The Need for a new Healthcare Model and some Concerns

The organized private healthcare in India needs to urgently evolve a new business model.

The present model faces challenges as the government goes about changing the healthcare landscape of the country in a ham-handed manner. The price controls that are being put in place essentially mean that private healthcare players will have to develop a new business model, which is ultra low cost and allows them to accept patients at the government mandated low prices.

The Ayushman Bharat Scheme and its different versions being developed by the state governments appear to be a precursor to some kind of Universal Healthcare system in India. The government in itself is not in a position to significantly increase its own healthcare spending on badly needed public healthcare infrastructure. Thus, it will willy-nilly rely on private healthcare, which in any case caters to a majority of the citizens of our country. This is likely to see the emergence of a low-cost health care system, which will serve the needs of the masses.

The Contours of the New Model

Going by the prices on offer from the government for various medical procedures, the new model will have to be quite bare bone. Essentially, this would mean less number of people employed in the hospital, very little by way of ”support services”, no private rooms, generic medicines (my fear is of inferior quality as well, as India has over 30000 pharmaceutical companies with poor regulation in place) and very little by way of patient comfort. The model can only work on large volumes of patients and high patient throughput.

The Concerns

While the model can be developed, the biggest concern will have to be the quality of care that will be delivered. The model’s cost-driven approach completely ignores the minimal clinical quality standards that must be delivered. Presently too, this is a nebulous area as the quality of health care services vary widely and there are no comparative acceptable benchmarks. Large private corporate hospitals have their own standards often comparable to global standards and they have systems in place to monitor the quality parameters and clinical outcomes. Small, private nursing homes have fuzzy standards not clearly defined and stated. No one publishes there outcomes.

To make matters worse, in India we do not have a clinical quality watchdog, which keeps an eye on medical processes and outcomes. Thus, hospitals can report their outcomes and clinical data as they wish. This is clearly a recipe for disaster.

While the implementation of National Health Protection Scheme (NHPS) may lead to better access to medical care to a large number of citizens, the large private healthcare players may get deluged with patients far beyond their capacity. When the payor will be the government through insurance companies, everyone would want to access the highest level of care possible. This in itself is fine and laudable if the care available in the country is of a uniformly high quality. However, in India, the quality of care varies tremendously and therefore the private healthcare players with high standards of care may find themselves unable to cope. Sadly, they may end up compromising on these very clinical standards to manage the patient volumes, thus blunting the competitive edge that they had to begin with.

The third big concern is the ability of the government agencies to be able to effectively implement this ambitious scheme. While the mandarins in Niti Aayog are burning the proverbial midnight oil to get the scheme off the ground, the challenge is indeed enormous. The best-planned schemes come to naught if the execution is tardy. That sadly has been the fate of almost all such similar schemes implemented earlier in different states. The government’s track record is hardly inspiring and the stakes this time around are truly high.

The private healthcare players, however, have their task clearly cut out for them. They have to find a new business model, which delivers world-class care to a very large number of people at a cost which is impossibly low. The sooner they get on with finding the right business models for themselves, the better off they will be.

The views expressed are personal







The Politicians and Private Healthcare in India

Of late politicians of various hues have been paying a lot of attention to the private healthcare sector in the country. Sadly, most of this attention is rather unhealthy, based on their own populist electoral agenda and completely partisan. Let us look at two recent examples. We have had the Prime Minister talking about capping of stent prices and the like, while speaking some time back in London and then more recently we had the health minister of the government of Delhi announcing a slew of measures that the government plans to implement to curb ”profiteering” by the private healthcare players in the National Capital Region.

Even a casual glance at the financial results of private healthcare players in the country will establish the simple fact that far from profiteering, most of them are struggling to make a decent profit on their investments. The EBITDA margins for most of the hospitals are in the range of 7%-15% and the return on capital employed (ROCE) is mostly in single digits even after a decade of hospital operations. The investors who set up these hospitals as ”for profit” businesses, would probably be far better off if they had just chosen to keep their money idle in a bank or may be invested in some other business.

The government and the pricing authority (NPPA) tend to look at hospital profitability through a completely distorted lens. Media stories inform readers that hospitals are making jaw-dropping profit margins on things like syringes, gloves and other sundry drugs and medicines. While these items are always sold on the MRP, the hospitals have also been baselessly accused of colluding with the manufacturers of these items in inflating the prices. Even if for a moment one assumes this is true, the simple fact is that a hospital’s profitability cannot be judged from the profit margins on sundry consumable items.

The profitability of a hospital has to be established by looking at the revenue that it earns and the entire cost structure that the hospital carries. The huge upfront cost of developing hospital infrastructure, the costs of all the clinicians and the medical staff employed by the hospital, the cost of all the non-medical services (such as housekeeping, the front office and F&B) and the cost of sophisticated equipment and instruments for diagnosis and treatment of the patient forms the bulk of the hospital cost. The hospitals incur these costs right at the start of their operations and continue to make losses for several years before they can hope to break-even.

Even on the revenue side, private hospitals are required to cater to patients such as those covered under the CGHS and the ECHS schemes of the government. These patients enjoy cashless services at the point of delivery, with the government paying a subsidized amount to the private hospitals later on. This is largely because the government’s own hospitals do not have sufficient infrastructure to take care of these patients. Payments from the government are low, sporadic and endlessly delayed. These patients, however, receive the same level of medical care as any non-subsidy enjoying patient and hospitals incur the same costs.

On one hand, we as consumers continue to demand more from our healthcare service providers including better equipment, greater patient safety, higher levels of infection controls, better-trained doctors and ultimately superior patient outcomes, it seems we are willing to pay less and less for all of this. Clearly, this can not work. The hospitals have to recover these costs for them to be financially viable.

Politicians whipping up unnecessary hysteria by claiming that hospitals make huge margins on say a cotton swab and then presenting themselves as knights in shining armor out to protect the general public from the depredations of unscrupulous private sector hospitals is just playing to the galleries. It is actually the politics of the worst kind. A far better approach would be to increase healthcare expenditure and invest in creating better public healthcare infrastructure. Partnering with the private healthcare players in a fair and equitable manner would go a long way in improving healthcare services to the citizens of our country.

Private Hospitals and clinicians provide the bulk of healthcare in the country. Investors who have put their money in these businesses must not be denied a reasonable profit just because politicians have elections to fight. If the government continues with this agenda, they will end up destroying private healthcare in India.

And that truly would be a very high price for all of us to pay.

The views expressed are personal.

When Journalists Pronounce Patients Dead

Quite often these days one comes across screaming media headlines about hospitals keeping dead patients alive on ventilators and other life-support paraphernalia. The headlines almost always accuse hospitals and doctors trying to make more money by keeping the patients in the hospital, even when the chances of their survival are minimal. Strangely, they always mention that the patient is already dead and the hospital is treating them unnecessarily.

This has always left me wondering as to how the journalists filing these reports and the media-houses publishing such drivel know that the patient is alive or dead. Since when have we handed over the responsibility of declaring people dead to journalists? Many of these worthies wouldn’t even know how to record a pulse, leave alone pronounce people dead. Yet, the media-houses carry these stories with aplomb, merrily destroying reputations and widening the gulf between the patients and the hospitals.

The laws in India on this are clear enough. Hospitals cannot withdraw life-support from a patient, howsoever sick he might be just because the patient’s families believe that there is no further chance of the patient’s recovery. The patient’s families often find themselves in a difficult situation wherein the patient remains alive on life-support in an ICU, with very slim chances of survival and the hospital bills keeps mounting. I can understand their dilemma well, to them it may appear that spending large amounts of money, when the patient has a very poor prognosis is futile. The attendants start pressurizing the hospital to hasten the inevitable. This is of course completely illegal and hospitals usually do not comply with these requests. This leads to bad blood between patients and hospitals, media gets called and accusations of making money by keeping the dead alive fly thick and fast.

With the media pressure mounting, the hospitals are forced to waive-off their charges and suddenly, hospitals find themselves in a better place. Patient’s angry relatives are no longer as difficult, they suddenly have a better ”understanding” of the hospital’s compulsions and they now urge the hospital to do whatever they can to ensure that the patient’s suffering is minimized. This drama plays out in our hospital corridors quite often.

Media’s role in this is quite suspect. They deliberately publish inflammatory and baseless reports of the dead continuing to receive treatment. They rarely carry statements from the treating doctor, even if they do, these are tucked away or played out in a manner that does little justice to the treating clinicians. The only objective is to put pressure on the hospitals and get the concessions for the patient and paint the hospital as the devil incarnate.

Hospitals can avoid this by taking a view that when patients are so sick that they have no chance of survival, they would on their own waive off their charges till the inevitable happens. This, of course, hurts their revenues and it isn’t really fair to them to continue providing a service free, but there is hardly a choice here. The inevitable media hoopla, which is far more unfair and even damaging can perhaps be avoided in this manner. They also have an opportunity of earning goodwill from the relatives of the patients, who one assumes would be grateful for this help in difficult times.

The other alternative is really a change in the laws of the country, which in a manner of speaking is underway. Do Not Resuscitate (DNR) guidelines have been given legal form through a judicial pronouncement. These though still remain nebulous and much more needs to be done to publicise the new laws, at least a good beginning has been made. Laws regarding the end of life care need to be framed with complete clarity and any loopholes regarding potential misuse must be plugged.

Till such time, this happens, doctors and hospitals will continue to be at the receiving end of a biased media in search of lurid stories and patient attendants, who see little point in continuing to pay for a relative who is unlikely to make it.

The views expressed are personal











Managing Hospital Marketing Costs in Difficult Times

The last financial year has been a difficult one for most private healthcare services providers in India. The regulatory headwinds related to the capping of prices of stents and knee implants, the extremely negative media campaigns and unruly patient activism have pegged back revenues and dented profits. The Prime Minister has been running a most undignified campaign of his own caricaturing Indian doctors as blood-thirsty parasites out to mistreat patients and highlighting the fact that he has been able to stop the rot through legislative action. In Delhi, the Chief Minister is busy rolling out his pet half-baked schemes and many states have come up with draconian provisions under the so-called Clinical Establishment Acts.

However, all this has left private healthcare providers in a hard place. They are left with no option but to ruthlessly cut costs and scale back some long-term investments. Many are re-working their growth and investment strategy. Marketing budgets are being slashed, head-counts being ” rationalized” and various kinds of harsh cost control measures are being implemented.

Marketing costs and costs related to patient amenities in the hospital are perhaps the easiest to cut. They do not involve the pain let us say of reducing head-counts by handing out pink-slips. They also do not significantly impact patient outcomes.  A few lesser ads in the newspaper and maybe a water-bottle less in the patient room is unlikely to cause too much of pain.

This is also the commonest mistake hospitals make.

Marketing activities and great patient experiences help spread the word around. Brand communication works quietly in pushing a particular hospital in the consideration set of new patients. It helps build perceptions about the quality of care provided by the hospital. It also helps position the hospital as a possible choice whenever the need arises. The messaging has to be continuously reinforced in an unobtrusive manner, gently working on the consumer’s mind, building the desired imagery of the hospital.

In times of turmoil, when an unforgiving media is hellbent on creating issues where none may exist and when politicians are vying with each other in demonizing a reasonably well-working system the marketing communications put out by the hospital assumes greater significance. Patient stories in the form of nicely crafted testimonial ads can go a long way in reassuring new patients. Announcement ads related to the induction of new technology and equipment can inform patients about new choices available to them. A digital marketing campaign can help patients access the hospital services with greater convenience. A well-executed community outreach program can allow the hospital to enroll patients in long-term relationship programs, binding them together with the hospital.

Great patient experiences also work in a similar manner. Satisfied and happy patients are the finest brand ambassadors. Their credibility based on their own experiences counts for a lot more than any advertising would ever do. It is also foolish to assume that patients will not notice small things, which quietly disappear when stiff cost programs are executed. That nice friendly GDA who takes the wheel-chair, the missing dessert in the meals, the fraying blanket or the worn upholstery on the attendant’s sofa in the patient’s room will always be noticed. Discerning patients will be able to see through these ”small” compromises and will definitely talk about them. This kind of talk is extremely detrimental to the brand equity of the hospital and is almost always impossible to fix later on.

Many years ago I had learned that there is usually a cost associated with cutting cost. Sadly, sometimes this cost is not visible at least in the short run. One has to be very careful while taking drastic cost decisions particularly when they look easy or simple. They often are not. The costs thus cut, have a way of coming back and hitting hard in the future. Marketing and patient experience costs usually return with a much greater vengeance and that too in the not so distant future.

So, what should hospitals do in difficult times such as these?

While they knuckle down to protect their meager profits, they should avoid knee-jerk cost action at least in these two areas. If anything, they should further reinforce their communication and patient experiences to ride out the storms.

The views expressed are personal




A Case of Abuse of Social Media

The last week saw a chastened-looking Mark Zuckerberg, testifying in the US Congress about data leaks from Facebook and explaining how he himself has been a victim of the same leaks. That may be cold comfort for most people and data leaks from social media behemoths are perhaps far bigger a problem than what ordinary folks face on social media on a daily basis.

Social media has been prone to abuse in multiple ways. While this piece cites a specific example that I came across last month, the wanton abuse of social media in spreading canards, abusing people in the vilest of terms, destroying reputations by twisting facts and sharing half-truths is quite worrying. Even more worrying is the lack of recourse that the aggrieved parties have in getting redress. While they can always present their side of the story, the abusers tend to ratchet up the diatribe and the language used is not something that perfectly decent folks can match. Thus, they give up.

Here is what happened last month.

A relative of a patient who died of liver failure at Max Hospital, New Delhi put up an extremely derogatory post abusing one of the doctors on the Liver Transplant team. The posts used the filthiest of language and dragged her extended family, including her long-deceased grandfather in a matter that was purely in the domain of the clinician’s work. The doctor, a lady with an impeccable track record of academics at the finest medical institutions in India and abroad was called horrible names, her competence questioned and her family’s name dragged through the mud.

The facts of the case as gleaned from the hospital records are quite straightforward. The patient had first been seen at Max Hospital, New Delhi in the last week of November 2017 when he had presented with symptoms quite clearly suggestive of liver cirrhosis. The patient was admitted to the hospital, investigations were conducted to confirm the provisional diagnosis and he was managed on medicines. He improved symptomatically and was discharged from the hospital 3 days later.

The patient again showed up at the hospital in early February 2018 and was advised admission. The patient’s family chose to disregard this advice and took the patient home. The patient was subsequently brought to the hospital in an emergency situation by the end of the month. He was admitted to the hospital ICU and was managed with medications. The patient’s family, however, decided to leave the hospital against the medical advice (LAMA).

The patient returned to the hospital the very next day. He was admitted and advised a Liver Transplant Surgery. The patient was managed and was provided all supportive therapy and the hospital waited for the patient’s family to take the decision on the liver transplant and arrange a suitable family member who can be the donor. The family once again discharged the patient LAMA and moved him to another hospital.

Incredibly, three days later the patient once again arrived in an emergency situation. The patient had deteriorated significantly. He was admitted to the hospital, needing an urgent liver transplant. The family now consented to the transplant. His wife agreed to be the donor and she was worked up for the surgery. Unfortunately, she was not found fit to donate and the patient in the meanwhile kept deteriorating. Sadly, the patient passed away without receiving the transplant. These are facts recorded in the EMR’s of the hospital.

While going through the hospital records, it was quite evident that the patient hardly followed the medical advice provided to them, they remained undecided about the transplant, till it was too late.

To blame a particular doctor in the transplant team for their travails is clearly unfair. The doctor advised them well, did her duty even when the family kept vacillating. To abuse her in the vilest of terms on a social media platform and to declare a ”war” against her and the hospital, vilify her family, which had nothing to do with any of this was most unfortunate.

The clinician chose not to respond to this calumny and decided to sue them for defamation. Taking on such elements on social media itself would clearly have been futile.

In an environment, where there exists a huge trust deficit between doctors and patients is there anything else that she could have done???

The views expressed are personal










The Big Healthcare Challenges in FY 19

As the present financial year draws to a close, I am left reflecting on the challenges the private healthcare services organizations in the country face in the coming year. The present year has been a pretty tumultuous one. The regulatory environment threw up several challenges. The NPPA orders on price controls of devices such as stents and joints impacted the profitability of most private healthcare companies adversely. The DPCO’s orders on price controls on key drugs too are also likely to dent the bottom line of private hospitals. The media brouhaha triggered by two cases one at Fortis Hospital Gurgaon and one at Max Hospital, Shalimar Bagh, New Delhi created consumer distrust of an unprecedented nature. The private sector hospitals were called names and their doctors were addressed in the vilest of terms leading to all around despondency. Private hospitals are now limping back from this assault. The government of Delhi also announced a half-baked scheme for its citizens, which allows them access to private hospitals if the government-owned hospitals put them on a wait-list of more than a month. Finally, in the budget, the union government announced the path-breaking ”Ayushman Bharat”, which is supposed to provide a cover of INR 500000 to a million families across the country.

All these are expected to lead to some fresh challenges for the private healthcare providers in the next financial year.

Regaining Patient’s Trust 

If there is one thing, which ranks higher than any financial matrix of revenue, costs, and profits it has to be the effort to regain the patient trust. The reasons for the loss of trust are many, some genuine and some purely trumped-up, however, most private hospitals see the urgent need to regain the customer trust. Significant investments will have to be made to improve transparency, patient communication, and organizational culture, which will lead to patients trusting their hospitals. This too is a difficult task and will involve a lot of senior management time and effort.


The government and the media have quite successively sold a narrative to ordinary citizens of the country that the private sector hospitals are profiteering and that they are out to cheat patients by over-prescribing, over-billing or worse. Thus, they have ascribed themselves the role of the guardians of the ordinary citizens against the rapacious, profit-hungry hospitals. The truth is far more prosaic and indeed worrying for the private sector hospitals. Most of them have seen a shrinkage in their profits, which to begin with were meager. The biggest challenge that private sector hospitals face in the coming year is clearly of ensuring reasonable returns for their shareholders. In an environment, driven by complete distrust between patients and the hospitals, with power-hungry politicians seemingly baying for their blood in what might be an election year, most private sector hospitals are staring at a bleak year ahead. The EBITDA margins are likely to contract. The hospitals will have to thus figure out a way of reining in costs, without compromising on patient care, safety, and outcomes. This is obviously easier said than done and will probably consume most of the bandwidth of the top management of the hospitals.

Managing the Changing Regulatory Environment

Healthcare is finally getting some attention from the government, which in itself is not a bad thing at all.  However, the controls being put on pricing and the schemes like the Ayushman Bharat and similar programs are not at all well thought through. The private sector, however, has no choice but to adapt to the changing situation. The National Health Protection Scheme (NHPS), will be rolled out this year. One is hopeful that it will be backed by suitable technology, which allows private hospitals to handle patients covered under NHPS. The hospitals will need to usher in change to be able to accommodate the large number of NHPS beneficiaries, which may flow into private hospitals. These changes may include modifying the bed configurations in the existing hospital, tweaking systems and processes and creating special areas to handle NHPS patients and create low-cost models, which allows the private hospitals to manage the NHPS patients in high volumes. Other regulatory changes in drug price controls, devices pricing controls and guidelines on re-usage will all lead to significant tweaks in hospital processes.

Managing Media and Consumer Activism

Consumer and media activism is here to stay. An unexpected outcome, a perfectly explainable error of judgment and sometimes a perceived lack of attention can trigger a media avalanche. Much as the hospitals may crib about being unfairly targeted, they will have to learn to live and cope with it. However, this does not mean that hospitals will not take a stand or push-back particularly when they are in the clear. They will have to learn to work with a partisan media and try their best to put out their side of the story. Speed will be of the essence and the communication teams of the hospitals will have to be beefed-up. Social Media too will throw up new challenges and the hospitals will have to learn to respond quickly and have a ready base of loyal supporters who will help defend them against motivated tirades.

These are all unique and new challenges. I am sure something good and lasting will emerge from these as well.

The views expressed are personal













The Uncertain Bill

One of the biggest problems that foreign patients face in India is the uncertainty regarding their final hospital bills. From a hospital’s point of view, it is almost impossible to provide an accurate estimate of likely expenses before the patient arrives at their doors. The variables involved in estimating the costs are quite complex and unpredictable. Often, the hospitals are required to respond based on old medical scans and reports of dubious quality sent by the patient over email. Sometimes because of different languages, translated reports do not accurately capture the patient’s present condition. Even if all this goes well, hospitals often discover at the time of patient’s admission undisclosed and hidden co-morbid conditions that require management before the patient can be taken up for a planned surgery. These situations are quite inevitable and an inaccurate estimate is really no one’s fault.

To make things infinitely worse, surgical complications, infections, and completely unanticipated medical exigencies also lead to prolonged stay and medical bills shooting up. These situations are a part and parcel of an episode of hospitalization. International patients usually travel for complex tertiary care needs and the variables involved are far more than those who require simple straightforward surgeries. This makes the likelihood of the bills going up even more.

From the point of view of a patient, who is in a strange country not knowing how much he may be required to pay for his treatment is always worrisome. Once, the nightmare of a complication starts unfolding, on one hand, the family of the patient worries about his prognosis and recovery, on the other hand, they live in the fear of the consequences of not being able to settle their bills. The patient’s family also worries about being fleeced by unscrupulous healthcare facilitator hanging around in the lobbies of most of our hospitals. They simply don’t know whom to trust with the limited financial resources that they have at their disposal.

All this leads to ugly uncalled-for situations. The hospitals feel that they are not getting their rightful due, the patients feel cheated as they believe that the bill escalation is not their problem and the hospitals should charge them no more than the estimate provided to them at the time of admission. Complaints fly thick and fast, embassies get involved, the HCF’s find themselves in the middle, unable to assuage either the patient or the hospital. The matters usually get resolved only after a lot of acrimony, ill-will and nobody really feels good about all this.

Here are some suggestions to handle this. These have been in circulation for some time but have not been implemented in any hospital in India that I know of.

The hospitals can possibly look at creating a fund that can be used to pay for patients whose bills unexpectedly run high and are not fully settled. The fund can be created by the hospitals charging a small sum from all international patients they handle and by contributing some amount themselves. This would mean that each international patient pays a little bit to help a fellow foreign patient, who might be facing financial difficulties. The hospital too contributes by reducing the bill by a pre-defined amount in all such cases. A suitable mechanism can be evolved to ensure that these funds are used judiciously and not squandered away. This will avoid the nasty situation that almost always presents itself when an international patient is unable to settle his bills.

Another way to manage this could be a ‘’Complications Insurance Cover’’ that a patient can buy from a general insurance company. On a visit to Dubai recently, I learned that they have now put in place a system of mandatory ‘’Complications Insurance’’, which a patient must buy before undergoing treatment at a hospital. Essentially, this means that the patient covers the risk of a complication through an insurance cover designed for this purpose. The product seems to be in its early life-cycle yet and is being offered by a few insurance companies, I am hopeful that Indian insurance companies would also look at it favorably. Maybe, the government can mandate that all patients traveling to India on a medical visa must buy a cover of a minimum value before they go under the knife in an Indian hospital.

I do realize that it requires a lot of work in developing a viable product of this nature by the insurance companies. However, with MVT into India growing at a CAGR of 15-20%, with patient arrivals already in the region of 200000 plus per annum, maybe there is an opportunity for the insurance companies to get into this. Assuming a minimum premium of USD 300 per patient (roughly 5% of the average bill value of the patient), this translates into a minimum USD 60mn opportunity per annum and growing handsomely. The calculations here are simplistic; however, it is undeniable that an opportunity exists for the insurance companies.

Let us hope that some of these remedies find favor with hospitals in India. These can go a long way in removing a thorny irritant, which often causes bad blood, even when the medical outcome and the general patient experience in the hospital have been good.