Healthcare Industry Witnessing Major Transition Ever
Industry analysts are expecting some important trends to arrive, which would change the face of healthcare delivery in times to come. The sunrise industry has witnessed foray of corporate players, international accreditations, reverse brain drain, world-class infrastructure and the era of responsive care in the last one decade. Common man has seen paradigm shift in various service sectors like aviation, hospitality, entertainment and telecom. This has brought in international standards, price war, quality services, and various options for individuals. In healthcare, insurance companies, medical tourism, preventive healthcare, BPOs, telemedicine, health information technology, consulting services, laboratory and diagnostic services, and medical devices industry, all these should expect good business opportunities in the near future.
Demand And Supply
As per the CII-Mckinsey Industry Analysis Report, demand is expected to outstrip supply over the next decade. Almost 80,000 additional hospital beds will be required every year for the next three to four years to adequately meet growing healthcare demands. The government, traditionally the largest healthcare provider, is now under pressure to meet evolving and rising demands for healthcare services across the country.
The healthcare industry’s size is estimated at USD 20 billion and can increase to USD 60 billion by 2010. The report predicts it will grow at a rate of 13 per cent annually, which will enable healthcare providers to secure a return of 15-20 per cent on their capital employed. This demand-supply interaction has created conditions for increasing private/voluntary sector participation in healthcare delivery.
Key Business Drivers
Gone are the days when healthcare used to be perceived as quasi-social responsibility, it is a profit-making business venture in itself now. Consumer demands, consumer awareness, thrust for quality and value for money, changing disease pattern, changing socio-economic profile and lifestyle patterns, demand for quality healthcare, corporatisation, increasing penetration of private health insurance, foreign alliances, IT in healthcare are few business drivers that have resulted in restructuring of Indian healthcare.
Early Transition Effects
Customer outlook:* Indian economy is growing at a rate of seven per cent, which has resulted in more cash flow in the hands of Indian customers. Increasing purchasing power and available options of delivery have made patients very impatient. These days, impatient patient demands augmented services besides just getting quality core product/services.
Payment model: ‘Cash and Carry’ model of payment is slowly taking a backseat and ‘third party payment’ is gaining importance. Third party payment facilitates cashless transaction by giving credit facility. Cashless facility for the insured person means he can just walk into a network provider of his preference for the cashless hospitalisation.
Standardisation of pricing: The fragmented nature of healthcare sector in India makes pricing very critical, since it varies widely depending on the provider and the location. As per classification of city and grading of hospitals, insurance companies are classifying hospital packages into standardised slabs. TPAs are pursuing this scheme of standardisation, but providers have not welcomed this initiative of IRDA or insurance companies.
From in-patient care to daycare: Growing health consciousness among middle and high-income families in India, together with technology growth in healthcare has shifted focus from inpatient treatment to outpatient/daycare treatment.
Accreditation and use of IT: The accreditation and use of IT is slowly but steadily coming to an age. Factors like increasing competition, entry of private insurance, and expanding clientele market to the tertiary zone of international boundaries are driving these trends. Most of the big hospital chains have already identified these needs and are in the process of automating their services. Indian flagship hospitals like Wockhardt and Apollo won accreditation from Joint Commission International in the last few months and many more are in queue.
Business Opportunities
Health insurance and TPA: Integrated healthcare business model, which is prevalent in developed countries, is beginning to make roads in our country. According to estimates, more than 80 per cent of the expenditure on healthcare is out of pocket in India. Approximately, three per cent of country’s population is covered by insurance of some form or other. India’s strong middle class can afford insurance. Expected growth in health insurance is around 13 per cent per annum. The increasingly affluent and strong middle-class population of 100 million is demanding and willing to pay for higher standards of healthcare. With the growing insurance market, we have seen growth in the TPA’s business as well. There are over 20 licensed TPAs. According to provisions of IRDA, every regional office of the insurance company has to appoint TPAs to take care of policy holders for cashless services.
Medical Tourism
CII-McKinsey study shows that at its current pace of growth, healthcare tourism alone can rake in over USD 2 billion as additional revenue by 2012. India offers world-class healthcare that costs substantially less than that of developed countries. For instance, heart surgery costs USD 30,000 in the US and just USD 8,000 in India, using the same technology delivered by competent specialists attaining similar success rates. Medical tourism in India has evolved at a great pace and the Indian sub-continent attracts patients from SouthEast Asia, Africa, Middle East, the UK and the US.
Preventive Healthcare
Growing health consciousness among middle and high-income families in India is heralding a new business opportunity – preventive healthcare. This has shifted focus from in-patient treatment to a regular preventive health check. Corporate companies offer annual health check for their employees; insurance companies conduct pre-insurance policy check; and self paid health checks also give out a potential business opportunity.
Healthcare BPO
The global healthcare industry is increasingly under pressure due to regulations and the need for cutting costs, which warrants huge potential for Indian IT companies to tap this market. We can capitalise on the BPO opportunities, existing at least in the more advanced sectors of healthcare such as imaging, disease management and claims processing.
Telemedicine: Tele-consultation and remote-patient-monitoring is taking a big leap in India to integrate fragmented healthcare industry. Technology of treating patients while the patient and doctor are geographically distant is best suited for Indian healthcare scenario, where cost and accessibility of quality care for a section of society is still a big question.
Healthcare IT: The health informatics market in India is on the verge of a rapid growth phase. Corporate hospitals and big trust hospitals have realised the need to transform themselves into paperless and film-less environment. Increasing competition, both global and local, with the entry of corporate hospitals and international ventures will be one aspect of fueling this segment. Application of information technology in healthcare will restructure the whole system with standardised workflows, medical record maintenance, real time patient monitoring, remote patient monitoring, decision support, knowledge management for patient and physicians, tracking of equipment and supplies, cost-effective patient transaction, patient education, and improved decision support for the management.
Laboratory and diagnostic services: India is becoming a competitive outsourcing destination for high-end laboratory and diagnostic testing. Dr Lal’s Pathlabs, Metropolis Health Services, SRL Ranbaxy are few of the diagnostics chains catering to the high-end services for hospitals in the UK, the US and West Asia. It is very cost effective for them to outsource these investigations to Indian providers, which is almost 70-80 per cent less expensive than the US laboratories.
Medical devices: The medical equipment market is the direct beneficiary of the boom in healthcare industry. Cardiology equipment accounts 20 per cent of total market followed by imaging systems, which constitutes about 15 per cent of total market. Driving forces are new investments in super-specialty hospitals and diagnostic centres, competition, existing setup upgrading their equipment, favourable government policies such as a reduction in import duties on medical equipment, expanding market boundaries etc.
The emerging industry structure is headed towards providing healthcare services as an integrated comprehensive package rather than the traditional concept of providing healthcare infrastructure and reactive medical care. Recession free industry is estimated to grow at a rate of 13 per cent per annum, which offers sufficient incentives for new players. With globalisation spreading its wings, we have seen national boundaries getting shorter day by day and with accreditations coming in, Indian healthcare is emerging as a ‘Global Doctor’.
The author is a Healthcare Consultant with Infosys Technologies, Pune.
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