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Cutting non-medical cost at an Indian hospital group
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
A private hospital group with twelve hospitals in India must cut INR 40 crore a year of cost without hurting patient care. Where would you find it?
Format note: Candidate-led: you build the cost tree and ask for the size of each bucket; the interviewer answers and pushes back.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: Which costs are in scope?
Answer: Non-medical costs only. Doctors and nurses are out of scope, and patient safety must not suffer.
If asked: Is the target yearly, and by when?
Answer: INR 40 crore a year (1 crore is 10 million), fully in place within 18 months.
If asked: How many hospitals, and do they buy together today?
Answer: Twelve hospitals, and each buys its own supplies.
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
Twelve hospitals buying separately usually pay different prices for the same items, so my hypothesis is that purchasing is the biggest lever, with shared back-office services second.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Non-medical cost buckets, sized, against the INR 40 crore targetThis comes from total cost = the sum of the cost buckets, with patient care kept out of reach; savings are added up against the INR 40 crore target.
- Key: Consumables and supplies: price and specification
- Non-clinical staff: shared services for billing, HR, and IT
- Facilities: energy and service contracts
- Protected: doctors, nurses, patient safety
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Size the target
What a strong candidate does: Candidate: "How big is the non-medical cost base?" Interviewer: "About INR 500 crore a year: consumables and supplies 250, non-clinical staff 180, facilities 70." Candidate: "So the target is 8 percent of it."
Target as a share of non-medical cost (%): 40 ÷ (250 + 180 + 70) × 100 = 8
Step 2: Consumables: pay less
What a strong candidate does: Candidate: "Do the hospitals pay different prices for the same items?" Interviewer: "Yes. Buying as one group could cut prices by about 6 percent."
Group purchasing saving (INR crore): 250 × 0.06 = 15
Step 3: Consumables: specify smarter
What a strong candidate does: Candidate: "Could the doctors agree on fewer versions of common items, such as gloves and catheters?" Interviewer: "A clinical committee thinks about 4 percent is possible without any effect on care."
Standardization saving (INR crore): 250 × 0.04 = 10
Step 4: Facilities
What a strong candidate does: Interviewer: "Energy audits and new service contracts could save about 10 percent."
Facilities saving (INR crore): 70 × 0.1 = 7
Step 5: Non-clinical staff
What a strong candidate does: Interviewer: "Nurses are our biggest cost. Should we look at them after all?" Candidate: "You put clinical staff out of scope, and I agree with that: nurses drive patient safety and revenue, so I would protect them. For billing, HR, and IT, one shared center for all twelve hospitals could save about 5 percent through natural turnover rather than layoffs."
Shared-services saving (INR crore): 180 × 0.05 = 9
Step 6: Add it up
What a strong candidate does: The four levers together, against the target of 40.
Total saving (INR crore a year): 250 × 0.06 + 250 × 0.04 + 70 × 0.1 + 180 × 0.05 = 41
Step 7: One-time cost
What a strong candidate does: Interviewer: "The shared center needs about INR 12 crore of new IT." Candidate: "That pays back in about 16 months from its own savings."
Payback on shared services (years): 12 ÷ (180 × 0.05) = 1.33
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
The group can save about INR 41 crore a year, just above the target, without touching clinical staff. First, consumables are half the non-medical cost, and buying as one group plus standardizing common items gives INR 25 crore, more than half the target. Second, a shared center for billing, HR, and IT saves about INR 9 crore and pays back its INR 12 crore of IT in about 16 months. Third, energy and service contracts add about INR 7 crore with little risk. Start with group purchasing, which needs no investment, and have every specification change approved by the clinical committee.
Risks a strong answer names: Doctors may resist standard items they did not choose; Suppliers may cut service levels when prices fall; The shared center may disrupt billing during the move.
Next steps: Compare prices for the 100 highest-spend items across the twelve hospitals; Set up a clinical committee to approve standard items; Plan the shared center in two waves, billing first.
Strong versus weak
A strong answer
Sized the cost base first, protected clinical staff with a clear reason, built four levers that add up to the target, and counted the one-time cost.
A weak answer
Proposed cutting nursing staff by 5 percent because it is the largest cost line, which risks patient safety and revenue.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?
Total
0 out of 25
Score all five criteria to see the band and the feedback template.