People Matters, in association with Technopak, looks into the broad trends in the fast-transforming healthcare landscape and talks to industry leaders about key people-related issues – talent supply, performance management, incentivizing employees for quality and process compliance

The Indian healthcare sector has undergone a radical transformation phase in the last decade and is one of the most promising sunrise industries in terms of revenue, growth and employment. Contributing around 6% to India’s GDP, the sector, which was a US$14.8 billion industry in 2002, is expected to touch US$33.6 billion in 2010 with an estimated CAGR of 15% for the next 15 years. India’s growing population coupled with increasing purchasing power of the middle class and rising awareness about chronic diseases have contributed to this growth. According to a 2008 report by Ernst & Young, India has 0.7 beds per thousand as against a world average of 2.6, which provides a huge untapped potential for healthcare providers. Industry insiders estimate this number to be at 1.5 beds per thousand currently.

The growing contribution of the private sector to the healthcare industry, whose share has grown from 60% to 80% of total expenditure over the last one decade, has further boosted growth. Employment-wise, the healthcare industry is today the second largest employer, first being the education sector, and is expected to employ close to nine million people by 2012.
Amidst all the growth, the sector is also suffering from internal as well as external challenges, the major ones being rising technology and manpower costs, providing affordable treatment, creating requisite infrastructure, using appropriate technology and providing medical facilities available in rural areas. Being an industry still in its nascent stage, the sector can gain from the expertise of its international counterparts.

In its report titled ‘Ten Industry Trends 2010’, leading management consulting firm Technopak outlines top industry trends that will shape the healthcare industry in the coming years.

Trend 1 Transition towards a more sustainable PPP model
Given the success of the Public-Private Partnership (PPP) models in the infrastructure sector with the development of highways, power plants, airports, central and state Governments are now increasingly pursuing the PPP model in order to bridge the gap existing between equity and accessibility in India’s healthcare sector. The PPP model can be successfully implemented for the creation of primary health centers partnering with NGOs, who will take care of operations and the Government funding the cost; District Hospitals in collaboration with technology providers assisting in clinical services and the Government paying annual fixed service payment for delivery of services; multi-speciality hospitals in partnership with organized physician practice groups providing services at subsidized rates to people below the poverty and the Government providing land and infrastructure at concessional rates. The Government has also realized the vitality of PPP models in fighting the spread of epidemics like the H1N1 swine flu and HIV.

While the Government is still to finalize an ideal PPP model that will act as a catalyst for the growth in the sector, it is increasingly assuming the role of an insurer providing a substantial patient base for private providers. At the same time, PPP models need strong political commitment and enabling legislation, clear policy and legal framework, strong oversight and dispute resolution mechanism, careful contract design and defining acceptable rate of return for the private sector.

Trend 2 Emergence of single specialty delivery models
Specialty hospitals are fast emerging in India, signaling a transition towards maturity of the industry with increased complexity of business and better consumer affordability. The main USP of such healthcare centers is their focus on a single specialty or service line. So be it the high-end disciplines such as oncology or neighbourhood specialties such as ophthalmology and day-care surgery, single specialty hospitals are growing in number and sticking to their core strength. While, till recently, these have been stand-alone specialty clinics or hospitals run by doctors, larger corporates are now getting involved in providing the same degree of quality care in multiple locations.

Single specialty hospitals have manifold advantages such as cost efficiency due to higher volumes, higher quality care due to greater specialization, easily attractable human resource, increased consumer satisfaction, competitive pricing and increased choice for the consumer. Speciality hospital formats range from low-risk specialty (including eye care, dermatology, mother and child) to high-end specialty (including cardiology, cancer and transplant medicine). Although currently, most specialty centers are operating in metros and mature markets, there is a huge untapped opportunity to offer such services in tier-II and tier-III cities.

Trend 3 Diagnostic Centers: Unbundling from the traditional setting
The diagnostic market in India, currently pegged at around Rs. 10,000 crore and constituting 4% of the overall healthcare delivery market is poised to grow at a CAGR of 20% and touch Rs. 54,000 crore by 2020, clearly indicating the potential that lies in this segment of healthcare business. Traditionally, diagnostic centers have always been a part of hospitals and physician offices. However, the set-up seems to be evolving with diagnostic centers operating as stand-alone entities and its services pegged to be offered at retail outlets, pharmacies and at home (personal testing).

Diagnostic test results impact more than 70% of healthcare decisions and thus form an essential element in the delivery of healthcare services. The marketplace is currently flooded with several hundred smaller players with a miniscule of organized players whose presence is limited to the metros. Although, good quality diagnostic services are inaccessible in rural areas, there are reasons to believe that the diagnostic marketplace will continue to grow due to growing and ageing population, consumers and insurers increasingly recognizing the value of diagnostics in improving health and reducing the overall cost of healthcare and organized players offering increased access to quality diagnostic services.

Trend 4 Low-cost healthcare delivery models
Healthcare models, more often than not, were hitherto developed primarily for the metro markets. However, it is beginning to become difficult for healthcare providers to sustain such high-cost structures and serve various economic segments of the society as developed healthcare infrastructure and rising competition have reached a saturation level in metros serving only a certain socio-economic segment of the population. A gradual movement toward setting up low-cost healthcare delivery models in Tier-II and Tier-III cities is becoming visible to serve different consumer segments such as lower middle income, urban poor and rural population.
Low capital-intensive models will not only ensure viability of the project, but also expand the healthcare providers’ reach in different geographies and consumer segments. Also, the low-cost models can be designed in such a way so as to have a low cost of operation like purchasing land on the outskirts rather than in the centre of town, reduced built-up area per bed, deployment of appropriate technology rather than the latest one, usage of good quality indigenous medical equipment etc.

Trend 5 Staying connected with patients
Healthcare service providers hitherto offered in-patient services within the limits of a certain geographical area. However, given the pace with which healthcare is evolving, organized healthcare providers are now diversifying from their core hospital business to include functions such as retail pharmacies, clinics and other services in order to achieve economies of scale. As insurance covers become increasingly accessible and consumer awareness rises, healthcare providers will offer the entire gamut of services across the value chain, including primary, secondary and tertiary services to attract patients into the healthcare system.

Some of the key trends in the healthcare system are the development of integrated healthcare delivery model around core hospitals, offering a broad spectrum of services across the value chain in the most cost-effective manner, hospitals having high volume specialty services, out-patient services becoming an integral component of the healthcare system, ability to negotiate service contracts with purchasers of group health care services, implementation of advanced health information and achieving price efficiencies through group purchasing.

Trend 6 Integrated medicine: Leveraging traditional strengths
With increasing demand for traditional medicine, policy-makers and health administrators are exploring the possibilities of bringing together traditional and modern medicine. Integrated medicine has emerged to be a new paradigm in health care that deploys the best aspects of diverse systems of medicine including modern medicine, Homeopathy, Siddha, Unani, Yoga and Naturopathy, thereby bringing traditional medicine into the general health system. The use of integrated medicines will not only provide a better understanding of differing practices, but also promote the best care for patients by intelligently selecting the optimal and best route to health and wellness. Evidence reflects that traditional medical practices are frequently utilized in curing chronic diseases. The use of traditional medicines also provides a low-cost alternative for rural and semi-urban areas where modern medicines are largely inaccessible. Integrated medicines will result in better patient outcomes, measured in terms of symptom relief, functional status and patient satisfaction.

Trend 7 Embracing technology to reduce cost
Selection and adoption of appropriate technology has the capability to completely revolutionize and transform the healthcare industry. Technology is seen as one of the most important drivers of increasing healthcare accessibility. However, technology constitutes almost 30-40% of the project cost and therefore it is becoming increasingly important for medical technology companies like GE, Philips and Siemens to devise ways to rationalize high cost of technology and improve the quality of outcomes by adopting innovative methods. Some of the innovative ways used by companies to rationalize technology cost are reducing the cost of medical technology research and development, encouraging indigenous production of medical devices and devising innovative ways of dealing with obsolescence.

Trend 8 Shift toward optimizing operations
Under constant pressure to meet increasing customer expectations and staying ahead in the competition, healthcare providers and administrators are looking toward optimizing operations in hospitals, which will enable them to provide world-class services with a finite set of resources and will significantly enhance the business performance. Optimization takes us towards appropriate workforce management, quality management, planning and control, sound clinical processes and outcome performance. It has largely been observed that despite using technology to optimize service delivery, automated support can only help up to a certain level of process management as for any kind of improvement to take place, it is vital to first understand the process workflow and tackling the bottlenecks primarily the ones prevailing in the process design.

Trend 9 Renewed focus on patient safety
One of the key concerns plaguing the healthcare providers is patient safety. It is estimated that worldwide 1.4 million people acquire infections from hospitals, millions of patients worldwide suffer disabling injuries or death due to unsafe medical care every year and one in 10 patients in developed countries is harmed at the stage of receiving hospital care; the figure is higher in developing countries. As per the 2010 Hospital National Patient Safety Goals, hospitals have been mandated to identify patients correctly, improve staff communication, use medicines safely, prevent infection and identify patient safety risks. However, before beginning to achieve these safety goals, it is vital that hospitals first adopt a safety culture. The hospitals can take various steps to improve patient safety like implementing computer physician order entry, having full-time doctors and nurses certified in critical care, implementing a patient safety compliance checklist, robust infection control mechanism etc.

Trend 10 Growth in alternative care settings
Healthcare design space has undergone a tremendous transformation stage and the emergence of ambulatory care services has revolutionized the way healthcare facilities are programmed and configured. Faster procedures and fewer in-patient stays have enabled ambulatory care centers to deliver care in less intensive settings, covering a wide range of health care services for patients who do not need to be admitted overnight. The ambulatory care hospitals are designed with an intention to serve patients who have not previously undergone complex surgeries and are able to walk. At the same time, such ambulances must also incorporate facilities for handicapped and patients under slight sedation.

While a 100-bed facility in-patient hospital would require 1,00,000 sq. feet of space, an ambulatory care service requires 40% to 60% of that space. Ambulatory environments work more effectively in terms of standardization of space as compared to in-patient environment, which are less efficient due to specific individual requirements. As for need for support infrastructure, ambulatory services require less facilities in comparison to in-patient care units, which require full support services.

Conclusion
India is poised to become the international medical tourism hub given its low cost of treatment as compared to international markets. But for this, it is imperative that the entire value chain of this industry, which includes hospitals, chemists, pharmacists, bio-technologists, scientists, doctors, government, infrastructure developers, medical technology and equipment providers, et al, work in synchronization with each other. It is also imperative for the private sector to streamline the business processes and devise cost-effective health care designs to provide affordable treatment to patients. The government too is directing its focus toward this sector as is evident from the Rs.25,154 crore allocated to health by the Government of India in the Budget 2010-11 and the tax holidays provided to set up healthcare institutions. It is now left for the public and the private healthcare sector to embrace new emerging trends and prepare the industry for yet another growth phase.