This article was first published in the June 2019 International edition of Accounting and Business magazine.

Accounting knowledge combined with entrepreneurial skills is a classic blend known for its ability to boost any business. For Ajith Tudawe, chairman of Ceylon Hospitals, the combination has been the catalyst for a remarkable growth story at the Sri Lankan healthcare group. Much of the organisation’s success, according to Tudawe, stems from his belief in the power of strategic management – and a culture of performance improvement.

Nearly 30 years after becoming head of the healthcare provider, he is still passionate about the business. He is excited about its Vision 2022 strategy, which, he says, ‘will change the entire landscape of the healthcare institution’.

So why has the business been such a success? ‘Employing strategies which differentiate us from the competition and focusing on core competencies have been key,’ he explains.

Vision 2022 is the latest in a string of strategies. ‘We started our first roadmap when I walked in as a young corporate director with entrepreneurial ambitions and an accounting background, and now we are working on our fifth.’

A generation of growth

When that entrepreneur became chairman in 1990 the hospital had a turnover of LKR8m (US$200,000 at the 1990 exchange rate) and a profit before tax of LKR1.3m (US$32,500). The figures for the 2017/18 financial year are LKR6bn (US$34.5m) and LKR600m (US$3.4m).

The company’s main medical facility, Durdans Hospital, may be the oldest private medical institution in Sri Lanka – it was set up as a British military hospital during the Second World War – but it has not become stuck in its ways. It is a pioneer in private healthcare delivery in a country where the sector has grown significantly over the past 20 years, with investment in infrastructure and concomitant development of medical professionals. The private sector now provides 10% of in-patient care and 50% of out-patient care in Sri Lanka.

Tudawe says: ‘It eases the strain on the heavily burdened state healthcare sector, which has long waiting lists for surgeries and treatments that cannot be reasonably managed by public hospitals at their existing capacity. It also ensures those who can afford healthcare get it to the highest standards, and significantly reduces the percentage of locals seeking treatment abroad, particularly in relation to complex surgeries.’

According to Tudawe, Ceylon Hospitals takes ‘calculated risks’, alongside its strategic and contingency planning, and is dedicated to building a good enterprise governance framework. ‘These things did not happen automatically, but with structured planning,’ Tudawe says. ‘When I arrived, the hospital did not have formal planning or decision-making. I started to bring on new thinking, as well as strategic planning and management.’

This planning has enabled Durdans to define its core competencies and start specialising in areas such as cardiology, ophthalmology, orthopaedic, urology, oncology and neurology. Today it operates medical centres and lab networks across Sri Lanka, employing nearly 2,000 people.

Top 100

Durdans is ranked among the country’s top 100 brands, according to Brand Finance, and was the first hospital in Sri Lanka to be awarded the gold seal of approval from global healthcare accreditation body Joint Commission International (JCI), an endorsement it still holds.

That JCI seal of approval speaks to the values of the organisation. ‘Our vision is not only to deliver the best quality healthcare but to change the dynamics of private healthcare delivery,’ says Tudawe. ‘This vision is enriched by our core values of compassionate care for our patients, a spirit of ownership and pride among our employees, and excellence in our service delivery.’

Ceylon Hospitals’ strategic aim is to develop and improve healthcare delivery in Sri Lanka, making private healthcare affordable to the public, increasing its surgical complexity capability and equipping clinicians with state-of-the-art technology.

To deliver Vision 2022, Tudawe and his board track the key strategic and operational areas – medical services, finance, HR, ICT, business development and supply chain. ‘The organisation’s annual business plan includes key performance indicators [KPIs] that drive critical success factors,’ he says. ‘We monitor the KPIs to ensure they are in line with the corporate vision and strategy so that we focus our efforts on areas where improvements are needed.’

Every department head is also given KPIs to achieve together with their team. The idea, says Tudawe, is ‘to enhance employee engagement and ensure everyone works towards our corporate goals’. Bed occupancy rates, customer satisfaction, and utilisation of key medical equipment and operating theatres are among the medical service KPIs.

Tudawe knows success is not given on a platter. He says: ‘It has been a lot of hard work to bring good management practices into the health sector, especially changing people’s mindset.’

To help drive that change, he says he is a firm believer in lifelong learning, continuous training and development, and empowerment.

Rewards for performance

He also likes to incentivise staff. ‘Seven years ago we introduced a performance-driven culture: if you perform, you will be rated higher and rewarded in addition to your normal remuneration.’ It is not a one-way street, though. ‘There are people who are not performing to the expected level,’ he says.

Tudawe also welcomes innovation and change. He keeps up to date with the latest forms of technology and is proud of the increasing digitisation of departments and processes. That has included the adoption of a customer relationship management system, laboratory information system, and online lab reports and health packages, which have led to greater operational efficiency and higher customer satisfaction.

Underperformance is not something that Tudawe could be accused of. He says he is driven by the challenge of achieving continuous improvement and growth, and by the dynamics of the ever changing business landscape of the healthcare industry. ‘I enjoy motivating, mentoring and empowering the senior management team, and seeing the economic entity progress in a sustainable manner,’ he adds.

Career dawn

After studying in the UK, where he gained a degree in accounting, subsequently becoming a professional accountant, he began his career as the director of the family-owned business in the construction sector – Tudawe Brothers – before entering healthcare. Ceylon Hospitals was also a closely held unquoted company, with his father a director and shareholder since the 1960s.

Tudawe displayed a knack for organisation and strategic management from early on and introduced and implemented computerised and streamlined operations and management in the family-owned business (Tudawe Brothers). His father, the late Lawrence Tudawe, had made a very modest investment in a small, privately run hospital in Colombo in 1964. From 1977, while still studying in the UK, Tudawe junior advised his father on the strategic investment value of the institution. In his mid 30s, after his father’s demise, he succeeded him as chairman of Ceylon Hospitals. He gradually applied an M&A strategy as part of a restructuring of the organisation completed in 2002.  

He remarks on how ACCA has positioned itself as a global accounting body, noting that although others are now thinking of following it down the global route, ‘ACCA had a head start’.

As for growing his business, Tudawe thinks the increase in population, prevalence of non-communicable diseases (such as heart disease, cancer and stroke) and rise in middle-income households will drive demand for private health. He sees the challenges as being competition, greater regulation and the rapid pace of technology development.

Colombo Stock Exchange data suggests the average return on equity for a health service provider is 12–14% – modest compared with other sectors. Tudawe thinks this return can be improved on. ‘The steadily increasing demand for private healthcare in Sri Lanka creates extensive opportunities for growth of the organisation,’ he says.

In pursuing these, he believes financial and management discipline and high standards of corporate governance – plus his own management style – will be key. ‘We need to maintain an environment that motivates people and strike a balance between conformance and performance.’

Peter Williams, journalist