a basic analysis to check external factors affecting or may affect the company
PEST Analysis for HCG
Political factors
• Tax policy- The tax charged is very volatile (this may also be due to deferred tax assets and liabilities) for the entire hospital industry. For example- tax rates for HCG were -56%(minus) in 2015, 3% in 2021 and 56% in 2022.
• There is a particular number of patients (lower class/government patients) which the hospital has to treat/operate, if failing to do so will be fined.
• There is a cap on prices on certain surgeries done by the hospital, prices above those cannot be charged.
Economic factors
• Inflation- When there is high inflation in the country people tend to spend less as cost of everything has been elevated. People tend to wait out till prices come back to normalcy although there is not too much impact on the topline of the hospitals as people who need to carry out emergency surgeries will still do so.
• Foreign exchange rates- Forex rates impact the topline of the hospital to the extent of the revenues collected from international patients. Sometimes this may have a positive and sometimes a negative impact on the bottomline.
Social factors
• Previously cancer was more commonly found in older people but now the cancer tide is rising amongst the youngsters.
Main causes of cancer are smoking, radiation and obesity.
People under peer pressure or stress smoke cigarettes, another reason is youngsters spend most of their time on laptops and phones and just exposing themselves to that radiation also there is a lack of movement or exercise in this generation which is causing them to become obese. All these factors summing up are acting as the perfect trigger for hospitals like HCG to increase their profits sustainably for the foreseeable future.
Technological factors
• R&D Activity- HCG is not only into the hospital business but also does extensive research and development in the field of oncology to find more cheaper and efficient methods to do surgeries/treat cancer. HCG spends around 5% of its topline on these activities.
• Automation- HCG has the more advanced, cheaper and efficient technology (for eg- DA VINCI) than its major competitors like Apollo and Fortis.
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