Development plan

DEVELOPMENT PLAN For the years 2014-2018 Republic of Armenia Yerevan, H. Nersisyan 19 Phone: (37410)242024 Yerevan Nov 2013

Introduction “IZMIRLIAN” Medical Center Closed Joint Stock Company (“IMC”) is recognized medical center in Armenia that operates under the shelter of Mother See Holy Etchmiadzin and with support of Izmirlian Foundation. This development plan for IMC is developed by the management of the IMC and is presented to approval of its sole shareholder, Mother See Holy Etchmiadzin. The Medical Center annually conducts about 3,500 surgeries, 8,000 patients gets diagnosis and laboratory analysis. IMC provides inter-hospital and out-hospital medical services as well as implements research, educational and social projects. Since 2008 the IMC commenced and in Sept 2013 completed capital renovation of existing building and construction of new building of the Medical Center. Now it is proposed to acquire modern medical equipment and instruments, introduce and develop modern medical methods, and develop Patient-center system. This development plan includes measures to implement goals for year 2014-2018 as well as their financial results. Dr. Armen Muradyan Executive Director “IZMIRLIAN” Medical Center CJSC 3

Content Page: Development Plan Goals 4 2. Izmirlian Medical Center 9 3. Medical Services 10 4. Marketing Strategy 12 5. SWOT analysis 15 6. Human Resource Development 17 7. Capital Investments 19 8. Financial Results 21 9. Annexes 23

Development Plan Goals IMC vision is to provide quality and safe treatment to each patient through becoming Patient-centered medical center. Highlighting Quality, Affordability, Accessibility and other principals established by the World Health Organization-ի (WHO)1, IMC development plan benchmarks to establish JCI compatible system, and pursues to get JCI accreditation, as well as continues to implement research, educational and social projects. 1 World Health Organization, To ensure quality and safety of medical services Total Quality Management will be introduces. TQM requires development of those consecutive systems: 1. Introduction of quality system, 2. Assessment of quality system, 3. Management of quality system, 4. Monitoring of quality system: The quality system covers the period from patient entrance to and exit from the Medical Center. It includes development and introduction of system focused on patient unique demands including: Medical procedures based on Standard Operating Procedures (SOPs)2 Management of treatments, Documentation, Assessment of provided service. The assessment of reasonableness of measures, including justification of significant financial investments, is done based on the following five basic benchmarks: ”Patient-centered”– ensuring medical services, treatment and compassion toward each patient demand; Social responsibility –as a medical center under shelter of Mother See Holy Etchmiadzin; International recognition – a medical center that pursues obtaining JCI Accreditation; Financial feasibility – to promote increase and quality of medical services which would result to financial sustainability. Professional and scientific development, innovation – trainings, development scientific and research works, introduction of international best practices in our country, professional development of medical staff. To assess implementation of the goals, we plan to develop and introduce Information System that will collect and analyze the patients satisfaction over medical care provided based on reliable indicators. Such data would enable to review progress and affectivity of implemented projects, promptly and adequately respond to challenges and barriers, as well as will assist to develop further strategy and measures. In developing the assessment system we will specially consider development and maintenance of the following values at IMC: Quality – possible advance diagnostics, prevention and medical care; Affordability – though advance quality medical care requires significant costs, IMC will implement project to provide needed medical care to less creditworthy people in Armenia; Accessibility – our services shall be accessible to all people that need our medical services; Compassion– acting through empathy, understanding and kindness toward patients; Respect– human dignity, human rights and honor for the individual, and in demonstrating courtesy for the feelings and circumstances of other; Teamwork – teamwork and collaboration to achieve more effective and successful results; Financial transparency– excluding any payments or gifts from patients except those recorded by accounting. Also, IMC planning gradually to introduce and develop telemedicine that enables to obtain very required medical consultation and direct support up to performing remote surgeries in various phases of medical care. The development plan is prepared based on international medical best practices. Especially we emphasize the importance of International accreditation that provides clear benchmarks to become an international level medical center. The most recognized international accreditation organization that defines such requirements is Joint Commission International3. Its issued Joint Commission International Accreditation Joint Commission International, <http://www.jointcommissioninternational.org/> Standards for Hospitals provides those requirements that need to improve to obtain this accreditation. Advantages of JCI Accreditation include: Increase of public confidence in the organization that is concerned with patient safety and quality of provided services, Creation of safe and efficient working environment, which increases the satisfaction of health care providers, Provision of a chance to use quality indicators at the negotiation stages with different sources of financing, Establishment of an atmosphere, where medical errors and complications documented transparently and timely serve to the learning process. Quality and patient safety at all levels are becoming priority. Enables to become “Open-Medical Center”. Description of JCI accreditation as well as needed measures to be taken for JCI accreditation is presented in Annex 1. Though we do not anticipate obtaining JCI accreditation in this Development Plan, however we pursue measures to achieve the accreditation for the next strategic plan. “Open Medical Center” system that we consider to introduce after completion of this development plan will enable the experience recognized external doctors that accept IMC procedures, principals and financial terms to perform their surgeries at IMC. This system will be mutually beneficial: The doctor will use IMC modern medical premises, diagnostic equipment, surgery departments, and systems ensuring quality and safety; while IMC will utilize it resources, will promote its recognition among professional and society, and will get financial gains. Currently there are significant achievements for implementing the Development plan, particularly: Renovation of Medical Center building by Izmirlian Foundation and Mother See Holy Etchmiadzin; High recognition of the society over the IMC medical service quality that is gained over 30 years of operation: more than 120 thousand surgeries and 200 thousand patients; The professional staff of IMC that have recognition in Armenian and abroad. The most important goals for the further development are following: Development of Patient-centered system: as IMC vital culture and approach of all staff; Sustaining management and medical staff, promoting quality and compassion; Introduction of methods to promote continuous medical education; Development of scientific and research capabilities; Acquire and introduce modern equipment, especially emphasizing non-invasive surgery and radiology, and other modern diagnostic methods; Development of cooperation with international medical organizations and clinics, ministry of healthcare, and other organizations; Ensuring financial stability; Increasing efficiency in all layers of operations; Improve image and recognition of Izmirlian Medical Center among the population and in the region.

The Development Plan will be implemented in phases in following sequence: 1. Development of diagnostic capabilities, including radiology, and introduction of Information system: years 2014-2015; 2. Establishing and development of Emergency service: year 2015; 3. Introduction and development of modern Nursery system: year 2016; 4. Introduction of modern innovative equipment and methods, development of telemedicine: years 2016-2017; 5. Introduction of Patient-centered system: years 2016-2018. Successful implementation of this Development Plan will: Have significant achievement in medical care improvement in our country for the benefit of the population that can get modern medical treatment in our country saving considerable resources and time; Increase impact of Mother See Holy Etchmiadzin and Izmirlian Foundation toward healthcare in Armenia; Create financial sustainability; Make IMC as leading medical center in Armenia and in the region Develop modern equipment and methods skillful professional staff; Ensure efficient management of the Medical Center and Patient-centered culture; Enable to pursue JCI accreditation in short-period; Enable to introduce “Open Medical Center” system. “Izmirlian” Medical Center “Izmirlian” Medical Center Closed Joint Stock Company (“IMC”) is legal successor of renamed “Saint Nerses Mets” Scientific-Medical Center CJSC. All shares of the IMC belong to Mother See Holy Etchmiadzin. IMC is multi-profile medical center that employs experienced and highly qualified medical professionals. Annually about 3,500 surgeries are conducted and 8,000 patients get diagnostic and laboratory analysis. IMC represents as scientific-educational center for State Medical University of Yerevan, National Healthcare Institute and N 1 medical basic collage. Since 2008 the renovation and construction of IMC premises are commenced. The renovation was completed in Oct 2013, and in 15th the official reopening was held with participation of the President of Armenia: Serj Sargsyan, Catholicos of All Armenians: His Holiness Karekin II, and Mr. and Mrs. Tigran and Helena Izmirlian, as well as other officials and professionals. With support of Izmirlian Foundation and Mrs. Luis Simon Manukian, 12 million dollar project was implemented which enabled the renovation of the hospital and building new premise (Annex 9). New equipment and instruments were acquired. The organogram of IMC is attached in Annex 2. 10

Health Care Services The following departments are available at the Izmirlian Medical Center currently: Urology, General Proctology Coloproctology General and Laparoscopic Surgery, Orthopedics and Sports Traumatology Otorhinolaryngology (ENT) Consultation and Diagnosis Laboratory Anesthesiology, Intensive Care Unit and Operating Room The list of doctors employed at IMC is attached in Annex 3. The doctors are experienced and recognized in Armenia. Nineteen of all the doctors working at Izmirlian MC have doctoral degrees, and the average professional experience of all physicians is 30 years. Departments are closely collaborating with the recognised doctors from diaspora. Particularly: The department of Urology is collaborating with Dr. Garo Terdzakian M.D., Director of the Renal Transplantation Program at Western Medical Center, Santa Ana, California, USA. Orthopedics and Sports Traumatology department is collaborating with Dr. Francois S. Antounian, MD, who works at the Department of Orthopedic Surgery at San Rafael Medical Center (Kaiser Permanente), San Rafael, California. General Surgery Department is collaborating with Dr. Khachatur Badalyan, Senior Researcher at the N. N. Blokhin Cancer Research Center, Russian Academy of Medical Sciences, Moscow, Russian Federation. Taking into consideration the existing needs for the provision of health care services and the tendency towards the Joint Commission International (JCI) requirements we highlight the importance of the following developments in the provision of health care services and methods: Development of contemporary methods of diagnosis, including Radiology and Pathomorphology – starting from the year 2014, Non-invasive4 surgery development – starting from the year 2014, Establishment of telemedicine – starting from the year 2014, Non-invasive surgery prevents from blood loose and contact with internal organs and tissue. 11 Establishment of ambulance services – starting from the year 2015, Contemporary nursing system establishment – starting from the year 2016, that will become leading health care services not only in Armenia, but also in the region. For that purposes we foresee creation and development of the following departments and services which is also important for the expansion of the list of provided services at Izmirlian Medical Center and is highly demanded.

Departments: Ophthalmology, Gynecology, Vascular surgery.

Services: Pathomorphology , Stomatology, Endoscopy, Cardiology, Inpatient care, Radiology. Prioritizing the needs for the proposed services intended to quality, JCI accreditation and/or for business purposes, as well as the investment schedule is presented in Appendix 4. Current achievements of the departments and services along with the planned departments and services, as well as development major objectives are presented in the Appendix 5. The main capacities and goals of the Telemedicine are presented in the Appendix 6. 12

Marketing Strategy For developing effective market strategy the following were considered: Actual and expected numbers of the patients and prices of the medical services, SWOT analysis, Competition from other medical centers and clinics, Demand for medical services and peculiarities of the sector. The marketing strategy was developed in order to effectively increase the medical services of IMC. The major goals of the marketing strategy are: Recognition and advancement of Izmirlian MC brand among Armenian population and in the region, particularly: To announce the society of new brand in the healthcare sector: Izmirlian Medical Center; Continuous measures for market development, through employing adequately qualified and capable marketing specialist, who: will perform periodical monitoring over effectiveness of marketing initiatives taken; will develop and introduce more flexible and directed marketing initiatives; will perform periodical market research, and will recommend marketing initiative based on market research results. Medical services (Product/Service) IMC provides inter-hospital and out-hospital medical treatment. It includes Diagnosis and medical treatment; Drugs subscription, Follow up regarding effectiveness of the treatment. Information of Medical Services, including those that are projected, is presented in the chapter: “Medical Services”.

Place The Medical Center is located in Yerevan; hence the vast majority of the treatments will be conducted in Yerevan. In accordance to data of Ministry of Healthcare of the Republic of Armenia5: 68% of the patients of medical centers are from Yerevan, and only 32% are from regions. However, as the Accessibility is one of the principals of the IMC, we make visit to the regions, thus the regions’ populations is also access our medical services. Healthcare resources and data, <http://www.moh.am/?section=static_pages/index&id=237&subID=29> In addition, through introduction and development of the telemedicine, our high quality medical treatment will be accessible at remote regions of Armenia. Patient list of IMC will include: 13 Medium and high creditworthy patients of Armenia; Our national living abroad, who can get international advance level treatment in Armenia, including those related to equipment, skills of doctors and conditions of premises; thus combining treatment with visit to homeland (medical tourism); Other creditworthy patients in the region; Many high creditworthy people in Armenia spend considerable amounts to get medical treatment at abroad; while they can get such treatment in Armenia; People having medical insurance in Armenia; currently initiatives are taken to cooperate with institutions that have large number of people, particularly with: – Ministry of Defense of the Republic of Armenia, – Republic of Armenia Police, – Ministry of Emergency Situations of the Republic of Armenia. Actual number of patients per IMC medical departments during 2012-2013 as well as projected numbers, including those related to projected medical departments and services, are presented in Annex

7.Price IMC does not pursue price competition with providers of similar treatments. Patients are willing to pay premium for IMC treatment quality, recognition of doctors, condition of premises and equipment. People health is one of the most values, so IMC will not pursue price advantage by sacrificing the quality of treatment. Actual price of medical services per IMC medical departments during 2012-2013 as well as projected prices, including those related to projected medical departments and services, are presented in Annex

8. Market Promotion Our patient is our most important asset. We will continue to develop IMC activity through increase our patients’ satisfaction. This would result their recommendations to others to consider our services (word of mouth advertising): In addition, these organized and directed initiatives will attract more patients: Develop cooperation with insurance organizations; Develop cooperation with Emergency service; Cooperating with various sport federations and international organizations (esp., related to Orthopedic and sport traumatology services); Advertisement of services provide and promotion of IMC image through TV, Radio and Internet; particularly: “Shoghakat” TV, web-sites and newspapers related to healthcare; Marketing initiatives at social sites, e.g. Facebook; Market promotion events, e.g.: – Open doors days, e.g. April 7: international day for healthcare, – Benevolent visits to regions, – Conducting seminars and open lectures; – Seminars and surgeries conducted by recognized doctors invited by IMC; – Discount services during the religious holidays; – Free treatment of financially poor people. To inform the society of successful cases of complex or emergent cases; Communicate and present new premises, new equipment and methods; Participating in popular TV shows, clarifications by IMC doctors, presentation of IMC capabilities, experience and achievements; particularly: – “Don’t damage” show at “Shant” TV; – “Healthcare” show at ATV TV. Informing the society of the international trainings attended by IMC medical staff; Publishing scientific articles by IMC doctors; conducting professional research and communicating to the society; Introducing patient loyalty and extended payment schemes; External advertisement boards. Differentiation IMC will differentiate itself from the competition through: Patient-centered system, Recognition and experience of medical staff, due care toward patients; Quality of medical services, innovation and modern methods; Ensuring quality, esp. for after-surgery period; Transparency of medical history; Condition of premises and modern equipment.

SWՕT analysis Strengths Leadership and support of Mother See Holy Etchmiadzin; Significant support of Izmirlian Foundation; Recognition of IMC doctors; Devotion and professionalism of IMC staff; High image of IMC quality among society; Modernization of IMC premises; Management determination to Patient-centered medical service; Leading position on Urological and Proctologic services in Armenia; Patients form Georgia and Russia.

Weaknesses Highly depreciated and outdated medical equipment and instruments; Higher prices over some competitors; Low volumes requested by government, insurance organization and emergency service; Higher reimbursement to medical staff offered by some competitors in the form of percentage of revenue; The scope of medical service is lower to that of some other medical centers in Armenia; Insufficient number of high level medical staff, as well as lower number of doctors and nurses in Armenia6; 6 RoA Healthcare Minstry; Statistics; Annual data; <http://www.moh.am/?section=static_pages/index&id=237&subID=29>

Opportunities Increase of health-tourism in Armenia; Improvement of financial situation of population in Armenia; Introduction of mandatory medical insurance in Armenia (the draft law is in the process of discussions, and it is possible that the law could be accepted in year 2015); this could lead to increase of number of patients and increase in price of government subsidies treatments; Increase in number of patients due to acquisition of new equipment; Obtaining JCI accreditation, that would enhance image of the Medical Center not only in Armenia, but also in the world, and will result to significant increase in number of patients, attracting best doctors and professionals; Recruiting recognized doctors from other medical centers.

Threats Introduction of medical insurance in Armenia could result to price decrease up to 20% for many medical services, because the insurance companies detect their price policy; Decreasing number and worsening financial situation of the population in Armenia; IMC recognized doctors leaving to other medical centers (head hunting); Price damping by competing medical centers as well as employing non-fair competition techniques by them; Insufficient financial flows.

Human Resource Development The most valued resource of IMC is Human Resource. The management determined toward development and innovation, recognized doctors, experienced and adhering to Hippocratic Oath medical staff, as well supporting staff together create Patient-centered culture. Each staff member has unique values, capabilities, development potential and interest. IMC management is determined to create adequate environment and support to develop their unique capabilities, which will enable their professional development for the benefit of IMC. Recruiting, maintain and developing human resources is based on the following strategy: Professional trainings: for managerial and doctors, particularly: Periodical training of management at international best clinics, e.g. Cleveland Clinic 7, which is one of the leading medical training center in the world; Doctors trainings at USA Mayo Clinic, and other recognized clinics in Italy, France, Germany and Russia; Doctors participation on annual conferences at USA and Europe; Education and training of nurses. 7Clevland Clinic, <http://my.clevelandclinic.org/education/default.aspx> Involvement in scientific research: clinical research, international membership, publications in impact magazines. The following measures will be taken in this regard: Activation of scientific and research works at Saint Nerses Mets research center;; Activation of medical chairs; Organizing professional discussions and seminars at renovated lecture rooms. Reasonable and promoting reimbursement: Appling reasonable and promoting effective and devoted work reimbursement system based on job specification: The reimbursement of management and doctors are based on their job specifications and approach accepted in health industry. To promote medical service volumes and quality, some doctors and nurses reimbursement directly related to revenue of that department, which improved the teamwork and Patient-centered system. The actual percentage system that is calculated from the revenue of that department as well as projection of those for the coming years is presented at Annex 10. Managerial, administrative and other medical staff mostly gets fixed salary. The salary cost and projection of those staff is presented in Annex 11. Comfortable, supporting and safe environment work IMC is currently renovated, and now it is one of the comfortable and modern furniture medical centers. Promoting teamwork and team events; Empathy and consideration toward each staff demands and capabilities; Training events with nurses regarding to service quality. Every staff shall recognize challenges related to patient treatment, show due care and courtesy toward them. Effective system for human resource recruitment, work evaluation and promotion Develop and introduce effective work annual evaluation system, that will include: Granting certificates, valuable gifts or bonuses to best staff in various departments; Promoting best staff regarding to Patient-centered approach, while punishing undesired behavior; Justified and effective system for professional or organizational promotion, changes in salary or reimbursement percentages. Promote and support development of internal human resources through: Development of medical education; Enhancing skills with support of IMC recognized doctors; Possibility to get trainings at international recognized clinics; Attracting young doctors, supporting their professional advancement;; Experience doctors coaching young doctors. Currently IMC employs 200 staff. We expect increasing by 40% reaching to 280. The increase is primary due to: Increase in new medical departments and services, Increase in medical service quality, Maintaining hygiene of newly renovated medical center, Recruiting needed management staff, Increase in other services. The number of staff per departments and projection for the coming five years is attached at Annex 12.