage. Responsible for
logistics and accommodation of expert expatriate speakers
• Established ABI Homes in 2008 to provide residential care for
adults with autism employing a team of clinical psychologists,
speech and language therapists and psychiatrists. This business
grew from 1 to 3 residential homes in three years and was
subject of an acquisition in 2012.
Dr Ojeikere is a qualified medical practitioner and has practiced medicine for over 25 years.
An entrepreneur for over 15 years, he is highly skilled and knowledgeable in the
establishment and management of healthcare facilities and recruitment of healthcare
professionals. He is personally financially committed to this business venture and will
provide strong organisational leadership to the ALC Facility.
Professor Christopher B-Lynch
MA (OXON) MBBS (Barts) LRCP MRCS (England) FRCS (ED) FRCOG (UK)
MAE QDR (UK) MCIArB (UK) D.Univ (Honoris Causa) OU 1997
• Qualified from Bart’s Medical College in 1973
• Gained experience working with 4 Knight Bachelors such as Sir
Edward Tucker, former surgeon to Her Majesty the Queen
• Consultant Obstetrician and Gynaecologist in appointed to Oxford
Deanery based at MK General Hospital in 1984
• Personally developed the B-Lynch Brace suture for post partum
haemorrhage – this life saving technique is now applied around
the world
• Introduced keyhole surgery to Milton Keynes hospital
• Currently Consultant Emeritus in recognition of service and
expertise to hospital over 26 years
• Director of The Directorate of Child and Maternal Health and
Genito-Urinary Medicine at Milton Keynes Hospital 2001 - 2002
Professor Lynch is currently an appointed Commissioner for the World Health Organisation
for Women’s Health improvement in Africa – which is an on-going programme. An
experienced clinical director, Professor Lynch will occupy the post of Head of Clinical and
Medical Board at the ALC Facility with responsibility as detailed in the Section 6.5 below.
41
6.5 Oversight Boards
The proposed oversight Boards will be as follows:
Corporate Board
Clinical and Medical Board Facilities Operations Board
The Corporate Board - A Board of Directors will be constituted that will include people with
both clinical and operational expertise and will have corporate oversight of the facility. The
Board will be responsible for matters such as:
• Strategic oversight and direction of the Clinic;
• Profitable and sustainable commercial operation of the Clinic;
• Ensuring optimisation of return on investment to investors and shareholders;
• Capital investment decisions;
• Developing strategic and beneficial relationships and engagements with compatible
suppliers, partners and stakeholders;
• Overall medical and clinical performance of the Clinical
Membership of the Corporate Board will initially be limited to approximately 5 individuals and
will comprise the following:
(a) Dr Ojeikere – Chair and proprietor;
(b) Professor Christopher B Lynch - Head of Clinical and Surgical Services;
(c) Head of Facilities Operations Services;
(d) Representative of the key equity investor(s);
(e) Finance Director;
42
A system of delegation and subordination (with appropriate authority levels) will be put in
place to ensure that there is resilience in the decision making process in the event of
absence (either temporary or long-term absence of key Board Members) and that decisions
made at this Board are executed in a timely manner to ensure the continued effective
operation of the Clinic
The Clinical and Medical Board (CMB) – The CMB will be responsible for day-to-day
clinical and medical delivery at the Clinic. The CMB will be primarily responsible for all
medical staffing (surgical and nursing) and healthcare administration matters as well as all
clinical and surgical practice and procedure at the ALC Facility. The CMB will also have
responsibility for developing proposals for potential new areas of clinical and medical
delivery for consideration by the Corporate Board. The focus of the CMB will be in the
following areas parts:
• Ensure the right quality and quantity of experienced staff (both overseas trained and
local staff) is employed (either on a permanent basis or engaged on a contract basis) to
deliver the surgical services;
• Management of all medical and clinical staff;
• Ensuring the appropriate ambulatory surgery procedures are put in place for consistent
high quality healthcare delivery;
• Reviewing patient outcomes and determining what action is necessary to sustain and
improve the delivery of ambulatory surgery services;
• Ensure the appropriate systems and procedures are in place to enable continued
professional development for medical staff;
• Researching and developing proposals for new areas of ambulatory surgery delivery and
presentation of such proposals to the Corporate Board for approval.
Membership of the CMB will initially be limited to approximately 4 persons and will comprise
the following:
(a) Prof Christopher B Lynch -Head of Clinical and Medical Services – Chair of the Board
(b) Dr Ojeikere – CEO and Proprietor;
(c) Head of Facilities Operations Services;
(d) Finance Director;
43
For each member of the CMB, there will be designated alternates who will be able to attend
meetings and authorized to make contribution and take decisions in the absence of the
named Board member – this will provide the required robustness to the operations and
effectiveness of the Board.
The Facilities Operations Board (FOB) – The FOB will be responsible for the day-to-day
management of general administrative staff, operation of the infrastructure and fabric of the
ALC Facility as well as the performance and effective functioning of all capital assets and
equipment (namely medical assets e.g. diagnostic and theatre equipment, management
assets e.g. computers and systems and logistical assets e.g. vehicles). The FOB will be
responsible to the Corporate Board for ensuring that there are effective asset registers and
assets maintenance place in place and that a comprehensive asset longevity plan is in place
for each major piece of diagnostic and surgical equipment.
In addition, the FOB will have clear and consistent communication channels with the CMB to
ensure that the capital assets are available to enable delivery of clinical and surgical
services. The FOB will operate with the understanding that its raison d’être is to regard the
CMB as its key customer that requires fully functioning assets for performance. The focus of
the FOB will be as follows:
• Ensure that all capital assets are in an operational condition to enable high quality
healthcare delivery;
• Develop annual maintenance budgets that will enable necessary asset management and
maintenance plans to ensure asset availability;
44
• Work closely with the CMB to ensure that adequate research is conducted into proposed
capital asset purchases;
• Employing the necessary administrative and facilities management staff and engage
such facilities management suppliers as is necessary to ensure the ALC Facility’s
infrastructure or assets are always operational;
• Ensure that the fabric of the building and all aspects of the infrastructure of the ALC
Facility is maintained;
Membership of the FOB will initially be limited to approximately 4 persons and will comprise
the following:
(a) Head of Facilities Operation services – Chair of the Board;
(b) Dr Ojeikere – CEO and Proprietor;
(c) Finance Director;
(d) Head of Clinical and Medical Services.
As with the CMB, for each member of the FOB, there will be designated alternates who will
be able to attend meetings and authorized to make contribution and take decisions in the
absence of the named FOB member – this will provide the required resilience to the
decision making process as well as to the operational effectiveness of the FOB.
6.6 Personnel Headcount and Annual Payroll Budget
Forecast personnel headcount over the first five years is as follows:
Senior Management 2015 2016 2017 2018 2019
Staff Doctors 3 3 3 3 3
Nurses 2 2 2 2 2
Administrative Class Staff 4 4 4 4 4
Receptionist Class Staff 4 4 4 4 4
(drivers/security/cleaners) 10 10 10 10 10
Totals 23 23 23 23 23
Please note the following:
(a) The Administrative class staff will include administrative officer, finance officer, etc;
(b) The Receptionist class staff will include receptionists, drivers, security staff, cleaners etc.
RMS Nigeria will be prepared to pay staff a slightly higher remuneration than the average in
order to secure high quality staff and incentivise long stay.
45
The annual payroll budget for the first 5 years as detailed in the financial model is:
Personnel Plan - Yearly 2015 2016 2017 2018 2019
Year $81,667 $86,520 $89,116 $91,789 $94,543
$80,000 $82,400 $84,872 $87,418 $90,041
Senior Management $80,000 $82,400 $84,872 $87,418 $90,041
Staff Doctors (including City Centre Clinic) $19,200 $19,776 $20,369 $20,980 $21,610
Nurses $32,000 $32,960 $33,949 $34,967 $36,016
Administrative (Finance Officer/Drug Dispenser) $292,867 $304,056 $313,178 $322,573 $332,250
Receptionist/Drives/Security/Cleaner
Total 2015 2016 2017 2018 2019
3 3 3 3 3
Numbers of Personnel 2 2 2 2 2
Year 4 4 4 4 4
4 4 4 4 4
Senior Management
Staff Doctors (including City Centre Clinic) 10 10 10 10 10
Nurses 23 23 23 23 23
Administrative (Finance Officer/Drug Dispenser)
Receptionist/Drives/Security/Cleaner
Totals
Please note that the cost of the expatriate contract surgeons is already captured in the “Cost
per Unit” item to be charged for individual surgeries and is therefore not accounted for here
to avoid double-counting – please see Section 7.4 for detailed explanation.
6.7 Annual Operations Budget
The annual operations budget is detailed below. The basis for majority of the costs is also
explained below:
(a) General and Administrative Expense – this includes stationery, subcontract security
expenses and any other incidental expense that will be necessary for the administration
and the security of the two facilities;
46
(b) Marketing Expenses – this sum is for conducting the marketing activities detailed earlier
The marketing budget beyond the forts year is not forecast to be as high as the initial
launch marketing costs;
(c) Medical Board Registration – this relates to any fees that is required to be paid to the
Nigerian Medical Council for licensing or registration of the Clinic;
(d) Insurance costs – these are costs for insuring the facility as well as professional
indemnity insurance;
(e) Accommodation for medical staff – this is the allowance for leasing apartments or hotel
accommodation that will house expatriates surgeons and nurses that are flown in for the
ambulatory surgical operations;
(f) Lease of City Centre Clinic Premises – this is the cost for leasing the premises (2
consulting rooms and 1 treatment room) for the A3C Facility in Abuja city centre;
(g) Maintenance and Medical supplies – this is the provision for maintenance of equipment
as well as the purchase and replenishment of medical supplies such as swabs, syringes,
medication, chemical solutions, etc;
(h) Utilities – this is the provision for fuel and utility supplies. Hence this relates to costs for
fueling the generator, ambulances and paying all utility costs;
(i) Miscellaneous costs – this is a contingency sum to cover any unexpected and
unbudgeted expense.
The annual operating costs for the first 5 years are tabulated below:
Anticipated Yearly Expenses Growth 2015 2016 2017 2018 2019
Year 2.5% $20,000 $20,500 $21,013 $21,538 $22,076
2.5% $40,000 $25,000 $25,625 $26,266 $26,922
General and Administrative 1.0% $2,525
Marketing Expenses 2.5% $2,500 $10,250 $2,550 $2,576 $2,602
Medical Board Registration and Fees 2.5% $10,000 $25,625 $10,506 $10,769 $11,038
Insurance Costs 2.5% $25,000 $25,625 $26,266 $26,922 $27,595
Accommodation for Medical Staff $25,000 $26,266 $26,922 $27,595
Lease of City Centre Clinic Premises 2.5% $51,250
Maintenance + Med Supplies (inc A3C 2.5% $50,000 $76,875 $52,531 $53,845 $55,191
Facility) 2.0% $75,000 $30,750 $78,797 $80,767 $82,786
Utilities (Inc Gen Fuel) 1.0% $30,000 $10,100 $31,519 $32,307 $33,114
Staff Training (Medical & Administrative) $10,000 $278,500 $10,201 $10,303 $10,406
$287,500 $285,273 $292,214 $299,326
Miscellaneous Costs
Totals
The annual growth rate of these costs is also shown within the table.
47
6.8 Staff Training
RMS Nigeria intends that there will be a comprehensive training and skills enhancement
programme both for clinical and non-clinical staff. The clinical staff and surgeons will benefit
from working alongside the expatriate surgeons so that they will get first hand, expert
training and knowledge by being part of the surgical operations conducted by the
expatriates. Similarly, RMS Nigeria will explore options to send such doctors on short trips
abroad (UK or India) to enhance surgical skills or gain specific new knowledge that will be of
benefit to the ALC Facility. This will allow the ALC Facility surgeons to acquire the
knowledge, skills and expertise to provide a service of international standard in due time.
This will reduce medium and long term reliance on expatriate physicians and surgeons.
Non-Clinical staff will be rigorously trained to inculcate the high standards of customer
service ethos alongside training that relates to their jobs.
An allocation has been made in the budget for this training.
6.9 Summary
The overall management structure is as follows:
Corporate Board
Clinical and Medical Board Facilities and Operations
Board
Ambulatory Surgery at Infrastructure and
ALC Facility Operations oversight
Consultations at A3C Accounting and
Facility Finance
Diagnostics and Administrative and
Surgical asset matters Security
Medical personnel Asset maintenance
matters
The above structure is supported by a robust cost and expenses budget to underpin the
efficient and effective management of all clinical and operational activities at both the ALC
Facility and the A3C Facility.
48
7.0 Financial Analysis and Modeling
7.1 Output Summary
All financial analysis has been undertaken using US Dollars.
A 10 year Financial Model has been produced to model the expected financial performance
of ALC Facility and A3C Facility – this Financial Model is available on request. The ALC
Facility produces over 90% of the income. The output of the financial modeling is detailed in
this section with 5 year outputs demonstrated. The key outputs of the financial model are:
(a) 10 year income forecast at USD$68.5m;
(b) Profit margin of 44.1% – 51.6% averaging at 49.5% over 10 years;
(c) 5 year cumulative EBITDA is USD$19.8m;
(d) Payback to equity investor is 3 – 4 years;
(e) 5 year cumulative dividend to equity investor(s) based on 10% equity interest is $1.35m.
(f) 10 year cumulative dividend to equity investor(s) based on 10% equity interest is $3.4m.
Please note that a 10% equity interest is used in the financial model. In actuality, the equity
interest released by RMS Nigeria will depend on amount of equity investment provided;
7.2 Underlying Assumptions
The operation of the business and the development of the Financial Model has a number of
key underlying assumptions which are set out below:
(a) A conservative income growth rate has been assumed;
(b) A robust approach is taken with regards to costs to ensure operational reliability;
(c) Medical equipment is depreciated over 5 years;
(d) 98% of annual Free Cash Flow is available for dividend distribution;
(e) Equity investors will receive a share of dividend declared in line with equity interest;
(f) The business environment will be predominantly cash denominated. Hence, patients will
pay for their surgeries before receiving the surgery. Similarly, RMS Nigeria expects and
intends to settle all operational liabilities immediately through bank transfers or cash
payments. Accordingly, accounts receivable and accounts payable are assumed zero;
As previously stated, the quantum of equity investment provided will determine the amount
of equity interest to be released. For the purposes of the modeling, an equity interest
release of 10% has been assumed
49
7.3 Equity Funding Requirement for Start-Up
RMS Nigeria considers that the minimum equity investment required for start-up is USD$1m
and the proposed use of the equity funds is tabulated below:
Item Use/Projected Expenditure Amount
1 Air-conditioning and ventilation, water $200,000
treatment plant, electrical transformer,
2 leasing A3C Facility location $75,000
3 Fixed Furniture and Equipment $250,000
4 Working Capital $175,000
Medical Equipment including dialysis
5 equipment $200,000
6 Operating Theatre Equipment $50,000
7 Ambulance(s) and operational vehicles $10,000
8 Insurances $2,500
9 Registration with Medical Board $25,000
10 Pre Start-Up Marketing $12,500
Miscellaneous $1,000,000
Total
From the above, a minimum Equity investment of USD $1m is sought. Operations are
planned to commence in Q4 2014.
7.4 5 Year Annual Sales Projection
The annual sales of the business is built up by applying estimated volume of operations to
the unit charge rates. A conservative approach has been taken to the sales revenue
generation. Key assumptions made are as follows:
(a) Sales are built up during the first year. For instance, there are no sales in the first 3
months (other than Renal Dialysis) and the sales are gradually built up from there;
(b) Annual sales growth is as follows – for the ALC Facility, an initial 12% growth rate is
assumed in Year 2. This drops to 10% in the next 2 years and this growth rate drops
eventually to 6% as the business becomes more established. An initial 8% growth rate is
assumed for the A3C Facility falling to 5% after 4 years..
ALC Facility
The unit rates for the surgical services at the ALC Facility are as follows:
Surgery Type Cost per Unit Profit per Item Total Revenue
per Item
Breast Surgery $1,000 $3,500 $4,500
Fibroid Embolisation $1,000 $3,500 $4,500
Renal Dialysis $125 $150
Cataract/Eye Surgery $25 $2,500 $3,000
Gynaecological Surgery $500 $3,000 $4,000
$1,000
50
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