Hello June! Our team has been in India for almost 4 weeks. Working with a secondary-care hospital chain, we had opportunities to talk with some of great healthcare leaders in Tamil Nadu. Based on their insights and our own research, India healthcare is getting more and more sense.
First of all, India is at the crossroads of an exciting and challenging period in its history. Making healthcare affordable and accessible for all its citizens is one of the key focus areas of the country today. The challenge is immense, as around 70% of the country’s population lives in rural areas and 25% is below poverty level, according to Dr Rajagopalan from Sundaram Medical Foundation Hospital. So the real challenge is how to providing affordable care without compromising healthcare quality.
On the one hand, we understand most of India’s health expenditure is supported by private spending, primarily out-of-pocket. Moreover, the penetration rate of insurance in India, especially for tier 2 markets is very low and only 10% of the population having medical insurance. From hospital’s standpoint, so called “cash economy” in healthcare is favored however this may cause a price competition in local markets, especially some cities like Chennai. That’s also why our client, Be Well Hospital in Pondicherry, have to bring 20% down/discount and make itself competitive with other local hospitals. In addition, more and more private firms are entering in healthcare insurance sectors. As I know from US healthcare, the entry of private firms into the health insurance sector has to be properly regulated otherwise it will have adverse consequences for the cost of care, equity, consumer satisfaction, fraud and ethical standards. Some of the regulatory areas that pose challenges to the growth and penetration of the private health insurance sector in India are:
1. Rejection disputes due to technical reasons
2. Clear documentation between fair practice and unfair practice
3. Knowledge and implications of pre-existing conditions.
Therefore, focusing on quality, especially clear documentation and record for medical practice is becoming a priority for many private hospitals, including our client: Be Well Hospitals (This is also mostly related to our project at Be Well). With more and more healthcare insurance enrollment in the future, these private hospital focusing on quality would definitely be able to catch up with healthcare insurance regulations and make healthcare more affordable.
On another hand, prices of services in the private sector is greatly influenced by prices of some inputs such as labor, technology and etc. However the competitive edge is determined by three factors, according to Dr Rajagopalan - the experience of the practicing physicians, effective use of technology and proximity of service locations, which also act as barriers to entry. For example, finding a good “spot” for new branch in Be Well network is always taking a lot of time and resources. And also due to unqualified nurses and duty doctors, some private hospitals are far away from staying competitive. Therefore, creating a financial viability at a chain of hospital is so important for providing affordable care without compromising quality. Tackling with some challenges previously mentioned is a great start but some practices need to continue by having a sustainable profit margin. For example combining medical services with the sale of drugs and earning commissions from diagnostic laboratories for every referral are becoming new revenue centers for private hospitals. For these cases, Be Well is doing a very good job.
Finally, providing affordable care without compromising quality is a big challenge in India but innovative business models and focusing on quality of medical documentations/metrics would be definitely laying great foundation.
- Chris
First of all, India is at the crossroads of an exciting and challenging period in its history. Making healthcare affordable and accessible for all its citizens is one of the key focus areas of the country today. The challenge is immense, as around 70% of the country’s population lives in rural areas and 25% is below poverty level, according to Dr Rajagopalan from Sundaram Medical Foundation Hospital. So the real challenge is how to providing affordable care without compromising healthcare quality.
On the one hand, we understand most of India’s health expenditure is supported by private spending, primarily out-of-pocket. Moreover, the penetration rate of insurance in India, especially for tier 2 markets is very low and only 10% of the population having medical insurance. From hospital’s standpoint, so called “cash economy” in healthcare is favored however this may cause a price competition in local markets, especially some cities like Chennai. That’s also why our client, Be Well Hospital in Pondicherry, have to bring 20% down/discount and make itself competitive with other local hospitals. In addition, more and more private firms are entering in healthcare insurance sectors. As I know from US healthcare, the entry of private firms into the health insurance sector has to be properly regulated otherwise it will have adverse consequences for the cost of care, equity, consumer satisfaction, fraud and ethical standards. Some of the regulatory areas that pose challenges to the growth and penetration of the private health insurance sector in India are:
1. Rejection disputes due to technical reasons
2. Clear documentation between fair practice and unfair practice
3. Knowledge and implications of pre-existing conditions.
Therefore, focusing on quality, especially clear documentation and record for medical practice is becoming a priority for many private hospitals, including our client: Be Well Hospitals (This is also mostly related to our project at Be Well). With more and more healthcare insurance enrollment in the future, these private hospital focusing on quality would definitely be able to catch up with healthcare insurance regulations and make healthcare more affordable.
On another hand, prices of services in the private sector is greatly influenced by prices of some inputs such as labor, technology and etc. However the competitive edge is determined by three factors, according to Dr Rajagopalan - the experience of the practicing physicians, effective use of technology and proximity of service locations, which also act as barriers to entry. For example, finding a good “spot” for new branch in Be Well network is always taking a lot of time and resources. And also due to unqualified nurses and duty doctors, some private hospitals are far away from staying competitive. Therefore, creating a financial viability at a chain of hospital is so important for providing affordable care without compromising quality. Tackling with some challenges previously mentioned is a great start but some practices need to continue by having a sustainable profit margin. For example combining medical services with the sale of drugs and earning commissions from diagnostic laboratories for every referral are becoming new revenue centers for private hospitals. For these cases, Be Well is doing a very good job.
Finally, providing affordable care without compromising quality is a big challenge in India but innovative business models and focusing on quality of medical documentations/metrics would be definitely laying great foundation.
- Chris